22 December 2021

Crystal Amber Fund Limited

("Crystal Amber Fund", the "Company" or the "Fund")

Update re proposals following 2021 Continuation Vote

Dividend declaration

Crystal Amber Fund provides an update following the result of its 2021 annual general meeting ("AGM") where the resolution that the Company continue as constituted received a majority of votes, but did not achieve the required 75% majority of votes cast and accordingly was not passed.  By way of background, and as announced in 2013 on the basis it was never intended that the Fund would be evergreen, the Fund proposed that the 2021 AGM continuation vote should be subject to an extraordinary resolution, which would require a 75% majority.

The Board of Crystal Amber Fund believes it is in the interests of shareholders as a whole for the Fund to adopt a strategy of maximising capital returned to shareholders by timely disposals, including trade sales of the Fund's strategic holdings, where appropriate.

The Fund has accumulated several strategic holdings: since 2013, the Fund has been a shareholder in Hurricane Energy plc (currently 28.9% holding); since 2016, it has been a shareholder in Equals Group plc (currently 20.5% holding); since 2017, it has been a shareholder in Allied Minds (currently 18.2% holding); since 2018, it has been a shareholder in De La Rue plc (currently 9.2% holding) and it has been a shareholder in Sutton Harbour plc for more than a decade (currently 12.1% holding). Given the substantial progress achieved by the Fund with its activist strategy to date on these holdings, the Fund expects to have realised these investments within 24 months. Within this timescale, the Fund also anticipates selling its holding in Board Intelligence plc, an unquoted company where it has been a shareholder since 2018.

The Fund has a track record of returning cash to shareholders via share buybacks and dividends: since the change to the Articles in 2013, £60 million has been returned to shareholders. The Fund intends to return all net proceeds from its holdings in Hurricane Energy plc, Allied Minds plc, Equals Group plc, De La Rue plc, Sutton Harbour plc and Board Intelligence, after providing for ongoing operational costs as necessary.  The Fund previously announced, based on the Investment Manager's assessment of the status and timing of anticipated corporate transactions, that it is targeting additional shareholder returns of at least £40 million or 50p a share before 30 June 2022.  Whilst the Fund is confident that this as achievable, after consulting with a number of shareholders, it is no longer considered to be in the interests of the Fund to impose a fixed deadline but will be keeping it as a target.

The Fund will not make any new investments and will only make further opportunistic investments in existing holdings where, in the view of the Board and Investment Manager, such investment is considered necessary to protect the interests of shareholders and/or provide the Investment Manager with additional influence to maximise value and facilitate and accelerate an exit. Any such investment will require the prior approval of the Board and will only be permitted where it is not expected to compromise the timescale for realisations.

The Board also believes that it is in the interests of shareholders to incentivise the Investment Manager to maximise the realisation value of the investment portfolio in a timely manner.  Accordingly, the Board will be engaging with the Investment Manager to put in place a revised remuneration and incentivisation agreement, which will be conditional on shareholder approval.

GI Dynamics

In 2014, the Fund began to accumulate a shareholding in GI Dynamics. GI Dynamics is the developer of the EndoBarrier, a minimally invasive therapy for the treatment of Type 2 diabetes and obesity. EndoBarrier is a temporary bypass sleeve that is endoscopically delivered to the duodenal intestine. It offers similar effects to the surgical gastric bypass, without the risks of a major surgical procedure.

During the year to June 2021, GI Dynamics delisted from the Australian stock exchange. Its board and CEO were replaced with new executives and directors with medical device experience. As part of a $10 million investment in preferred stock, the Fund's senior secured loan was converted, and warrants were cancelled. The Fund currently owns 81.3% of the fully diluted share capital of GI Dynamics together with a $4.9 million convertible loan note.

After delays due to the COVID-19 surge in India, the I-STEP application for a randomised clinical trial (to be conducted in conjunction with Apollo Sugar Clinics) was reviewed by regulators in India in June 2021. The Fund is pleased to report that earlier this month, regulators approved the commencement of this trial.

The global pandemic has reaffirmed the importance of gaining control of the significant risk factors associated with Type II diabetes and obesity. More than ever, medical professionals and patients alike are seeking minimally invasive and effective therapies to help control and resolve these chronic conditions. GI Dynamics is preparing to meet this large unmet clinical need.

The Fund believes that because of its intensive activism, the investment in GI Dynamics now has considerable strategic value. This was recently evidenced by two approaches from US trade parties that have expressed an interest in making a significant investment in GI Dynamics. The Fund looks forward to continuing to work with the company to achieve its operational milestones and to further develop the pathway to maximise shareholder value. In due course, the Fund will consult with investors about the longer-term plans for GI Dynamics to realise value for its shareholders. Given the anticipated value accretive milestones, the Fund believes it is appropriate that it gives GI Dynamics the time it requires to maximise shareholder returns.

Dividend declaration

The Fund is pleased to declare an interim dividend of 10p pence per share in respect of the financial year ending 30 June 2022. This dividend will be payable to shareholders on the register as at 14 January 2022 with an associated ex-dividend date of 13 January 2022 and a payment date on or around 9 February 2022.

The Board intends to write to shareholders in January 2022 to convene an extraordinary general meeting at which shareholders will be asked to approve the strategy set out above and the revised remuneration and incentivisation agreement with the Investment Manager.

For further enquiries please contact:

Crystal Amber Fund Limited

Chris Waldron (Chairman)

Tel: 01481 742 742

Allenby Capital Limited - Nominated Adviser

David Worlidge/Liz Kirchner

Tel: 020 3328 5656

Winterflood Securities - Broker

Joe Winkley/Neil Langford

Tel: 020 3100 0160

Crystal Amber Advisers (UK) LLP - Investment Adviser

Richard Bernstein

Tel: 020 7478 9080