REG - Crystal Amber Fund - Half-year Report
21/03/2025 07:15
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RNS Number : 5811B Crystal Amber Fund Limited 21 March 2025
21 March 2025
Crystal Amber Fund Limited
("Crystal Amber Fund", the "Company" or the "Fund")
Interim Report and Unaudited Condensed Financial Statements
For the six months ended 31 December 2024
Highlights
· Net Asset Value ("NAV") per share increased by 2.4% over the
six-month period to 31 December 2024 to 178.08p.
· According to Trustnet, the Fund is first out of 20 peer group funds,
generating returns over the last six months, one year and five years of 5.4%,
43.8% and 241.0%, against average peer group returns of -6.7%, 7.2% and 95.5%.
· £1.4 million asset enhancing share buyback during the period at an
average 43.3% discount to NAV.
· Encouraging operational progress at Morphic Medical Inc. in readiness
for expected regulatory approval.
· Further to the Fund's announcement on 13 January 2025, 194,358,367
common shares in Morphic Medical Inc. have been issued to the Fund arising
from conversion of $25.4 million of loan notes and $3 million of accrued
interest.
· De La Rue Plc receives binding offer to sell Authentication Division
for £300 million and, following the period end, receives takeover approaches.
For further enquiries please contact:
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
Chairman's Statement
The six month period to 31 December 2024 has seen the Fund make solid
progress, with net asset value increasing from £126.7 million (173.9p per
share) to an unaudited NAV of £127.4 million (178.08p per share). During the
period, £1.4 million was spent on share buybacks. Net asset value per share
increased by 2.4%. This compares to a 3.8% increase in the Numis Small Cap
Index over the same period.
According to Trustnet, as at 31 December 2024, the Fund's share price return
was 5.4% over the previous six months, 43.8% over one year, 71.5% over three
years and 241.0% over five years. This compares with returns for the
Investment Trust UK Smaller Companies index of -6.7%, 7.2%, -1.2% and 95.5%
over the equivalent periods.
The Fund's largest shareholding, Morphic Medical Inc ("MMI"), continued to
make encouraging commercial and regulatory progress. Last month, the Fund was
pleased to announce that MMI had completed another important stage towards its
EU regulatory filing, with the successful conclusion of the Medical Device
Reporting ("MDR") audit of its appointed manufacturer Medical Murray. The
final Technical Review by the Notified Body is currently taking place and MMI
remains confident in its path to CE certification.
With CE certification, the company will be ready to enter key markets in
Europe, the UK and the Middle East and will roll out a comprehensive
commercial and clinician training programme to customers and selective
distribution partners. Revenue projections are being bolstered by positive
customer feedback ahead of market re-entry.
The period under review was also a successful one for the Fund's other major
shareholding, De La Rue. In October 2024, 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. In December 2024, De La Rue disclosed that it was in
receipt of a partial offer from "PSFC Entities" to acquire up to 40% of De La
Rue's issued share capital at 125p a share. Last month, De La Rue announced
that the PSFC Entities were considering a full cash offer. Importantly, De La
Rue also announced that it had received approaches from separate third parties
that may result in possible cash offers and that a formal sale process had
commenced. De La Rue is also in receipt of approaches from third parties to
acquire its Currency Division.
Against this background, it was important that De La Rue's underlying trading
remained strong, and this has very much been the case, particularly in the
historically volatile Currency Division. In March 2023, the order book for
the Currency Division stood at £137 million. At 30 September 2024, this had
increased to £252 million. Earlier this month, De La Rue reported that
following strong order intake, at 31 January 2025, the order book stood at
£347 million.
The Investment Manager has consistently stated that the strategic value of De
La Rue is far greater than its operational value and is fully supportive of De
La Rue conducting its formal sale process. The Fund is confident that this
will lead to a very substantial cash return to its shareholders.
It is now three years since the current investment strategy was approved by
shareholders. Over this period, the Investment Manager has delivered very
strong absolute and relative returns through the successful sales of strategic
positions in Hurricane Energy Plc and Equals Group, which have funded
substantial returns of capital. Although it has taken some time, it has also
actively encouraged a transformation in prospects at De La Rue which has
culminated in a re-rating of the shares and the current multiple takeover
approaches. It has also supported MMI as it seeks to regain its CE Mark and
position itself as an attractive commercial proposition, a process which has
led to a material uplift in the independent valuation of MMI. In both of these
cases, the increased valuations are a direct consequence of the Investment
Manager's patient activism. The Fund has also prepared the way for more
flexible returns of capital through the ability to create B shares, as
approved by shareholders in October 2024.
In my last Chairman's Statement, I wrote that by the end of the first quarter
of 2025, it was intended that the Board would consult the Fund's larger
shareholders and/or make arrangements to seek shareholder approval on the
future strategy of the Company. Following publication of today's results, that
consultation will commence but will necessarily be conducted in the light of
both the expected regulatory approval at MMI and further clarity on the
quantum and timing of cash returns from De La Rue, both of which will be
important in maximising returns to shareholders.
Christopher Waldron
Chairman
20 March 2025
Investment Manager's Report
Performance
During the six month period to 31 December 2024, net asset value increased
from £126.7 million (173.9p per share) to an unaudited NAV of £127.4 million
(178.08p per share).
Investee companies
Morphic Medical Inc ("MMI")
Morphic's product, 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.
During the period, MMI continued to make commercial and regulatory progress.
Last month, the Fund announced that MMI had completed another important
regulatory milestone in its EU filing, with the successful conclusion of the
Medical Device Reporting ("MDR") audit of its appointed manufacturer Medical
Murray. The final Technical Review by the Notified Body is currently taking
place and MMI remains confident in its path to CE certification.
MMI has now gathered a robust collection of new real-world data supporting the
sustained efficacy of RESET for the treatment of obesity and diabetes from the
ABCD worldwide registry, the latest data will be shared at several key
conferences throughout 2025.
Pending the CE certification, the company is ready to enter key markets in
Europe, the UK and the Middle East and will roll out a comprehensive
commercial and clinician training programme to customers and selective
distribution partners. Revenue projections are being bolstered by positive
customer feedback ahead of market re-entry. In Germany, over 100 hospitals are
planning to apply for NUB funding for RESET, the reimbursement procedure for
novel drugs and devices not yet included in the aG-DRG system. In the UK,
three large NHS Trusts have initiated the economic business case for RESET.
MMI is currently in discussions with several strategic investors interested in
the endoscopic treatment of obesity and diabetes. According to the World
Obesity Federation, 2.2 billion people suffer from being overweight and obese,
yet only 6% are treated. Every year, nearly 5 million deaths are driven by
high BMI (≥ 25 kg/m2) and associated cardiometabolic disease. RESET is an
investigational medical device for people living with uncontrolled type 2
diabetes and obesity that seeks to bridge the gap between partially effective
medications, insulin injections, and irreversible surgery.
At 31 December 2024, the Fund owned 95.3% of MMI's share capital via common
shares and preferred shares and held interest bearing convertible loan notes.
As anticipated, in January 2025, all $25.4 million loan notes and $3 million
accumulated interest were converted to equity. The notes were converted into
194,358,367 common shares in MMI at share values ranging from US$0.088 to
US$0.48 per share pursuant to the terms of the respective individual loan
agreements, with an average weighted conversion price of US$0.146 per share.
This compares with the audited independent valuation of MMI at 30 June 2024 of
US0.48 per share. Following the final allotment of the conversion shares and
additional investment in MMI, the Fund now owns an aggregate of 394,986,465
common shares and preference shares in MMI, equivalent to 97.6% of MMI's share
capital.
De La Rue Plc
The period under review was a successful one for De La Rue. In October 2024,
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.
In December 2024, De La Rue disclosed that it was in receipt of a partial
offer from "PSFC Entities" to acquire up to 40% of De La Rue's issued share
capital at 125p a share. Last month, De La Rue announced that the PSFC
Entities were considering a full cash offer. Importantly, De La Rue also
announced that it had received approaches from separate third parties that may
result in possible cash offers and that a formal sale process had commenced.
De La Rue is also in receipt of approaches from third parties to acquire its
Currency Division.
Trading during the period was strong, a trend that has continued into 2025. In
March 2023, the order book for the Currency Division stood at £137 million.
At 30 September 2024, this had increased to £252 million. In December 2024,
it was reported that De La Rue had won a contract to print $6.25 billion of
bank notes for the Central Bank of Libya. Earlier this month, De La Rue
reported that following strong order intake, at 31 January 2025, the order
book stood at £347 million.
On 3 February 2025, the Fund entered into a Contract for Difference ("CFD ")
agreement with CMC Markets to release liquidity for the Fund whilst
maintaining the long exposure with the De La Rue investment.
The Investment Manager has consistently stated that the strategic value of De
La Rue is far greater than its operational value and is fully supportive of De
La Rue conducting its formal sale process.
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 active discussions with each of these companies
with a view to maximising their monetisation.
Outlook
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 particular, the
holding in MMI offers the potential for very substantial further growth.
Crystal Amber Asset Management (Guernsey) Limited
20 March 2025
Condensed Statement of Profit or Loss and Other Comprehensive Income (Unaudited)
For the six months ended 31 December 2024
Six months ended 31 December Six months ended 31 December
2024 2023
Revenue Capital Total Revenue Capital Total
Note £ £ £ £ £ £
Income
Interest received 2,178 - 2,178 60,955 - 60,955
2,178 - 2,178 60,955 - 60,955
Net gains on financial assets designated at FVTPL
Equities
Net realised gains 4 - 693,295 693,295 - 6,128,586 6,128,586
Movement in unrealised gains 4 - 1,321,006 1,321,006 - 5,982,219 5,982,219
Debt Instruments
Movement in unrealised gains 4 - 569,740 569,740 - 329,851 329,851
- 2,584,041 2,584,041 12,440,656 12,440,656
Total income 2,178 2,584,041 2,586,219 60,955 12,440,656 12,501,611
Expenses
Transaction costs - 50,039 50,039 - 9,716 9,716
Exchange movements on revaluation of investments and working capital (190,654) (215,017) (405,671) 215,315 292,123 507,438
Management fees 9 345,000 - 345,000 270,000 - 270,000
Directors' remuneration 65,000 - 65,000 65,000 - 65,000
Administration fees 77,941 - 77,941 44,155 - 44,155
Custodian fees 35,723 - 35,723 18,037 - 18,037
Audit fees 70,000 - 70,000 30,075 - 30,075
Other expenses 256,246 - 256,246 253,303 - 253,303
659,256 (164,978) 494,278 895,885 301,839 1,197,724
(Loss)/return for the period (657,078) 2,749,019 2,091,941 (834,930) 12,138,817 11,303,887
Basic and diluted (loss)/earnings per share (pence) 2 (0.91) 3.83 2.91 (1.00) 14.59 13.59
All items in the above statement derive from continuing operations.
The total column of this statement represents the Company's Statement of
Profit or Loss and Other Comprehensive Income prepared in accordance with
IFRS. The supplementary information on the allocation between revenue return
and capital return is presented under guidance published by the AIC.
The Notes to the Unaudited Condensed Financial Statements form an integral
part of these Interim Financial Statements.
Condensed Statement of Financial Position (Unaudited)
As at 31 December 2024
As at As at As at
31 December 30 June 31 December
2024 2024 2023
(Unaudited) (Audited) (Unaudited)
Note £ £ £
Assets
Cash and cash equivalents 120,713 2,301,175 3,905,308
Trade and other receivables 65,114 76,167 62,223
Financial assets designated at FVTPL 4 127,581,426 124,529,781 84,664,567
Total assets 127,767,253 126,907,123 88,632,098
Liabilities
Trade and other payables 354,048 199,075 343,983
Total liabilities 354,048 199,075 343,983
Equity
Capital and reserves attributable to the Company's equity shareholders
Share capital 6 997,498 997,498 997,498
Treasury shares reserve 7 (29,409,600) (28,022,816) (20,459,580)
Distributable reserve 40,586,958 40,586,958 40,586,958
Retained earnings 115,238,349 113,146,408 67,163,239
Total equity 127,413,205 126,708,048 88,288,115
Total liabilities and equity 127,767,253 126,907,123 88,632,098
NAV per share (pence) 3 178.08 173.90 106.08
The Interim Financial Statements were approved by the Board of Directors and
authorised for issue on 20 March 2025.
Christopher Waldron
Jane Le Maitre
Chairman
Director
20 March 2025
20 March 2025
The Notes to the Unaudited Condensed Financial Statements form an integral
part of these Interim Financial Statements.
Condensed Statement of Changes in Equity (Unaudited)
For the six months ended 31 December 2024
Share Treasury Distributable Retained earnings Total
Capital Shares Reserve Capital Revenue Total Equity
Note £ £ £ £ £ £ £
Opening balance at 1 July 2024 997,498 (28,022,816) 40,586,958 123,554,686 (10,408,278) 113,146,408 126,708,048
Purchase of Ordinary shares into Treasury 7 - (1,386,784) - - - - (1,386,784)
Gains/(losses) for the period - - - 2,749,019 (657,078) 2,091,941 2,091,941
997,498 (29,409,600) 40,586,958 126,303,705 (11,065,356) 115,238,349 127,413,205
Balance at 31 December 2024
For the six months ended 31 December 2023
Share Treasury Distributable Retained earnings
Capital Shares Reserve Capital Revenue Total Total Equity
Note £ £ £ £ £ £ £
Opening balance at 1 July 2023 997,498 (19,767,097) 40,586,958 64,910,222 (9,050,870) 55,859,352 77,676,711
Purchase of Ordinary shares into Treasury 7 - (692,483) - - - - (692,483)
Gains/(losses) for the period - - - 12,138,817 (834,930) 11,303,887 11,303,887
Balance at 31 December 2023 997,498 (20,459,580) 40,586,958 77,049,039 (9,885,800) 67,163,239 88,288,115
The Notes to the Unaudited Condensed Financial Statements form an integral
part of these Interim Financial Statements.
Condensed Statement of Cash Flows (Unaudited)
For the six months ended 31 December 2024
Six months Six months
ended ended
31 December 31 December
2024 2023
(Unaudited) (Unaudited)
£ £
Cash flows from operating activities
Bank interest received 2,178 60,955
Management fees paid (345,000) (270,000)
Directors' fees paid (65,000) (97,500)
Other expenses paid (273,881) (432,284)
Net cash outflow from operating activities (681,703) (738,829)
Cash flows from investing activities
Purchase of debt investments (1,560,848) (1,556,709)
Sale of debt investments - 1,778,758
Purchase of equity instruments (4,170,604) (7,666,911)
Sale of equity instruments 5,669,516 536,250
Transaction charges on purchase and sale of investments (50,039) (9,716)
Net cash outflow from investing activities (111,975) (6,918,328)
Cash flows from financing activities
Purchase of Company shares into Treasury (1,386,784) (692,483)
Net cash outflow from financing activities (1,386,784) (692,483)
Net decrease in cash and cash equivalents during the period (2,180,462) (8,349,640)
Cash and cash equivalents at beginning of period 2,301,175 12,254,948
Cash and cash equivalents at end of period 120,713 3,905,308
The Notes to the Unaudited Condensed Financial Statements form an integral
part of these Interim Financial Statements.
Notes to the Unaudited Condensed Financial Statements
For the six months ended 31 December 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 31 December 2024 it had five wholly-owned
subsidiaries and its principal place of business is Boston. Refer to Note 9
for further information.
The Company's Ordinary shares were listed and admitted to trading on AIM, on
17 June 2008. The Company is also a member of the AIC.
1. MATERIAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these Interim
Financial Statements are set out below. These policies have been consistently
applied to those balances considered material to the Interim Financial
Statements throughout the current period, unless otherwise stated.
Basis of preparation
The Interim Financial Statements have been prepared in accordance with IAS 34,
Interim Financial Reporting.
The Interim Financial Statements do not include all the information and
disclosures required in the Annual Financial Statements and should be read in
conjunction with the Company's Annual Financial Statements for the year to 30
June 2024. The Annual Financial Statements have been prepared in accordance
with IFRS.
The same accounting policies and methods of computation are followed in the
Interim Financial Statements as in the Annual Financial Statements for the
year ended 30 June 2024.
The presentation of the Interim Financial Statements is consistent with the
Annual Financial Statements. Where presentational guidance set out in the SORP
"Financial Statements of Investment Trust Companies and Venture Capital Trust
(issued by the AIC in November 2014 and updated in February 2018, October
2019, April 2021 and July 2022) is consistent with the requirements of IFRS,
the Directors have sought to prepare the Interim Financial Statements on a
basis compliant with the recommendations of the SORP. In particular,
supplementary information which analyses the Statement of Profit or Loss and
Other Comprehensive Income between items of a revenue and capital nature has
been presented alongside the total Statement of Profit or Loss and
Comprehensive Income.
Going concern
As at 31 December 2024, the Company had net assets of £127.4 million (30 June
2024: £126.7 million) and cash balances of £0.1 million (30 June 2024: £2.3
million) which are sufficient to meet current obligations as they fall due.
Approximately 32% of the Company's investment portfolio comprises readily
realisable securities with a value of £33.1 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, 32% of the Company's
investments are valued by reference to the market bid price as at the balance
sheet date.
All capitalised terms are defined in the Glossary of Capitalised Defined Terms
unless separately defined.
As these are quoted prices in an active market, any volatility in the global
economy is reflected within the value of the financial assets designated at
fair value through profit or loss. As such, the Company has not included any
fair value impairments in relation to its investments.
Following extensive shareholder consultation in the early part of 2022, a
change of investment policy was approved by shareholders which prioritised the
intention to maximise the return of capital, representing a change of
strategy, as noted above.
The Company has a track record of returning cash to shareholders via share
buybacks and dividends. Since 2013, when the requirement for the continuation
vote to be proposed at the 2021 AGM was introduced, over £111 million has
been returned to shareholders via such means.
In line with the change in strategy, the Company has sold investments in
Alquiber Quality SA., Board Intelligence, Equals Group Plc and Prax
Exploration Plc since March 2022.
The Directors have considered the contributing factors set out above and are
confident that the Company has adequate resources to continue in operational
existence for the foreseeable future, and do not consider there to be any
threat to the going concern status of the Company. Accordingly, they continue
to adopt the going concern basis of accounting in preparing these financial
statements.
For management purposes, the Company is domiciled in Guernsey and is engaged
in investment in UK equity instruments, mainly in one geographical area, and
therefore the Company has only one operating segment.
2. BASIC AND DILUTED EARNINGS PER SHARE
Earnings per share is based on the following data:
Six months Six months
ended ended
31 December 31 December
2024 2023
(Unaudited) (Unaudited)
Return for the period £2,091,941 £11,303,887
Weighted average number of issued Ordinary shares 71,852,163 83,177,141
Basic and diluted earnings per share (pence) 2.91 13.59
3. NAV PER SHARE
NAV per share is based on the following data:
As at 31 December As at 30 June As at 31 December
2024 2024 2023
(Unaudited) (Audited) (Unaudited)
NAV per Condensed Statement of Financial Position £127,413,205 £126,708,048 £88,288,115
Total number of issued Ordinary shares (excluding Treasury shares) 71,549,500 72,864,500 83,231,000
NAV per share (pence) 178.08 173.90 106.08
4. FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
1 July 2024 to 1 July 2023 to 1 July 2023 to
31 December 2024 30 June 31 December 2023
2024
(Unaudited) (Audited) (Unaudited)
£ £ £
Equity investments 104,893,536 104,163,131 68,854,742
Debt instruments 22,687,890 20,366,650 15,809,825
Financial assets designated at FVTPL 127,581,426 124,529,781 84,664,567
Total financial assets designated at FVTPL 127,581,426 124,529,781 84,664,567
Equity investments
Cost brought forward 85,417,572 94,072,155 94,072,155
Purchases 4,170,604 3,536,709 1,556,709
Sales (5,669,516) (14,506,694) (1,778,758)
Net realised gain 693,296 2,315,402 6,128,586
Cost carried forward 84,611,956 85,417,572 99,978,692
Unrealised gains/(losses) brought forward 17,933,233 (37,704,443) (37,704,443)
Movement in unrealised gains 1,321,002 55,637,676 5,982,218
Unrealised gains carried forward 19,254,235 17,933,233 (31,722,225)
Effect of exchange rate movements 1,027,342 812,326 598,275
Fair value of equity investments 104,893,533 104,163,131 68,854,752
Debt instruments
Cost brought forward 17,779,755 10,713,124 10,713,124
Purchases 1,560,848 7,602,881 3,629,824
Repayment of Loans - (536,250) (536,250)
Cost carried forward 19,340,603 17,779,755 13,806,698
Unrealised gains brought forward 3,131,000 2,311,120 2,311,120
Movement in Debt 569,740 819,880 329,851
Unrealised gains carried forward 3,700,740 3,131,000 2,640,971
Effect of exchange rate movements (353,450) (544,105) (637,844)
Fair value of debt instruments 22,687,893 20,366,650 15,809,825
Total financial assets designated at FVTPL 127,581,426 124,529,781 84,664,567
5. FINANCIAL INSTRUMENTS
Fair value measurements
The Company measures fair values using the following fair value hierarchy that
prioritises the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The three
levels of the fair value hierarchy under IFRS 13 are as follows:
Level 1: Quoted price (unadjusted) in an active market for an
identical instrument.
Level 2: Valuation techniques based on observable inputs, either
directly (i.e. as prices) or indirectly (i.e. derived from prices). This
category includes instruments valued using: quoted prices in active markets
for similar instruments; quoted prices for identical or similar instruments in
markets that are considered less than active; or other valuation techniques
for which all significant inputs are directly or indirectly observable from
market data.
Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments for which the valuation
technique includes inputs that are not based on observable data, and the
unobservable inputs have a significant impact on the instrument's valuation.
This category includes instruments that are valued based on quoted prices for
similar instruments for which significant unobservable adjustments or
assumptions are required to reflect differences between the instruments.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. For this purpose, the
significance of an input is assessed against the fair value measurement in its
entirety. If a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that measurement is a
Level 3 measurement. Assessing the significance of a particular input to the
fair value measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The determination of what constitutes 'observable' requires significant
judgement by the Company. The Company considers observable data to be that
market data that is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant market.
The objective of the valuation techniques used is to arrive at a fair value
measurement that reflects the price that would be received if an asset was
sold or a liability transferred in an orderly transaction between market
participants at the measurement date.
The following tables analyse, within the fair value hierarchy, the Company's
financial assets measured at fair value at 31 December 2024 and 30 June 2024:
Level 1 Level 2 Level 3 Total
Unaudited Unaudited Unaudited Unaudited
31 December 2024 £ £ £ £
Financial assets designated at FVTPL
Equity instruments - listed equity investments 32,003,601 1,048,399 - 33,052,000
Equity instruments - unlisted equity investments - - 71,841,536 71,841,536
Debt instruments - loan notes - - 22,687,890 22,687,890
32,003,601 1,048,399 94,529,426 127,581,426
Level 1 Level 2 Level 3 Total
Audited Audited Audited Audited
30 June 2024 £ £ £ £
Financial assets designated at FVTPL
Equity instruments - listed equity investments 31,614,000 1,327,971 - 32,941,971
Equity instruments - 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
The Level 1 equity investments were valued by reference to the closing bid
prices in each investee company on the reporting date.
The Level 2 equity investment relates to Sutton Harbour due to the low volume
of trading activity in the market for this investment and has been valued by
reference to the closing bid price in the investee company on the reporting
date.
The Level 3 equity investment in Allied Minds (which delisted on 30 November
2022) was valued at the net asset value per share on 31 December 2024
converted at an exchange rate of $1.2736 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 unable 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 as
at 30 June 2024, 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. There has been no
change in the valuation since 30 June 2024. 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:
Six months ended 31 December 2024 Year ended
30 June 2024
Six months ended 31 December 2023
Reconciliation in Level 3 (Unaudited) (Audited) (Unaudited)
£ £ £
Opening balance 91,587,810 43,032,574 43,032,574
Purchases 1,757,405 7,602,881 3,629,824
Movement in unrealised gains 778,543 41,688,252 -
Sales - (536,250) -
Repayments of debt instruments - - (536,250)
Effect of exchange rate movements 405,668 (199,647) (69,052)
Closing balance 94,529,426 91,587,810 46,057,096
The Company recognises transfers between levels of the fair value hierarchy on
the date of the event of change in circumstances that caused the transfer.
The table below provides information on significant unobservable inputs used
at 31 December 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 31 December 2024 Unobservable inputs Factor Sensitivity to changes in significant unobservable inputs
Morphic Medical Inc Discounted cash flow and PWERM 60,575,754 Discount rate 30% An increase (decrease) in the discount rate to 32% (28%) would reduce
(increase) FV by £10.0m (£11.8m)
7.5x
Revenue Exit Multiple
A decrease (increase) in the exit multiple to 8.5x (6.5x) would reduce
(increase) FV by £7.1m (£7.1m)
An increase (decrease) in the exit multiple to 11.5x (9.5x) would reduce
(increase) FV by £3.3m £(3.3m)
Trade Sale Revenue Exit Scenario Multiple
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 NA NA NA
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 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)
An increase (decrease) in the exit multiple to 11.5x (9.5x) would reduce
(increase) FV by £3.3m £(3.3m)
Trade Sale Revenue Exit Scenario Multiple
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 NA NA NA
Allied Minds NAV 4,471,681 Illiquidity discount 25% An increase (decrease) in the liquidity discount to 35% (to 15%) would reduce
(increase) FV by £0.6m
6. SHARE CAPITAL AND RESERVES
The authorised share capital of the Company is £3,000,000 divided into 300
million Ordinary shares of £0.01 each.
The issued share capital of the Company, including Treasury shares, is
comprised as follows:
31 December 2024 30 June 2024
(Unaudited) (Audited)
Number £ Number £
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
During the period, the Company did not issue any Ordinary shares (2023: nil).
On 28 October 2024, shareholders approved a special resolution to issue B
Shares and related actions to permit returns of capital over time to
shareholders in a more flexible manner.
7. TREASURY SHARES RESERVE
Six months ended Year ended
31 December 2024 30 June 2024
(Unaudited) (Audited)
Number £ Number £
Opening balance 26,885,262 28,022,816 16,518,762
19,767,097
Treasury shares purchased during the period/year 1,315,000 10,366,500
8,255,719
1,386,784
Closing balance 28,200,262 29,409,600 26,885,262 28,022,816
During the period ended 31 December 2024, 1,315,000 Treasury shares (2023:
969,500) were purchased at an average price of 105.46p per share (2023:
71.43), representing an average discount to NAV at the time of purchase of
43.29%. On 14 March 2025, the Company cancelled Treasury shares totalling
15,126,000 (which included 11,681,500 purchased between 15 December 2023 and
31 December 2024). At the date of this report, the Company continues to hold
16,573,672 Ordinary shares in treasury.
8. DIVIDENDS
No dividend has been declared for the six months ended 31 December 2024.
9. RELATED PARTIES
Richard Bernstein is a director and a member of the Investment Manager, a
member of the Investment Adviser and a holder of 10,000 (30 June 2024: 10,000)
Ordinary shares in the Company, representing 0.01% (30 June 2024: 0.01%) of
the voting share capital of the Company at 31 December 2024.
During the period the Company incurred management fees of £345,000 (2023:
£270,000), none of which was outstanding at 31 December 2024 (30 June 2024:
£Nil). No performance fees were payable during the period (30 June 2024:
£Nil) and none outstanding at the period end.
As at 31 December 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 period,
the Company purchased unsecured convertible loan notes of $2.0 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 31 December 2024, including accrued interest amounts to over
£22.5 million (30 June 2024: £20.2 million).
MMI was incorporated in Delaware, had five wholly-owned subsidiaries as at 31
December 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
· Morphic Medical, UK Ltd, a UK-incorporated company that conducts
certain UK business operations
In accordance with the revised Investment Management Agreement approved by
shareholders on 7 March 2022 the management fee payable to the investment
manager was intended to cease on 31 December 2023. In order to ensure that
the Fund continued to have active portfolio management in 2024, a new
Investment Management Agreement was agreed with the Investment Manager on 25
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 31 December 2024, the Investment Manager held 5,799,031 Ordinary shares
(30 June 2024: 6,299,031) of the Company, representing 8.1% (30 June 2024:
8.3%) of the voting share capital. Richard Bernstein is the majority
shareholder of the Investment Manager owning 87.1% of the voting share capital
(30 June 2024: 87.0%).
Performance fee for period ended 31 December 2024
At 31 December 2024, the Basic Performance Hurdle was £216,000 (as adjusted
for all dividends paid during the performance period on their respective
payment dates, compounded at the applicable annual rate) (June 2024:
£216,000).
The aggregate cash returned to shareholders after 1 July 2022 was £Nil.
Accordingly, no performance fee was earned during the period ended 31 December
2024 (2023: £Nil).
The interests of the Directors in the share capital of the Company at the
period/year end, and as at the date of this report, are as follows:
31 December 2024 30 June 2024
Number of Ordinary shares Total voting rights Number of Ordinary shares Total voting rights
Christopher Waldron((1)(2)) 30,000 0.04% 30,000 0.04%
Jane Le Maitre((2)) 13,500 0.02% 13,500 0.02%
Fred Hervouet 7,500 0.01% 7,500 0.01%
Total 51,000 0.07% 51,000 0.07%
( )
((1) ) Chairman of the Company
((2) ) Ordinary shares held indirectly
All related party transactions are carried out on an arm's length basis.
10. POST BALANCE SHEET EVENTS
On 3 February 2025, the Company entered into a Contract for Difference ("CFD ") agreement with CMC Markets to release liquidity. At 20 March 2025, the Company had a position of £21.5 million in De La Rue, with a net liability owed on the CFD positions of £5.7 million.
On 14 March 2025 the Company announced that 15,126,000 Ordinary shares held in
treasury had been cancelled which includes 11,681,500 shares held in treasury
at 31 December 2024. The total number of Treasury shares held prior to
cancellation on 14 March were 31,699,762 (31 December 2024: 28,200,262).
Following the cancellation the Company holds 16,573,762 Ordinary Shares in
treasury.
11. AVAILABILITY OF INTERIM REPORT
Copies of the Interim Report will be available to download from the Company's website www.crystalamber.com.
Glossary of Capitalised Defined Terms
"ABCD Worldwide Registry" means the Association of British Clinical
Diabetologists registry of new diabetes devices;
"aG-DRG" means the system in Germany used for for hospital reimbursement and
resource allocation through German Diagnosis Related Groups;
"AGM" or "Annual General Meeting" means the annual general meeting of the
Company;
"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;
"Articles of Incorporation" means the articles of incorporation of the
Company;
"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;
"BMI" means Body Mass Index;
"Board" or "Directors" or "Board of Directors" means the directors of the
Company;
"CFD" means Contract for Difference;
"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);
"Crane NXT" means Crane NXT, Co.;
"CRS" means Common Reporting Standard;
"De La Rue" means De La Rue Plc;
"Equals" means Equals Group Plc;
"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;
"FV" means Fair Value;
"FVTPL" means Fair Value Through Profit or Loss;
"IAS" means international accounting standards as issued by the Board of the
International Accounting Standards Committee;
"IFRS" means the International Financial Reporting Standards, being the
principles-based accounting standards, interpretations and the framework by
that name issued by the International Accounting Standards Board;
"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.
"UK Smaller Companies Index" means the fund that tracks the performance of the
FTSE Small Cap Index;
"IPO" means Initial Public Offering;
"KPMG" means KPMG Channel Islands Limited;
"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;
"MDR" means Medical Device Reporting;
"Medical Murray" is a Company that manufactures finished medical devices;
"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;
"NHS" means the National Health Service in England and Wales;
"NMPI" means Non-Mainstream Pooled Investments;
"Numis Small Cap Index" means the Deutsche Numis Small Companies Index
(DNSCI);
"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;
"PSFC Entities" means Pension SuperFund Capital entities;
"RESET" is an investigational medical device for people living with
uncontrolled type 2 diabetes and obesity that is sought to bridge the gap
between partially effective medications, insulin injections, and irreversible
surgery;
"Smaller Companies Index" means an index of small market capitalisation
companies;
"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;
"Trustnet" means the website powered by FE fundinfo offering comprehensive
prices, performance and key facts coverage of the local mutual funds market;
"UK" or "United Kingdom" means the United Kingdom of Great Britain and
Northern Ireland;
UK Smaller Companies Index" means the fund that tracks the performance of the
FTSE Small Cap Index;
"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;
"World Obesity Federation" means a global organisation that aims to reduce,
prevent and treat obesity;
"£" or "Pounds Sterling" or "Sterling" means British pounds sterling and
"pence" means British pence.
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