Crystal Amber Fund
Limited
("Crystal Amber Fund", the "Company" or the
"Fund")
Interim Report and Unaudited Condensed
Financial Statements
For the six months ended 31 December
2023
Key Points
· Net Asset Value
("NAV") per share increased by 13.7% over the six-month period to 31
December 2023 to 107.33p.
· According to
Trustnet over the last six months, the Fund is second out of 24
peer group funds and over one and three years, first out of 23 peer
group funds.
· £5 million asset
enhancing share buyback announced within the period. Further
buybacks anticipated in the second quarter of 2024.
· Further
realisations since the period end, with more than half of the Prax
Exploration Deferred Consideration Units now sold.
· De La Rue plc
share price increased by more than 75% over the six months to 31
December 2023.
· Strong operational
progress at Morphic Medical Inc. Regulatory approval expected in
the coming months.
· In February 2024,
Morphic Medical Inc's competitor, Fractyl Health Inc ("Fractyl")
listed on NASDAQ, raising $110 million. Current enterprise value of
Fractyl is $275 million. Fractyl had historic revenues of $102,000.
This peer group comparison serves to demonstrate the potential
significant upside in the value of Morphic Medical Inc.
For further enquiries please
contact:
Crystal Amber Fund Limited
Chris Waldron (Chairman)
Tel: 01481 742 742
www.crystalamber.com
Allenby Capital Limited - Nominated Adviser
Jeremy Porter/ Dan
Dearden-Williams
Tel: 020 3328 5656
Winterflood Investment Trusts - Broker
Joe Winkley/Neil Langford
Tel: 020 3100 0160
Crystal Amber Advisers (UK) LLP - Investment
Adviser
Richard Bernstein
Tel: 020 7478 9080
(1) All capitalised terms are defined in the Glossary of
Capitalised Defined Terms below unless separately
defined.
Chairman's Statement
During the six month period to 31
December 2023, net asset value increased from £77.7 million (93.33
pence per share) to an unaudited NAV of £88.3 million (107.33 pence
per share) representing an increase of 13.7% in NAV. This compares
to a 5.5% increase in the Numis Small Cap Index over the same
period.
This strong absolute and relative
performance continues the trend of the last three years, where
according to Trustnet, the Fund's share price has risen by 20.8%
over six months, 19.1% over one year and 35.6% over three years.
This compares with returns for the Investment Trust UK Smaller
Companies index of 5.2%, -2.8% and 0.1% over the equivalent
periods.
July 2023 also saw the payment of an
interim dividend of 25p per share in respect of the year to 30 June
2023, with £20.8 million returned to shareholders. This brings the
total returned to shareholders since the new investment strategy
was proposed in February 2022, excluding buybacks, to £45.8
million.
During the period under review, the
largest contributor to the increase in net asset value was the 79%
rise in the share price of De La Rue. In September 2023 we reported
that following a prolonged period of intense and successful
activism at De La Rue, the Fund purchased 15.3 million shares at a
cost of £6.3 million, equivalent to 41.2p a share. Whilst the
Fund's investment strategy remains to maximise value through
returns of capital, this well-timed purchase demonstrates the
benefit to shareholders of retaining a degree of flexibility in
respect of existing holdings.
In December 2023, De La Rue reported
operating profits ahead of previous guidance, net debt below
previous guidance and a currency order book that had more than
doubled over the previous three months to £220 million. The Fund
notes both the cross-selling revenue benefits and the elimination
of a substantial plc and head office overhead that would accrue to
a trade acquiror. The Fund is De La Rue's largest shareholder, with
a holding close to 17 per cent of its issued share capital. Crystal
Amber remains of the view that the strategic value of De La Rue is
substantially more than its operational value and that it is now a
highly attractive takeover target in an industry requiring
consolidation.
In December 2023, the Fund announced
the recommencement of on-market purchases under a share buyback
programme to repurchase Ordinary shares to an aggregate amount of
£5 million, pursuant to the authority obtained at the Company's
annual general meeting on 22 November 2023 (the "Buyback"). The
purpose of the Buyback is to reduce the share capital of the
Company and continue the process of returning cash to shareholders.
In addition, the Buyback is intended to help narrow the discount of
the share price to NAV. The Buyback has been funded from the
Company's existing surplus cash resources. By 31 December 2023,
close to one million shares had been acquired at an average cost of
71.38p a share. The Buyback continued after the period end, and to
date, over 6.2 million shares have been acquired, reducing the
total voting rights by 7.5% and increasing net asset value per
share by approximately 1.9%.
Last month, the Fund announced that
it had disposed of over one-third of its holding of Deferred
Consideration Units ("DCUs") in Prax Exploration & Production
plc at a 20% premium to carrying value. Combined with the
anticipated payment in the coming days from the DCUs, this is
expected to increase cash receipts by £5.7 million, equivalent to
7.3p a share. In aggregate, these are expected to increase net
asset value by 2.3p a share. Earlier this month, the Fund realised
an additional £1.2 million from the sale of further DCUs. More than
half of this unquoted holding has now been sold at a 20% premium to
the carrying value at 31 December 2023.
It is now two years since the
current investment strategy was approved and the Investment Manager
continues to work to maximise the value received within the
portfolio to allow for timely returns of capital. In the resolution
proposing this strategy, it was envisaged that "predominantly all
of the Company's assets" would have been sold by the end of 2023,
with the noted exception of the unlisted Morphic Medical Inc. Aside
from De La Rue, this has been substantially achieved in respect of
the listed positions and, as noted here and in previous reports, we
believe that careful engagement and management of the De La Rue
position will yield a significantly better outcome for shareholders
than a forced sale.
As detailed below in the Investment
Manager's Report, the Fund's primary focus beyond De La Rue is to
achieve the regulatory approval at Morphic Medical Inc that will
enable sales to re-commence. This should
not only underpin but should
significantly enhance the value of this core holding. At this
point, the Board will seek to consult with the Fund's shareholders
and advisors over the future structure of the Fund, given that
almost all of its assets may well be unlisted by then.
Christopher Waldron
Chairman
27 March 2024
Investment Manager's
Report
Performance
During the six month period to 31
December 2023, net asset value increased from £77.7 million (93.33
pence per share) to an unaudited NAV of £88.3 million (107.33 pence
per share).
Investee companies
Morphic Medical Inc ("MMI") formerly GI Dynamics Inc ("GI
Dynamics")
The Fund has a fully diluted equity
interest of 81.5%, in addition to interest bearing loan
notes.
Last summer, GI Dynamics changed its
name to Morphic Medical Inc. MMI is a privately held company,
headquartered in Boston, MA, that develops an endoscopically
delivered medical device for patients with Type 2 Diabetes and
Obesity. The device is called RESET, formerly known as the
Endobarrier. RESET is a thin, flexible implant that lines the
proximal intestine and mimics gastric bypass bariatric surgery as
food bypasses the duodenum and the upper
intestines.
Unlike gastric bypass surgery, RESET
is reversible, minimally invasive, and temporary. It does not
permanently alter the patient's anatomy but uniquely targets the
body's own blood glucose control mechanisms. This is achieved
through a 20-minute endoscopic procedure. The patient will
typically retain the device for nine months, after which the device
is removed.
According to the World Obesity
Federation, the impact of being overweight and obese on the UK
economy will continue to grow and is projected to reach 2.4% of GDP
or £125 billion by 2060. This is both a global problem and a global
market.
Over the last year, treatments for
Type 2 Diabetes and Obesity have become a huge area of focus in
both the general and the financial press. Novo Nordisk, the
manufacturer of Ozempic and Wegovy has seen its market
capitalisation surpass that of Tesla, with its share price rising
by 85% over the last year. The "trickle down" effect of investor
attention has found its way to MMI's close competitor, Fractyl
Health. This is a company with historic annual revenues of
$102,000. Last month, it successfully raised $110 million on
NASDAQ. Its current market capitalisation is $385 million,
equivalent to an enterprise value of $275 million.
Whilst MMI still requires CE Mark
certification, it believes that its RESET device can deliver
superior and durable results without change to the anatomy. A UK
study by Dr Bob Ryder of the Sandwell and West Birmingham NHS Trust
demonstrated an average 17.9 Kg reduction in weight and a 2%
reduction in HBA1C at the end of treatment with RESET. Three years
after treatment, 75% of patients maintained most of the improvement
achieved.
During the period under review and
in anticipation of the re-instatement of the CE Mark which will
enable sales to re-commence, the board of MMI was significantly
strengthened by the appointment of an ex-Medtronic Executive and by
the appointment of the former Chairman of Apollo Endosurgery,
which, last year, was acquired by Boston Scientific for an
enterprise value of $615 million.
De La Rue
Following a prolonged period of
intense and successful activism at De La Rue, the Fund purchased
15.3 million shares in De La Rue during the summer of 2023 at a
cost of £6.3 million, equivalent to 41.2p a share.
In December 2023, De La Rue reported
first-half operating profits ahead of previous guidance at £7.9
million, net debt of £82 million, which was £18 million below
previous guidance. Its currency order book had more than
doubled over the previous three months to £220 million, with a very high win
rate.
The Fund is De La Rue's largest
shareholder, with a
holding close to 17 per cent of its issued share
capital. The Investment Manager
remains of the view that the strategic value of De
La Rue is substantially more than its operational value and that it is
now a highly attractive takeover target in an industry requiring
consolidation. The Fund notes both the cross-selling revenue
benefits and the elimination of a substantial plc and head office overhead that
would accrue to a trade acquiror.
Allied Minds
Allied Minds is an investor in
technology and life science sectors and operates as a private
equity firm of early-stage companies. The Fund first invested in
November 2018 and it owns 18.4% of the company's issued share
capital.
In late 2022, the company delisted
from the market to reduce costs and preserve cash as it pursues its
strategy to realise assets. After delisting, the company undertook
a review of internal costs and external providers. It is understood
that Allied Minds has sufficient cash to continue until 2027.
Nevertheless, Allied Minds has failed to provide positive news flow
from its remaining portfolio, with news from Federated Wireless,
where Allied Minds has a 24% interest, particularly scant. Earlier
in the month, portfolio company Orbital Sidekick launched two
satellites, which to date are responding as expected. Given the
continuing lack of evidence of realisations and returns of capital
at Allied Minds, the Investment Manager is currently in discussions
with Allied Minds regarding its optimal structure.
Hedging activity
The Fund did not engage in hedging
activity during the period.
Outlook
Following two years of successful
realisations and consequential shareholder distributions, the
remaining portfolio is, as a consequence, intensely concentrated.
With two remaining listed investments, De La Rue represents 95% of
the value of the quoted portfolio. Overall, MMI comprises more than
40% of net asset value and the Investment Manager is heavily
focused on the re-instatement of MMI's CE Mark, which is expected
in the coming months.
Crystal Amber Asset Management (Guernsey)
Limited
27 March 2024
Condensed Statement of Profit or
Loss and Other Comprehensive Income (Unaudited)
For the six months ended 31
December 2023
|
|
Six months ended 31
December
|
|
Six months ended 31
December
|
|
|
|
2023
|
|
2022
|
|
|
|
Revenue
|
Capital
|
Total
|
|
Revenue
|
Capital
|
Total
|
|
|
Note
|
£
|
£
|
£
|
|
£
|
£
|
£
|
|
Income
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
60,955
|
-
|
60,955
|
|
10,182
|
-
|
10,182
|
|
|
|
60,955
|
-
|
60,955
|
|
10,182
|
-
|
10,182
|
|
Net
gains on financial assets designated at FVTPL
|
|
|
|
|
|
|
|
|
Equities
|
|
|
|
|
|
|
|
|
|
Net realised gains
|
4
|
-
|
6,128,586
|
6,128,586
|
|
-
|
7,135,460
|
7,135,460
|
|
Movement in unrealised gains /
(losses)
|
4
|
-
|
5,982,219
|
5,982,219
|
|
-
|
(2,393,065)
|
(2,393,065)
|
|
Debt
Instruments
|
|
|
|
|
|
|
|
|
|
Movement in unrealised
gains
|
4
|
-
|
329,851
|
329,851
|
|
-
|
327,869
|
327,869
|
|
|
|
-
|
12,440,656
|
12,440,656
|
|
-
|
5,070,264
|
5,070,264
|
|
Total income
|
|
60,955
|
12,440,656
|
12,501,611
|
|
10,182
|
5,070,264
|
5,080,446
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Transaction costs
|
|
-
|
9,716
|
9,716
|
|
-
|
38,624
|
38,624
|
|
Exchange movements on revaluation of
investments and working capital
|
|
215,315
|
292,123
|
507,438
|
|
(3,401)
|
(40,747)
|
(44,148)
|
|
Management fees
|
9
|
270,000
|
-
|
270,000
|
|
540,000
|
-
|
540,000
|
|
Directors' remuneration
|
|
65,000
|
-
|
65,000
|
|
65,000
|
-
|
65,000
|
|
Administration fees
|
|
44,155
|
-
|
44,155
|
|
60,435
|
-
|
60,435
|
|
Custodian fees
|
|
18,037
|
-
|
18,037
|
|
27,626
|
-
|
27,626
|
|
Audit fees
|
|
30,075
|
-
|
30,075
|
|
30,488
|
-
|
30,488
|
|
Other expenses
|
|
253,303
|
-
|
253,303
|
|
184,066
|
-
|
184,066
|
|
|
|
895,885
|
301,839
|
1,197,724
|
|
904,214
|
(2,123)
|
902,091
|
|
Return/(loss) for the period
|
|
(834,930)
|
12,138,817
|
11,303,887
|
|
(894,032)
|
5,072,387
|
4,178,355
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share
(pence)
|
2
|
(1.00)
|
14.59
|
13.59
|
|
(1.07)
|
6.09
|
5.02
|
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 revenue return
and capital return is presented under guidance published by the
AIC.
The Notes to the Unaudited Condensed
Financial Statements below form an integral part of these
Interim Financial Statements.
Condensed Statement of
Financial Position (Unaudited)
As at 31 December
2023
|
|
|
As at
|
|
As at
|
|
As at
|
|
|
|
31 December
|
|
30 June
|
|
31 December
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
(Unaudited)
|
|
|
Note
|
£
|
|
£
|
|
£
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
3,905,308
|
|
12,254,948
|
|
177,083
|
|
Trade and other
receivables
|
|
62,223
|
|
71,338
|
|
77,314
|
|
Financial assets designated at
FVTPL
|
4
|
84,664,567
|
|
69,859,825
|
|
108,290,491
|
|
Total assets
|
|
88,632,098
|
|
82,186,111
|
|
108,544,888
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Trade and other payables
|
|
343,983
|
|
4,509,400
|
|
306,148
|
|
Total liabilities
|
|
343,983
|
|
4,509,400
|
|
306,148
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Capital and reserves attributable to the Company's equity
shareholders
|
|
|
|
|
|
|
Share capital
|
6
|
997,498
|
|
997,498
|
|
997,498
|
|
Treasury shares reserve
|
7
|
(20,459,580)
|
|
(19,767,097)
|
|
(19,767,097)
|
|
Distributable reserve
|
|
40,586,958
|
|
40,586,958
|
|
61,394,708
|
|
Retained earnings
|
|
67,163,239
|
|
55,859,352
|
|
65,613,631
|
|
Total equity
|
|
88,288,115
|
|
77,676,711
|
|
108,238,740
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
88,632,098
|
|
82,186,111
|
|
108,544,888
|
|
|
|
|
|
|
|
|
|
NAV
per share (pence)
|
3
|
107.33
|
|
93.33
|
|
130.05
|
The Interim Financial Statements
were approved by the Board of Directors and authorised for issue on 27 March
2024.
Christopher Waldron
Jane Le Maitre
Chairman
Director
27 March 2024
27 March 2024
The Notes to the Unaudited Condensed
Financial Statements below form an integral part of these Interim
Financial Statements.
Condensed Statement of Changes in
Equity (Unaudited)
For the six months ended 31
December 2023
|
|
|
Share
|
Treasury
|
Distributable
|
Retained
earnings
|
|
|
|
|
Capital
|
Shares
|
Reserve
|
Capital
|
Revenue
|
Total
|
Total
Equity
|
|
|
Note
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
|
Opening balance at 1 July
2023
|
|
997,498
|
(19,767,097)
|
40,586,958
|
64,910,222
|
(9,050,870)
|
55,859,352
|
77,676,711
|
|
Purchase of Ordinary shares into
Treasury
|
7
|
-
|
(692,483)
|
-
|
-
|
-
|
-
|
(692,483)
|
|
Return for the period
|
|
-
|
-
|
-
|
12,138,817
|
(834,930)
|
11,303,887
|
11,303,887
|
|
Balance at 31 December
2023
|
|
997,498
|
(20,459,580)
|
40,586,958
|
77,049,039
|
(9,885,800)
|
67,163,239
|
88,288,115
|
For the six months ended 31
December 2022
|
|
|
Share
|
Treasury
|
Distributable
|
Retained
earnings
|
|
|
|
|
Capital
|
Shares
|
Reserve
|
Capital
|
Revenue
|
Total
|
Total
Equity
|
|
|
Note
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
|
Opening balance at 1 July
2022
|
|
997,498
|
(19,767,097)
|
78,040,908
|
68,401,964
|
(6,966,688)
|
61,435,276
|
120,706,585
|
|
Dividends paid in the
period
|
8
|
-
|
-
|
(16,646,200)
|
-
|
-
|
-
|
(16,646,200)
|
|
Return for the period
|
|
-
|
-
|
-
|
5,072,387
|
(894,032)
|
4,178,355
|
4,178,355
|
|
Balance at 31 December
2022
|
|
997,498
|
(19,767,097)
|
61,394,708
|
73,474,351
|
(7,860,720)
|
65,613,631
|
108,238,740
|
Condensed Statement of Cash Flows
(Unaudited)
For the six months ended 31
December 2023
|
|
Six months
|
Six months
|
|
|
ended
|
ended
|
|
|
31 December
|
31 December
|
|
|
2023
|
2022
|
|
|
(Unaudited)
|
(Unaudited)
|
|
|
£
|
£
|
|
Cash
flows from operating activities
|
|
|
|
Bank interest received
|
60,955
|
10,182
|
|
Management fees paid
|
(270,000)
|
(540,000)
|
|
Directors' fees paid
|
(97,500)
|
(65,000)
|
|
Other expenses paid
|
(432,284)
|
(277,090)
|
|
Net
cash outflow from operating activities
|
(738,829)
|
(871,908)
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Purchase of equity
investments
|
(1,556,709)
|
(1,152,316)
|
|
Sale of equity investments
|
1,778,758
|
19,612,051
|
|
Purchase of debt
instruments
|
(7,666,911)
|
(2,273,290)
|
|
Sales of debt instruments
|
536,250
|
1,500,000
|
|
Transaction charges on purchase and
sale of investments
|
(9,716)
|
(38,624)
|
|
Net
cash (outflow)/ inflow from investing activities
|
(6,918,328)
|
17,647,821
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
Purchase of Company shares into
Treasury
|
(692,483)
|
-
|
|
Dividends paid
|
-
|
(16,646,200)
|
|
Net
cash outflow from financing activities
|
(692,483)
|
(16,646,200)
|
|
|
|
|
|
|
|
|
|
Net (decrease)/ increase in cash and
cash equivalents during the period
|
(8,349,640)
|
129,713
|
|
Cash and cash equivalents at
beginning of period
|
12,254,948
|
47,370
|
|
Cash
and cash equivalents at end of period
|
3,905,308
|
177,083
|
The Notes to the Unaudited Condensed
Financial Statements below form an integral part of these Interim
Financial Statements.
Notes to the Unaudited Condensed
Financial Statements
For the six months ended 31
December 2023
General Information
Crystal Amber Fund Limited (the
"Company") was incorporated and registered in Guernsey on 22 June
2007 and is governed in accordance with the provisions of the
Companies Law. The registered office address is PO Box 286, Floor
2, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GYI 4LY.
The Company was established to provide Shareholders with an
attractive total return, which was 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. Following changes to the Company's investment
policy in March 2022, the Company's strategy is to optimise
outcomes for a limited number of special situations where the
Company believes value can be realised regardless of market
direction.
Morphic Medical Inc is an
unconsolidated subsidiary of the Company and was incorporated in
Delaware. As at 31 December 2023 it had 5 wholly-owned subsidiaries
and its principal place of business is Boston. Refer to Note 9 for
further information.
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.
All capitalised terms are defined in
the Glossary of Capitalised Defined Terms below unless separately
defined.
1.
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies
applied in the preparation of these Interim Financial Statements
are set out below. These policies have been consistently applied to
those balances considered material to the Interim 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
2023. 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 2023.
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 Trust (issued by the AIC in November 2014 and updated in
February 2018, October 2019, April 2021 and July 2022) is
consistent with the requirements of IFRS, the Directors have sought
to prepare the Interim 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.
Going concern
As at 31 December 2023, the Company
had net assets of £88.3 million (30 June 2023: £77.7 million) and
cash balances of £3.91 million (30 June 2023: £12.25 million) which
are sufficient to meet current obligations as they fall
due.
In relation to the Company's
investment portfolio, 44% of the Company's investments are valued
by reference to the market bid price as at the date of the balance
sheet date.
As these are quoted prices in an
active market, any volatility in the global economy is reflected
within the value of the financial assets designated at fair value
through profit or loss. As such, the Company has not included any
fair value impairments in relation to its investments.
Following extensive Shareholder
consultation in the early part of 2022, a change of investment
policy was approved by Shareholders which prioritised the intention
to maximise the return of capital, representing a change of
strategy, as noted above.
The Company has a track record of
returning cash to Shareholders via share buybacks and dividends:
the Company has returned £114.9 million to Shareholders via such
means since 2013 when the requirement for the continuation vote to
be proposed at the 2021 AGM was introduced.
The Directors have considered the
contributing factors set out above and 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. Accordingly,
they continue to adopt the going concern basis of accounting in
preparing these financial statements.
For management purposes, the Company
is domiciled in Guernsey and is engaged in investment in UK equity
instruments, mainly in one geographical area, and therefore the
Company has only one operating segment.
2.
BASIC AND DILUTED EARNINGS PER SHARE
Earnings per share is based on the
following data:
|
|
|
Six months
|
Six months
|
|
|
|
ended
|
ended
|
|
|
|
31 December
|
31 December
|
|
|
|
2023
|
2022
|
|
|
|
(Unaudited)
|
(Unaudited)
|
|
Return for the period
|
|
£11,303,887
|
£4,178,355
|
|
Weighted average number of issued
Ordinary shares
|
|
83,177,141
|
83,231,000
|
|
Basic and diluted earnings per share
(pence)
|
|
13.59
|
5.02
|
3.
NAV PER SHARE
NAV per share is based on the
following data:
|
|
As at
|
As at
|
As at
|
|
|
31 December
|
30 June
|
31 December
|
|
|
2023
|
2023
|
2022
|
|
|
(Unaudited)
|
(Audited)
|
(Unaudited)
|
|
|
|
|
|
|
NAV per Condensed Statement of
Financial Position
|
£88,288,115
|
£77,676,711
|
£108,238,740
|
|
Total number of issued Ordinary
shares (excluding Treasury shares)
|
82,261,500
|
83,231,000
|
83,231,000
|
|
NAV per share (pence)
|
107.33
|
93.33
|
130.05
|
4.
FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR
LOSS
|
|
1 July 2023
to
|
|
1 July 2022
to
|
|
1 July 2022
to
|
|
|
31 December
2023
|
|
30 June
2023
|
|
31 December
2022
|
|
|
(Unaudited)
|
|
(Audited)
|
|
(Unaudited)
|
|
|
£
|
|
£
|
|
£
|
|
Equity investments
|
68,854,742
|
|
57,258,110
|
|
96,525,470
|
|
Debt instruments
|
15,809,825
|
|
12,601,175
|
|
11,765,021
|
|
Financial assets designated at FVTPL
|
84,664,567
|
|
69,859,825
|
|
108,290,491
|
|
Total financial assets designated at FVTPL
|
84,664,567
|
|
69,859,825
|
|
108,290,491
|
|
|
|
|
|
|
|
|
Equity investments
|
|
|
|
|
|
|
Cost brought forward
|
94,072,155
|
|
132,232,346
|
|
132,232,346
|
|
Purchases
|
1,556,709
|
|
16,692,050
|
|
1,152,316
|
|
Sales Proceeds
|
(1,778,758)
|
|
(65,588,276)
|
|
(19,612,051)
|
|
Net realised gain
|
6,128,586
|
|
10,736,035
|
|
7,135,460
|
|
Cost carried forward
|
99,978,692
|
|
94,072,155
|
|
120,908,071
|
|
Unrealised losses brought
forward
|
(37,704,443)
|
|
(24,168,635)
|
|
(24,168,635)
|
|
Movement in unrealised gains /
(losses)
|
5,982,218
|
|
(13,535,808)
|
|
(2,393,065)
|
|
Unrealised (losses) carried
forward
|
(31,722,225)
|
|
(37,704,443)
|
|
(26,561,700)
|
|
Effect of exchange rate
movements
|
598,275
|
|
890,398
|
|
2,179,100
|
|
Fair
value of equity investments
|
68,854,752
|
|
57,258,110
|
|
96,525,471
|
|
|
|
|
|
|
|
|
Debt
instruments
|
|
|
|
|
|
|
Cost brought forward
|
10,713,124
|
|
8,965,416
|
|
8,965,416
|
|
Purchases
|
3,629,824
|
|
3,867,708
|
|
2,273,290
|
|
Debt Repayments
|
(536,250)
|
|
(2,120,000)
|
|
(1,500,000)
|
|
Cost carried forward
|
13,806,698
|
|
10,713,124
|
|
9,738,706
|
|
Unrealised gains brought
forward
|
2,311,120
|
|
1,682,934
|
|
1,682,934
|
|
Movement in unrealised
gains
|
329,851
|
|
628,186
|
|
327,869
|
|
Unrealised gains carried
forward
|
2,640,971
|
|
2,311,120
|
|
2,010,803
|
|
Effect of exchange rate
movements
|
(637,844)
|
|
(422,529)
|
|
15,511
|
|
Fair
value of debt instruments
|
15,809,825
|
|
12,601,715
|
|
11,765,020
|
|
|
|
|
|
|
|
|
Total financial assets designated at FVTPL
|
84,664,567
|
|
69,859,825
|
|
108,290,491
|
5.
FINANCIAL INSTRUMENTS
Fair value measurements
The Company measures fair values
using the following 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 13 are as
follows:
Level 1:
Quoted price (unadjusted) in an
active market for an identical instrument.
Level 2:
Valuation techniques based on
observable inputs, either directly (i.e. as prices) or indirectly
(i.e. derived from prices). This category includes instruments
valued using: quoted prices in active markets for similar
instruments; quoted prices for identical or similar instruments in
markets that are considered less than active; or other valuation
techniques for which all significant inputs are directly or
indirectly observable from market data.
Level 3:
Valuation techniques using
significant unobservable inputs. This category includes all
instruments for which the valuation technique includes inputs that
are not based on observable data, and the unobservable inputs have
a significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments for which significant unobservable adjustments
or assumptions are required to reflect differences between the
instruments.
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. 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 judgement, considering factors
specific to the asset or liability.
The determination of what
constitutes 'observable' requires significant judgement 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 objective of the valuation
techniques used is to arrive at a fair value measurement that
reflects the price that would be received if an asset was sold or a
liability transferred in an orderly transaction between market
participants at the measurement date.
The following tables
analyse, within the fair
value hierarchy, the Company's financial assets measured at fair
value at 31 December 2023 and 30 June 2023:
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|
31
December 2023
|
£
|
£
|
£
|
£
|
|
Financial assets designated at FVTPL
|
|
|
|
|
|
Equity instruments - listed equity
investments
|
28,380,000
|
1,817,225
|
-
|
30,197,225
|
|
Equity instruments - unlisted equity
investments
|
-
|
8,410,246
|
30,247,271
|
38,657,517
|
|
Debt instruments - loan
notes
|
-
|
-
|
15,809,825
|
15,809,825
|
|
|
28,380,000
|
10,227,471
|
46,057,096
|
84,664,567
|
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
|
Audited
|
Audited
|
Audited
|
Audited
|
|
30
June 2023
|
£
|
£
|
£
|
£
|
|
Financial assets designated at FVTPL
|
|
|
|
|
|
Equity instruments - listed equity
investments
|
14,261,875
|
2,376,371
|
-
|
16,638,246
|
|
Equity instruments - unlisted equity
investments
|
-
|
10,189,005
|
30,430,859
|
40,619,864
|
|
Debt instruments - loan
notes
|
-
|
-
|
12,601,715
|
12,601,715
|
|
|
14,261,875
|
12,565,376
|
43,032,574
|
69,859,825
|
The Level 1 equity investments were
valued by reference to the closing bid prices in each investee
company on the reporting date.
The Level 2 equity investment
relates to Sutton Harbour due to the low volume of trading activity
in the market for this investment and has been valued by reference
to the closing bid price in the investee company on the reporting
date. Prax Exploration & Production PLC is traded on an
over-the-counter basis by JP Jenkins and has been valued by
reference to the closing bid price in the investee company on the
reporting date.
The Level 3 equity investment in
Allied Minds (which delisted on 30 November 2022) was valued at the
net asset value per share on 31 December 2023 converted at an
exchange rate of $1.2736 to £1 and reduced by a 25% liquidity
discount. The Level 3 equity and debt investments in MMI. were
valued by reference to the discounted cash flow valuation of the
company with an additional discount for dilution risk. The total
valuation was then allocated through a waterfall to the loan note,
Series A shares and common stock owned by the Company. The Level 3
equity investment in Sigma Broking Limited was valued by reference
to a third party funding of the company. The third party is an
external investor buying the investment for equity.
For financial instruments not
measured at FVTPL, the carrying amount is approximate to their fair
value.
Fair value hierarchy - Level 3
The following table shows a
reconciliation from the opening balances to the closing balances
for fair value measurements in Level 3 of the fair value
hierarchy:
|
|
Six months ended 31 December
2023
|
Year Ended
30 June
2023
|
Six months ended 31 December
2022
|
|
Reconciliation in Level 3
|
(Unaudited)
|
(Audited)
|
(Unaudited)
|
|
|
£
|
£
|
£
|
|
Opening balance
|
43,032,574
|
40,628,276
|
40,628,276
|
|
Purchases
|
3,629,824
|
3,867,708
|
2,273,290
|
|
Allied Minds transferred in from
Level 1
|
-
|
15,007,031
|
-
|
|
Movement in unrealised
(losses)/gains
|
-
|
(10,315,139)
|
1,761,952
|
|
Sales
|
-
|
(2,000,000)
|
(3,500,000)
|
|
Repayments of debt
instruments
|
(536,250)
|
(2,120,000)
|
-
|
|
Net realised loss
|
-
|
(352,974)
|
(352,974)
|
|
Effect of exchange rate
movements
|
(69,052)
|
(1,682,328)
|
44,415
|
|
Closing balance
|
46,057,096
|
43,032,574
|
40,854,959
|
The Company recognises transfers between levels of
the fair value hierarchy on the date of the event of change in
circumstances that caused the transfer.
The table below provides information
on significant unobservable inputs used at 31 December 2023 in
measuring equity financial instruments categorised as Level 3 in
the fair value hierarchy. It also details the sensitivity to
changes in significant unobservable inputs used to measure value in
each case.
|
|
Valuation Method
|
Fair Value at 31 December
2023
|
Unobservable
inputs
|
Factor
|
Sensitivity to changes in
significant unobservable inputs
|
|
Morphic Medical Inc
|
Discounted cash flow
|
18,981,489
|
Discount
rate
High
growth rate over 9 year period
Dilution
discount
|
43%
48%
20%
|
An increase (decrease) in the
discount rate to 48% (38%) would reduce (increase) FV by £6.2m
(£8.9m)
A decrease (increase) in the
near-term growth rate to 38% (58%) would decrease (increase) FV by
£4.1m
An increase (decrease) in the
dilution discount to 30% (to 10%) would reduce (increase) FV by
£3.6m
|
|
Sigma Broking Limited
|
Third party funding
|
6,794,101
|
N/A
|
N/A
|
N/A
|
|
Allied Minds
|
NAV
|
4,471,681
|
Illiquidity discount
|
25%
|
An increase (decrease) in the
liquidity discount to 35% (to 15%) would reduce (increase) FV by
£0.6m
|
|
|
Valuation Method
|
Fair Value at 30 June
2023
|
Unobservable
inputs
|
Factor
|
Sensitivity to changes in
significant unobservable inputs
|
|
Morphic Medical Inc
|
Discounted cash flow
|
19,165,077
|
Discount
rate
High
growth rate over 9 year period
Dilution
discount
|
43%
48%
20%
|
An increase (decrease) in the
discount rate to 48% (38%) would reduce (increase) FV by £6.3m
(£8.1m)
A decrease (increase) in the near
term growth rate to 38% (58%) would decrease (increase) FV by
£4.1m
An increase (decrease) in the
dilution discount to 30% (to 10%) would reduce (increase) FV by
£3.6m
|
|
Sigma Broking Limited
|
Third party funding
|
6,794,101
|
N/A
|
N/A
|
N/A
|
|
Allied Minds
|
NAV
|
4,471,681
|
Illiquidity discount
|
25%
|
An increase (decrease) in the
liquidity discount to 35% (to 15%) would reduce (increase) FV by
£0.6m
|
6.
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, including Treasury shares, is comprised as
follows:
|
|
31 December
2023
|
30 June
2023
|
|
|
(Unaudited)
|
(Audited)
|
|
|
Number
|
£
|
Number
|
£
|
|
Issued, called up and fully paid
Ordinary shares of £0.01 each
|
99,749,762
|
997,498
|
99,749,762
|
997,498
|
During the period, the Company did
not create or issue any Ordinary shares (2022: nil).
7.
TREASURY SHARES RESERVE
|
|
Six months
ended
|
Year ended
|
|
|
31 December
2023
|
30 June
2023
|
|
|
(Unaudited)
|
(Audited)
|
|
|
Number
|
£
|
Number
|
£
|
|
|
|
|
| |
|
Opening balance
|
16,518,762
|
19,767,097
|
16,518,762
|
19,767,097
|
|
Treasury shares purchased during the
period/year
|
969,500
|
692,483
|
-
|
-
|
|
Closing balance
|
17,488,262
|
20,459,580
|
16,518,762
|
19,767,097
|
During the period ended 31 December
2023, 969,500 Treasury shares were purchased at an average price of
71.43 pence per share (2022: nil), representing an average discount
to NAV at the time of purchase of 33.4%. All of these shares will
be subsequently cancelled. No Treasury shares were sold during the
period ended 31 December 2023 or 31 December 2022.
8.
DIVIDENDS
No Dividend has been declared for
the six months ended 31 December 2023.
9.
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 2023: 10,000) Ordinary
shares in the Company, representing 0.01% (30 June 2023: 0.01%) of
the voting share capital of the Company at 31 December
2023.
During the period the Company
incurred management fees of £270,000 (2022: £960,000), none of
which was outstanding at 31 December 2023 (30 June 2022: £Nil). No
performance fees were payable during the period (2022: £Nil) (30
June 2023: £Nil) and none outstanding at the period end.
As at 31 December 2023, the
Company's investment in MMI is treated as an unconsolidated
subsidiary due to the Company's percentage holding in the voting
share capital of MMI. As MMI is a private company and its shares
are not listed on a stock exchange, the percentage held is not
disclosed. During the period, the Company purchased convertible
loan notes (not driven by any contractual obligation) for the
purpose of supporting MMI in pursuing its strategy.
There is no restriction on the
ability of MMI to pay cash dividends or repay loans, but it is
unlikely that MMI will make any distribution or loan repayments
given its current strategy.
MMI was incorporated in Delaware,
had five wholly-owned subsidiaries as at 31 December 2023 and its
principal place of business is Boston. The five subsidiaries were
as follows:
· Morphic Medical Securities Corporation, a
Massachusetts-incorporated non-trading entity;
· GID
Europe Holding B.V., a Netherlands-incorporated non-trading holding
company;
· GID
Europe B.V., a Netherlands-incorporated company that conducts
certain European business operations;
· GID
Germany GmbH, a German-incorporated company that conducts certain
European business operations; and
· GI
Dynamics Australia Pty Ltd, an Australian-incorporated company that
conducts Australian business operations.
In accordance with the revised
Investment Management Agreement approved by shareholders on 7 March
2022 the management fee payable to the investment manager was
intended to cease on 31 December 2023. In order to ensure
that the Fund continued to have active portfolio management in
2024, a new Investment Management Agreement was agreed with the
Investment Manager on 25th October 2023. It has been agreed that
the Fund will continue to pay a monthly management fee to the
Investment Manager calculated on the basis of amounts paid in
2023. Accordingly, the IMA has been amended such that from 1
January 2024, the monthly fee due to the Investment Manager is
£57,500 (£690,000 annually, as per 2023). This fee equates to
approximately 0.83% of the current NAV on an annual basis. The
monthly management fee will be subject to review by the Fund on one
month's notice and will be formally reviewed by the Board at
regular intervals. It is intended that this will provide the Fund
with flexibility and control, depending on the status of the
portfolio and progress with realisations.
In accordance with the revised
Investment Management Agreement, the performance fee will continue
to be calculated by reference to the aggregate cash returned to
Shareholders after 1 January 2022. The Investment Manager will
receive 20% of the aggregate cash paid to Shareholders after 1
January 2022 (including the interim dividend of 10 pence per
Ordinary Share declared on 22 December 2021) in excess of a
threshold of £216,000,000.
Depending on whether the Ordinary
shares are trading at a discount or a premium to the Company's NAV
per share when the performance fee becomes payable, the performance
fee will be either payable in cash (subject to the restrictions set
out below) or satisfied by the sale of Ordinary shares out of
Treasury or by the issue of new fully paid Ordinary shares (the
number of which shall be calculated as set out below):
· If
Ordinary shares are trading at a discount to the NAV per Ordinary
share when the performance fee becomes payable, the performance fee
shall be payable in cash. Within a period of one calendar month
after receipt of such cash payment, the Investment Manager shall be
required to purchase Ordinary shares in the market of a value equal
to such cash payment.
· If
Ordinary shares are trading at, or at a premium to, the NAV per
Ordinary share when the performance fee becomes payable, the
performance fee shall be satisfied by the sale of Ordinary shares
out of Treasury or by the issue of new fully paid Ordinary shares.
The number of Ordinary shares that shall become payable shall be a
number equal to the performance fee payable divided by the closing
mid-market price per Ordinary share on the date on which such
performance fee became payable.
As at 31 December 2023, the
Investment Manager held 6,899,031
Ordinary shares (30 June 2023: 6,899,031) of the
Company, representing 8.30% (30 June 2023: 8.30%) of the
voting share capital.
Performance fee for period ended 31 December
2023
At 31 December 2023, the Basic
Performance Hurdle was £Nil
(as adjusted for all dividends paid during the
performance period on their respective payment dates, compounded at
the applicable annual rate) (June 2023: Nil pence).
The aggregate cash returned to
Shareholders after 1 July 2022 was £Nil. Accordingly, no performance fee was earned during
the period ended 31 December 2023 (2022: £Nil).
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:
|
|
31 December
2023
|
|
30 June
2023
|
|
|
Number of Ordinary
shares
|
Total voting
rights
|
|
Number of Ordinary
shares
|
Total voting
rights
|
|
Christopher
Waldron(1)(2)
|
30,000
|
0.03%
|
|
30,000
|
0.03%
|
|
Jane Le
Maitre(2)
|
13,500
|
0.01%
|
|
13,500
|
0.01%
|
|
Fred Hervouet
|
7,500
|
0.01%
|
|
7,500
|
0.01%
|
|
Total
|
51,000
|
0.05%
|
|
51,000
|
0.05%
|
(1)
Chairman of the Company
(2)
Ordinary shares held indirectly
All related party transactions are
carried out on an arm's length basis.
10. POST
BALANCE SHEET
EVENTS
On 22 February 2024, the Company reported that
its unaudited NAV at 31 January 2024 was 109 pence per Ordinary
share.
11.
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
"AGM" means the annual general
meeting of the Company;
"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;
"Board" or "Directors" or "Board of Directors" means the
directors of the Company;
"Buyback" means the share
buyback programme announced in December 2023, up to an aggregate
amount of £5 million;
"Company" or "Fund" means Crystal Amber Fund
Limited;
"Companies Law" means the
Companies (Guernsey) Law, 2008, (as amended);
"EBITDA" means earnings before
interest, taxes, depreciation and amortisation;
"Fractyl" means Fractyl Health
Inc;
"FV" means Fair
Value
"FVTPL" means Fair Value
Through Profit or Loss;
"General Meeting" means a
general meeting of the Company;
"GID" or "GI Dynamics" means GI
Dynamics, Inc;
"HBA1C" means Hemoglobin A1C
test;
"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
"IMA" means the
investment management agreement between the Company and the
Investment Manager dated 16 June 2008, as amended on 21 August
2013, further amended on 27 January 2015, further amended on 12
June 2018 and further amended and restated on 7 March
2022.
"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;
"Market Capitalisation" means
the total number of Ordinary shares of the Company multiplied by
the closing share price;
"MMI" means Morphic Medical
Inc;
"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 share" means an
allotted, called up and fully paid Ordinary share of the Company of
£0.01 each;
"Small Cap Index" means an
index of small market capitalisation companies;
"SMEs" means small and
medium-sized enterprises and businesses
whose personnel numbers fall below certain limits. The abbreviation
"SME" is used by international organizations such as the World
Bank, the European Union, the United Nations and the World Trade
Organization;
"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$" or "$" means United States
dollars; and
"£" or "Pounds Sterling" or "Sterling" means British pound sterling
and "pence" means British
pence.