22 November 2021

Crystal Amber Fund Limited

(the "Company" or the "Fund")

Result of Annual General Meeting

The Company announces that at its Fourteenth Annual General Meeting held earlier today, all ordinary resolutions (Resolutions 1 to 9) set out in the Notice of AGM dated 1 November 2021 (the "Notice") were duly passed.

Extraordinary Resolution 10, THAT the Company continue as constituted, required a 75% majority of votes cast to pass and did not pass.

The breakdown of voting percentages for each resolution (on a total votes cast basis) is as follows:

Discretionary votes received were voted in favour of a Resolution and are counted in the proportion of votes 'for'. 

*Votes withheld are not included as a vote withheld is not a vote in Law and is therefore not counted towards the proportion of votes 'for' or 'against' a Resolution.

As announced in 2013, and on the basis that it was never intended that the Fund would be evergreen, the Fund proposed that the 2021 AGM continuation vote would require an extraordinary resolution, which would require a 75% majority to continue, rather than an ordinary resolution requiring a 50% majority. The Manager has positioned the portfolio accordingly, with the most recent significant activist position, De La Rue plc ("De La Rue"), initiated in April 2018.

In the year to 30 June 2020, the Fund returned £10.1 million though share buybacks and dividends. For the year to 30 June 2021, £11.1 million was returned through share buybacks and dividends. Since the change to the Articles in 2013, the Fund has completed £31.2 million of share buybacks and £28.8 million of dividend payments.

De La Rue is a good example of the time lag that exists between initiating an activist strategy and it bearing fruit. In 2019, the Fund provided regular updates on its view of the scale of past mismanagement at De La Rue. Exposing and highlighting these failings, accelerated the departures of the former Chief Executive and Chairman, allowing the new leadership to take the corrective action necessary to execute its turnaround. With underlying profits set to more than double and with consensus profit before tax for the year to March 2022 at £38 million, the Fund's "hard yards" have been completed and now the focus is on securing the strategic value of the shareholding. In this regard, the Fund's access to relevant parties is helpful.

Over the last 12 months, following the Fund's intensive engagement at Equals Group plc ("Equals"), its share price has trebled. The business is now operationally cash positive, enjoying top line growth of 47% against the pre-Covid comparative period and ideally placed to benefit from industry consolidation. The Fund has introduced Equals to third parties that it believes will be able to specifically assist Equals in this regard.

At Hurricane Energy, in the six months to 30 June 2021, operating cash flow was $75.9 million. Since Crystal Amber successfully blocked the proposed financial restructuring in the High Court, prospects have been transformed. The Fund has a clear pathway to maximising the strategic value of its shareholding and believes that if production continues according to the current projected trajectory and the oil price remains stable, this realisation could be at a multiple of the current share price.

GI Dynamics has commenced discussions with industry partners. The Fund notes that Fractyl Health Inc. has recently completed a $100 million fundraise and as with GI Dynamics, it focuses on medical device therapies for Type II diabetes.

Next month, the Fund intends to provide an update on its 18.1%, shareholding in Allied Minds.

These five strategic holdings comprise around 89% of the net asset value of the Fund. Of late, the Fund's focus has been to realise the maximum value position from its highly concentrated portfolio. This includes active engagement and discussions with potential trade buyers. The Fund is optimistic that this approach will maximise both the returns on and returns of investments to shareholders.

Last month, the Fund reported that since September 2020, including dividends, net asset value over the previous year has increased by 46.8%. The Fund is optimistic that this strong performance can continue, augmented by the potential to secure control premiums or highly accretive corporate transactions on several of the Fund's strategic shareholdings.

On 25 June 2021, we announced the communication received from Saba Capital, a 26.2% shareholder, indicating that it would not support continuation and that should the vote to continue not pass, the Articles require the Fund to "formulate proposals...to reorganise, reconstruct, or wind up the Company." The Fund notes that Saba Capital acquired its shareholding in the last 12 months and along with another US hedge fund, together comprising just under 30% of the Fund's total voting rights, have "sold short" shares in portfolio companies De La Rue and Allied Minds. These two "short" positions have placed De La Rue among the Top 20 stocks shorted on the London Stock Exchange. Accordingly, having hedged their exposure to some of the Fund's largest positions, these two shareholders have insulated themselves against the negative impact of an accelerated monetisation of assets, whereas all other shareholders may likely suffer material impairment in value without the planned and controlled disposal programme that the Fund is already implementing.

The Fund notes that excluding these two shareholders (those shareholders without short positions in the Fund's investments), more than 75 per cent of shareholders voted in favour of continuation.

The Articles now require the Fund to formulate proposals to reorganise, reconstruct, or wind up the Company. In the coming weeks, the Fund intends to provide shareholders with specific proposals. It is currently envisaged that these will centre around the continued realisation of assets and increasing capital returns to shareholders. Based on the Manager's assessment of the status and timing of anticipated corporate transactions, the Fund is targeting additional shareholder returns of at least £40 million or 50p a share before 30 June 2022. This would bring returns of capital since the 2013 amendment to the Articles to more than £100 million. When such disposals are concluded, it is intended that returns to shareholders would be paid as soon as practicable. Further significant realisations and returns of capital are planned for the period after 30 June 2022.

The Board notes the diversity of votes received in relation to Resolutions 2, 3, 5, 6 and 7. As regards Resolution 2, 5, 6, and 7, more than 95% of votes against were from Saba Capital. In respect of Board remuneration, the Board notes that the overall level of director remuneration has remained the same as the previous year. In addition, the Board advises that there will be no increases in the remuneration of directors in the coming year. As regards Resolution 3, the Fund's auditor, KPMG, proved the most competitive when the Fund's audit was tendered in 2017 but the Fund acknowledges that KPMG has been in situ for more than a decade, which is considered by some proxy advisory services not to be best practice. The Board intends therefore to re-assess the tendering process.