TIDMCRS
RNS Number : 5371S
Crystal Amber Fund Limited
13 September 2010
13 September 2010
Crystal Amber Fund Limited
(the 'Fund' or the 'Company')
Final results for the year ended 30 June 2010
The Company announces its final results for the year ended 30 June 2010.
Highlights:
· Substantial profits realised through Delta, Kentz, Chloride and Tate &
Lyle
· Net assets up from GBP68.5 million (114.21p per share) at 30 June 2009 to
GBP69.3 million (115.5p per share)
· Promising pipeline of new investments
· Strong cash position boosted by profits realised
· Increased engagement with key investee holdings
William Collins, Chairman, commented:
"The year saw some notable successes, as well as some challenges. Investments
in some of our main holdings were realised with excellent profits, amounting to
more than GBP15 million. On the other hand, weakness in the share price of our
holding in JJB Sports, where some profits were realised during the year,
affected the Fund's overall performance in the final quarter."
Enquiries
+--------------------------------------------------+----------------+
| Crystal Amber Fund Limited | |
+--------------------------------------------------+----------------+
| William Collins | Tel: 01481 716 |
| | 000 |
+--------------------------------------------------+----------------+
| | |
+--------------------------------------------------+----------------+
| Merchant Securities Limited | |
+--------------------------------------------------+----------------+
| Bidhi Bhoma | Tel: 020 7628 |
| | 2200 |
+--------------------------------------------------+----------------+
| | |
+--------------------------------------------------+----------------+
CHAIRMAN'S STATEMENT
I am pleased to present the third annual report of Crystal Amber Fund Limited
("the Company"), for the year to 30 June 2010.
The period under review was one in which the world economy continued to recover
from the credit crisis of 2008/9. The recovery was stronger in developing
regions of the world in comparison to the more mature economies of the West.
Financial markets continued to improve, although concerns about the durability
of the recovery returned during the second quarter of 2010.
It was the second full reporting year for the Company and a period in which we
engaged intensely with our main investee companies, in line with the brief set
out in our admission document.
The year saw some notable successes, as well as some challenges. Investments in
some of our main holdings were realised with excellent profits, amounting to
more than GBP15 million. On the other hand, weakness in the share price of
holding in JJB Sports affected the Fund's overall performance in the final
quarter.
Net asset value ("NAV") at 30 June 2010 was GBP69.3 million, compared with
GBP68.5 million at 30 June 2009 and the initial level of GBP57.0 million at
admission to AIM in June 2008. NAV per share was 115.5p at 30 June 2010,
compared with 114.21p the previous year and the initial level of 95.02p on
admission.
In the course of the year the Fund deployed its resources more fully, with 82
per cent. invested at 30 June 2010, compared with 57 per cent. a year earlier.
Our cash resources enable us to take advantage of investment opportunities and
to pursue our activist mandate.
On two occasions, we felt it necessary to take a public stance in relation to
our investee companies, firstly on the takeover bid for Delta, where we
challenged the terms and succeeded in obtaining a modest improvement, then with
Pinewood Shepperton, where we sought board changes after our initial discussions
with the company failed to produce the outcome we were seeking. Since the
period end, we have acquired further shares in Pinewood Shepperton and now hold
27.01 per cent. of the issued share capital. We are determined to see the
unlocking of the substantial value that we have identified.
The economic outlook remains uncertain and, whilst there are some encouraging
signs, recovery in the main Western economies is fragile with a "double dip"
recession still being a possibility. The high level of government debt in many
countries remains worrying. The continuing tide of liquidity from central banks
is understandable, but its long-term inflationary implications are a concern.
We have known from the outset that the activist path can require determination
and patience, and we remain committed to pursuing our goal of delivering value
for our shareholders. We note and welcome the UK Financial Reporting Council's
Stewardship Code, which encourages investors to be more proactive and sets
benchmarks for engaging with companies on a regular basis.
The Company is still young and we are confident that our strategy will continue
to deliver positive returns for our shareholders.
William Collins
Chairman
INVESTMENT MANAGER'S REPORT
The year under review was one of modest recovery in the global economy and
financial markets, punctuated with bouts of apprehension that recession might
return.
One of the biggest threats to the recovery in Europe was the concern about
government debts in many countries of the Eurozone. This caused severe falls in
markets during May in particular, raising fears that the instability of 2008/9
was returning.
The key issue is the amount of debt taken on by governments, whether accumulated
over several years or inflated by the rescue of their banking systems. There
has been a weakening of confidence that the Eurozone's southern countries can
rebuild their fiscal positions without some form of devaluation or default. This
overshadowed what appears to be a gradual economic recovery.
In the UK, the official GDP growth estimate for the second quarter of 2010 is
1.2 per cent. above the first quarter and 1.6 per cent. above the previous year.
The trend appears to support forecasts of growth of between 1 per cent. and 2
per cent. for 2010 as a whole; the forecast of the new Office for Budget
Responsibility ("OBR") is 1.25 per cent. Any positive growth in the UK economy
will be welcome after the contraction recorded in 2009. The OBR's forecast for
growth is 2.6 per cent. in 2011, followed by 2.8 per cent. in 2012.
Internationally, central banks continue to stoke the markets with "quantitative
easing", which may ultimately push up the rate of inflation. All this suggests
that markets will remain volatile. Some believe that the hypergrowth of China
has become a bubble that will burst. Others seize on the troubles of Spain's
cajas as the catalyst of the next crisis. One of the downsides of globalisation
and almost instant access to developments is that traders can now panic over
issues of which they would never have heard a few years ago.
THE EQUITY PORTFOLIO
At 30 June 2010 the Fund's top six investments - Pinewood Shepperton plc
("Pinewood Shepperton" or "Pinewood"), JJB Sports plc ("JJB"), PayPoint plc
("PayPoint"), Omega Insurance Holdings Limited ("Omega"), Trading Emissions PLC
("Trading Emissions" or "TRE") and Sutton Harbour Holdings PLC ("Sutton
Harbour") - accounted for 87 per cent. of the Fund's equity portfolio. This is
in line with the Fund's mandate and allows focus on areas where intensive
activism is more likely to achieve positive results. The greater concentration
of specific stock risk than in a more diversified portfolio inevitably causes
some volatility in net asset values over short periods.
+------------------------+------+---------+
| |GBPm | (% |
| | |stake)* |
+------------------------+------+---------+
| Pinewood Shepperton | 13.1 | 18.0 |
+------------------------+------+---------+
| JJB | 12.1 | 15.4 |
+------------------------+------+---------+
| PayPoint | 8.8 | 4.9 |
+------------------------+------+---------+
| Omega | 7.2 | 2.7 |
+------------------------+------+---------+
| Trading Emissions | 4.8 | 1.8 |
+------------------------+------+---------+
| Sutton Harbour | 3.1 | 10.0 |
+------------------------+------+---------+
| Total of top six | 49.1 | |
| holdings | | |
+------------------------+------+---------+
| Other Equities | 7.5 | |
+------------------------+------+---------+
| Total Equities | 56.6 | |
+------------------------+------+---------+
| Cash & net current | 12.7 | |
| assets | | |
+------------------------+------+---------+
| Net assets | 69.3 | |
+------------------------+------+---------+
| *Percentage of share | | |
| capital held | | |
+------------------------+------+---------+
PERFORMANCE
The year saw heightened activism in pursuit of the Fund's mandate and some
excellent realisations from the portfolio, justifying the detailed analysis
underlying the stock selections.
NAV per share rose from 121.48p at 31 January 2010 to 128.17p at 30 April 2010.
General stock market weakness and specific share price weakness in JJB,
following its results in May, led to a fall in NAV at 30 June to 115.5p*.
The Fund engaged actively with several portfolio companies over the period and
took a public stance in the bid for Delta which succeeded in producing improved
offer terms. Particularly active engagement also took place with Pinewood, JJB,
PayPoint, and Sutton Harbour.
Having already invested in Delta following extensive analysis, the Fund took a
pro-active stance when Valmont Industries launched a takeover bid. It doubled
the size of its Delta holding and publicly called on Valmont to improve the
terms. This raised the Fund's profile and broadened recognition of its role.
Though a counter bid for Delta did not materialise, Valmont improved its offer
by reinstating Delta's final dividend, delivering the best achievable outcome
for the Fund.
The Fund's investments in Kentz and Chloride were sold at total profits of
GBP2.6m and more than GBP3m respectively. Though Kentz has performed well,
following engagement with management the potential for activism appeared
limited. The return on this investment was 68 per cent., before including
dividends. The Fund's investment in Tate & Lyle was sold at a profit of more
than GBP4m. The return on this investment was in excess of 60 per cent. Other
successful disposals brought total realised gains for the year to more than
GBP15m.
Having maintained a cautious attitude and high cash reserves in the early months
of its life, the Fund stepped up its investment in 2010 and by mid-April was 97
per cent. invested, the highest level since its inception. The realisations set
out above enabled the Fund to rebuild its cash position. It is clear that
shareholders appreciate the advantages of the Fund's cash holding and the
immediate flexibility it offers.
The Fund's objective is absolute return, but it is outperforming the FTSE 250
index, which at recent levels is barely changed from its level at the time of
the Fund's inception. Over its first two years, the Fund's NAV increased by 21.6
per cent..
At 30 June 2010 the Fund held a total of 15 equity investments and was 82 per
cent. invested.
*Unaudited NAV per share was 116.72p on 31 August 2010.
PINEWOOD SHEPPERTON plc
At 30 June 2010, the Fund held 18 per cent. of Pinewood and its holding was
valued at GBP13.1 million. We engaged intensely with Pinewood's board and
management. A series of meetings were held with management, with the
involvement of Pinewood's chairman Michael Grade. Specific concerns and
proposals were put to Pinewood in February 2010; the chairman undertook to
evaluate these, consult the board and report back to the Fund.
The Fund's concern is to make clear the intrinsic value of Pinewood's core
business and to improve the understanding of its strengths, performance and
potential. Proposals to improve the transparency and visibility of the business
were put to the chairman and management. By June 2010, no progress was being
made. At this point the Fund called publicly for the chairman of Pinewood to
step down, as well as its senior independent director. The Pinewood board
rejected this. The Fund challenged the chairman at Pinewood's annual general
meeting on 29 June 2010. This attracted widespread publicity.
The Fund is determined to pursue its activist strategy at Pinewood, in order to
unlock the full potential of the business.
JJB SPORTS plc
At 30 June 2010 the Fund held 15.4 per cent. of JJB and its holding was valued
at GBP12.1 million. The pace of recovery at JJB has been slower than we hoped
and recent share price performance has been disappointing. This has had a
negative impact on the Fund's NAV, though the Fund has previously benefited from
GBP2.5 million of realised gains on this investment.
We had concerns about the previous management of JJB and communicated these to
the board. These reservations were confirmed by JJB's results for the year to 31
January 2010, which were published on 27 May. Revenue from continuing
businesses fell 22.6 per cent., gross margins narrowed and a pretax loss of
GBP68.6m was sustained. In our view, valuable time has been lost.
We are, however, greatly encouraged by the new management, with Keith Jones as
chief executive and John Clare as chairman. Trading has improved considerably
and gross margins have recovered. Although much remains to be done, progress is
encouraging. We are engaging intensely and constructively with JJB's board and
management and are committed to delivering significant value from this
investment.
PAYPOINT plc
At 30 June 2010 the Fund held 4.9 per cent. of PayPoint and its holding was
valued at GBP8.8 million. PayPoint is a specialist payments company with a
network of 22,000 terminals in UK and Irish retail outlets, a growing business
in internet and mobile phone payment services, a parcel delivery service, and a
retail payments network in Romania.
Its recent share price performance was overshadowed by a serious competitive
threat from Camelot, the lottery operator, which announced plans to offer bill
payment services on its terminals. PayPoint and others believe this would be
unfair competition in view of Camelot's privileged position.
The Fund took an active role. Crystal Amber Advisers, the Fund's Investment
Adviser, commissioned a survey of Lottery customers which found that 60 per
cent. would be reluctant to buy lottery tickets if they were delayed by others
paying their bills. The findings were passed to the National Lottery Commission.
In July 2010, the Commission provisionally rejected Camelot's application. The
Fund welcomes this ruling and supports PayPoint's management in its
determination to confront this threat. It continues to see the potential for
attractive returns as PayPoint expands its internet and other payment services,
and extends its reach to the US, Canada and France. Provided the Camelot issue
can be finally resolved, PayPoint's strong cash flow and high dividend yield
suggest that its shares are undervalued.
OMEGA INSURANCE HOLDINGS LIMITED
At 30 June 2010, the Fund held 2.7 per cent. of Omega and its holding was valued
at GBP7.2 million. Omega is a Lloyd's insurer and reinsurer covering property
catastrophes, marine, motor and liability insurance, especially for small and
medium sized US businesses, and has its own underwriting agency. Omega has a
strong profit record and balance sheet, an excellent underwriting record, and a
progressive dividend policy, suggesting that its shares are undervalued in an
industry which has seen considerable consolidation.
The Fund monitored Omega for seven months before its initial investment, which
followed the arrival of a new chairman and chief executive. The Fund has
commenced dialogue with Omega's management; this is currently at an early stage.
TRADING EMISSIONS PLC
At 30 June 2010, the Fund held 1.8 per cent. of TRE and its holding was valued
at GBP4.8 million. TRE has a portfolio of carbon emission permits, private
equity investments in permit-generating projects and cash. Following the
rejection of its proposed merger with Leaf Clean Energy, it consulted investors
about improving returns. The Fund engaged with TRE's management as part of this
process.
In May 2010, TRE announced a plan for a controlled realisation to optimise the
cash value of its assets, selling the credits portfolio by end-2012 and
realising the projects "actively". The plan incentivised TRE's management to
deliver returns of 150p to 230p per share and was subject to shareholders'
approval.
In June 2010, Tricorona AB, a Swedish owner of carbon credits, was bought by
Barclays Plc for GBP98 million by way of a cash offer, a price which valued
Tricorona's credits at 25 per cent. above their market price.
SUTTON HARBOUR HOLDINGS PLC
At 30 June 2010, the Fund held 10 per cent. of Sutton Harbour and its holding
was valued at GBP3.1million.
Sutton Harbour owns waterside properties and the airport in Plymouth, has
property developments in Exeter, Swansea, and Portland, and at the time of our
investment owned South West Airlines. The Fund has engaged actively with the
management and board of Sutton Harbour about the potential for its assets and
the improvement of returns. A series of meetings has been held with the
management and chairman as part of this process.
In May 2010 Sutton Harbour announced plans to sell South West Airlines after
recent losses, worsened by volcanic ash problems. Subsequently, in July 2010, it
warned that the sale would result in a loss.
THE PORTFOLIO
At 30 June 2010, the total equity portfolio had a market value of GBP56.6
million. The top six holdings detailed above amounted to 87 per cent. of the
portfolio. This concentration is in line with the policy set out in the
admission document. In addition to the core activist stocks, the Fund also
invests in a limited number of stocks where it takes a modest initial holding
and where it is able to take advantage of specific situations.
ENGAGEMENT
Engagement with the management and boards of investee companies is a fundamental
part of the Fund's strategy. Dialogue has been established with almost all the
companies in the portfolio. Lengthy and detailed meetings with management teams
have been held and in the case of JJB, stores have been visited regularly.
Where it is considered useful, the Fund has undertaken independent research on
companies' operations and prospects.
In the majority of cases, engagement with management teams has been constructive
and amicable. We recognise that management teams are under pressure from many
directions. Against that background, the open and positive reception to our
engagement has been very encouraging in most cases. It is inevitable that in
some instances, boards and management are less receptive to our suggestions. In
the case of Pinewood, our repeated requests for improvement in the measurement
and reporting of the company's assets and operations made no progress. In these
circumstances, we felt there was no alternative to requesting board changes at
the company's annual general meeting.
We are determined to pursue our objectives, which are aimed at the delivery of
better performance for all shareholders. The Fund will do its utmost to ensure
that our investments deliver their potential. We remain committed to engaging
with our investee companies and to giving boards and management all possible
encouragement to deliver value for their investors and for ours.
REALISATIONS
As already noted, the Fund made some excellent realisations during the year
including Delta, Chloride, Kentz and Tate & Lyle.
The Fund initially invested in Delta in December 2009 at about 140p per share
after our analysis suggested fundamental value in excess of 200p. When Valmont
Industries of the US offered 185p per share, the Fund took an activist stance,
rejecting the bid publicly and objecting in particular to the omission of
Delta's final dividend. Ultimately Valmont raised its offer to include the
dividend, lifting the bid proceeds effectively to 190p. The Fund realised a
profit of GBP0.85m.
Chloride was one of the Fund's early investments, chosen for the strength of its
business and the attractions to bidders, as shown by the earlier rejected offer
from Emerson of the US. The analysis was vindicated when Emerson returned and a
bid battle developed with ABB. The Fund realised a profit in excess of GBP3
million.
Kentz was another early investment, chosen for its strong oil services business,
net cash and balance sheet strength. Following some constructive engagement, the
potential for further activism appeared limited and after strong gains in the
share price, profits in excess of GBP2.6m were realised.
The Fund's investment in Tate & Lyle was realised at a profit of more than
GBP4m. The return on this investment was in excess of 60 per cent, before
dividends.
Total profits of more than GBP2.5m were realised on JJB through a sale of shares
ahead of JJB's placing in October 2009.
PROSPECTIVE INVESTMENTS
The search for prospective investments is continuous. A targeted pipeline of
potential investments has been identified and assessed. The potential exit route
from any investment and the liquidity of trading in the relevant stock are
important considerations.
PROFILE/PUBLICITY
The Fund's focus on activism has inevitably attracted
attention. Its actions at Pinewood, JJB and Delta have been extensively covered
in the media. While a wider understanding of our objectives is welcome, the
focus remains on effective action rather than publicity.
The Fund is listed on the Association of Investment Companies (AIC) and Trustnet
websites. These are independent sources and the information provided does not
always come from Crystal Amber - for example, the AIC publishes daily net asset
value estimates calculated by Fundamental Data Limited, an independent
researcher. We remind shareholders that the Fund's NAV is reported on a monthly
basis and published on our website www.crystalamber.com.
STRATEGY AND OUTLOOK
The economic outlook for the Fund's third year of operations remains only
slightly less challenging than in the first two. It is encouraging that the
leaders of the world's most important economies continue to seek a joint
approach to problems, even if they find it difficult to agree. The global
recovery remains fragile but seems to be continuing. Concerns about banking and
government stability persist but have yet to trigger a new crisis.
The challenges the Fund faces in its third year of operation are changing. After
the initial task of building a targeted portfolio, we are now intensively
involved in the engagement phase. Inevitably this will require significant
activism in some instances, though on the whole we are greatly encouraged by the
response of managements and boards. Whatever the circumstances, we are
determined to implement our strategy and remain convinced it can continue to
deliver good returns.
Crystal Amber Asset Management (Guernsey) Limited
Investment Manager
INVESTING POLICY
Crystal Amber Fund Limited ("the Fund" or "the Company") is an activist fund
which aims to identify and invest in undervalued companies and, where necessary,
take steps to enhance their value. The Company aims to invest in a concentrated
portfolio of undervalued companies which are expected to be predominantly, but
not exclusively, listed or quoted on UK markets (usually the Official List or
AIM) and which have a typical market capitalisation of between GBP100 million
and GBP1,000 million. Following investment, the Fund and its advisers typically
engage with the management of those companies with a view to enhancing value for
all their shareholders.
Investment objective
The Fund's objective is to provide its shareholders with an attractive total
return, which is expected to comprise primarily capital growth but with the
potential for distributions, including distributions arising from the
realisation of investments, if this is considered to be in the best interests of
its shareholders.
Investment strategy
The Fund focuses on investing in companies which it considers to be undervalued,
and will aim to promote measures to correct the undervaluation. In particular,
it aims to focus on companies which the Fund's investment manager and investment
adviser believe may have been neglected by fund managers and investment funds
due to their size or where analyst coverage is inadequate or where analysts have
relied on traditional valuation techniques and/or not fully understood the
underlying company. The Fund and its advisers seek the co-operation of the
company's management in connection with such corrective measures as far as
possible. Where a different ownership structure would enhance value, the Fund
will seek to initiate changes to capture such value. The Fund may also seek to
introduce measures to modify existing capital structures and introduce greater
leverage and/or seek divestiture of certain businesses of the investee company.
Pending investment of the type referred to above, the Company's funds will be
placed on deposit but the Company also has the flexibility to make other
investments which are considered to be reasonably liquid in order to ensure that
its funds are appropriately deployed. The Company may, in certain circumstances,
acquire stakes in target companies from investors in exchange for shares in the
Company.
Where it considers it to be appropriate the Fund may (i) utilise leverage for
the purpose of investment and enhancing returns to its shareholders and (ii)
enter into derivative transactions, for example in seeking to manage its
exposure to interest rate and currency fluctuations through the use of currency
and interest rate hedging arrangements or for the purposes of efficient
portfolio management, and to acquire exposure to target companies through
contracts for difference.
Investment restrictions
It is not intended that the Company will invest, save in exceptional
circumstances, in:
· companies with a market capitalisation of less than GBP100 million at the
time of the investment;
· pure technology-based businesses; or
· unlisted companies or pre-IPO situations.
It is expected that no single investment in any one company will represent more
than 30 per cent. of the gross asset value of the Company at the time of
investment. However, there is no guarantee that this will be the case after any
investment is made, particularly during the early life of the Company or where
it is believed that an investment is particularly attractive.
Composition of the portfolio
The Fund's board, investment manager and investment adviser believe that the
number of potential target companies is high with more than 2,000 companies
quoted on AIM or the Official List and they consider that a significant number
of these are in the Fund's targeted range.
Target investee companies typically operate in one or more of the following
sectors:
· consumer products;
· industrial products;
· retail;
· support services;
· healthcare; or
· financial services.
However, the Fund is in no way restricted to these sectors and investment
decisions are taken based on market conditions and other investment
considerations at the time.
Further information on the Company is set out in its AIM Admission Document,
which is available to download from the Company's website www.crystalamber.com.
Income Statement
For the year ended 30 June 2010
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| | | 2010 | | 2009 |
+--------------------+-------+-----------------------------------------+----------+-------------------------------------+
| | | Revenue | Capital | Total | | Revenue | Capital | Total |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| |Notes | GBP | GBP | GBP | | GBP | GBP | GBP |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Income | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Dividend income | | 1,948,124 | - | 1,948,124 | | 457,128 | - | 457,128 |
| from listed | | | | | | | | |
| investments | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Interest income | | 492,678 | - | 492,678 | | 938,403 | - | 938,403 |
| from UK Government | | | | | | | | |
| securities | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Fixed deposit | | 37,038 | - | 37,038 | | 328,970 | - | 328,970 |
| interest | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Bank interest | | 8 | - | 8 | | 336,567 | - | 336,567 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| | | 2,477,848 | - | 2,477,848 | | 2,061,068 | - | 2,061,068 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Net gains on | | | | | | | | |
| financial assets | | | | | | | | |
| at fair value | | | | | | | | |
| through profit or | | | | | | | | |
| loss | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Realised gain | 8 | - | 15,096,818 | 15,096,818 | | - | 7,202,801 | 7,202,801 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Movement in | 8 | - | (14,487,648) | (14,487,648) | | - | 5,240,225 | 5,240,225 |
| unrealised loss | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Total income | | 2,477,848 | 609,170 | 3,087,018 | | 2,061,068 | 12,443,026 | 14,504,094 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Expenses | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Transaction costs | 4 | - | 464,679 | 464,679 | | - | 473,077 | 473,077 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Management fees |12,14 | 1,459,600 | - | 1,459,600 | | 1,168,847 | - | 1,168,847 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Performance fees | | - | - | - | | - | 1,040,581 | 1,040,581 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Directors' fees | | 95,000 | - | 95,000 | | 95,000 | - | 95,000 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Administration | | 82,876 | - | 82,876 | | 74,735 | - | 74,735 |
| fees | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Custodian fees | | 38,042 | - | 38,042 | | 27,571 | - | 27,571 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Audit fees | | 17,360 | - | 17,360 | | 19,315 | - | 19,315 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Other expenses | | 155,969 | - | 155,969 | | 94,672 | - | 94,672 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| | | 1,848,847 | 464,679 | 2,313,526 | | 1,480,140 | 1,513,658 | 2,993,798 |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Return for the | | 629,001 | 144,491 | 773,492 | | 580,928 | 10,929,368 | 11,510,296 |
| year | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
| Basic and diluted | | 1.05 | 0.24 | 1.29 | | 0.97 | 18.22 | 19.18 |
| earnings per share | | | | | | | | |
| (pence) | | | | | | | | |
+--------------------+-------+-----------+--------------+--------------+----------+-----------+------------+------------+
The total column of this statement represents the Company's Statement of
Comprehensive Income prepared in accordance with International Financial
Reporting Standards. The supplementary income return and capital return columns
are presented under guidance published by the Association of Investment
Companies.
The Notes to Financial Statements form an integral part of these financial
statements.
Balance Sheet
as at 30 June 2010
+-----------------------------+-------+-------------+----+------------+
| | | 30 June | | 30 June |
+-----------------------------+-------+-------------+----+------------+
| | | 2010 | | 2009 |
+-----------------------------+-------+-------------+----+------------+
| ASSETS |Notes | GBP | | GBP |
+-----------------------------+-------+-------------+----+------------+
| Cash and cash equivalents | 6 | 12,419,482 | | 12,228,732 |
+-----------------------------+-------+-------------+----+------------+
| Trade and other receivables | 7 | 1,015,805 | | 209,753 |
+-----------------------------+-------+-------------+----+------------+
| Financial assets designated | 8 | 56,557,754 | | 58,907,174 |
| at fair value through | | | | |
| profit or loss | | | | |
+-----------------------------+-------+-------------+----+------------+
| Total assets | | 69,993,041 | | 71,345,659 |
+-----------------------------+-------+-------------+----+------------+
| | | | | |
+-----------------------------+-------+-------------+----+------------+
| LIABILITIES | | | | |
+-----------------------------+-------+-------------+----+------------+
| Trade and other payables | 9 | 694,542 | | 2,820,652 |
+-----------------------------+-------+-------------+----+------------+
| Total liabilities | | 694,542 | | 2,820,652 |
+-----------------------------+-------+-------------+----+------------+
| | | | | |
+-----------------------------+-------+-------------+----+------------+
| EQUITY | | | | |
+-----------------------------+-------+-------------+----+------------+
| Capital and reserves | | | | |
| attributable to the | | | | |
| Company's equity | | | | |
| shareholders | | | | |
+-----------------------------+-------+-------------+----+------------+
| Share capital | 10 | 600,000 | | 600,000 |
+-----------------------------+-------+-------------+----+------------+
| Distributable reserve | 10 | 56,447,261 | | 56,447,261 |
+-----------------------------+-------+-------------+----+------------+
| Retained earnings | 10 | 12,251,238 | | 11,477,746 |
+-----------------------------+-------+-------------+----+------------+
| Total equity | | 69,298,499 | | 68,525,007 |
+-----------------------------+-------+-------------+----+------------+
| | | | | |
+-----------------------------+-------+-------------+----+------------+
| Total liabilities and | | 69,993,041 | | 71,345,659 |
| equity | | | | |
+-----------------------------+-------+-------------+----+------------+
| | | | | |
+-----------------------------+-------+-------------+----+------------+
| Net asset value per share | 5 | 115.50 | | 114.21 |
| (pence) | | | | |
+-----------------------------+-------+-------------+----+------------+
The financial statements were approved by a committee of the Board of Directors
and authorised for issue on 10 September 2010.
Statement of Changes in Equity
For the year ended 30 June 2010
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| 2009 | | Share | Share | Distributable | Retained earnings | Total |
+------------------------+-------+---------+--------------+---------------+-------------------------------------+------------+
| |Notes | Capital | Premium | Reserve | Capital | Revenue | Total | Equity |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| | | GBP | GBP | GBP | GBP | GBP | GBP | GBP |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| Opening balance at 1 | 10 | 600,000 | 56,447,261 | - | - | (32,550) | (32,550) | 57,014,711 |
| July 2008 | | | | | | | | |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| Return for the year | | - | - | - | 10,929,368 | 580,928 | 11,510,296 | 11,510,296 |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| Transfer to | | - | (56,447,261) | 56,447,261 | - | - | - | - |
| distributable reserve | | | | | | | | |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| Balance at 30 June | | 600,000 | | 56,447,261 | 10,929,368 | 548,378 | 11,477,746 | 68,525,007 |
| 2009 | | | - | | | | | |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| | | | | | | | | |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| 2010 | | Share | Share | Distributable | Retained earnings | Total |
+------------------------+-------+---------+--------------+---------------+-------------------------------------+------------+
| |Notes | Capital | Premium | Reserve | Capital | Revenue | Total | Equity |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| | | GBP | GBP | GBP | GBP | GBP | GBP | GBP |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| Opening balance at 1 | 10 | 600,000 | | 56,447,261 | 10,929,368 | 548,378 | 11,477,746 | 68,525,007 |
| July 2009 | | | - | | | | | |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| Return for the year | | - | - | - | 144,491 | 629,001 | 773,492 | 773,492 |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
| Balance at 30 June | | 600,000 | | 56,447,261 | 11,073,859 | 1,177,379 | 12,251,238 | 69,298,499 |
| 2010 | | | - | | | | | |
+------------------------+-------+---------+--------------+---------------+------------+-----------+------------+------------+
Statement of Cash Flows
For the year ended 30 June 2010
+---------------------------------------+-------+--------------+----------+---------------+
| | | 30 June | | 30 June |
+---------------------------------------+-------+--------------+----------+---------------+
| | Notes | 2010 | | 2009 |
+---------------------------------------+-------+--------------+----------+---------------+
| | | GBP | | GBP |
+---------------------------------------+-------+--------------+----------+---------------+
| Cashflows from operating activities | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Dividend income received from listed | | 1,366,142 | | 343,561 |
| investments | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Interest income received from UK | | 563,500 | | 867,581 |
| Government securities | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Fixed deposit interest received | | 33,968 | | 376,625 |
+---------------------------------------+-------+--------------+----------+---------------+
| Bank interest received | | 1,050 | | 361,025 |
+---------------------------------------+-------+--------------+----------+---------------+
| Management fees paid | | (1,459,600) | | (1,186,380) |
+---------------------------------------+-------+--------------+----------+---------------+
| Performance fee paid | | (1,040,581) | | - |
+---------------------------------------+-------+--------------+----------+---------------+
| Directors' fees paid | | (95,000) | | (147,908) |
+---------------------------------------+-------+--------------+----------+---------------+
| Other expenses paid | | (233,561) | | (180,844) |
+---------------------------------------+-------+--------------+----------+---------------+
| Net cash (outflow)/inflow from | | (864,082) | | 433,660 |
| operating activities | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Cashflows from financing activities | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Proceeds from issuance of ordinary | | - | | 2,462,075 |
| shares | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Share issue expenses | | - | | (50,802) |
+---------------------------------------+-------+--------------+----------+---------------+
| Net cash inflow from financing | | - | | 2,411,273 |
| activities | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Cashflows from investing activities | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Purchase of investments | | (79,131,260) | | (132,661,932) |
+---------------------------------------+-------+--------------+----------+---------------+
| Sale of investments | | 80,650,771 | | 87,902,119 |
+---------------------------------------+-------+--------------+----------+---------------+
| Transaction charges on purchase and | | (464,679) | | (473,077) |
| sale of investments | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Net cash inflow/(outflow) from | | 1,054,832 | | (45,232,890) |
| investing activities | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Net increase/(decrease) in cash and | | 190,750 | | (42,387,957) |
| cash equivalents during the year | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Cash and cash equivalents at | | 12,228,732 | | 54,616,689 |
| beginning of year | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
| Cash and cash equivalents at end of | 6 | 12,419,482 | | 12,228,732 |
| year | | | | |
+---------------------------------------+-------+--------------+----------+---------------+
Notes to the Financial Statements
For the year ended 30 June 2010
General Information
Crystal Amber Fund Limited is a company incorporated and registered in Guernsey
on 22 June 2007 and is governed under the provisions of the Companies (Guernsey)
Law 2008. The address of the registered office is given on page 3. The Company
has been established to provide shareholders with an attractive total return
which is expected to comprise primarily capital growth but with the potential
for distributions. The Company will achieve this through the investment in a
concentrated portfolio of undervalued companies which are expected to be
predominantly, but not exclusively, listed or quoted on UK markets and which
have a typical market capitalisation of between GBP100 million and GBP1,000
million. The Company was listed and admitted to trading on AIM, the market of
that name operated by the London Stock Exchange on 17 June 2008. The Company was
also listed on the CISX on 17 June 2008. The Company is also a member of the
AIC.
1. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied
throughout the current period, unless otherwise stated.
Basis of preparation
The financial statements give a true and fair view, are in accordance with
International Financial Reporting Standards ("IFRS") and the AIC's Statement of
Recommended Practice "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" issued in January 2009 and comply with the Companies
(Guernsey) Law 2008. The financial statements are presented in Sterling, the
Company's functional currency.
These financial statements have been prepared under the historic cost convention
with the exception of financial assets designated at fair value through profit
and loss which are measured at fair value.
IFRS requires management to make judgments, estimates and assumptions that
affect the application of the reported amounts in these financial statements.
The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates.
Segmental reporting
The Company has adopted IFRS 8, 'Operating Segments' as of 1 January 2009. The
new standard requires a 'management approach', under which segment information
is presented on the same basis as that used for internal reporting purposes.
The Board has considered the requirements of IFRS 8 'Operating Segments', and is
of the view that the Company is domiciled in Guernsey and is engaged in a single
segment of business, being UK equity instruments. The Board, as a whole, has
been determined as constituting the chief operating decision maker of the
Company. The key measure of performance used by the Board to assess the
Company's performance and to allocate resources is the total return on the
Company's net asset value, as calculated under IFRS, and therefore no
reconciliation is required between the measure of profit or loss used by the
Board and that contained in these financial statements.
The Board of Directors has overall management and control of the Company.
Material changes to the investment objective or investment policy can only be
made by Shareholders. The Board of Directors has delegated the day to day
implementation of this strategy to its Investment Adviser but retain
responsibility to ensure that adequate resources of the Company are directed in
accordance with their decisions. The investment decisions of the Investment
Adviser are reviewed on a regular basis to ensure compliance with the policies
and legal responsibilities of the Board. The Investment Adviser has been given
full authority to act on behalf of the Company, including the authority to
purchase and sell securities and other investments on behalf of the Company and
to carry out other actions as appropriate to give effect thereto. Whilst the
Investment Adviser may make decisions on a day to day basis re the allocation of
funds to different investments, any changes to the investment strategy or major
allocation decisions have to be approved by Shareholders, even though they may
be proposed by the Investment Adviser and Manager. The Board therefore retains
full responsibility as to the major allocations decisions made on an ongoing
basis. The Investment Adviser will always act in accordance with the investment
policy and investment restrictions set out in the Company's latest Prospectus
which cannot be radically changed without the approval of Shareholders.
The Fund has a diversified portfolio of investments from which it receives
dividends from time to time and no single investment accounts for more than 30
per cent. of the Fund's gross assets. All the Fund's assets are classified as
current assets.
The Fund also has a diversified shareholder population which is detailed on page
16.
Foreign currency translation
Monetary assets and liabilities are translated from currencies other than
Sterling ("foreign currencies") to Sterling (the "functional currency") at the
rate prevailing on the reporting date. Income and expenses are translated from
foreign currencies to Sterling at the rate prevailing at the date of the
transaction. Exchange differences are recognised in the Statement of
Comprehensive Income.
Financial instruments
Financial instruments comprise investment in equity and debt securities, trade
and other receivables, cash and cash equivalents, and trade and other payables.
Financial instruments are recognised initially at fair value. Subsequent to
initial recognition financial instruments are measured as described below.
Investments
All the Company's investments are designated at fair value through profit or
loss. They are initially recognised at fair value, being the cost incurred in
their acquisition. Transaction costs are expensed in the Statement of
Comprehensive Income. Gains and losses arising from changes in fair value are
presented in the Statement of Comprehensive Income in the period in which they
arise.
Purchases and sales of investments are recognised using trade date accounting.
Quoted investments are valued at the bid price on the reporting date. Where
investments are listed on more than one securities market, the price on the
market on which the security was originally purchased is used. If the price is
not available as at the accounting date, the last available price is used.
Cash and cash equivalents
The Company considers all highly liquid investments with original maturities of
less than 90 days when acquired to be cash equivalents.
Share issue expenses
Share issue expenses of the Company directly attributable to the issue and
listing of the shares are charged to the share premium account.
Share capital
Ordinary shares are classified as equity where there is no obligation to
transfer cash or other assets.
Income
Investment income and interest income have been accounted for on an accruals
basis using the effective interest method. Dividends receivable are taken to the
Statement of Comprehensive Income when the relevant security is quoted
ex-dividend.
Expenses
All expenses are accounted for on an accruals basis. In respect of the analysis
between revenue and capital items presented within the statement of
comprehensive income, all expenses have been presented as revenue items except
as follows:
· expenses which are incidental to the acquisition and disposal of an
investment are charged to capital; and
· expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the investments
held can be demonstrated and accordingly the performance fee is charged to
capital, in order to reflect the Directors' expected long-term view of the
nature of the investment returns of the Company.
2. NEW STANDARDS AND INTERPRETATIONS
The following new standards, new interpretations and amendments to standards and
interpretations have been issued but are not yet effective for the financial
year beginning 1 January 2010 and have not been early adopted:
- IFRS 9, 'Financial Instruments', issued in December 2009. This addresses the
classification and measurement of financial assets and is likely to affect the
Company's accounting for financial assets. The standard is not applicable until
1 January 2013 but it is available for early adoption. The standard is not
expected to have a significant impact on the financial statements since the
majority of the Company's financial assets are designated at fair value through
profit or loss.
3. TAXATION
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 2008 and is charged an annual
fee of GBP600.
4. TRANSACTION COSTS
The transaction charges incurred in relation to the acquisition and disposal of
investments during the year are analysed as follows:
+-------------------------------------+----------+----------+--------------------+
| | 2010 | | 2009 |
+-------------------------------------+----------+----------+--------------------+
| | GBP | | GBP |
+-------------------------------------+----------+----------+--------------------+
| Stamp duty | 240,763 | | 252,908 |
+-------------------------------------+----------+----------+--------------------+
| Commissions and custodian | 223,916 | | 220,169 |
| transaction charges | | | |
+-------------------------------------+----------+----------+--------------------+
| | 464,679 | | 473,077 |
+-------------------------------------+----------+----------+--------------------+
5. BASIC AND DILUTED EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
+-----------------------------+-----+----+----------------------+----------+---------------------+
| Basic and diluted earnings per share is based on the | | |
| following data: | | |
+---------------------------------------------------------------+----------+---------------------+
| | | 2010 | | 2009 |
+-----------------------------------+----+----------------------+----------+---------------------+
| | | GBP | | GBP |
+-----------------------------------+----+----------------------+----------+---------------------+
| Return for the period | | 773,492 | | 11,510,296 |
+-----------------------------------+----+----------------------+----------+---------------------+
| Average number of issued Ordinary | | 60,000,000 | | 60,000,000 |
| shares | | | | |
+-----------------------------------+----+----------------------+----------+---------------------+
| Basic and diluted earnings per | | 1.29 | | 19.18 |
| share (pence) | | | | |
+-----------------------------------+----+----------------------+----------+---------------------+
| | | | | |
+-----------------------------------+----+----------------------+----------+---------------------+
| Net asset value per share is based on the following | | |
| data: | | |
+---------------------------------------------------------------+----------+---------------------+
| | | 2010 | | 2009 |
+-----------------------------+----------+----------------------+----------+---------------------+
| | | GBP | | GBP |
+-----------------------------+----------+----------------------+----------+---------------------+
| Net asset value per balance | | 69,298,499 | | 68,525,007 |
| sheet | | | | |
+-----------------------------+----------+----------------------+----------+---------------------+
| Number of Ordinary shares | | 60,000,000 | | 60,000,000 |
| outstanding | | | | |
+-----------------------------+----------+----------------------+----------+---------------------+
| Net asset value per share | | 115.50 | | 114.21 |
| (pence) | | | | |
+-----------------------------+----------+----------------------+----------+---------------------+
| | | | | | |
+-----------------------------+-----+----+----------------------+----------+---------------------+
6. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash held by the Company available on demand
and on deposit with maturities of less than 90 days. Cash and cash equivalents
are analysed as follows:
+-------------------------------------+------------+----------+------------+
| | 2010 | | 2009 |
+-------------------------------------+------------+----------+------------+
| | GBP | | GBP |
+-------------------------------------+------------+----------+------------+
| | | | |
+-------------------------------------+------------+----------+------------+
| Cash available on demand | 4,406,267 | | 5,514,335 |
+-------------------------------------+------------+----------+------------+
| Cash on deposit with maturities of | 8,013,215 | | 6,714,397 |
| less than 90 days | | | |
+-------------------------------------+------------+----------+------------+
| | 12,419,482 | | 12,228,732 |
+-------------------------------------+------------+----------+------------+
Cash available on demand earns interest at a rate based on the bank call deposit
rate while short-term placements earned interest ranging from 0.20 per cent. per
annum to 5.17 per cent. per annum during the year.
7. TRADE AND OTHER RECEIVABLES
+-------------------------------------+-----------+----------+----------+
| | 2010 | | 2009 |
+-------------------------------------+-----------+----------+----------+
| | GBP | | GBP |
+-------------------------------------+-----------+----------+----------+
| | | | |
+-------------------------------------+-----------+----------+----------+
| Trade receivables | 1,000,579 | | 187,183 |
+-------------------------------------+-----------+----------+----------+
| Prepayments | 15,226 | | 22,570 |
+-------------------------------------+-----------+----------+----------+
| | 1,015,805 | | 209,753 |
+-------------------------------------+-----------+----------+----------+
There are no past due or impaired receivable balances outstanding at the year
end.
8. FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
+-------------------------------------+--------------+--+--------------+
| | 2010 | | 2009 |
+-------------------------------------+--------------+--+--------------+
| | GBP | | GBP |
+-------------------------------------+--------------+--+--------------+
| Equity investments - UK equity | 56,557,754 | | 38,870,094 |
| securities | | | |
+-------------------------------------+--------------+--+--------------+
| Bond investments | - | | 20,037,080 |
+-------------------------------------+--------------+--+--------------+
| | 56,557,754 | | 58,907,174 |
+-------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------+--------------+--+--------------+
| Cost brought forward | 53,670,914 | | - |
+-------------------------------------+--------------+--+--------------+
| Purchases | 78,023,962 | | 134,370,232 |
+-------------------------------------+--------------+--+--------------+
| Sales | (80,950,980) | | (87,902,119) |
+-------------------------------------+--------------+--+--------------+
| Realised gain | 15,096,818 | | 7,202,801 |
+-------------------------------------+--------------+--+--------------+
| Cost carried forward | 65,840,714 | | 53,670,914 |
+-------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------+--------------+--+--------------+
| Unrealised gains brought forward | 5,240,225 | | - |
+-------------------------------------+--------------+--+--------------+
| Movement in unrealised losses/gains | (14,487,648) | | 5,240,225 |
+-------------------------------------+--------------+--+--------------+
| Unrealised gains carried forward | (9,247,423) | | 5,240,225 |
+-------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------+--------------+--+--------------+
| Effect of exchange rate movements | (35,537) | | (3,965) |
+-------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------+--------------+--+--------------+
| Fair value at 30 June | 56,557,754 | | 58,907,174 |
+-------------------------------------+--------------+--+--------------+
9. TRADE AND OTHER PAYABLES
+-------------------------------------+----------+--+------------------+
| | 2010 | | 2009 |
+-------------------------------------+----------+--+------------------+
| | GBP | | GBP |
+-------------------------------------+----------+--+------------------+
| | | | |
+-------------------------------------+----------+--+------------------+
| Accruals | 93,542 | | 1,112,352 |
+-------------------------------------+----------+--+------------------+
| Unsettled trade purchases | 601,000 | | 1,708,300 |
+-------------------------------------+----------+--+------------------+
| | 694,542 | | 2,820,652 |
+-------------------------------------+----------+--+------------------+
The credit period taken for trade purchases is less than 30 days. The carrying
amount of trade payables approximates to their fair value.
10. SHARE CAPITAL AND RESERVES
Capital risk management
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns to
shareholders and to maintain an optimal capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Company may adjust the
amount of dividends paid to shareholders, return capital to shareholders, issue
new shares or sell assets.
As per the Company's memorandum and articles of association the retained
earnings are distributable by way of dividend in addition to distributable
reserve held on the Fund's balance sheet at year end. The distributable reserve
represents the amount transferred from the share premium account which was
approved by the Royal Court of Guernsey on 18 July 2008.
Externally imposed capital requirement
There are no capital requirements imposed on the Company.
The authorised share capital of the Company is 300 million Ordinary Shares of
GBP0.01 each.
The issued share capital of the Company is comprised as follows:
+----------------------------+------------+---------+-+------------+---------+
| | 2010 | | 2009 |
+----------------------------+----------------------+-+----------------------+
| | Number | GBP | | Number | GBP |
+----------------------------+------------+---------+-+------------+---------+
| | | | | | |
+----------------------------+------------+---------+-+------------+---------+
| Allotted, called up and | 60,000,000 | 600,000 | | 60,000,000 | 600,000 |
| fully paid Ordinary | | | | | |
| shares of GBP0.01 each | | | | | |
+----------------------------+------------+---------+-+------------+---------+
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
Financial risk management objectives
The Manager, Crystal Amber Asset Management (Guernsey) Limited and the
Administrator, Heritage International Fund Managers ("HIFM"), provide advice to
the Company which allows it to monitor and manage financial risks relating to
its operations through internal risk reports which analyse exposures by degree
and magnitude of risks. The Manager and the Administrator report to the Board
on a quarterly basis.
The risks relating to the Company's operations include credit risk, liquidity
risk, and the market risks of interest rate risk, price risk and to a certain
extent foreign currency risk.
Credit risk
Credit risk refers to the risk that the counterparty to a financial instrument
will default on its contractual obligations resulting in financial loss to the
Company. At the balance sheet date the major financial assets which were
exposed to credit risk included financial assets designated at fair value
through profit or loss and cash and cash equivalents.
The carrying amounts of financial assets best represent the maximum credit risk
exposure at the balance sheet date. The Company's credit risk on liquid funds is
minimised because the counterparties are banks with high credit ratings assigned
by an international credit-rating agency.
The table below shows the cash balances at the balance sheet date and the
Standard & Poor's credit rating for each counterparty.
+------------------------------+----------+--------+------------+----------+------------+
| | Location | Rating | Carrying | | Carrying |
| | | | Amount | | Amount |
+------------------------------+----------+--------+------------+----------+------------+
| | | | 2010 | | 2009 |
+------------------------------+----------+--------+------------+----------+------------+
| | | | GBP | | GBP |
+------------------------------+----------+--------+------------+----------+------------+
| MeesPierson (C.I.) Limited | | | | | |
+------------------------------+----------+--------+------------+----------+------------+
| (ultimately owned by ABN | Guernsey | A | 4,391,938 | | 5,499,359 |
| Amro Bank N.V.) | | | | | |
+------------------------------+----------+--------+------------+----------+------------+
| HSBC Bank Plc - Guernsey | Guernsey | AA | 8,023,215 | | 6,724,396 |
| Branch | | | | | |
+------------------------------+----------+--------+------------+----------+------------+
| Other | | | 4,329 | | 4,977 |
+------------------------------+----------+--------+------------+----------+------------+
| | | | 12,419,482 | | 12,228,732 |
+------------------------------+----------+--------+------------+----------+------------+
The credit ratings disclosed above are the credit ratings of the parent entities
of each of the counterparties namely ABN Amro Bank N.V. and the HSBC PLC.
The Company's credit risk on financial assets designated at fair value through
profit or loss is considered minimal as these assets are either quoted equities
or government securities.
The Company is also exposed to credit risk on the financial assets with its
brokers for unsettled transactions. This risk is considered minimal due to the
short settlement period involved and the high credit quality of the brokers
used.
At the balance sheet date GBP60,949,692 (2009: GBP64,406,533) of the financial
assets of the Company were held by the Custodian, MeesPierson (C.I.) Limited.
Bankruptcy or insolvency of the Custodian may cause the Company's rights with
respect to financial assets held by the Custodian to be delayed or limited. The
Company monitors its risk by monitoring the credit quality and financial
position of the Custodian.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which has built an appropriate framework for the management of the
Company's liquidity requirements.
The Company adopts a prudent approach to liquidity risk management and maintains
sufficient cash reserves to meet its obligations. All the Company's investments
are listed and are subject to a settlement period of three days.
The following table details the Company's expected maturity for its financial
assets and liabilities:
+---------------------+-----------+-------------+-------+-------+--------------+
| 2010 | Weighted | Less | 1-5 | 5+ | Total |
| | average | than 1 | years | years | |
| | interest | year | | | |
| | rate | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| Assets | | GBP | GBP | GBP | GBP |
+---------------------+-----------+-------------+-------+-------+--------------+
| Non-interest | - | 57,573,559 | - | - | 57,573,559 |
| bearing | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| Variable interest | 0.35% | 12,419,482 | - | - | 12,419,482 |
| rate instruments | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| Liabilities | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| Non-interest | - | (694,542) | - | - | (694,542) |
| bearing | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| | | 69,298,499 | | | 69,298,499 |
| | | | - | - | |
+---------------------+-----------+-------------+-------+-------+--------------+
| | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| 2009 | Weighted | Less | 1-5 | 5+ | Total |
| | average | than 1 | years | years | |
| | interest | year | | | |
| | rate | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| Assets | | GBP | GBP | GBP | GBP |
+---------------------+-----------+-------------+-------+-------+--------------+
| Non-interest | - | 39,079,847 | - | - | 39,079,847 |
| bearing | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| Variable interest | 5.14% | 32,265,812 | - | - | 32,265,812 |
| rate instruments | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| Liabilities | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| Non-interest | - | (2,820,652) | - | - | (2,820,652) |
| bearing | | | | | |
+---------------------+-----------+-------------+-------+-------+--------------+
| | | 68,525,007 | | | 68,525,007 |
| | | | - | - | |
+---------------------+-----------+-------------+-------+-------+--------------+
Interest rate risk
The Company is exposed to interest rate risk as it has funds held on deposit,
current account balances and UK Government bonds from time to time. The
Company's exposure to interest rates is detailed in the liquidity risk section
of this note.
The Manager monitors market interest rates and will place interest bearing
assets at best available rates but also taking into consideration the
counterparty's credit rating and financial position.
Interest rate sensitivity analysis
The sensitivity analysis below has been based on the exposure to interest rates
for financial assets held at the balance sheet date. An increase/decrease of
0.15 per cent. represents management's assessment of a reasonably possible
change in interest rates.
If interest rates had been 0.15 per cent. (2009: 0.50 per cent.) higher/lower
and all other variables were held constant:
· the Company's profit for the year ended 30 June 2010 would have
increased/decreased by GBP20,088 (2009: GBP197,329);
· there would have been no impact on the other equity reserves.
Price risk
The Company's exposure to market price risk arises from uncertainties about
future prices of its investments. This risk is managed through diversification
of the investment portfolio across business sectors. Generally the Company will
seek not to invest more than 30 per cent. of the Company's gross assets in any
single investment at the time of investment.
The following table details the Company's investments:
+------------------------+-----------------+------------+----------+------------------------+
| Equity Investments | Sector | Value | | Percentage |
| | | | | of Gross |
| | | | | Assets |
+------------------------+-----------------+------------+----------+------------------------+
| | | GBP | | |
+------------------------+-----------------+------------+----------+------------------------+
| Pinewood Shepperton | Media | 13,065,411 | | 19 |
| PLC | | | | |
+------------------------+-----------------+------------+----------+------------------------+
| JJB Sports PLC | Retail | 12,112,500 | | 17 |
+------------------------+-----------------+------------+----------+------------------------+
| Paypoint PLC | Support | 8,820,792 | | 13 |
| | Services | | | |
+------------------------+-----------------+------------+----------+------------------------+
| Omega Insurance | Insurance | 7,185,863 | | 10 |
| Holdings Ltd | | | | |
+------------------------+-----------------+------------+----------+------------------------+
| Trading Emissions PLC | Financial | 4,836,462 | | 7 |
| | services | | | |
+------------------------+-----------------+------------+----------+------------------------+
| Sutton Harbour | Transportation | 3,085,596 | | 4 |
| Holdings PLC | services | | | |
+------------------------+-----------------+------------+----------+------------------------+
| Conygar Investment | Real estate | 2,664,259 | | 4 |
| Company PLC | | | | |
+------------------------+-----------------+------------+----------+------------------------+
| Other | Various | 4,786,870 | | 7 |
+------------------------+-----------------+------------+----------+------------------------+
| Total | | 56,557,753 | | 81 |
+------------------------+-----------------+------------+----------+------------------------+
If market prices had been 25 per cent. higher/lower at the balance sheet date
and all other variables were held constant:
· the Company's profit and net assets for the year ended 30 June 2010 would
have increased/decreased by GBP14,139,438 (2009: GBP14,726,794);
· there would have been no impact on the other equity reserves.
Foreign Exchange Risk
The Company's exposure to foreign exchange risk was immaterial for the year
ended 30 June 2010.
Fair value measurements
The Company adopted the amendment to IFRS 7, effective 1 January 2009. This
requires the Company to classify fair value hierarchy that reflects the
significance of the inputs used in making the measurements. IFRS 7 establishes a
fair value hierarchy that prioritises the inputs to valuation techniques used to
measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3
measurements). The three levels of the fair value hierarchy under IFRS 7 are as
follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability either directly (that is, as prices) or
indirectly (that is, derived from prices);
Level 3: Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is
categorised in its entirety is determined on the basis of the lowest level input
that is significant to the fair value measurement in its entirety. For this
purpose, the significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses observable inputs
that require significant adjustment based on unobservable inputs, that
measurement is a Level 3 measurement. Assessing the significance of a particular
input to the fair value measurement in its entirety requires judgment,
considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant judgment
by the Company. The Company considers observable data to be that market data
that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources that are
actively involved in the relevant market.
The following table analyses within the fair value hierarchy the Company's
financial assets measured at fair value at 30 June 2010:
+------------------------------+------------+-------+-------+------------+
| 2010 | Level | Level | Level | Total |
| | 1 | 2 | 3 | |
+------------------------------+------------+-------+-------+------------+
| | GBP | GBP | GBP | GBP |
+------------------------------+------------+-------+-------+------------+
| Financial assets designated | | | | |
| at fair value through profit | | | | |
| and loss: | | | | |
+------------------------------+------------+-------+-------+------------+
| Equity investments - UK | 56,557,754 | - | - | 56,557,754 |
| equity securities | | | | |
+------------------------------+------------+-------+-------+------------+
The equity investments were fair valued with reference to the closing bid prices
of each investee company on the reporting date.
12. RELATED PARTIES
Mark Huntley, Director of the Company, is also a director of the Company's
Administrator, Heritage International Fund Managers Limited and the Investment
Manager. During the year the Company incurred administration fees of GBP82,876
(2009: GBP74,735) of which GBP22,688 (2009: GBP18,750) was outstanding at the
year end. Mark Huntley also received a Director's fee of GBP20,000 (2009:
GBP20,000) of which GBP5,000 (2009: GBP5,000) was outstanding at the year end.
Richard Bernstein is a director of the Investment Manager and a holder of
650,000 Ordinary Shares, representing 1.08 per cent. (2009: 0.88 per cent.) of
the issued share capital of the Company at the year end. During the year the
Company incurred management fees of GBP1,459,600 (2009: GBP1,168,847) all of
which had been paid at the year end (2009: GBPnil). The Company also incurred
performance fees of GBP86,425 (2009: GBP1,040,581). The Investment Manager has
waived the performance fee for the year ended 30 June 2010.
All related party transactions are carried out on an arm's length basis.
13. DIRECTORS' REMUNERATION
+----------------+-----------------------+---------+--+--------+
| | | 2010 | | 2009 |
+----------------+-----------------------+---------+--+--------+
| | | GBP | | GBP |
+----------------+-----------------------+---------+--+--------+
| William | | 30,000 | | 30,000 |
| Collins | | | | |
+----------------+-----------------------+---------+--+--------+
| Sarah Evans | | 25,000 | | 25,000 |
+----------------+-----------------------+---------+--+--------+
| Mark Huntley | | 20,000 | | 20,000 |
+----------------+-----------------------+---------+--+--------+
| Nigel Ward | | 20,000 | | 20,000 |
+----------------+-----------------------+---------+--+--------+
| Total | | 95,000 | | 95,000 |
+----------------+-----------------------+---------+--+--------+
14. MATERIAL AGREEMENTS
The Company has entered into the following material agreements:
Crystal Amber Asset Management (Guernsey) Limited (the "Manager")
The Company has entered into a management agreement with the Manager. The
Manager receives a management fee at the annual rate of 2 per cent. of the Net
Asset Value ("NAV") of the Company payable quarterly in advance.
In addition, the Manager is entitled to a performance fee in certain
circumstances. This fee is payable by reference to the increase in NAV per
Ordinary Share over the course of each performance period.
Payment of the performance fee is subject to:
1. the achievement of a performance hurdle condition: the NAV per Ordinary
Share at the end of the relevant performance period must exceed an amount equal
to the placing price increased at a rate of 7 per cent. per annum on an annual
compounding basis up to the end of the relevant performance period ("the Basic
Performance Hurdle"); and
2. the achievement of a "high watermark": the NAV per Ordinary Share at the
end of the relevant performance period must be higher than the highest
previously reported NAV per Ordinary Share at the end of a performance period in
relation to which a performance fee, if any, was last earned. If no performance
fee has been earned since admission, the NAV per Ordinary Share must be higher
than the placing price.
If the Basic Performance Hurdle is met, and the high watermark exceeded, the
performance fee is an amount equal to 20 per cent. of the excess of the NAV per
Ordinary Share at the end of the relevant performance period over the higher of:
1. the Basic Performance Hurdle;
2. the NAV per Ordinary Share at the start of the relevant performance period;
and
3. the high water mark.
Heritage International Fund Managers Limited (the "Administrator")
The Company has entered into an administration agreement with the Administrator.
The Administrator has been appointed to provide administration and secretarial
services to the Company. For these services, the Administrator will be paid an
annual fee of 0.12 per cent. (2009: 0.1 per cent.) of the Net Asset Value
(subject to a minimum of GBP75,000 per annum.)
MeesPierson (C.I.) Limited (formerly Fortis Bank (C.I.) Limited) (the
"Custodian")
The Company has entered into a custodian agreement with the Custodian. The
Custodian receives a fee, calculated and payable quarterly in arrears at the
annual rate of 0.05 per cent. of NAV per annum, subject to a minimum fee of
GBP25,000 per annum. Transaction charges of GBP100 per trade for the first 200
trades processed in a calendar year and GBP75 per trade thereafter are also
payable.
15. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, on the basis of the shareholdings advised to
them, the Company has no ultimate controlling party.
16. POST BALANCE SHEET EVENT
On 6 August 2010 the Company reported that its unaudited NAV at 31 July 2010 was
116.08p per share.
On 7 September 2010 the Company reported that its unaudited NAV at 31 August
2010 was 116.72p per share.
17. COPIES OF THE REPORT AND ACCOUNTS
Copies of the Report and Accounts will be posted to shareholders shortly and
will be available from the Company's registered office at Heritage Hall, Le
Marchant Street, St. Peter Port, Guernsey GY1 4HY and on its website
www.crystalamber.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFUFAEFSSESU
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