Crystal Amber Regulatory News (CRS)

Crystal Amber Fund Limited - Interim Results for the period ended 31 December 2016

PR Newswire

London, March 27

28 March 2017

Crystal Amber Fund Limited

Interim Results for the period ended 31 December 2016

The Company announces its interim results for the six months ended 31 December 2016.

Highlights

William Collins, Chairman of the Company, commented:

“In the six months to 31 December 2016, the Fund’s performance was strong as it continued to deliver on its activist investment strategy. The return of 45.0 per cent. over the Period, made Crystal Amber the best performing UK fund included within Trustnet’s 110 Investment Trusts. During a period of political uncertainty, the Fund continued its bottom up approach, focusing on special situations where it sees the potential to act as a catalyst for change.”

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(1) All capitalised terms are defined in the Glossary of Capitalised Defined Terms unless separately defined.

Chairman’s Statement

I hereby present the interim results of the Company for the six months to 31 December 2016.

Over the Period, NAV per share increased 41.8 per cent. to an unaudited 218.02 pence per share (153.79 pence per share at 30 June 2016). Total return over the Period, including the dividends paid, was 45.0 per cent.. This compares with a total return of 12.0 per cent. for the FTSE All Share Index and 16.7 per cent. for the Numis Smaller Companies Index. Over the 2016 calendar year, the Fund’s total return was 44.7 per cent., which compares to a total return of 16.8 per cent. for the FTSE All Share and 12.8 per cent. for the Numis Smaller Companies Index.

During the Period, the UK economy faced times of political uncertainty and instability, with the UK vote in favour of “Brexit” and Donald Trump’s victory in the US presidential elections. However, despite these developments, US and UK equity markets performed strongly over the Period and the FTSE 100 ended the calendar year at a record high.

In August 2016, the Bank of England cut interest rates from 0.5 to 0.25 per cent. and committed a further £100 billion of quantitative easing to reduce the likelihood of the UK slipping into a recession. Sterling’s depreciation contributed to strong returns in UK equity markets during the Period. The Fund believes this currency weakness makes UK companies more attractive to overseas buyers and is leading to an increase in takeovers. 

The Fund continues to purchase FTSE put options as insurance against a significant market sell-off. The net cost of these options amounted to 3.6 per cent. of NAV over the Period.

The discount management policy continued, with a further 160,000 shares purchased into Treasury at an average cost of 157.7 pence, and at an average discount to NAV at the time of purchase of 4.5 per cent.. As at 31 December 2016, the Fund’s closing share price traded at a discount to NAV of 7.6 per cent..

In keeping with the Fund’s dividend policy of paying 5 pence per year, a dividend of 2.5 pence per share in respect of the six months ended 30 June 2016 was paid on 19 August 2016 and an interim dividend of 2.5 pence per share in respect of the six months ended 31 December 2016 was paid on 19 January 2017. Based on the NAV at 31 December 2016, this represents a yield of approximately 2.3 per cent.. 

In conclusion, I am pleased to report strong performance, both in absolute and relative terms, over the Period and the Board is confident of positive outcomes from recent and current engagement with our principal investee companies.

William Collins

Chairman

27 March 2017

Investment Manager’s Report

Strategy and Performance

During the Period, the Fund continued to engage closely with the management and boards of its major holdings.

At 31 December 2016, investments in equities represented 103.3 per cent. of net assets. Net debt and accruals were £7.1 million, of which £2.5 million was for the interim dividend announced on 14 December 2016.

The table below lists the top ten holdings at 31 December 2016, with the performance contribution of each during the six-month period. The main positive contributions came from Hurricane (35.5 per cent.), Northgate (6.3 per cent.) and Grainger (2.7 per cent.). The main negative contribution was from Sutton Harbour Holdings plc (“Sutton Harbour”) (-0.2 per cent.). 

Net realised gains for the Period were £3.9 million. This compares with £2.9 million for the six months ended 31 December 2015. 

Portfolio

Investee Companies

Our comments on a number of our principal investments are as follows; 

Hurricane

Hurricane is an oil exploration company targeting naturally fractured basement rock reservoirs in the West of Shetlands area. Its core oil fields are Lancaster, Halifax, Lincoln and Warwick. The Fund initially invested in Hurricane in 2013.

Drilling results reinforce the Fund’s view that Hurricane has a significant resource base, potentially in excess of one billion barrels of oil. The oil price recovered in 2016, resulting in improved market sentiment towards the sector. 

On 9 September 2016, Hurricane announced positive drilling results at its Lancaster well, indicating contingent resources materially higher than previous estimates of 200 million barrels. In October 2016, the company announced flow rates 50 per cent. higher than the previous horizontal well. Following these results, Hurricane raised £70 million to fund the drilling of two additional exploration wells, the acquisition of sub-sea equipment and engineering studies for the Early Production System phase of the Lancaster development. As part of this deal, the Fund invested a further £10.7 million in Hurricane.

In November 2016, Hurricane was awarded an adjacent new licence, Halifax. By drilling Halifax and Lincoln, the company expects to determine how far the field extends in the Greater Lancaster Area. 

On 19 December 2016, Hurricane announced positive interim results at its Lincoln exploration well.

We currently await more detailed results from the Halifax and Lincoln wells, as well as the updated Competent Person’s Report for Lancaster. A Competent Person’s Report is a technical report intended to provide an unbiased and independent opinion on the technical aspects of an oil company or specific oil field, with the ultimate purpose of informing investors. 

The Fund continues with its ongoing positive engagement with Hurricane and supports the management’s strategy.

Grainger

Grainger is the UK’s largest listed residential landlord with a portfolio of assets worth £2.7 billion. It owns over 3,600 regulated tenancy properties with a market value of £1.3 billion. As these properties become vacant and are sold, Grainger estimates that they will generate a reversionary surplus of £327 million for the company.

As there are no new regulated tenancies in the UK, Grainger aims to focus growth efforts on the Private Rental Sector (“PRS”) division of the business by investing £850 million in it by 2020. In its December 2016 full year results, Grainger confirmed that it had secured £389 million of this investment target. In these results it also announced that its cost of debt has been reduced to 3.9 per cent.. 

Over the Period, the Fund continued to engage with Grainger’s management on optimising capital structures and balance sheet efficiency. Despite management’s commitment to simplifying, refocusing and improving the efficiency of the business, at the Period end Grainger’s shares traded at a 17.1 per cent. discount to its net asset value of 287 pence per share. This figure excludes the 78 pence per share reversionary surplus. 

After the Period end, Grainger announced the retirement of its Chairman, Baroness Margaret Ford, who is to be replaced by Mark Clare, the former CEO of Barratt Developments plc.

On 8 February 2017, Grainger announced a positive trading update with solid progress in its PRS division and welcomed the Government’s Housing White Paper, which recognises the importance of rental properties in solving the housing crisis. This should underpin Grainger’s strategy to invest a total of £850 million into the PRS by 2020.

There remains a continuing opportunity to reduce Grainger’s overhead, debt and tax costs and improve capital allocation. We feel that there is still the potential to realise significant value through either a spin-off of the regulated tenancy portfolio or from the sale of the business. 

Northgate

Northgate is the leading light commercial vehicle hire business in the UK, Ireland and Spain and has been supplying and managing vehicles for over 35 years. It offers a flexible rental product without a long-term commitment from the customer. The company has a fleet of over 93,000 commercial vehicles, available from more than 100 sites across the UK, Ireland and Spain. Customers can tailor rental contracts to their requirements and retain some flexibility as their needs evolve. 

On 6 December 2016, Northgate announced interim results in line with expectations. The company had seen slightly weaker levels of vehicle hire in the UK, but these had stabilised and were starting to increase. The Spanish division saw continued growth. 

Also in December 2016, Northgate announced the departure of its CEO, Bob Contreras, and the appointment of a new CEO, Kevin Bradshaw, former CEO of Wyevale Garden Centres and UK CEO of Avis Europe. The Fund welcomes this development: in July 2016, the Fund announced that it had written to the company setting out its assessment of the company’s prospects with suggested actions, including a strategic review to consider a potential sale of all or part of the business.

During the Period, the Fund continued to increase its stake and engaged with Northgate on ways to better capitalise on its brand, market position and balance sheet strength. We maintain the view that Northgate is a company with good prospects, trading at a significant discount to the market, making it an attractive acquisition target.

STV Group plc (“STV”)

STV is a media company that broadcasts free-to-air TV through the Channel 3 licence in Scotland. This channel is served by ITV in most of the UK.

In December 2016, STV announced a settlement with its pension trustees that provides improved visibility of the cash requirements of the business.

In March 2017, the company reported its full year results, slightly ahead of consensus expectations. Highlights included increasing the dividend by 50 per cent. to 15 pence per share (equivalent to a 4 per cent. yield), which represents a payout of 70 per cent. of earnings after the pension contribution. Advertising revenues were weaker in the final quarter of 2016, but this was consistent with guidance from ITV. 

STV is targeting 10 per cent. annual earnings per share growth for the next three years, which we believe could be conservative given the number of potential profit levers. The company owns the rights to online revenues, so will benefit from online growth as it provides a significantly higher incremental gross margin of 50 per cent. (the margin on terrestrial business is 20 per cent.).

We maintain the view that the company could be an attractive acquisition target.

Leaf Clean Energy Company (“Leaf”)

Leaf is an investment company focused on clean energy, largely in North America. 

The Fund continues to support the company’s realisation strategy. Leaf is currently litigating with its largest holding, Invenergy, seeking payment of $126 million (pre-tax). This equates to c.85 pence per Leaf share (pre-tax), which compares to Leaf’s share price at the Period end of 35.5 pence. We remain confident that the litigation will be successful in due course and note that whilst it is ongoing, assuming a successful outcome for Leaf, the claim accrues interest at 6 per cent.. We feel that this adequately compensates our position given the confidence we have in Leaf’s case. We believe the company will be able to generate resources needed to see through the litigation, from the orderly realisation of other assets, thereby maximising the value of the legal case against Invenergy.

FairFX Group plc (“FairFX”)

FairFX is an international payment services provider, offering services to customers in the UK since 2007. It has developed a payments platform that enables personal and business customers to make easy, low-cost payments in a broad range of currencies and countries and across a range of FX products via one integrated system.

In September 2016, FairFX announced interim results with strong growth in revenue and a more profitable business mix. A switch to higher margin products saw gross profit rise 30 per cent., three times faster than turnover. Card and international payments products delivered strong returns and the corporate card platform saw very strong growth. 

After the Period end, FairFX released a trading statement reporting revenues for 2016 ahead of management expectations and 27 per cent. ahead of 2015. The corporate platform saw particularly strong growth with turnover up 98 per cent. from the previous year. In January 2017, FairFX announced the acquisition of an e-money licence. This brings the possibility of FairFX becoming a card issuing bank and reducing operating costs.

With its corporate platform we believe FairFX is well positioned to capture the business left behind by the withdrawal of high street banks from small and medium enterprises.

Hansard Global plc (“Hansard”)

Hansard is a life insurance company based in the Isle of Man specialising in long-term savings products. It writes policies via a network of more than 500 independent financial advisers who provide access to clients in more than 170 countries. Its core customers are affluent individuals looking for flexible and tax efficient investment products. Hansard’s platform funnels policyholders’ savings to external fund managers. Whilst the products are insurance policies, Hansard’s liabilities are matched by its asset holdings (unit-linked products) and so there is little of the insurance risk associated with annuities or with-profits books of business.

Over the Period, the company has continued to execute its new sales strategy, delivering a 56 per cent. sales growth (excluding a related party transaction) for the second half of calendar 2016. On 19 January 2017, Hansard announced a strategic alliance with Union Insurance Company, a major insurer in the United Arab Emirates. This will leverage Hansard’s administration skills, which we believe are its core competence. On 23 February 2017, in its interim results, the company announced its decision to reduce the dividend starting in 2018, as it was necessary to fund future sales growth.

We believe the company is delivering on its growth strategy and remain supportive.

Shepherd Neame Ltd (“Shepherd Neame”)

Shepherd Neame is Britain’s oldest brewer, founded in 1698 in Kent. The brewery produces a range of cask ales and filtered beers such as Spitfire, Whitstable Bay Pale Ale and Asahi Super Dry. The company owns and operates 335 high quality pubs and hotels throughout the South East of England, the majority of which are freehold sites. These pubs are a mixture of 261 tenanted, 67 managed operations and 7 free-of-tie pubs, where the company’s beer products are sold alongside wine and food and a growing accommodation business that totals around 500 letting rooms. 

We believe there remains significant hidden value within Shepherd Neame’s property portfolio. The NAV reported in March 2017 stands at 1269 pence. This excludes any revaluation of the unlicenced estate, which includes the 34 acre residual holding of the Queen Court farm in Ospringe near Faversham.

Activist Investment Process

The Fund originates ideas mainly from its screening processes and its network of contacts, including its institutional shareholders. Companies are valued with focus on their replacement value, cash generation ability and balance sheet strength. In the process, the Fund’s goal is to examine the company both ‘as it is’ and also ‘as it could be’ to maximise shareholder value.

Investments are typically made after an initial engagement, which in some cases may have been preceded by the purchase of a modest position in the company, which allows us to meet the company as a shareholder. Engagement includes dialogue with the company chairman and management, and normally also several non-executive directors, as we build a network of knowledge around our holdings. Site visits are undertaken to deepen our research and where appropriate, independent research is commissioned. We attend investee company annual general meetings to maintain close contact with the board and other stakeholders.

Wherever possible, the Fund strives to develop an activist angle and aims to contribute to the companies’ strategy with the goal of maximising shareholder value. Where value is hidden or trapped, we look for ways to realise it. Most of the Fund’s activism has taken place in private, but the Fund remains willing to make its concerns public when appropriate. The response of management and boards to our suggestions has generally been encouraging. We remain determined to ensure that our investments deliver their full potential for all shareholders, and are committed to engage to the degree required to achieve this.

Realisations

Over the Period, net realised gains, after taking in account losses realised on put options purchased for portfolio insurance purposes, amounted to £3.9 million. 

The Fund realised the remainder of its holding in Pinewood Shepperton plc (“Pinewood”) during the Period at a profit of £5.3 million. Taking into account all realisations since July 2011, this brings the total profit on the Fund’s investment in Pinewood to £14.7 million.

During the Period, the Fund also realised its holding in Restaurant Group at a profit of £1.3 million and realised a profit of £3.3 million on part of its holding in Hurricane. During the Period, the Fund realised losses from its holdings in Providence Resources (-£0.6 million) and San Leon Energy (-£0.5 million).

Previous profitable exits include Dart Group plc, 4imprint Group plc, Aer Lingus Group plc, Thorntons plc, Norcros plc, 3i Quoted Private Equity plc, Delta plc, Kentz Corporation Ltd, Tate & Lyle plc and Chloride Group plc.

Hedging Activity

The Fund continues to purchase FTSE put options as insurance against a significant market sell-off. The net cost of these options amounted to 3.6 per cent. of NAV over the period to 31 December 2016.

Outlook

We feel the global economic outlook remains uncertain, as the full impact of Brexit and the Donald Trump presidency is yet to be seen. We maintain strong conviction in the Fund’s bottom up investment strategy, focusing on asset backed special situations where it sees the potential to act as a catalyst to realise shareholder value. 

Crystal Amber Asset Management (Guernsey) Limited

27 March 2017

Condensed Statement of Profit or Loss and Other Comprehensive Income (Unaudited)

For the six months ended 31 December 2016

All items in the above statement derive from continuing operations.

The total column of this statement represents the Company’s Statement of Profit or Loss and Other Comprehensive Income prepared in accordance with IFRS. The supplementary information on the allocation between income return and capital return is presented under guidance published by the AIC.

Condensed Statement of Financial Position (Unaudited)

As at 31 December 2016

The financial statements were approved by the Board of Directors and authorised for issue on 27 March 2017.

William Collins Sarah Evans

Chairman Director

27 March 2017 27 March 2017

Condensed Statement of Changes in Equity (Unaudited)

For the six months ended 31 December 2016

Condensed Statement of Cash Flows (Unaudited)

For the six months ended 31 December 2016

The Notes to the Unaudited Condensed Financial Statements form part of these financial statements.

Notes to the Unaudited Condensed Financial Statements

For the six months ended 31 December 2016

General Information

The Company was incorporated and registered in Guernsey on 22 June 2007 and is governed under the provisions of the Companies Law. The registered office address is Heritage Hall, Le Marchant Street, St. Peter Port, Guernsey, GYI 4HY. The Company was established to provide shareholders with an attractive total return which is expected to comprise primarily capital growth with the potential for distributions of up to 5 pence per share per annum following consideration of the accumulated retained earnings as well as the unrealised gains and losses at that time. The Company seeks to 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 £100 million and £1,000 million.

The Company’s Ordinary shares were listed and admitted to trading on AIM, 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 to those balances considered material to the financial statements throughout the current Period, unless otherwise stated.

Basis of preparation

The Interim Financial Statements have been prepared in accordance with IAS 34, Interim Financial Reporting. 

The Interim Financial Statements do not include all the information and disclosures required in the Annual Financial Statements and should be read in conjunction with the Company’s Annual Financial Statements for the year to 30 June 2016. The Annual Financial Statements have been prepared in accordance with IFRS.

The same accounting policies and methods of computation are followed in the Interim Financial Statements as in the Annual Financial Statements for the year ended 30 June 2016.

The presentation of the Interim Financial Statements is consistent with the Annual Financial Statements. Where presentational guidance set out in the SORP “Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued by the AIC in November 2014 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. In particular, supplementary information which analyses the Statement of Profit or Loss and Other Comprehensive Income between items of a revenue and capital nature has been presented alongside the total Statement of Profit or Loss and Comprehensive Income.

The Company does not operate in an industry where significant or cyclical variations as a result of seasonal activity are experienced during the financial year. Income and dividends from investments will vary according to the construction of the portfolio from time to time.

Going concern

The Directors are confident that the Company has adequate resources to continue in operational existence for the foreseeable future and do not consider there to be any threat to the going concern status of the Company.

The Directors have specifically considered the implications of the continuation vote to be proposed at the 2017 AGM on the application of the going concern basis. The continuation vote is scheduled to occur every two years. The Directors have no reason to doubt that shareholders will vote for the Company to continue as constituted at the AGM, scheduled for November 2017, given the positive performance of the Company since the previous continuation vote at the 2015 AGM. Therefore, the Directors conclude that there is no material uncertainty which may cast significant doubt on the ability of the Company to continue as a going concern. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Segmental reporting

Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board as a whole. 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 NAV, 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.

For management purposes, the Company is domiciled in Guernsey and is engaged in a single segment of business mainly in one geographical area, being investment in UK equity instruments, and therefore the Company has only a single operating segment.

2. BASIC AND DILUTED EARNINGS/(LOSS) PER SHARE

Earnings/(loss) per share is based on the following data:

3. NET ASSET VALUE PER SHARE

NAV per share is based on the following data:

4. FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS

At the reporting date the Company’s derivative financial instruments consisted of four (30 June 2016: two) FTSE 100 Index Put Option positions, purchased as protection against a significant market sell-off and two warrant instruments in FairFX and Hurricane (30 June 2016: two) for the purchase of ordinary shares.

At the reporting date, the warrant instruments in FairFX and Hurricane were valued using a Black Scholes valuation technique.

The following table details the Company’s positions in derivative financial instruments:

5. SHARE CAPITAL AND RESERVES

The authorised share capital of the Company is £3,000,000 divided into 300 million Ordinary shares of £0.01 each.

The issued share capital of the Company is comprised as follows:

6. TREASURY SHARES

During the period ended 31 December 2016, 160,000 (2015: 250,000) Treasury shares were purchased at an average price of 157.7 pence per share, representing an average discount to NAV at the time of purchase of 4.5 per cent., (2015: 157.22 pence per share). During the period ended 31 December 2016, Nil (2015: 295,000) Treasury shares were sold, representing a premium above cost of £Nil (2015: £75,405).

7. DIVIDENDS

On 14 July 2016, the Company declared an interim dividend of £2,460,369, equating to 2.5 pence per Ordinary share, which was paid on 19 August 2016 to shareholders on record on the register on 22 July 2016.

On 14 December 2016, the Company declared an interim dividend of £2,459,120, equating to 2.5 pence per Ordinary share, which was paid on 19 January 2017 to shareholders on record on the register on 22 December 2016.

8. RELATED PARTIES

Richard Bernstein is a director and a member of the Investment Manager, a member of the Investment Adviser and a holder of 10,000 (30 June 2016: 10,000) Ordinary shares in the Company, representing 0.01 per cent. (30 June 2016: 0.01 per cent.) of the voting share capital of the Company at 31 December 2016.

During the Period the Company incurred management fees of £1,438,909 (2015: £1,314,947) none of which was outstanding at 31 December 2016 (30 June 2016: £Nil). The Company also accrued performance fees of £5,714,940 (2015: £Nil) all of which was outstanding and is included in trade and other payables as at 31 December 2016 (30 June 2016: £Nil). Under the terms of the Investment Management Agreement between the Company and the Investment Manager, if the NAV per share at 30 June 2017 exceeds the 2017 performance hurdle, a performance fee will be payable to the Investment Manager. The performance hurdle represents an expected return on share capital since placing compounded at a rate of 7 per cent. up to 20 August 2013, 8 per cent. up to 27 January 2015 and 10 per cent. after that date.

As the NAV per share at 31 December 2016 exceeded the performance hurdle at that date, a performance fee has been accrued in the Interim Financial Statements. In the event that, on 30 June 2017, the NAV per share exceeds the 2017 performance hurdle, the performance fee will be an amount equal to 20 per cent. of the excess of the NAV per share at that date over the 2017 performance hurdle multiplied by the time weighted average number of Ordinary shares in issue during the year ending 30 June 2017. Depending on whether the Ordinary shares are trading at a discount or a premium to the Company's NAV per share at 30 June 2017, the performance fee will be either payable in cash (subject to the Investment Manager being required to use the cash payment to purchase Ordinary shares in the market) or satisfied by the sale of Ordinary shares out of Treasury or by the issue of new fully paid Ordinary shares at the closing mid-market closing price on 30 June 2017, respectively. 

As at 31 December 2016 the Investment Manager held 4,015,666 Ordinary shares (30 June 2016: 4,015,606) of the Company, representing 4.08 per cent. (30 June 2016: 4.08 per cent.) of the voting share capital.

The interests of the Directors in the share capital of the Company at the Period/year end and as at the date of this report are as follows:

All related party transactions are carried out on an arm’s length basis.

9. POST BALANCE SHEET EVENTS

On 6 February 2017 the Company reported that its unaudited NAV at 31 January 2017 was 218.51 pence per share.

On 6 March 2017 the Company reported that its unaudited NAV at 28 February 2017 was 231.52 pence per share.

10. AVAILABILITY OF INTERIM REPORT

Copies of the Interim Report will be available to download from the Company’s website www.crystalamber.com.

Glossary of Capitalised Defined Terms

“AIC” means the Association of Investment Companies;

“AIM” means the Alternative Investment Market of the London Stock Exchange;

“Annual Financial Statements” means the audited annual financial statements of the Company, including the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and associated notes;

“Annual Report” means the annual publication of the Company to the shareholders to describe their operations and financial conditions, together with the Company’s financial statements;

“Board” or “Directors” or “Board of Directors” means the directors of the Company;

 “Company” or “Fund” means Crystal Amber Fund Limited;

“Companies Law” means the Companies (Guernsey) Law, 2008, (as amended);

 “FTSE” means the Financial Times Stock Exchange;

“FVTPL” means Fair Value Through Profit or Loss;

 “IAS” means international accounting standards as issued by the Board of the International Accounting Standards Committee;

“IFRS” means the International Financial Reporting Standards, being the principles-based accounting standards, interpretations and the framework by that name issued by the International Accounting Standards Board, as adopted by the European Union;

“Interim Financial Statements” means the unaudited condensed interim financial statements of the Company, including the Condensed Statement of Profit or Loss and Other Comprehensive Income, the Condensed Statement of Financial Position, the Condensed Statement of Changes in Equity, the Condensed Statement of Cash Flows and associated notes;

“Interim Report” means the Company’s interim report and unaudited condensed financial statements for the period ended 31 December;

“Investment Management Agreement” means the agreement between the Company and the Investment Manager, dated 16 June 2008, as amended on 21 August 2013 and further amended on 27 January 2015;

 “NAV” or “Net Asset Value” means the value of the assets of the Company less its liabilities as calculated in accordance with the Company’s valuation policies and expressed in Pounds Sterling;

“NAV per share” means the Net Asset Value per Ordinary share of the Company and is expressed in pence;

 “Ordinary shares” means allotted, called up and fully paid Ordinary shares of the Company of £0.01 each;

“Period” means the six months to 31 December 2016;

 “SORP” means Statement of Recommended Practice;

 “Treasury” means the reserve of Ordinary shares that have been repurchased by the Company;

“Treasury shares” means Ordinary shares in the Company that have been repurchased by the Company and are held as Treasury shares;

“UK” or “United Kingdom” means the United Kingdom of Great Britain and Northern Ireland;

“US” means the means the United States of America, its territories and possessions, any state of the United States and the District of Columbia; and

“£” or “Pounds Sterling” or “Sterling” means British pound sterling and “pence” means British pence.

Directors and General Information