REG - Crystal Amber Fund - Final Results
12/11/2024 07:00
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RNS Number : 8655L Crystal Amber Fund Limited 12 November 2024
12 November 2024
Crystal Amber Fund Limited
("Crystal Amber Fund" or the "Company")
Final results for the year ended 30 June 2024
The Company announces its final results for the year ended 30 June 2024.
Highlights
· Net Asset Value ("NAV") per share increased by 86.3% over the 12
months to 30 June 2024 from 93.3p to 173.9p a share. NAV rose from £77.7
million to £126.7 million.
· 12.5% of the Company's issued share capital bought in for
cancellation at an average of 80.19p a share, a discount to year end NAV of
53.9%
· Successful activism at De La Rue, with the 15 October 2024
announcement of a definitive agreement to sell its Authentication Division for
£300 million cash. Since June 2023, De La Rue's share price has more than
doubled.
· Fund performance: according to Trustnet over the last year the Fund
is second out of 22 peer group funds and over three years, first, with
shareholder returns of 68.4% against a decline of 9.2% in the Investment Trust
Smaller Companies Index.
· Completed successful exit of Prax Exploration Deferred Consideration
Units.
· Approval received from the US Food and Drug Administration ("FDA")
for Morphic Medical Inc's ("MMI") application for amendments to certain
requirements for its pivotal study, expected to significantly accelerate
access to the key US markets for the treatment of diabetes and obesity.
Contacts:
Crystal Amber Fund Limited
Chris Waldron (Chairman)
Tel: 01481 742 742
www.crystalamber.com (http://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 unless separately defined.
Chairman's Statement
I hereby present the seventeenth annual report of Crystal Amber Fund Limited
(the "Company" or the "Fund"), for the year to 30 June 2024. I am pleased
to report tangible progress as demonstrated by an 86.3% increase in net asset
value per share over the year from 93.3p a share to 173.9p a share. NAV was
£126.7 million, compared with an unaudited NAV of £88.3 million at 31
December 2023 and an audited NAV of £77.7 million at 30 June 2023. This
compares favourably with the Numis Smaller Companies Index, which rose
by 14.5% in the same period.
During the year, the Fund continued its policy of monetising the portfolio in
an orderly manner, achieving an appropriate balance between maximising value
received and making timely returns of capital. In the same period, 10.4
million shares, equivalent to around 12.5% of the issued share capital
were purchased for cancellation at an average of 80.19p a share, which had
the effect of increasing the year end NAV per share by 6.7%. This represents
buying in at a 53.9% discount to net asset value at the year end. Following
the year end, an additional 1.3 million shares (or around 1.8% of the issued
share capital) were acquired at an average of 104p a share. This has brought
total returns of capital, including share buy backs, to more than £110
million to date.
Last year, I commented that in the course of a prolonged period of intense and
ultimately successful activism, the Fund purchased an additional 15.3 million
shares in De La Rue at a cost of £6.3 million. This resulted in the Fund
increasing its holding in De La Rue to close to 17% of its issued share
capital, up from less than 10%. Subsequently, De La Rue's share price rose
by over 130% in the 12 months to 30 June 2024. I also noted that, at a time
when the currency market cycle was improving, the Fund remained of the view
that the strategic value of De La Rue was substantially more than its then
market value, in an industry requiring consolidation.
This view was reinforced in May 2024 when De La Rue reported that the order
book at its Currency Division had increased to £241, million up from £137
million at 31 March 2023. De La Rue also announced that it was in discussions
with a number of parties who had made proposals in relation to or expressed
interest in both its Currency and Authentication Divisions. This culminated
last month with De La Rue reporting that it had entered into a definitive
agreement for the sale of its Authentication Division to Crane NXT for a cash
consideration representing an enterprise value of £300 million. For the year
to March 2024, the division reported an adjusted operating profit of £14.6
million, meaning that the price represents a multiple of more than 20 times
operating profits and 2.9 times revenue.
The Fund believes that after proceeds are received from the sale of the
Authentication Division, all bank debt and pension liabilities can be settled,
leaving De La Rue with net cash of around £140 million. Its remaining
Currency Division has attracted interest from trade buyers and the Fund
believes that De La Rue could sell this division for at least £150 million.
Whilst the price achieved for Authentication significantly exceeded analysts'
expectations, it matched the Fund's previous publicly stated target, given its
strategic importance. The Fund believes that the price achieved will only
serve to increase competitive tension for the disposal of the Currency
Division.
During the year under review, the Fund disposed of its remaining holding of
Prax Exploration Deferred Consideration Units (DCUs), following the
acquisition of Hurricane Energy Plc by Prax Exploration. This brought total
proceeds from the DCUs to £12.5 million, realising a profit of £2.3
million.
Shareholders will recall that in June 2021, the Fund successfully prevented a
debt for equity swap in the High Court which would have resulted in 95%
dilution of the ordinary shareholders. Ahead of the court case, shares in
Hurricane Energy Plc were trading at 1p per share. Following the disposal in
May 2024, total proceeds received by the Fund were 8.2p per share on its
holding of 575.6 million shares.
As the process of monetising the Company's portfolio has continued, there has
been increasing focus on the largest remaining holding, Morphic Medical Inc
(MMI). MMI is a privately held company, headquartered in Boston, MA, that has
developed 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. The Investment Manager believes that MMI's
RESET device can deliver superior and durable results without change to the
anatomy.
In June 2024, the Company reported that MMI had received approval from the US
Food and Drug Administration (FDA) for MMI's application to amend certain
requirements for its pivotal study, which is approved as a staged study. These
protocol changes are expected to significantly accelerate access to the key US
markets for the treatments of diabetes and obesity, subject to, inter alia,
successful completion of the study and trials.
MMI is also in very advanced stages of securing CE Mark certification, which
is expected in the coming weeks.
Over the last three years, against a backdrop of poor UK equity markets (the
AIM index has fallen by around 40%), the Fund has successfully exited several
illiquid positions at premiums to carrying value. Moreover, the Board notes
that the Investment Manager's dogged determination, perseverance and acumen
has resulted in transformational and positive outcomes at both Hurricane
Energy and De La Rue.
When we look back at the last three years, we see that the UK Smaller
Companies Investment Companies Index has fallen by 9.2%. Over the same
period, the Fund has delivered a return of 68.4% (source:
Trustnet). However, there still remains substantial value within the
portfolio and the Board is confident that De La Rue can deliver significant
further growth in net asset value as well as a very substantial cash
monetisation. In addition, MMI provides our shareholders with the potential to
benefit from its market positioning in a sector set to enjoy substantial
growth in the coming decade.
The Company continues to pursue its strategy of maximising capital returned to
Shareholders by way of timely disposals, and whilst this has taken longer than
expected, primarily because of events at De La Rue and MMI, investments have
increased in value in the period as noted above. As the Company will not have
realised all of its investments by 31 December 2024, it is intended that the
Board will consult its larger Shareholders and/or make arrangements to seek
Shareholder approval on the future strategy of the Company by the end of the
first quarter of 2025, including steps that might be necessary to maximise the
opportunity to realise value from the remaining assets of the Company.
In particular, as MMI is very likely to be the last investment held by the
Company, there will need to be careful consideration of the best structure
through which to hold this investee company in order to maximise its potential
in a cost-efficient manner.
Christopher Waldron
Chairman
11 November 2024
Investment Manager's Report
Performance
During the year, the Company's NAV per share rose from 93.3p to 173.9p.
Portfolio and Strategy
At 30 June 2024, the Company held equity investments in five companies
(2023: six). The Company also held debt instruments in MMI and Sigma Broking
Limited.
The Company's strategy is to optimise realisations for a limited number of
special situations where the Company believes value can be realised regardless
of broad market direction. By its nature as an activist fund, the Company
needs to hold sufficiently large stakes to facilitate engagement as a
significant shareholder. Therefore, the Company is inevitably exposed to a
growing concentration risk, as continuing realisations have significantly
increased the weighting of the remaining holdings.
As at 30 June 2024, the weighted average market capitalisation of the
Company's listed investee companies was £181 million (30 June 2023:
£83 million).
Morphic Medical Inc ("MMI")
The Fund first acquired a small equity interest in MMI in 2014. MMI is a US
based company which initially listed on the Australian Stock Exchange in 2011,
raising A$80 million and later commanded a market capitalisation of A$304
million. In 2017, Morphic received formal notification of CE Mark withdrawal
for EndoBarrier (now known as RESET), its device to treat diabetes, preventing
MMI making sales in Europe and select Middle Eastern countries. Thereafter,
Crystal Amber commenced more significant activism. By December 2020, the Fund
effected a change of management and supported a delisting of the shares from
the Australian Stock Exchange. At that time, the Fund's investment represented
14p per share of the Fund's 129p per share of total net asset value. Since
then, Crystal Amber has been and continues to be the sole provider of funding
to MMI.
The Fund currently owns 95.3% of MMI's share capital via common shares and
preferred shares and holds interest bearing convertible loan notes totalling
US$23.4 million, with accrued interest currently standing at approximately
US$2.13 million. The loan notes are repayable from 13 January 2025, unless
converted to equity, and accrue interest at 5% and 7.5% per annum. The Fund's
representative executive director on the board of MMI has an option to acquire
approximately US$1.96 million of the Fund's shareholding in MMI as part of
their incentive package. The Fund's representative previously led the Obesity
and Metabolic Health Business at Medtronic Inc.
RESET is a thin, flexible implant that lines the proximal small 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 and 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, affecting around 1 billion of the world's population and expected to
increase to 25% by 2035, or around 1.9 billion people, resulting in an
estimated burden of $4 trillion in 2035 or 2.9% of global GDP (Source: IQVIA).
The Investment Manager believes that MMI's RESET device can deliver superior
and durable results without changing 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 (the amount of glucose in
blood cells) at the end of treatment with RESET. Three years after treatment,
75% of patients maintained most of the improvement achieved.
The Investment Manager believes that these results compare favourably to the
Wegovy and Ozempic drug treatments and importantly, without the side-effects
experienced by this currently popular weight loss drug category.
In April 2024, based on the body of evidence submitted, the European Society
for Gastrointestinal Endoscopy and the American Society for Gastrointestinal
Endoscopy provisionally endorsed RESET therapy in conjunction with lifestyle
modification, for treatment of metabolic disease.
MMI is now in the final stages of securing CE Mark certification, with an
anticipated commercial launch in Germany and the UK once this is achieved.
Sales in other European markets and the Middle East are planned for the first
half of 2025.
Whilst product development and regulatory approval is ongoing, MMI currently
has no revenue. In anticipation of receiving regulatory approval, MMI
recruited Mike Gutteridge as Head of Commercial Operations, International in
late 2023. Mike previously held a senior role at Apollo Endosurgery, which was
acquired by Boston Scientific for around £500 million.
In order to ensure volume ramp ups can be achieved, MMI has secured Medical
Murray Inc. as its contract manufacturer to complete testing, validation and
build inventory in preparation for launch.
MMI continues to expand its innovation pipeline with new R&D projects and
IP filings.
In June 2024, MMI received approval from the US Food and Drug Administration
("FDA") to MMI's application for amendments to certain requirements for its
pivotal study, which is approved as a staged study. These protocol changes are
expected to significantly accelerate access to the key US markets for the
treatments of diabetes and obesity, subject to, inter alia, successful
completion of the study and trials.
Given the market opportunity and the ability to tap into other existing
infrastructure and sales distribution channels, MMI is in early-stage
discussions with a number of large-scale medical devices companies. These
discussions aim to achieve significant equity investment via a strategic
stake, as well as sales and distribution agreements. There can be no certainty
as to a successful outcome of these discussions.
Given the importance of MMI to the Fund, the Fund commissioned two independent
third-party valuations of MMI. Further details on the third-party valuations
are outlined in note 14. These concluded that, at 30 June 2024, it is
reasonable to value MMI at US$98.8 million (approximately £77 million) on a
risk-adjusted basis and on a cash free, debt free basis.
This valuation means that the Fund's equity interest in MMI at 30 June 2024,
on an undiluted basis (i.e. excluding conversion of loan notes and associated
interest and exercise of MMI employee share options) and after including net
debt at 31 December 2023 (being the date of the most recently published
balance sheet of MMI), was valued at approximately £60 million.
De La Rue Plc
In May 2023, following the Fund's successful campaign to remove Kevin
Loosemore, Clive Whiley was appointed to replace him as Chairman. By the end
of the following month he was able to successfully negotiate a reduction in
contributions to the pension plan, revise and relax banking covenants and
secure the removal of the material uncertainty going concern audit
qualification.
Against this improving backdrop and with increasing evidence of a cyclical
upturn in the currency market, the Fund substantially added to its holding.
During the summer of 2023, the Fund increased its shareholding from less than
10% of De La Rue's issued capital to close to 17%. The average cost of these
purchases was 41.2p a share and by 30 June 2024, De La Rue's share price had
risen by over 130%. The Investment Manager remains of the view that the
strategic value of De La Rue is substantially more than its operational value
in an industry requiring consolidation.
In May 2024, De La Rue reported that the order book at its Currency division
had increased to £241 million, up from £137 million at 31 March 2023. De La
Rue also announced that it was in discussions with a number of parties who had
made proposals in relation to or expressed interest in both its Currency and
Authentication divisions. Last month, De La Rue reported that it had entered
into a definitive agreement for the sale of its Authentication Division to
Crane NXT for a cash consideration representing an enterprise value of £300
million. For the year to 31 March 2024, the Division reported an adjusted
operating profit of £14.6 million. The sale price represents a multiple of
more than 20 times operating profits and 2.9 times revenue.
The Investment Manager believes that after proceeds are received from the sale
of the Authentication Division, all bank debt and pension liabilities can be
settled, leaving De La Rue with net cash of £140 million. Its Currency
Division has also attracted interest from trade buyers. The Investment Manager
believes that De La Rue can and should sell this Division for at least £150
million.
The Fund's other remaining holdings of Allied Minds Plc, Sigma Broking Limited
and Sutton Harbour Plc account for 10% of the Fund's total net asset value.
The Investment Manager is in discussions with each of these companies with a
view to maximising their monetisation.
Outlook
After a successful last 12 months, whilst mindful of significant
concentration risk following multiple successful exits and returns of capital
since 2022, the Investment Manager believes that the
Fund's remaining holdings still offer significant upside. In the coming
months, the Manager is hopeful of further progress in the share price of De La
Rue, which at the year-end represented around 25% of NAV. Furthermore, the
holding in MMI offers the potential for substantial further growth.
Crystal Amber Asset Management (Guernsey) Limited
11 November 2024
Investment Policy
The Company is an activist fund which aims to identify and invest in
undervalued companies and, where necessary, engage with management to take
steps to enhance their value. The Company's strategy is to optimise
realisations for a decreasing number of special situations where the Company
believes value can be realised regardless of market direction. By its nature
as an activist fund, the Company needs to hold sufficiently large stakes to
facilitate engagement as a significant shareholder. Therefore, the Company is
inevitably exposed to a growing concentration risk, as continuing realisations
have significantly increased the weighting of the remaining investments.
Investment objective
The objective of the Company is to provide its Shareholders with an attractive
total return, which is expected to comprise primarily capital growth but with
the potential for distributions from realised distributable reserves,
including the realisation of investments, if this is considered to be in the
best interests of its Shareholders.
Investment strategy
On 7 March 2022 a revised investment policy to reflect a realisation strategy
was approved by Shareholders at an Extraordinary General Meeting. It was
agreed that the Fund would not make any new investments and would only make
further opportunistic investments in existing holdings where, in the view of
the Board and Investment Manager, such investment was 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 would require the prior approval of the Board and
would only be permitted where it was not expected to compromise the timescale
for realisations.
From 7 March 2022 the Company adopted a strategy of maximising capital
returned to Shareholders by way of timely disposals, including trade sales of
the Company's strategic holdings, where appropriate (with the potential
exception of Morphic Medical Inc.) and returns of cash to Shareholders. Whilst
it was initially intended to complete this process by 31 December 2023,
Shareholders were aware that this was a target rather than a deadline.
In seeking the realisation of predominantly all the Company's investments
(with the possible exception of Morphic Medical Inc), it was agreed that the
Directors would aim to achieve a balance between maximising their net value
and progressively returning cash to Shareholders. In so doing, the Board would
take account of the continued costs of operating the Company. The Company's
admission to trading on AIM will be maintained for as long as the Directors
believe it to be practicable and cost-effective within the requirements of the
AIM Rules for Companies.
The Company has ceased to make any new investments except where, in the
opinion of the Investment Manager and with the approval of the Board, the
investment is considered necessary by the Board to protect or enhance the
value of any existing investments of the Company or to facilitate orderly
disposals of assets held by the Company. Any cash received by the Company as
part of the realisation process prior to its distribution to Shareholders will
be held by the Company, on behalf of the Shareholders, as cash on deposit
and/or as cash equivalents.
As the Company will not have realised all of its investments by 31 December
2024, it is intended that by the end of the first quarter of 2025, the Board
will consult its larger Shareholders and/or make arrangements to seek
Shareholder approval on the future strategy of the Company, including steps
that might be necessary to maximise the opportunity to realise value from the
remaining assets of the Company. In particular, as MMI is very likely to be
the last investment held by the Company, there will need to be careful
consideration of the best structure through which to hold this investee
company in order to maximise its potential in a cost-efficient manner.
Dividend Policy
Following any material realisations of the Company's investments, the
Directors intend to continue to return cash to Shareholders using
tax-efficient means such as the new B Share Scheme approved at the
Extraordinary General Meeting held on 28 October 2024.
Crystal Amber Fund Limited
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2024
2024 2023
Revenue Capital Total Revenue Capital Total
Notes £ £ £ £ £ £
Income
Interest received 70,578 - 70,578 33,644 - 33,644
70,578 - 70,578 33,644 - 33,644
Net (losses)/gains on financial assets at FVTPL
Equities
Net realised gains 9 - 2,315,402 2,315,402 - 10,736,035 10,736,035
Movement in unrealised gains/(losses) 9 - 55,637,676 55,637,676 - (13,535,808) (13,535,808)
Debt instruments
Movement in unrealised gains 9 - 819,880 819,880 - 628,186 628,186
- 58,772,958 58,772,958 - (2,171,587) (2,171,587)
Total income/(loss) 70,578 58,772,958 58,843,536 33,644 (2,171,587) (2,137,943)
Expenses
Transaction costs 4 - 50,422 50,422 - 72,199 72,199
Exchange movements on revaluation of investments and working capital 121,576 78,072 199,648 434,639 1,247,956 1,682,595
Management fees 15,17 615,000 - 615,000 960,000 - 960,000
Directors' remuneration 16 130,000 - 130,000 130,000 - 130,000
Administration fees 17 96,841 - 96,841 127,028 - 127,028
Custodian fees 17 40,186 - 40,186 51,497 - 51,497
Audit fees 56,200 - 56,200 57,025 - 57,025
Other expenses 368,183 - 368,183 357,636 - 357,636
1,427,986 128,494 1,556,480 2,117,825 1,320,155 3,437,980
Return/(Loss) for the year (1,357,408) 58,644,464 57,287,056 (2,084,181) (3,491,742) (5,575,923)
Basic and diluted (loss)/earnings per share (pence) 5 (1.71) 73.36 71.65 (2.51) (4.19) (6.70)
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 Financial Statements form an integral part of these Financial
Statements.
Crystal Amber Fund Limited
Statement of Financial Position
As at 30 June 2024
2024 2023
Assets Note £ £
Cash and cash equivalents 7 2,301,175 12,254,948
Trade and other receivables 8 76,167 71,338
Financial assets designated at FVTPL 9 124,529,781 69,859,825
Total assets 126,907,123 82,186,111
Liabilities
Trade and other payables 10 199,075 4,509,400
Total liabilities 199,075 4,509,400
Equity
Capital and reserves attributable to the Company's equity shareholders
Share capital 11 997,498 997,498
Treasury shares 12 (28,022,816) (19,767,097)
Distributable reserve 40,586,958 40,586,958
Retained earnings 113,146,408 55,859,352
Total equity 126,708,048 77,676,711
Total liabilities and equity 126,907,123 82,186,111
NAV per share (pence) 6 173.90 93.33
The Financial Statements were approved by the Board of Directors and
authorised for issue on 11 November 2024.
Christopher Waldron
Jane Le Maitre
Chairman
Director
11 November 2024
The Notes to the Financial Statements form an integral part of these Financial
Statements.
Crystal Amber Fund Limited
Statement of Changes in Equity
For the year ended 30 June 2024
Share Treasury Distributable Retained earnings Total
Note capital shares reserve Capital Revenue Total equity
£ £ £ £ £ £ £
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 12 - (8,255,719) - - - - (8,255,719)
Gains/(Losses) for the year - - - 58,644,464 (1,357,408) 57,287,056 57,287,056
Balance at 30 June 2024 997,498 (28,022,816) 40,586,958 123,554,686 (10,408,278) 113,146,408 126,708,048
Share Treasury Distributable Retained earnings Total
Note capital shares reserve Capital Revenue Total equity
£ £ £ £ £ £ £
Opening balance at 1 July 2022 997,498 (19,767,097) 78,040,908 68,401,964 (6,966,689) 61,435,275 120,706,584
Dividends paid in the year 13 - - (37,453,950) - - - (37,453,950)
Loss for the year - - - (3,491,742) (2,084,181)) (5,575,923) (5,575,923)
Balance at 30 June 2023 997,498 (19,767,097) 40,586,958 64,910,222 (9,050,870) 55,859,352 77,676,711
The Notes to the Financial Statements form an integral part of these Financial
Statements.
Crystal Amber Fund Limited
Statement of Cash Flows
For the year ended 30 June 2024
2024 2023
£ £
Cashflows from operating activities
Bank interest received 70,578 33,644
Management fees paid (615,000) (960,000)
Directors' fees paid (130,000) (130,000)
Other expenses paid (692,871) (542,128)
Net cash outflow from operating activities (1,367,293) (1,598,484)
Cashflows from investing activities
Purchase of equity investments (3,536,709) (2,319,352)
Sale of equity investments 14,506,694 55,399,271
Purchase of debt instruments (11,786,573) (3,867,708)
Sale of debt instruments 536,250 2,120,000
Purchase of money market investments (50,423) (72,199)
Net cash (outflow)/inflow from investing activities (330,761) 51,260,012
Cashflows from financing activities
Purchase of Ordinary shares into Treasury (8,255,719) -
Dividends paid - (37,453,950)
Net cash outflow from financing activities (8,255,719) (37,453,950)
Net (decrease)/increase in cash and cash equivalents during the year (9,953,773) 12,207,578
Cash and cash equivalents at beginning of year 12,254,948 47,370
Cash and cash equivalents at end of year 2,301,175 12,254,948
The Notes to the Financial Statements form an integral part of these
Financial Statements.
Crystal Amber Fund Limited
Notes to the Financial Statements
For the year ended 30 June 2024
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 5p 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, the Company's
strategy is now to optimise outcomes for a decreasing number of special
situations where the Company believes value can be realised regardless of
market direction.
Morphic Medical Inc (MMI) is an unconsolidated subsidiary of the Company and
was incorporated in Delaware. As at 30 June 2024 it had 5 wholly-owned
subsidiaries and its principal place of business is Boston. Refer to Note 15
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
unless separately defined.
1. MATERIAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the Financial
Statements are set out below. These policies have been consistently applied to
those balances considered material to the Financial Statements throughout the
current year, unless otherwise stated.
Basis of preparation
The Financial Statements have been prepared to give a true and fair view, are
in accordance with IFRS and the SORP "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" issued by the AIC in November 2014 and
updated in January 2022 to the extent to which it is consistent with IFRS and
comply with the Companies Law. The Financial Statements are presented in
Sterling, the Company's functional currency.
The Financial Statements have been prepared under the historical cost
convention with the exception of financial assets designated at fair value
through profit or loss ("FVTPL").
Investment Entities
To determine whether the Company meets the definition of an investment entity,
further consideration is given to the characteristics of an investment entity
that are demonstrated by the Company.
The Company meets the definition of an investment entity on the basis of the
following criteria:
· The Company obtains funds from multiple investors for the purpose of
providing those investors with investment management services;
· The Company commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income,
or both; and
· The Company measures and evaluates the performance of substantially
all its investments on a fair value basis.
As the Company has met the definition of an investment entity under IFRS 10,
it is exempt from preparing consolidated financial statements.
The Company has taken the exemption permitted by IAS 28 "Investments in
Associates and Joint Ventures", IFRS 10 ''Consolidated Financial Statements''
and IFRS 11 "Joint Arrangements" for entities similar to investment entities
and measures its investments in subsidiaries and associates at fair value. The
Directors consider a subsidiary to be an entity over which the Company has
control. The Directors consider an associate to be an entity over which the
Company has significant influence by means of owning between 20% and 50% of
the entity's shares. The Company's subsidiaries and associates are disclosed
in Note 15.
The Company meets the definition of an investment entity and complies with the
disclosure requirements in IFRS 10, IFRS 12 and IAS 27.
Going concern
As at 30 June 2024, the Company had net assets of £126.7 million (30 June
2023: £77.7 million) and cash balances of £2.3 million (30 June 2023:
£12.25 million) which are sufficient to meet current obligations as they fall
due. Approximately 31% of the Company's investment portfolio comprises readily
realisable securities with a value of £32.9 million which could be sold to
meet funding requirements if necessary.
The Directors are confident that the Company has adequate resources to
continue in operational existence for the foreseeable future and as a result
of this, do not consider there to be any threat to the going concern status of
the Company.
In relation to the Company's investment portfolio, 31% of the Company's
investments are valued by reference to market bid price as at the date of this
report.
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.
The Directors have also considered the result of the continuation vote which
occurred at the 2021 AGM and results of the subsequent EGM which did not
conclude that the Company should be wound up. Following extensive Shareholder
consultation, a new investment policy was put before Shareholders and approved
at the EGM in March 2022 which prioritised the Company's intention to maximise
the return of capital to Shareholders, representing a change of strategy.
The Board believes that it still in the interests of Shareholders for the
Company to adopt a strategy of maximising capital returned by way of timely
disposals, including trade sales of the Company's mature listed strategic
holdings, where appropriate. The Company has a track record of returning cash
to Shareholders via share buybacks and dividends: since 2013, when the
requirement for the continuation vote to be proposed at the 2021 AGM was
introduced, over £110 million has been returned to Shareholders via such
means.
In line with the change in strategy, the Company has sold investments in
Alquiber Quality S.A., Board Intelligence, Equals Group Plc and Prax
Exploration Plc since March 2022
It is intended that, by the end of the first quarter of 2025, the Board will
consult its larger Shareholders and/or make arrangements to seek Shareholder
approval on the future strategy of the Company, including steps that might be
necessary to maximise the opportunity to realise value from the remaining
assets of the Company. In particular, as MMI is very likely to be the last
investment held by the Company, there will need to be careful consideration of
the best structure through which to hold this investee company in order to
maximise its potential in a cost-efficient manner.
In 2014, the Company acquired its initial shareholding in MMI. The Company
believes it has been able to acquire majority ownership of a valuable
shareholding, which comprises 95.3% of MMI's undiluted share capital. The
Company contributes to the management of MMI through its representative
executive director.
Following updates to MMI as discussed in the Directors' Report, the Directors
have also made a robust assessment of the prospects of the Company for the
two-year period ending 30 June 2026. The Directors consider that this is an
appropriate period to assess the viability of the Company given the new
investment policy agreed with Shareholders in March 2022.
The Directors have also considered the Company's expenditure projections for
the two-year period ending 30 June 2026. The Company currently has no
borrowings, £2.3 million held in cash (which could cover approximately one
year's worth of expenses) and the investment portfolio still includes readily
realisable securities valued at £32.9 million which could be sold to meet
funding requirements if necessary.
Based on the results of this analysis, including change in investment strategy
and future strategic plans involving MMI, the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due for the foreseeable future.
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.
Use of estimates and judgements
The preparation of the Financial Statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of the reported amounts in these Financial Statements. The
determination that the Company is an investment entity is a critical
judgement, as set out above. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to
be reasonable in the circumstances. Actual
results may differ from these estimates. The unquoted equity and debt
securities have been valued based on unobservable inputs (see Note 14).
Foreign currency translation
Monetary assets and liabilities are translated from currencies other than
Sterling ('foreign currencies') to Sterling (the 'functional currency') at the
rate prevailing on the reporting date. Income and expenses are translated from
foreign currencies to Sterling at the rate prevailing at the date of the
transaction. Exchange differences are recognised in the profit or loss section
of the Statement of Profit or Loss and Other Comprehensive Income.
Financial instruments
Financial instruments comprise investments in equity, debt instruments,
derivatives, trade and other receivables, cash and cash equivalents, and trade
and other payables. Financial instruments are initially recognised at fair
value unless they are trade receivables. The cost of the instrument may be
indicative of the fair value. Subsequent to initial recognition financial
instruments are measured as described below.
Financial assets designated at FVTPL
All the Company's investments including equity, debt instruments and
derivative financial instruments are held at FVTPL. Financial instruments are
initially recognised at fair value. The cost of the instrument may be
indicative of the fair value. Transaction costs are expensed in the profit or
loss section of the Statement of Profit or Loss and Other Comprehensive
Income. Gains and losses arising from changes in fair value are presented in
the profit or loss section of the Statement of Profit or Loss and Other
Comprehensive Income in the period in which they arise.
Purchases and sales of investments are recognised using trade date accounting.
Quoted investments are valued at bid price on the reporting date or at
realisable value if the Company has entered into an irrevocable commitment
prior to the reporting date to sell the investment. Where investments are
listed on more than one securities market, the price used is that quoted on
the most advantageous market, which is deemed to be the market on which the
security was originally purchased. If the price is not available as at the
accounting date, the last available price is used. The valuation methodology
adopted is in accordance with IFRS 13.
Loan notes are classified as debt instruments and are initially recognised at
fair value. The cost of the instrument may be indicative of the fair value.
Subsequent to initial recognition, loan notes are valued at fair value. In the
absence of an active market, the Company determines the fair value of its
unquoted investments by taking into account the International Private Equity
and Venture Capital ("IPEV") guidelines.
Trade and other receivables
The Company's trade and other receivables are classified as financial assets
at amortised cost. They are measured at amortised cost less impairment
assessed using the general approach of the expected credit loss model based on
experience of previous losses and expectations of future losses.
Trade and other payables
The Company's trade and other payables are measured at amortised cost and
include trade and other payables and other short term monetary liabilities
which are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest rate method.
Derecognition of financial instruments
The Company derecognises a financial asset when the contractual rights to the
cash flows from the asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all the risks
and rewards of ownership of the financial asset are transferred.
On derecognition of a financial asset, the difference between the carrying
amount of the asset (or the carrying amount allocated to the portion of the
asset derecognised), and consideration received (including any new asset
obtained less any new liability assumed) is recognised in the profit or loss
section of the Statement of Profit or Loss and Other Comprehensive Income.
The Company derecognises a financial liability when its contractual
obligations are discharged, cancelled or expire. Any gain or loss on
derecognition is recognised in the profit or loss section of the Statement of
Profit or Loss and Other Comprehensive Income.
Cash and cash equivalents
The Company considers all highly liquid investments with original maturities
of less than 90 days when acquired to be cash equivalents. Due to the credit
rating of the financial institutions holding the Company's cash and cash
equivalents, no impairment has been recognised.
Share issue expenses
Share issue expenses of the Company directly attributable to the issue and
listing of its own shares are charged to the distributable reserve.
Share capital
Ordinary shares are classified as equity where there is no obligation to
transfer cash or other assets.
Dividends
Dividends declared and paid during the year from distributable reserves are
disclosed in the Statement of Changes in Equity. Dividends declared post year
end are disclosed in the Notes to the Financial Statements.
Distributable reserves
Distributable reserves represent the amount transferred from the share premium
account, approved by the Royal Court of Guernsey on 18 July 2008, and amounts
transferred to distributable reserves in relation to the sale of Treasury
shares above cost.
Income
Investment income and interest income have been accounted for on an accruals
basis using the effective interest method. Dividend income is recognised in
the profit or loss section of the Statement of Profit or Loss and Other
Comprehensive Income when the relevant security is quoted ex-dividend.
The Company currently incurs withholding tax imposed by countries other than
the UK on dividend income. These dividends are recorded gross of withholding
tax in the profit or loss section of the Statement of Profit or Loss and Other
Comprehensive Income.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the Statement of
Profit or Loss and Other Comprehensive Income, all expenses have been
presented as revenue items except as follows:
· expenses which are incidental to the acquisition and disposal of an
investment are charged to capital; and
· expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the investments
held can be demonstrated. Accordingly, the performance fee is charged to
capital, reflecting the Directors' expected long-term view of the nature of
the investment returns of the Company.
Treasury shares reserve
The Company has adopted the principles outlined in IAS 32 'Financial
Instruments: Presentation' and treats consideration paid including directly
attributable incremental cost for the repurchase of Company shares held in
Treasury as a deduction from equity attributable to the Company's equity
holders until the shares are cancelled, reissued or sold. No gain or loss is
recognised within the statement of Profit or Loss and Other Comprehensive
Income on the purchase, sale, issue or cancellation of the Company's own
equity investments.
Any consideration received, net of any directly attributable incremental
transaction costs upon sale or re-issue of such shares, is included in equity
attributable to the Company's equity holders.
2. NEW STANDARDS AND INTERPRETATIONS
New and amended standards and interpretations applied in these financial
statements
New accounting standards and interpretations have been published and are
mandatory for the Company's accounting periods beginning on or after 1 January
2023. The following are the new or amended accounting standards or
interpretations applicable to the Company:
· Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of
Accounting policies (effective for annual periods beginning on or after 1
January 2023);
· Amendments to IAS 8 - Definition of Accounting Estimates (issued on
12 February 2021 and effective for annual periods beginning on or after 1
January 2023); and
· Amendments to IAS 12 - International tax reform - Pillar two model
rules (issued on 23 May 2023 effective for period beginning on or after 1
January 2023).
New and amended standards and interpretations not applied in these financial
statements (issued but not yet effective)
Other accounting standards and interpretations have been published and will be
mandatory for the Company's accounting periods beginning on or after 1 January
2024, but the impact of these standards is not expected to be material to the
reported results and financial position of the Company.
· Classification of Liabilities as Current or Non-current - Amendments
to IAS 1 (applicable for annual periods beginning on or after 1 January 2024);
· Non-current Liabilities with Covenants (Amendments to IAS 1)
(applicable for annual periods beginning on or after 1 January 2024);
· Amendments to IFRS 18 - Presentation and Disclosures in Financial
Statements (applicable for annual periods beginning on or after 1 January
2027). The Directors are assessing the future impact of this; and
· Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
(applicable for annual periods beginning on or after 1 January 2024).
3. TAXATION
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 2008 and is charged an annual
fee of £1,200 (2023: £1,200).
4. TRANSACTION COSTS
The transaction charges incurred in relation to the acquisition and disposal
of investments during the year were as follows:
2024 2023
£ £
Stamp Duty 17,724 32,557
Commissions and custodian transaction charges:
In respect of purchases 12,364 7,232
In respect of sales 20,334 32,410
50,422 72,199
5. BASIC AND DILUTED (LOSS)/ EARNINGS PER SHARE
Earnings per share is based on the following data:
2024 2023
Return/(loss) for the year £57,287,056 (£5,575,923)
Weighted average number of issued Ordinary shares 79,944,992 83,231,000
Basic and diluted earnings/(loss) per share (pence) 71.65 (6.70)
6. NAV PER SHARE
NAV per share is based on the following data:
2024 2023
NAV per Statement of Financial Position £126,708,048 £77,676,711
Total number of issued Ordinary shares (excluding Treasury shares) at 30 June 83,231,000
2024
72,864,500
NAV per share (pence) 173.90 93.33
7. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash held by the Company available on
demand. Cash and cash equivalents were as follows:
2024 2023
£ £
Cash on demand 2,301,175 12,254,948
8. TRADE AND OTHER RECEIVABLES
2024 2023
£ £
Current assets:
Other receivables 56,143 56,557
Prepayments 20,024 14,781
76,167 71,338
There were no past due or impaired receivable balances outstanding at the year
end (2023: £Nil).
9. FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
1 July 2023 to 1 July 2022 to
30 June 2024 30 June 2023
£ £
Equity investments 104,163,131 57,258,110
Debt instruments 20,366,650 12,601,715
Financial assets designated at FVTPL 124,529,781 69,859,825
Total financial assets designated at FVTPL 124,529,781 69,859,825
Equity investments
Cost brought forward 94,072,155 132,232,346
Purchases 3,536,709 16,692,050
Sales (14,506,694) (65,588,276)
Net realised gain 2,315,402 10,736,035
Cost carried forward 85,417,572 94,072,155
Unrealised (losses) brought forward (37,704,443) (24,168,635)
Movement in unrealised gains/(losses) 55,637,676 (13,535,808)
Unrealised gains/(losses) carried forward 17,933,233 (37,704,443)
Effect of exchange rate movements 812,326 890,398
Fair value of equity investments 104,163,131 57,258,110
Debt instruments
Cost brought forward 10,713,124 8,965,416
Purchases 7,602,881 3,867,708
Repayment of Loans (536,250) (2,120,000)
Cost carried forward 17,779,755 10,713,124
Unrealised gains brought forward 2,311,120 1,682,934
Movement in unrealised gains 819,880 628,186
Unrealised gains carried forward 3,131,000 2,311,120
Effect of exchange rate movements (544,105) (422,529)
Fair value of debt instruments 20,366,650 12,601,715
Total financial assets designated at FVTPL 124,529,781 69,859,825
Total realised gains and losses and unrealised gains and losses on the
Company's equity, debt and derivative financial instruments are made up of the
following gain and loss elements:
2024 2023
£ £
Realised gains 2,337,689 14,284,779
Realised losses (22,287) (3,548,744)
Net realised gains in financial assets designated at FVTPL 2,315,402
10,736,035
Increase/(decrease) in unrealised gains 31,291,871 (7,936,128)
Increase/(decrease) in unrealised losses 25,165,685 (4,971,494)
Increase/(decrease) in unrealised gains/(losses) in financial assets (12,907,622)
designated at FVTPL
56,457,556
On 8 June 2023, Hurricane Energy Plc was acquired by Prax Exploration &
Production Plc resulting in the Company receiving £34,654,130 and 575,649,999
Deferred Consideration Units (DCU) in Prax Exploration & Production Plc.
In the Statement of Cashflow for the year ended 30 June 2023, the purchases
and sales proceeds have been adjusted by the valuation of Prax Exploration
& Production Plc of £10,189,005 to reflect that this was a non-cash
transaction as part of the acquisition of Hurricane Energy Plc.
On 23 May 2024, the Company sold its remaining holdings in Prax Exploration
& Production Plc for a consideration of £3,713,732.44.
10. TRADE AND OTHER PAYABLES
2024 2023
£ £
Current liabilities:
Accruals 199,075 325,706
Unsettled trade purchases - 4,183,694
199,075 4,509,400
The carrying amount of trade payables approximates to their fair value.
11. 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 (See note
12), is as follows:
2024 2023
Number £ Number £
Opening balance 99,749,762 997,498 99,749,762 997,498
Issued, called up and fully paid Ordinary shares of £0.01 each
99,749,762 997,498 99,749,762 997,498
Capital risk management
In order to maintain or adjust the capital structure, the Company may adjust
the amount of dividends paid to Shareholders, return capital to Shareholders,
issue new shares or sell assets.
In accordance with the Company's Memorandum and Articles of Incorporation, the
retained earnings and distributable reserve shown in the Company's Statement
of Financial Position at the year-end are distributable by way of dividend.
The Company may carry the returns of the Company to the distributable reserve
or use them for any purpose to which the returns of the Company may be
properly applied and either employed in the business of the Company or be
invested, in accordance with applicable law. The distributable reserve
includes the amount transferred from the share premium account which was
approved by the Royal Court of Guernsey on 18 July 2008.
During the year ended 30 June 2024, the Company paid no dividends (2023:
£37,453,950) from distributable reserves, as disclosed in Note 13.
Externally imposed capital requirement
There are no capital requirements imposed on the Company.
Rights attaching to shares
The Ordinary shares carry the right to vote at general meetings and the
entitlement to receive any dividends and surplus assets of the Company on a
winding up.
12. TREASURY SHARES RESERVE
2024 2023
Number £ Number £
Opening balance 16,518,762 19,767,097 16,518,762 19,767,097
Treasury shares purchased during the year 10,366,500 8,255,719 - -
Closing balance 26,885,262 28,022,816 16,518,762 19,767,097
During the year ended 30 June 2024, 10,366,500 Treasury shares were purchased
at an average price of 80.19p per share (2023: nil), representing an average
discount to NAV at the time of purchase of 10.9%. No Treasury shares were sold
during the year ended 30 June 2024 or 30 June 2023.
13. DIVIDENDS
No dividends were declared or paid during the year.
On 7 July 2022, the Company declared a second interim dividend of £8,323,100
equating to 10p per Ordinary share, which was paid on 12 August 2022 to
Shareholders on the register on 15 July 2022.
On 11 November 2022, the Company declared an interim dividend of £8,323,100
equating to 10p per Ordinary share, which was paid on 23 December 2022 to
Shareholders on the register on 25 November 2022.
On 8 June 2023, the Company declared an interim dividend of £20.8 million
equating to 25p per
Ordinary share, which was paid on 7 July 2023 to Shareholders on the register
on 16 June 2023.
14. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
Financial risk management objectives
The Investment Manager, Crystal Amber Asset Management (Guernsey) Limited and
the Administrator, Ocorian Administration (Guernsey) Limited provide advice to
the Company which allows it to monitor and manage financial risks relating to
its operations through internal risk reports which analyse exposures by degree
and magnitude of risk. The Investment Manager and the Administrator report to
the Board on a quarterly basis. The risks relating to the Company's operations
include credit risk, liquidity risk, and the market risks of interest rate
risk, price risk and foreign currency risk. The Board has considered the
sensitivity of the Company's financial assets and monitors the range of
reasonably possible changes in significant observable inputs on a regular
basis and does not consider that any changes are required this year to the
categories used in prior years.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will
default on its contractual obligations with the Company, resulting in
financial loss to the Company. At 30 June 2024 the major financial assets
which were exposed to credit risk included financial assets designated at
FVTPL and cash and cash equivalents.
The carrying amounts of financial assets best represent the maximum credit
risk exposure at 30 June 2024. The Company's credit risk on liquid funds is
minimised because the counterparties are banks with high credit ratings
assigned by an international credit-rating agency.
The table below shows the cash balances at the accounting date and the S&P
credit rating for each counterparty at that date.
Location Rating Cash Balance Cash Balance
2024 2023
Butterfield Bank (Channel Islands) Limited Guernsey BBB+ 2,183,585 12,001,525
Barclays Bank Plc - Isle of Man Branch Isle of Man A+ 117,590 253,423
2,301,175 12,254,948
The credit ratings disclosed above are the credit ratings of the parent
entities of each of the counterparties being The Bank of N. T. Butterfield
& Son Limited and Barclays Bank Plc.
The Company's credit risk on financial assets designated at FVTPL arises on
debt instruments. The Company's credit risk on financial assets designated at
FVTPL is considered acceptable as debt instruments make up only a small
percentage of the financial assets. The Company is also exposed to credit risk
on financial assets with its brokers for unsettled transactions. This risk is
considered minimal due to the short settlement period involved and the high
credit quality of the brokers used. There are no credit ratings available for
the debt instruments held by the Company. At 30 June 2024, £106,346,715
(2023: £69,259,635) of the financial assets of the Company were held by the
Custodian, Butterfield Bank (Guernsey) Limited.
Bankruptcy or insolvency of the Custodian may cause the Company's rights with
respect to financial assets held by the Custodian to be delayed or limited.
82% (2023: 70%) of the Company's financial assets are held by the Custodian in
segregated accounts. The Company monitors its risk by monitoring the credit
quality and financial position of the Custodian. The parent of the Custodian
has an S&P credit rating of BBB+ (2023: BBB+). The remaining balance of
financial assets of £20,560,407 (2023: £12,926,476) includes £117,590
(2023: £253,423) cash held by Barclays Bank Plc, £76,168 (2023: £71,338)
trade receivables and £20,187,483 (2023: £11,888,484) loan notes issued by
Morphic Medical Inc and £179,166 (2023: £713,230) loan notes issued by Sigma
Broking Limited.
Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its
obligations arising from financial liabilities. Ultimate responsibility for
liquidity risk management rests with the Board of Directors, which has built
an appropriate framework for the management of the Company's liquidity
requirements.
The Company adopts a prudent approach to liquidity risk management and
maintains sufficient cash reserves to meet its obligations. All the Company's
Level 1 investments are listed and are subject to a settlement period of three
days.
The following tables detail the Company's expected and contractual maturities
for its financial assets and liabilities:
2024 Weighted average interest rate Less than 1 year 1-5 years 5+ years Total
Assets £ £ £ £ £
Non-interest bearing 44,283,921 59,955,378 104,239,299
-
Variable interest rate instruments 0.29% 2,301,175 - - 2,301,175
Fixed interest rate instruments 5.00% 12,445,389 - - 12,445,389
Fixed interest rate instruments 7.50% 7,921,260 - - 7,921,260
Liabilities
Non-interest bearing (199,075) - - (199,075)
66,752,670 59,955,378 - 126,708,048
2023 Weighted average interest rate Less than 1 year 1-5 years 5+ years Total
Assets £ £ £ £
Non-interest bearing - 57,582,871 - - 57,582,871
Variable interest rate instruments 12,001,525 - - 12,001,525
0.29%
Fixed interest rate instruments 12,601,715 - - 12,601,715
5.00%
Liabilities
Non-interest bearing - (4,509,400) - - (4,509,400)
77,676,711 - - 77,676,711
Market risk
The Company is exposed through its operations to market risk which encompasses
interest rate risk, price risk and foreign exchange risk.
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Company is exposed to
interest rate risk as it has current account balances with variable interest
rates and debt instruments at fair value through profit or loss. The Company's
exposure to interest rates is detailed in the liquidity risk section of this
note. Interest rate repricing dates are consistent with the maturities stated
in the liquidity risk section of this note. The Company is exposed to fixed
interest rate risk on the loans receivable as where an instrument is a fixed
rate security, the value of the Financial Instruments is expected to be
particularly affected by the current climate of rising interest rate.
The Investment Manager monitors market interest rates and will place interest
bearing assets at best available rates but will also take the counterparty's
credit rating and financial position into consideration.
The cash at hand balances are the only assets with variable interest rates and
the movement in variable interest rates is an immaterial amount, therefore, no
sensitivity analysis for the movement is disclosed.
Price risk
Price risk is the risk that the fair value of investments will fluctuate as a
result of changes in market prices. This risk is managed through
diversification of the investment portfolio across business sectors. However,
there is no guarantee that the value will not rise above 20% of gross assets
after any investment is made, particularly where it is believed that an
investment is exceptionally attractive.
The following tables detail the Company's equity investments as at 30 June
2024:
2024
Equity Investments Sector Value Percentage of Gross Assets
£
Morphic Medical Inc USD Healthcare 59,955,378 47
De La Rue Plc Commercial Services 31,614,000 25
Sigma Broking Limited Financial Services 6,794,101 5
Allied Minds Plc Private Equity 4,471,681 4
Sutton Harbour Plc Industrial Transportation 1,327,971 1
Total 104,163,131 82
2023 Percentage of Gross Assets
Equity Investments Sector Value
£
Morphic Medical Inc Healthcare 19,165,077 23
De La Rue Plc Commercial Services 14,261,875 17
Equals Group Plc Financial Services 10,189,005 12
Sigma Broking Limited Financial Services 6,794,101 8
Allied Minds Plc Private Equity 4,471,681 5
Other Various 2,376,371 3
Total 57,258,110 68
The following tables detail the investments in which the Company holds more
than 20% of the relevant entities. These have been recognised at fair value as
the Company is regarded as an investment entity as set out in Note 1.
2024 Place of Business Place of Incorporation Percentage Ownership Interest
Equity Investments
Morphic Medical Inc United States United States 95.3
2023 Place of Business Place of Incorporation Percentage Ownership Interest
Equity Investments
Morphic Medical Inc. United States United States 95.3
The Company has assessed the price risk of the listed equity and debt holdings
based on a potential 25% (2023: 25%) increase/decrease in market prices, which
the Company believes represents the effect of a possible change in market
prices and provides consistent analysis for Shareholders, as follows:
At the year end and assuming all other variables are held constant:
· If market prices of listed equity and debt had been 25% higher (2023:
25% higher), the Company's return and net assets for the year ended 30 June
2024 would have increased by £8,235,493 net of any impact on performance fee
accrual (2023: £4,159,562);
· If market prices of listed equity, debt and derivative financial
instruments had been 25% lower (2023: 25% lower), the Company's return and net
assets for the year ended 30 June 2024 would have decreased by £8,235,493,
net of any impact on performance fee accrual (2023: decreased by £4,159,562
reflecting the effect of the derivative financial instruments held at the
reporting date); and
· There would have been no impact on the other equity reserves.
Foreign exchange risk
Foreign exchange risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates and arises when the Company
invests in financial instruments and enters into transactions that are
denominated in currencies other than its functional currency. During the year,
the Company was exposed to foreign exchange risk arising from equity and debt
investments and financial instruments held in US Dollars (2023: US Dollars).
The table below illustrates the Company's exposure to foreign exchange risk at
30 June 2024;
2024 2023
£ £
Financial assets designated at FVTPL:
Unlisted equity investments denominated in US Dollars 59,955,378 19,165,077
Debt instruments denominated in US Dollars 20,187,483 11,888,485
Total assets 80,142,861 31,053,562
If the US Dollar weakened/strengthened by 10% (2023: 10%) against Sterling
with all other variables held constant, the fair value of debt instruments
would increase/decrease by £2,018,748 (2023: £1,188,849) and the fair value
of the unlisted equity investments would increase/decrease by £5,995,538
(2023: £1,916,508).
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 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 to sell an asset or
transfer a liability 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 30 June 2024 and 30 June 2023:
Level 1 Level 2 Level 3 Total
2024 £ £ £ £
Financial assets designated at FVTPL:
Equity investments - listed equity investments 31,614,000 1,327,971 - 32,941,971
Equity investments - unlisted equity investments - - 71,221,160 71,221,160
Debt instruments - loan notes - - 20,366,650 20,366,650
31,614,000 1,327,971 91,587,810 124,529,781
Level 1 Level 2 Level 3 Total
2023 £ £ £ £
Financial assets designated at FVTPL:
Equities - listed equity investments 14,261,875 2,376,371 - 16,638,246
Equities - unlisted equity investments - 10,189,005 30,430,859 40,619,864
Debt - 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 investments relates to Sutton Harbour due to the low volume
of trading activity in the market for this investment but 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 30 June 2024 converted at
an exchange rate of $1.2647 to £1 and reduced by a 25% liquidity discount to
reflect the nature and risks associated with the underlying portfolio of
Allied Minds and the likelihood of being able to realise the investment at Net
Asset Value. The Level 3 equity and debt investments in MMI were valued by
reference to two separate independent third-party valuations commissioned by
the Company. The valuers reported a range of valuations using discounted
cash flow techniques and a probability-weighted expected returns method in
the event of a potential liquidation, trade sale or IPO. 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 into 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:
2024 2023
£ £
Opening balance at 1 July 2023/1 July 2022 43,032,574 40,628,276
Purchases 7,602,881 3,867,708
Allied Minds transferred in from Level 1 - 15,007,031
Movement in unrealised gain/(loss) 41,688,252 (10,315,139)
Sales (536,250) (2,000,000)
Repayments of debt instruments - (2,120,000)
Net realised loss - (352,974)
Effect of exchange rate movements (199,647) (1,682,328)
Closing balance at 30 June 2024/2023 91,587,810
43,032,574
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 30 June 2024 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 30 June 2024 Unobservable inputs Factor Sensitivity to changes in significant unobservable inputs
Morphic Medical Inc Discounted cash flow and PWERM 59,955,378 Discount rate 30% An increase (decrease) in the discount rate to 32% (28%) would reduce
(increase) FV by £9.9m (£11.6m)
7.5x
Revenue Exit Multiple
A decrease (increase) in the exit multiple to 8.5x (6.5x) would reduce
(increase) FV by £7.0m (£7.0m)
Trade Sale Revenue Exit Scenario Multiple
An increase (decrease) in the exit multiple to 11.5x (9.5x) would reduce
(increase) FV by £3.3m £(3.3m)
10.5x
Probability Weightings 5% liquidation scenario An increase (decrease) in the liquidation scenario to 10% (2.5%)
with equal weightings to the other two scenarios would reduce (increase) FV by
£2.7m (£1.4m)
47.5% trade sale post FDA approval
47.5%
IPO scenario
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 43% An increase (decrease) in the discount rate to 48% (38%) would reduce
(increase) FV by £6.3m (£8.1m)
48%
High growth rate over 9 year period
A decrease (increase) in the near-term growth rate to 38% (58%) would decrease
(increase) FV by £4.1m
Dilution discount An increase (decrease) in the dilution discount to 30% (to 15%) would reduce
(increase) FV by £3.6m
20%
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.
15. 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 (2023: 10,000)
Ordinary shares in the Company, representing 0.01% (2023: 0.01%) of the voting
share capital of the Company at the year end.
During the year, the Company incurred management fees payable to the
Investment Manager of £615,000 (2023: £960,000) none of which were
outstanding at the year-end (2023: £Nil). No performance fees were incurred
in the year (2023: £Nil) and none were outstanding at the year-end (30 June
2023: £Nil). Details of the revised Investment Management Agreement announced
on 23 October 2023 is included in note 17.
As at 30 June 2024, the Investment Manager held 6,299,031 Ordinary shares
(2023: 6,899,031) of the Company, representing 8.30% (2023: 8.30%) of the
voting share capital. Richard Bernstein is the majority shareholder of the
Investment Manager owning 87.0% of the voting share capital (2023: 87.0%)
As at 30 June 2024, the Company's investment in MMI is an unconsolidated
subsidiary due to the Company's undiluted 95.3% holding in the voting share
capital of MMI. 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. During the year,
the Company purchased unsecured convertible loan notes of $9.5 million (not
driven by any contractual obligation) for the purpose of supporting MMI in
pursuing its strategy. The total value of the unsecured convertible loan notes
held in MMI as at 30 June 2024, including accrued interest amounts to over
£20.2 million.
MMI was incorporated in Delaware, had five wholly owned subsidiaries as at 30
June 2024 and its principal place of business is Boston. The five subsidiaries
were as follows:
· Morphic Medical Securities Inc., a Massachusetts-incorporated
non-trading entity;
· Morphic Medical Europe Holding B.V., a Netherlands-incorporated
non-trading holding company;
· Morphic Medical Europe B.V., a Netherlands-incorporated company that
conducts certain European business operations;
· Morphic Medical 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.
16. DIRECTORS' INTERESTS AND REMUNERATION
The interests of the Directors in the share capital of the Company at the year
end and as at the date of this report are as follows:
2024 2023
Number of Ordinary shares Total Number of Ordinary shares Total
voting rights voting rights
Christopher Waldron ((1)*) 30,000 0.04% 30,000 0.03%
Jane Le Maitre ((1)) 13,500 0.02% 13,500 0.01%
Fred Hervouet 7,500 0.01% 7,500 0.01%
Total 51,000 0.07% 51,000 0.05%
(1) Ordinary shares held indirectly
*held by persons closely associated to him
During the year, the Directors earned the following remuneration in the form
of Directors' fees from the Company:
2024
2023
£ £
Christopher Waldron((1)) 47,500 47,500
Jane Le Maitre((2)) 42,500 42,500
Fred Hervouet((3)) 40,000 40,000
Total 130,000 130,000
((1)) Chairman of the Company with effect from 23 November 2017.
((2)) Chairman of Audit Committee with effect from 4 January 2018.
((3)) Chairman of Remuneration and Management Engagement Committee with effect
from 22 November 2019
At 30 June 2024, Directors' fees of £32,500 (2023: £32,500) were accrued
within trade and other payables.
17. MATERIAL AGREEMENTS
The Company was party to the following material agreements:
Crystal Amber Asset Management (Guernsey) Limited
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 10p 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 30 June 2024, the Investment Manager held 6,299,031 Ordinary shares (30
June 2023: 6,899,031) of the Company, representing 8.64% (30 June 2023: 8.29%)
of the voting share capital.
Performance fee for year ended 30 June 2024
At 30 June 2024, the Basic Performance Hurdle was £216,000,000 (as adjusted
for all dividends paid during the performance period on their respective
payment dates, compounded at the applicable annual rate) (2023:
£216,000,000).
The aggregate cash returned to Shareholders after 1 January 2022 was
£54,200,729 (2023: £45,791,950). Accordingly, no performance fee was earned
during the year ended 30 June 2024 (2023: £Nil).
Ocorian Administration (Guernsey) Limited
The Administrator provides administration and company secretarial services to
the Company. For these services, the Administrator is paid an annual fee of
0.12% (2023: 0.12%) of that part of the NAV of the Company up to £150 million
and 0.1% (2023: 0.1%) of that part of the NAV over £150 million (subject to a
minimum of £75,000 per annum). During the year, the Company incurred
administration fees of £96,841 (2023: £127,028).
Butterfield Bank (Guernsey) Limited
Under the custodian agreement, the Custodian receives a fee, calculated and
payable quarterly in arrears at the annual rate of 0.05% (2023: 0.05%) of the
NAV per annum, subject to a minimum fee of £25,000 per annum. Transaction
charges of £100 per trade for the first 200 trades processed in a calendar
year and £75 per trade thereafter are also payable. During the year, the
Company incurred custodian fees of £40,186 (2023: £51,497).
18. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors and on the basis of the shareholdings advised
to them, the Company has no ultimate controlling party.
19. OTHER INFORMATION
The Company reported that its unaudited NAV at 31 July 2024 was 174.13p per
Ordinary share.
The Company reported that its unaudited NAV at 31 August 2024 was 169.41p per
Ordinary share.
The Company reported that its unaudited NAV at 30 September 2024 was 164.93p
per Ordinary share.
20. POST BALANCE SHEET EVENTS
At An Extraordinary General Meeting held on 28 October 2024, Shareholders
voted to adopt and implement a B Share Scheme to enable the Company to pursue
returns of capital over time to Shareholders by way of redemption of the B
Shares following the full or partial realisation of the Company's assets. The
Company will be able to make successive bonus issues of redeemable B Shares to
Shareholders on a pro rata basis and redeem such B Shares for cash shortly
thereafter without action being required by Shareholders.
Glossary of Capitalised Defined Terms
"AEOI Rules" means the Automatic Exchange of Information Rules;
"AGM" or "Annual General Meeting" means the annual general meeting of the
Company;
"AIF" means Alternative Investment Funds;
"AIFM" means AIF Manager;
"AIFM Directive" means the EU Alternative Investment Fund Managers Directive
(no. 2011/61/EU);
"AIC" means the Association of Investment Companies;
"AIC Code" means the AIC Code of Corporate Governance;
"AIM" means the AIM market of the London Stock Exchange;
"Annual Report" means the annual publication of the Company to the
Shareholders to describe its operations and financial conditions, together
with the Company's financial statements;
"APMs" means Alternative Performance Measures.
"ARR" means annual recurring revenue;
"Articles of Incorporation" or "Articles" means the articles of incorporation
of the Company;
"Audited Financial Statements" or "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;
"Australian Stock Exchange" means the Australian Stock Exchange Limited;
"Bank of England" means the Bank of England, the central bank of the UK;
"Basic Performance Hurdle" means the threshold return of aggregated cash
returned to shareholders after 1 January 2022 return for Performance Fee. The
performance fee is payable at a rate of 20% of the excess amount;
"Board" or "Directors" or "Board of Directors" means the directors of the
Company;
"CEO" means chief executive officer;
"CE Mark" means a certification mark that indicates conformity with health,
safety, and environmental protection standards;
"Committee" means the Audit Committee of the Company;
"Company" or "Fund" means Crystal Amber Fund Limited;
"Companies Law" means the Companies (Guernsey) Law, 2008, (as amended);
"CRS" means Common Reporting Standard;
"EBITDA" means earnings before interest, taxes, depreciation and amortisation;
"EGM" or "Extraordinary General Meeting" means an extraordinary general
meeting of the Company;
"Equals" means Equals Group Plc;
"FATCA" means Foreign Account Tax Compliance Act;
"FCA" means the Financial Conduct Authority;
"FDA" means the United States Food and Drug Administration;
"FRC" means the Financial Reporting Council;
"FRC Code" means the UK Corporate Governance Code published by the FRC;
"FTSE" means the Financial Times Stock Exchange;
"FV" means Fair Value;
"FVTPL" means Fair Value Through Profit or Loss;
"GFSC" means the Guernsey Financial Services Commission;
"GFSC Code" means the GFSC Finance Sector Code of Corporate Governance;
"Gross Asset Value" means the value of the assets of the Company, before
deducting its liabilities, and is expressed in Pounds Sterling;
"IAS" means international accounting standards as issued by the Board of the
International Accounting Standards Committee;
"IASB" means the International Accounting Standards Board;
"IFRIC" means the IFRS Interpretations Committee, which issues IFRIC
interpretations following approval by the IASB;
"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;
"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 Adviser" means Crystal Amber Advisers (UK) LLP
"Investment Manager" means Crystal Amber Asset Management (Guernsey) Limited
"Investment Management Agreement" means the agreement between the Company and
the Investment Manager, dated 16 June 2008, as amended on 21 August 2013,
further amended on 27 January 2015 and further amended on 12 June 2018.
Additionally, the Investment Management Agreement was further amended and
restated on 14 February 2022.
"IPEV Capital Valuation Guidelines" means the International Private Equity and
Venture Capital Valuation Guidelines on the valuation of financial assets;
"KPMG" means KPMG Channel Islands Limited;
"LSE" or "London Stock Exchange" means the London Stock Exchange Plc;
"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;
"NMPI" means Non-Mainstream Pooled Investments;
"Ordinary share" means an allotted, called up and fully paid Ordinary share of
the Company of £0.01 each;
"PWERM" means Probability Weighted Expected Return Method
"Risk Committee" means the Risk Committee of the Investment Manager;
"S&P" means Standard & Poor's Credit Market Services Europe Limited, a
credit rating agency registered in accordance with Regulation (EC) No
1060/2009 with effect from 31 October 2011;
"Smaller Companies Index" means an index of small market capitalisation
companies;
"SME" means small and medium sized enterprises;
"SORP" means Statement of Recommended Practice;
"Stewardship Code" means the Stewardship Code of the Company adopted from 14
June 2016, as published on the Company's website www.crystalamber.com
(http://www.crystalamber.com) ;
"Supreme Court" means the highest court in the federal judiciary of the US;
"Target Multiple" means the maximum multiple of the original investment that
could be paid, given value drivers, and receive a desired return on
investment;
"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;
"UK Stewardship Code" means the UK Stewardship Code published by the FRC in
July 2010 and revised in September 2012;
"US" means the means the United States of America, its territories and
possessions, any state of the United States and the District of Columbia;
"US$" or "$" means United States dollars;
"US Federal Reserve" means the Federal Reserve System, the central banking
system of the US; and
"£" or "Pounds Sterling" or "Sterling" means British pounds sterling and
"pence" means British pence.
Alternative Performance Measures
ALTERNATIVE PERFORMANCE MEASURES ("APMs")
The Company assesses its performance using a variety of measures that are not
specifically defined under IFRS and therefore termed APMs. The APMs that are
used may not be directly comparable with those used by other companies.
ONGOING CHARGES
Ongoing charges are calculated using the AIC Ongoing Charges methodology,
which was last updated in April 2022 and is available on the AIC website
(theaic.co.uk). They represent the Company's investment management fee and all
other operating expenses, excluding currency loss/profit, ad-hoc costs
associated with portfolio transactions, ad-hoc research expenses and
non-recurring legal and professional fees and are expressed as a percentage of
the average Net Asset Value for the year. The Board continues to be conscious
of expenses and works hard to maintain a sensible balance between good quality
service and cost. The ongoing charges calculation is shown below:
2024 2023
£ £
Average NAV for the year (a) 87,294,715 104,929,784
Investment management fee 615,000 960,000
Other company expenses 691,411 671,899
Total recurring company expenses (b) 1,306,411 1,631,899
Ongoing Charges Ratio (b/a) 1.50% 1.56%
NET ASSET VALUE ("NAV")
The NAV is the net assets attributable to shareholders that is, total assets
less total liabilities, expressed as an amount per individual share.
NAV PER SHARE INCLUDING DIVIDENDS
A measure showing how the NAV per share has performed in the year, taking into
account both capital returns and dividends paid to shareholders.
NAV total return is calculated by adjusting for dividends paid. It considers
the changes in market value as well as other surges of income such as
dividends expressed as a percentage. It shows a more accurate valuation of a
stock's return.
The AIC shows NAV total return as a percentage change from the start of the
year. It assumes that dividends
(https://www.theaic.co.uk/aic/glossary/D?item=989) paid to shareholders are
reinvested at NAV at the time the shares are quoted ex-dividend
(https://www.theaic.co.uk/aic/glossary/E?item=993)
2024 2023
Pence Pence
NAV PER SHARE INCLUDING DIVIDENDS
Opening NAV per share (a) 93.33 145.03
Add Dividends for the year (b) - 45
Opening NAV per share (c) 93.33 145.03
Closing NAV per share (d) 173.90 93.33
Movement in NAV per share in the year (e) = (d) - (c) 80.57 (51.70)
NAV per share including Dividends (f) = (a) + (b) + (e) 173.90 138.33
Increase/(Decrease)/ in NAV per share in the year (g) = (f) - (a) 80.57 (6.70)
Percentage increase/(decrease)/ in NAV per share in the year 86.3% (4.6)%
(h) = (g) / (a) * 100
Net Asset Value ("NAV") per share including dividends paid increased by 86.3%
(2023: decrease 4.6%).
TOTAL RETURN
Total return is calculated by taking the difference between the number of
shares multiplied by NAV per share at both the start and end of the year. The
increase or decrease percentage is calculated based on the opening value.
Adjusting for dividends paid, the total loss in the Company's NAV per share
for the year was 26.44% (2023: loss 35.68%)
2024 2023
Pence Pence
TOTAL RETURN
Number of shares (a) 1,093.70 1093.70
Opening NAV for the year (pence) (b) 93.33 145.03
(c) = (a) + (b) 1,020.75 1,586.19
Number of shares (d) 1,093.7 1093.70
Closing NAV per share (e) 173.90 93.33
(f) = (d) + (e) 1901.94 1020.75
Movement in the year (pence) (g) = (c) + (f) 881.19 (565.44)
Percentage Total Return (h) = (g) / (c) * 100 86.33% (35.65%)
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