Monthly Net Asset Value

8 January 2018
 

CRYSTAL AMBER FUND LIMITED

(“Crystal Amber Fund” or the “Fund”)

Monthly Net Asset Value

Crystal Amber Fund announces that its unaudited net asset value (“NAV”) per share at 31 December 2017 was 190.69 pence (30 November 2017: 186.55 pence per share). 

The proportion of the Fund’s NAV at 31 December 2017 represented by the ten largest shareholdings, other investments and cash (including accruals), was as follows:

Top ten shareholdings	Pence per share	Percentage of investee equity held
Hurricane Energy plc	49.9	8.0%
Northgate plc	26.9	5.2%
FairFX Group plc	19.0	15.3%
STV Group plc	18.4	14.5%
NCC Group plc	13.4	2.0%
Ocado Group plc	13.2	0.5%
Leaf Clean Energy Co.	10.1	29.9%
Sutton Harbour Holdings plc	7.9	29.3%
GI Dynamics Inc	4.3	46.7%
Camellia plc	2.9	0.9%
Total of ten largest holdings	166.0
Other investments	26.1
Cash and accruals	-1.4
Total NAV	190.7

Investment Adviser’s commentary on the portfolio

Over the quarter to 31 December 2017, NAV per share decreased by 6.1%.  Taking into account the 2.5p per share dividend accrued during the period, NAV per share decreased by 4.9%.  

The top contributors over the quarter were Ocado Group plc (+1.7%) and FairFX Group plc (+1.0%).  The main detractors were Northgate plc (-1.6%), Leaf Clean Energy Co. (-1.5%), GI Dynamics Inc (-1.4%) and Hurricane Energy plc (-1.4%).

Hurricane Energy plc (“Hurricane”)

Hurricane’s share price fell by 5.3% over the quarter. The Fund notes with regret the circumstances surrounding the resignation of Hurricane’s Chairman, Rob Arnott. The company also announced the establishment of a Listing and Governance Committee and the appointment of an Interim Chairman.  The Fund has engaged with Hurricane’s Board to improve the company’s governance and to release value. The Fund welcomes the company’s announcement in December that it intends to become fully compliant with UK Corporate Governance Code Provision B.1.2 regarding the appointment of non-executive directors and its statement that the director nomination processes, succession planning and Board evaluations are integral parts of a well-functioning, effective Board, and will form part of the ongoing Board strengthening activities.

In December, the company published an updated Competent Person’s Report, which acted as a positive catalyst for the stock. The report primarily covers the Halifax, Lincoln and Warwick assets, and raises the estimate of Hurricane’s total 2P Reserves plus 2C Contingent Resources to 2.6 billion barrels of oil equivalent.

Hurricane remains on track to achieve “first oil” from its Early Production System at Lancaster in the first half of 2019, and in December it hosted a visit to the floating production, storage and offloading vessel in Dubai that will form the basis of the development once its upgrades are complete.

Northgate plc (“Northgate”)

At its Capital Markets Day in October, Northgate’s new management team laid out in considerable detail its strategy to return the UK business to growth and its three-year growth and margin expectations for the UK and Spain. These imply earnings growth above analyst forecasts.  However, the share price fell by 12.1% over the quarter following earnings downgrades after the H1 results, largely driven by lower forecasts of profit from the sale of vehicles, despite residual values having remained stable to date.

The Fund is supportive of management’s efforts to arrest market share losses in the UK, optimise the vehicle hire site network, and maximise the opportunity presented by the Van Monster retail network and brand. In Spain, Northgate is the clear leader in the LCV flexible hire market, with a strong brand, good geographic coverage and attractive return on assets – management expects to achieve >10% CAGR in vehicles-on-hire over the next three years, together with the consequent further growth in margins.

The Fund believes that the considerable value of Northgate’s Spanish business is not reflected in its share price and that options to release the value of this asset should be explored, including ways that could preserve procurement synergies with the UK, e.g. a partial listing in Spain.

Ocado Group plc (“Ocado”)

The Fund’s investment thesis is based on the returns arising from Ocado’s technology investment (the Ocado Smart Platform (“OSP”)) and Ocado’s ability to monetise this through international partnerships. The Fund believes that Ocado offers a scalable, efficient solution to major food retailers.  In November, Ocado announced its first major international partnership deal for the OSP, with Casino in France.  Ocado’s share price increased by 35.7% over the quarter.

Sutton Harbour Holdings plc (“Sutton Harbour”)

On 7 December 2017, the board of Sutton Harbour recommended to its shareholders a partial cash offer from FB Investors LLP for up to 70% of its share capital, which concludes the strategic review process undertaken in conjunction with Rothschild. The Fund has accepted this offer. On 3 January 2018, the partial offer was declared wholly unconditional. Sutton Harbour’s share price increased by 7.6% over the quarter.  

Transactions in Own Shares

Over the quarter, the Fund bought back 322,482 of its own shares at an average price of 180.1p per share as part of its buyback programme.  These shares are held in Treasury.

For further enquiries please contact:

Crystal Amber Fund Limited

Chris Waldron (Chairman)

Tel: [phone]

www.crystalamber.com

Allenby Capital Limited - Nominated Adviser

David Worlidge/James Thomas/Liz Kirchner

Tel: [phone]

Winterflood Investment Trusts - Broker

Joe Winkley/Neil Langford

Tel: [phone]

Crystal Amber Advisers (UK) LLP - Investment Adviser

Richard Bernstein

Tel: [phone]