The information contained in this announcement is restricted
and is not for publication, release or distribution in the United
States of America, any member state of the European Economic Area
(other than to professional investors in Belgium, Denmark, the
Republic of Ireland, Luxembourg, the Netherlands, Norway and
Sweden), Canada, Australia, Japan or the Republic of South
Africa.
28 June 2024
Chrysalis Investments
Limited ("Chrysalis" or the "Company")
Interim
Results
Financial Summary
|
31 March 2024
|
30 September 2023
|
%
Increase
|
NAV per share
|
147.46p
|
134.65p
|
9.5%
|
Share price
|
83.00p
|
62.20p
|
33.4%
|
Total net assets
|
£878 million
|
£801 million
|
9.5%
|
Headlines
-
NAV per share of 147.46 pence, representing a
9.5% increase over the first half of the financial year
-
Follow on investment into Smart Pension (£6.1
million) and a further investment into wefox following the period
end (€5.5 million)
-
The first six months of the financial year saw
improving market conditions, which supported an increase both in
public and private asset valuations and M&A activity
-
The Investment Adviser continues to focus on
balancing investee company growth with a path to cash generation,
with the objective of driving maximum value across the
portfolio
-
Funding options continue to be explored at wefox.
The exact structure and option chosen will determine the precise
ramifications for the Company's holding, but the balance of
probabilities suggest the most viable ones are likely to involve a
further decrease in the carrying value of this asset, possibly by a
material degree
-
The previously mentioned "likely disposal" and
the debt facility negotiations remain on track, and could deliver
over £100 million of near-term liquidity, representing c22% of the
Company's market capitalisation
-
In addition, the Investment Adviser is exploring
other liquidity opportunities that have the potential to generate
significant further cash realisations, albeit these processes are
at an earlier stage and carry a commensurately greater risk to
completion
-
Having gained approval for its Capital Allocation
Policy (CAP), the Board and the Investment Adviser are considering
the best possible ways to address the share price discount to
NAV
Andrew Haining, Chair,
commented:
"The six-month period to March 2024 has seen a
modest recovery in our portfolio of investments and improved
visibility on potential liquidity options within the portfolio. The
Board is acutely aware of the discount at which the Company's
shares trade, relative to the NAV per share, and continues to
explore ways to reduce the level of this
discount.
The Investment Adviser has worked with other stakeholders to
resolve wefox's funding situation and continues to help shape these
conversations. While it is frustrating not to be able to offer
shareholders clearer guidance, we will endeavour to do so as soon
as reasonably practicable."
Nick Williamson and Richard Watts,
Managing Partners of the Investment Adviser, commented:
"The market backdrop is probably the best it has been since
growth assets began to correct in late 2021/early 2022; this is
encouraging for potential asset realisations.
We continue to work hard to explore opportunities to increase
the Company's liquidity (currently c£18 million), which we see as
key to unlocking both the CAP and, by inference, addressing the
current discount to NAV the shares trade on. To this end, we have a
number of live discussions on-going, two of which - the "likely
disposal" mentioned in December 2023, and the possibility of a debt
facility - we have mentioned publicly. In terms of the former, we
believe the process is on track and we hope it will come to a
conclusion in the short-term; on the latter, discussions are at an
advanced stage. Successfully concluding either of these would at
least cover our £50 million buffer requirement under the CAP;
together they would provide a significant surplus at over £100
million (including our current liquidity). This would equate to
approximately 22% of the Company's current market
capitalisation.
In addition, we are involved in other processes, at different
stages of maturity and certainty, which could lead to further
significant cash realisations.
We continue to work hard with the portfolio companies to
ensure they are in the best possible position to maximise their
valuations."
-ENDS-
For further information, please contact
Media
Montfort Communications:
Charlotte McMullen / Imogen
Saunders
|
+44 (0) 7921 881 800
chrysalis@montfort.london
|
|
|
Chrysalis Investment Partners LLP:
James Simpson
|
+44 (0) 20 7871 5343
|
G10 Capital Limited (AIFM):
|
|
Maria Baldwin
|
+44 (0) 20 7397 5450
|
|
|
Liberum:
Chris Clarke / Darren Vickers /
Owen Matthews
|
+44 (0) 20 3100 2000
|
Deutsche Numis:
Nathan Brown / Matt
Goss
|
+44 (0) 20 7260 1000
|
Apex Administration (Guernsey) Limited:
Chris Bougourd
|
+44 (0) 20 3530 3109
|
LEI:
213800F9SQ753JQHSW24
A copy of this announcement will
be available on the Company's website at https://www.chrysalisinvestments.co.uk
The information contained in this
announcement regarding the Company's investments has been provided
by the relevant underlying portfolio company and has not been
independently verified by the Company. The information contained
herein is unaudited.
This announcement is for
information purposes only and is not an offer to invest. All
investments are subject to risk. Past performance is no guarantee
of future returns. Prospective investors are advised to seek expert
legal, financial, tax and other professional advice before making
any investment decision. The value of investments may fluctuate.
Results achieved in the past are no guarantee of future results.
Neither the content of the Company's website, nor the content on
any website accessible from hyperlinks on its website for any other
website, is incorporated into, or forms part of, this announcement
nor, unless previously published by means of a recognised
information service, should any such content be relied upon in
reaching a decision as to whether or not to acquire, continue to
hold, or dispose of, securities in the Company.
The Company is an alternative
investment fund ("AIF") for the purposes of the AIFM Directive and
as such is required to have an investment manager who is duly
authorised to undertake the role of an alternative investment fund
manager ("AIFM"). The AIFM appointed is G10 Capital Limited (part
of the IQEQ Group).
Chairman's Statement
The six-month period to 31 March
2024 has seen a modest recovery in our portfolio of investments and
improved visibility on potential liquidity options within the
portfolio.
The Net Asset Value ("NAV") for
the period increased from 134.65p per share (as at 30 September
2023) to 147.46p per share (as at 31 March 2024). The Investment
Adviser's Report goes into more detail on the individual
investments, but at the portfolio level it is encouraging to see
momentum building from improving underlying operating performance,
increased corporate activity and the early signs of primary capital
markets reopening.
The Board is acutely aware that,
notwithstanding this improved backdrop, our shares continue to
trade in a 40% to 50% discount range to our NAV per share. The
focus of our attention at the Board is ensuring that we, in
conjunction with the Investment Adviser, continue to explore all
ways in which we can possibly reduce this level of discount, which
we believe significantly undervalues your Company. I have
referenced some of the action steps below and the Investment
Adviser also addresses this issue in its report in greater
detail.
AGM Result
On 15 March 2024, we held our AGM
which sought to agree the following:
1. A
continuation of the Company's operating basis through until March
2027, with rationale for,
2. A
revised agreement with the investment team that has worked on the
portfolio from inception, but which has now formed its own
investment advisory company to provide investment advice for the
Company; and
3. A
Capital Allocation Policy which would cover the next phase in the
Company's development through to March 2027.
The Board was delighted that its
proposals met with such strong support. We are grateful to all
shareholders who supported us on these issues, and particularly
those who had provided input during the consultation
phase.
Ongoing Discount Management
The Shareholders of the Company,
in support of continuation, agreed at the AGM to adopt the
following Capital Allocation Policy where available capital to the
Company would be applied in the following way:
1. To
support existing portfolio companies;
2. To fund
working capital (operating costs, fees etc.);
3. To
invest in late-stage growth opportunities in accordance with the
Company's investment policy; and
4. To
return available capital to Shareholders through share buybacks (or
equivalent programmes) where it is economically attractive to do
so.
In order to support the first two
points above, the Board has indicated that we intend to maintain a
cash buffer of up to £50 million.
We have previously announced a
"potential disposal", which is currently still navigating its way
through, what will hopefully be, the final stages of approval; we
have also indicated the Investment Adviser
has been exploring securing a debt facility, where we are undertaking final analysis over the next few
weeks. If either of these two liquidity events come to fruition,
they will enable us to at least cover the requirement for
the £50 million
buffer; collectively, they would provide a significant surplus at
over £100 million (including our current liquidity
position).
We have already been considering
various options for how available liquidity beyond the £50 million
buffer could be applied to returning capital to shareholders. We
will be working with our brokers - Liberum and Deutsche Numis - on
which option makes most sense based on a variety of factors,
including comparable approaches being adopted by others in the
market.
Assuming completion of the
potential disposal and the debt facility, coupled with any other
liquidity events that may occur within the portfolio, the Company
should be in a position to begin to make progress towards its goal
of returning £100 million of capital.
Wefox Holding AG ("wefox")
While the Investment Adviser
covers wefox in its report, I felt it appropriate to also comment
here.
The Board is aware of the recent
media reports concerning wefox and believes it is unfortunate that
selective details of the restructuring of this important investment
have been made public. Negotiations continue and the Investment
Adviser is directly involved in that process.
However, I do think it is worth
clarifying the following issues for shareholders:
· The
Company provided the market with a March quarter end valuation of
its assets on 2 May 2024, which is
consistent with the valuation included in these interim financial
statements. The Company's carrying value
of wefox of £126.5 million (or approximately 21 pence per share) at
that date was based on information available to the Company at that
time in accordance with accounting and market practice. The
information included results to 31 March 2024 together with
business projections going forward. Those projections noted the
need for additional cash in the business to support wefox's future
plans and made provision for how such funds would likely be raised.
The Company made a further announcement on 17 May 2024 following a
Sky News article on wefox, which referred to a Memo to wefox
shareholders. The Investment Adviser reviewed the information
contained in that Memo to the information we had available for the
31 March valuation and concluded that there was no material new
information.
· In
the normal course of business, a valuation of the portfolio,
including wefox, will be performed as at 30 June 2024 during July
and published at the end of July. That valuation will take account
of the proposals for how wefox may go forward, which we expect to
be at a more advanced stage by then.
· If
negotiations conclude prior to our 30 June NAV being published in
July, we will consider whether it is appropriate to update
shareholders on any impact on the carrying value of
wefox.
· I do
not believe it is appropriate to comment on media speculation, but
it is fair to say there are a range of possible options being
discussed that lead to a variety of outcomes for our investment.
These options include recapitalisation of wefox, as well as
potential disposals. The exact structure and option chosen will
determine the precise ramifications for our holding, but the
balance of probabilities suggest the most viable ones are likely to
involve a further decrease in the carrying value of this asset,
possibly by a material degree.
· The
Investment Adviser has proffered a solution to recapitalise wefox,
which, with selective disposals, would see the company funded to
likely profitability. It believes this proposal has met with the
approval of a number of other shareholders.
· Chrysalis has expressed clearly to the board of wefox that it
expects the directors to implement a business strategy in the
interests of all shareholders, in line with its fiduciary duties,
and has recommended the use of independent investment banks to
oversee the implementation of any disposal strategy. Furthermore,
Chrysalis is generally not supportive of situations where the roles
of chairman and chief executive are combined.
While I appreciate it is
frustrating not to be able to offer shareholders more precision in
regard to wefox, at the current point in time, any efforts to
do so are at risk of proving misleading.
Elsewhere, the Board remain
confident that there are not only positive developments at an
operating level across the portfolio but also a positive change in
the capital markets for growth companies. The Board continues to
believe that the portfolio as a whole can develop successfully over
the coming months and years.
It remains me for to thank my
colleagues and all service providers to the Company for their hard
work during the period.
Signed on behalf of the Board
by:
Andrew Haining
Chairman
28 June 2024
Portfolio Statement
As at 31 March 2024
|
|
|
|
|
|
|
Company
|
Location
|
Cost
(£'000)
|
Opening
value
1 October
2023
(£'000)
|
Net invested /
returned
(£'000)
|
Fair value
movements
(£'000)
|
Closing
Value
(£'000)
|
% of net
assets
|
Starling Bank Limited
|
UK
|
118,349
|
141,696
|
-
|
65,274
|
206,970
|
23.6
|
Wefox Holding AG
|
Germany
|
69,187
|
188,633
|
-
|
(62,158)
|
126,475
|
14.4
|
Smart Pension Limited
|
UK
|
108,570
|
79,683
|
6,069
|
19,399
|
105,151
|
12.0
|
Klarna Group PLC
|
UK
|
71,486
|
56,913
|
-
|
43,066
|
99,979
|
11.4
|
The Brandtech Group LLC
|
USA
|
46,440
|
103,881
|
-
|
(7,024)
|
96,857
|
11.0
|
Featurespace Limited
|
UK
|
29,546
|
49,588
|
-
|
22,571
|
72,159
|
8.2
|
Deep Instinct Limited
|
USA
|
62,225
|
51,514
|
-
|
(6,147)
|
45,367
|
5.2
|
Cognitive Logic Inc.
("InfoSum")
|
USA
|
48,454
|
27,231
|
-
|
8,843
|
36,074
|
4.1
|
Graphcore Limited
|
UK
|
57,589
|
16,506
|
-
|
18,560
|
35,066
|
4.0
|
Secret Escapes Limited
|
UK
|
28,008
|
25,030
|
-
|
1,202
|
26,232
|
3.0
|
Wise PLC
|
UK
|
2,621
|
10,284
|
(2,809)
|
3,668
|
11,143
|
1.3
|
Sorted Holdings Limited
|
UK
|
316
|
316
|
-
|
-
|
316
|
0.0
|
Growth Street Holdings
Limited
|
UK
|
11,223
|
63
|
-
|
-
|
63
|
0.0
|
Tactus Holdings Limited
|
UK
|
42,130
|
29,038
|
-
|
(29,038)
|
-
|
0.0
|
Rowanmoor Group Limited
|
UK
|
13,363
|
-
|
-
|
-
|
-
|
0.0
|
Total investments
|
|
709,507
|
780,376
|
3,260
|
78,216
|
861,852
|
98.2
|
Cash and cash equivalents
|
|
|
|
|
|
16,461
|
1.9
|
Other net current
liabilities
|
|
|
|
|
|
(676)
|
(0.1)
|
Total net assets
|
|
|
|
|
|
877,637
|
100.0
|
|
|
|
|
|
|
|
|
Investment Adviser's Report
Market context
Overall, the Investment Adviser
views the market backdrop as probably the best it has been since
growth assets began to correct in late 2021/ early 2022. This is
encouraging for potential asset realisations.
Stock markets generally performed
well over the six months to March 2024. NASDAQ rose approximately
24%, driven by mega caps such as Nvidia, Microsoft and Amazon, and
assisted by falling yields: US 10 year yields fell from 4.6% to
4.2% over the period. The UK also saw progression, albeit at a
slower rate, with the FTSE All Share index rising by approximately
5%.
The performance of these indices
suggests that the negative valuation ramifications for
long-duration growth assets, from the shift in the interest rate
environment in late-2021, are showing signs of abating. This has
begun to feed through to IPO markets where European IPOs have seen
a pick up in activity with 11 undertaken in 1Q24, versus only 5 in
1Q23. The US has also fared better, with 63 IPOs undertaken
year-to-date, versus 59 by the same point in 2023.
UK IPO markets have remained under
significant pressure, with minimal activity over the last two
quarters. Following on from no listings in 4Q23, the UK saw only
two in 1Q24, which raised £6 million in total. The Investment
Adviser is nevertheless encouraged by the overall picture, with
risk appetite seeming to be cautiously returning to listed
markets.
The Investment Adviser has always
viewed IPO as an important exit route for the Company's assets, but
not the only one. Commensurate with the improvement in activity
seen in many listed markets, trade/sponsor sales and secondary
markets have also seen increased activity. This could give the
Company another route to achieve liquidity in the portfolio and has
been used before to achieve an exit when Embark was sold to Lloyds
Banking Group in 2022.
In terms of sponsor sales, rising
interest rates also had an impact on global M&A activity, with
higher borrowing costs affecting the number of corporate
acquisitions and leveraged buyouts. There was a decline in global
M&A activity by deal volume in both 2022 and 2023, with 2023
representing the second lowest level of M&A activity by deal
volume since 2014.
There are reasons for optimism,
however, with deal volumes historically rebounding strongly
following two consecutive annual declines. This was evident
following 2001-2002 and 2007-2008. This trend was apparent in 1Q
2024 with total global deal value increasing by approximately 4%
year-on-year.
Within this, technology M&A
saw a more pronounced increase and accounted for approximately 24%
of deal value in 1Q 2024, up from approximately 16% in 1Q 2023.
This rebound saw deal value in technology rise to $165 billion in
1Q 2024, up approximately 43% year-on-year. These figures were
driven by several large cap technology deals such as Synopsys
agreeing to acquire Ansys, a provider of engineering simulation
software, for a total of $35 billion and Hewlett Packard Enterprise
("HPE") also agreeing to acquire Juniper Networks, a provider of
high-performance networking solutions, for $14 billion.
There is also a noticeable
increase in the average EV/EBITDA valuation multiple paid of the
trailing twelve months across the sector, with a trailing
twelve-month EV/EBITDA multiple of 15.2x representing a ten-year
high. The five largest technology acquisitions year to date all
involved strategic buyers, with only two private equity deals
making it into the largest ten M&A transactions, so there is
clear evidence to suggest that acquirers are willing to pay a
significant valuation premium for a highly strategic
asset.
There have been a number of
M&A transactions across relevant sectors for Chrysalis,
particularly the cyber security and marketing technology sectors.
Examples pertinent to the portfolio include LiveRamp acquiring Habu
(a data cleanroom company; analogous to InfoSum) for $200 million -
with estimated historic revenues of c$9.4 million - and a number in
the cyber security space, including Crowdstrike buying Bionic (a
cyber security company; analogous to Deep Instinct) for $350
million, which had estimated revenues of $10 million.
This suggests that those assets
occupying a strategic niche and/or performing strongly in their
markets are proving attractive to competitors.
The secondary private market has
also seen an increase in activity.
Although pricing has yet to
respond to this activity, total indications of interest ("IoI") on
Forge's platform have risen by 45% in 1Q 2024 versus 4Q 2023 and
the skew has shifted materially towards buying.
Activity
In line with previous periods, the
Company has not had access to new capital, given the discount its
shares have been trading at relative to NAV. As such, the
Investment Adviser has focused resources on follow-ons to support
existing investee companies, where necessary.
Over the period, an approximate
£6.1 million investment was made into Smart Pension to further
accelerate growth, including via M&A, and which is expected to
underpin Smart's drive towards profitability. This transaction
resulted in an uplift to the Company's carrying value, equivalent
to approximately 3.3 pence per share.
Elsewhere, approximately £2.8
million was realised via the sale of shares in Wise; this was
achieved at an average share price of 936 pence per
share.
In December 2023, the Company
announced it had visibility over a likely disposal at a valuation
that, if applied to the Company's Net Asset Value ("NAV") as at 30
September 2023, would imply an increase of approximately 5.5 pence
per ordinary share to the Company's NAV. It went on to say that
completion of the disposal, which was subject to conditions, was
likely to take a number of months.
At the current time, the
Investment Adviser has no further comment to make on this, bar that
the process remains on-going.
Outlook
The Investment Adviser will
continue to focus on two main areas:
1.
Maximising investee company potential to boost valuations
and
2. Closing
the discount to NAV the Company's shares trade at.
Maximising investee company
potential to boost valuations
As previously discussed, the last
couple of years have seen a shift in focus by the market away from
pure growth, to one which balances growth with a path to cash
generation. It is fair to say that this is still an important
consideration, despite a better market backdrop.
Much of the work the Investment
Adviser undertakes is behind the scenes, but a good example of the
type of programme that has been prevalent recently is the funding
round undertaken by Smart.
The Company committed
approximately £6.1 million to a funding round in March 2024, which
was also backed by other major Shareholders. This fresh capital
will help Smart to accelerate along its road to profitability,
partly via cost optimisation, and ensure it continues to grow as
fast as possible, by giving it firepower for potential
acquisitions. As part of this process, certain new hires have been
made, most pertinently a new CPO in Bahea Izmeqna, who joins
from Standard Chartered Ventures where she was COO. In
addition, a new Chairman has also been appointed, following the
decision of Ruston Smith to step down. Gordon Wilson has a 20 year
track record in software, which the Investment Adviser believes
makes him ideal for the next stage of Smart's growth, part of which
involves the optimisation of Keystone, the company's technology
platform.
Elsewhere, the Investment Adviser
continues to push for actions that might improve eventual exit
valuations. For example, the Investment Adviser has been a
long-term proponent of Engine (Starling's Platform as a Service
"PaaS" offering), which it views as a potentially key driver for
Starling's eventual exit valuation. With the delivery of one of its
initial contracts in the period, it appears that there is market
demand for this service.
Continuing to drive maximum value
across the portfolio is also important for the second point -
closing the discount - as it can accelerate realisations;
profitability is an asset when it comes to securing a liquidity
event, certainly via IPO but also-via trade sale.
Closing the
discount
The Company set out and gained
approval for its Capital Allocation Policy ("CAP") as part of its
Continuation Vote in March 2024. The CAP sets the framework for
capital returns to Shareholders, to be funded by future
realisations.
As of period end, the Company had
total liquidity of approximately £27 million, comprising net cash
of approximately
£16 million and a position in Wise
worth approximately £11 million. In addition, the Company has
previously announced two processes it is involved in - a "likely
disposal" mentioned in December 2023, and the possibility of
putting in place a debt facility. In terms of the former, the
Investment Adviser believes the process is on track and hopes it
will come to a conclusion in the short-term; on the latter,
discussions are at an advanced stage.
Successfully concluding either of
these would at least cover the £50 million buffer requirement under
the CAP; together they would provide a significant surplus at over
£100 million (including current liquidity).
Thereafter, the Investment Adviser
believes there are other avenues for liquidity, including a
potential Klarna IPO. At
the Company's current carrying
value, this would yield a further £100 million of
liquidity.
In conclusion, listed and private
markets seem to be recovering some poise and this has allowed
market activity, as well as valuations, to improve. The Investment
Adviser views this as potentially encouraging for future
realisations. While some capital is likely to be required to
continue to support the portfolio as it develops, the Investment
Adviser believes the current liquidity position of the Company is
adequate to cover this.
Company section
Featurespace Limited ("Featurespace")
Featurespace continues to be at
the forefront of combating fraud and financial crime. The company's
Adaptive Behavioural Analytics - a machine learning software
solution, typically delivered via ARIC Risk Hub - already yields
some of the best results in the industry; a partnership with TSYS
via its "Foresight Score" has seen customers benefit from as much
as a 70% reduction in net fraud, partly helped by a 34% decrease in
false positives.
Other customers have also
benefited materially, with NatWest and Featurespace winning the
"Best Innovation by a Financial Institution" award at the 2023
Fraud and AML Impact Awards, for the former's deployment of ARIC
Risk Hub. This led to increases of 57% and 135% in the value of
fraud and scams detected respectively.
Despite having a best-in-class
product, Featurespace has continued development and launched
TallierLTM in October 2023. Tallier uses Generative AI and
represents the first adoption of this technology to build a Large
Transaction Model "LTM". Tallier can be deployed at major scale, is
self-supervised and pre-trained, and can significantly improve
fraud value detection rates, by up to 71%. Tallier analyses
individual customers' spending patterns, thus allowing it to
predict likely future transactions, and in turn can highlight any
deviations from these predictions, which could indicate fraud. This
analysis can also inform financial institutions of their customers'
spending habits, thus potentially enabling other services to be
offered. The Investment Adviser believes Tallier will maintain
Featurespace's advantage in the fraud detection market, and offers
an AI solution to frauds that are beginning to be generated by
AI.
Fraud continues to be a major
issue in society. The Nilson Report predicts global fraud losses
are likely to be nearly $400 billion over the next ten years, with
approximately $165 billion being in the US. Scams, such as
Authorised Push Payments ("APP"), are also rising. In 2023, the
Financial Times reported a 193% increase in APP scams over the last
five years, with £239 million lost in 1H23 alone in the
UK.
Featurespace has seen demand for
its products continue to grow. Over 2023, the company saw
particularly rapid growth of approximately 50%, with a number of
major global financial institutions procuring new or additional
services; this progress led to underlying EBITDA performing better
than expected. The company's cash position remains strong. The
factors above contributed to the company's recent upward
revaluation in the portfolio.
Smart Pension Limited ("Smart")
Smart has designed and built
software to allow customers, particularly SMEs, to easily onboard
and manage pensions for their employees. The company's technology
platform - Keystone - not only powers the Smart Pension Master
Trust ("SPMT") in the UK, but is also available for white labelling
and to power other entities' schemes, such as the eMPF project for
the Mandatory Provident Fund Schemes Authority ("MPFA") in Hong
Kong.
Auto enrolment was introduced into
the UK over ten years ago in order to address the "retirement gap"
of workers not saving enough during their working lives; automatic
enrolment had benefited nearly eleven million people by the end of
2022. The success of this project has encouraged other countries,
also with retirement savings gaps, to consider similar schemes, and
this is contributing to growth opportunities for Smart both in the
UK and abroad.
SPMT has continued to grow well.
In March 2024, assets under management ("AuM") hit £5 billion. With
regular contributions from members of £1 billion per annum and many
schemes being relatively young, this suggests strong organic growth
will continue, with faster growth rates forecast over 2024 and
2025.
In addition to organic growth,
SPMT has been a successful acquirer of other schemes, nine of which
have been added over the years, most recently Evolve in July 2023,
which added approximately £750 million of AuM. SPMT currently has
over 1.4 million members working at 70,000 employers.
Keystone has been successful in
partnering with Zurich in Dubai, where new workplace schemes are
emerging, as well as with New Ireland Assurance - part of Bank of
Ireland Group - where it powers one of its new pension
offerings.
Like most VC-backed businesses
over the last two years, Smart has looked to balance its growth
opportunities with its cost base and cash runway. Over the course
of the last 18 months, Smart has continually looked to optimise its
operations for efficiency and the Company has supported it through
this process.
To this end, a capital injection
of approximately £6.1 million was made in March 2024 to further
accelerate growth, including via M&A, as well as assist Smart's
drive towards profitability, which the Investment Adviser believes
is within reach. At the time of this investment, the Investment
Adviser stated that it believed the terms associated with the
investment would give rise to an increase of approximately 3.3
pence per share in the Company's Net Asset Value per share.
Following the March revaluation process, this uplift has been
ratified.
With an efficient business model
and several growth angles in front of it, the Investment Adviser is
optimistic of progress over the coming year.
Klarna Group PLC ("Klarna")
Klarna has received considerable
attention from investors and journalists alike over the last six
months, due to both its financial performance and its articulation
of a desire to IPO soon.
In terms of 2023, Klarna saw
revenue growth accelerate to 22%, outstripping GMV growth of 17%,
due to mix effects from growth in the US (higher take rate) as well
as likely increases in other services, such as marketing. As a
result of operational gearing, gross profit grew 60%, with falling
credit losses - which dipped to 38 basis points ("bps") of GMV,
down from 66 bps in 2022 - being the main driver. The Investment
Adviser believes this reflects the on-going maturation of the US:
new markets typically experience significantly higher loss ratios,
as the lending model is fine-tuned and non-payers are weeded
out.
The upshot of this was that
adjusted operating losses fell from SEK7.8 billion in 2022 to
SEK0.4 billion in 2023, with the second and third quarters in 2023
reporting profits. Klarna dipped back into loss in 4Q23 as the
business invested in growth ahead of 2024; this was mainly seen via
a pick-up in impairments and operating costs.
This strong financial progression
has continued through 2024 with the company releasing a strong 1Q
trading update post the period-end. Klarna generated 29% revenue
growth year-on-year and adjusted operating profit of SEK229
million. The US continued to perform well, generating 38% revenue
growth year-on-year and 97% profit growth.
Klarna has also been vocal about
its investment in generative AI over the last year, particularly
its collaboration with OpenAI/ChatGPT. As a particular example,
Klarna highlighted the work it had undertaken in customer service
in February 2024. A month after deploying its AI powered assistant,
it had already undertaken 2.3 million conversations with customers,
representing two thirds of all interactions. The new assistant has
seen resolution times drop from eleven minutes on average to less
than two, a 25% drop in repeat enquiries and is doing the work of
700 full time agents. Klarna estimates it will drive a $40 million
improvement in profit in 2024.
Klarna continues to challenge the
existing credit model, typified by credit cards, and has recently
published consumer survey data in the US.
Globally, Klarna's default rate is
around 1%; it is likely higher in the US as it is a newer market.
Of all US BNPL orders, 96% are paid on time and only 2% are handed
over to a debt collection agency. This compares with credit cards
where 41% of users are revolving their debt monthly at rates of up
to 36%. The credit card model relies on customers being in debt so
that interest is applied, unlike BNPL which is typically merchant
funded and thus interest free, and the stock of credit card debt
hit a high of $1.13 trillion in the US in 2023.
The Klarna model is differentiated
to consumers by its much lower cost, as well as its ease of use:
orders and returns can be tracked efficiently, watch lists for
certain products can be created, AI powered tools can help search
for products via images etcetera. The Investment Adviser believes
this inherently more beneficial customer proposition is what has
helped Klarna to grow so successfully over recent years.
As Klarna has moved towards
profitability so speculation about a potential IPO has mounted.
Over the early part of 2024, Klarna's CEO gave a number of
interviews saying that an IPO is likely to happen "quite soon",
intimating that it might occur in the US.
The Investment Adviser has spelt
out the ramifications of such a move already, but at the Company's
carrying value, this could imply a liquidity injection of
approximately £100 million, which would be very material in terms
of the Company's CAP and versus its current market
capitalisation.
Starling Bank Limited ("Starling")
Starling has continued to perform
well against a backdrop of interest rates that were materially
higher over 2023 versus 2022. This has enabled the bank to earn
returns on assets held in liquid form or with other financial
institutions, including the Bank of England, thus boosting
profitability. The Investment Adviser has commented extensively on
this dynamic in recent reports.
During the period, there have been
two key pieces of news.
The first concerns the appointment
of a permanent CEO in Raman Bhatia.
Raman has taken over from John
Mountain, who was interim-CEO following the decision taken by Anne
Boden to step back from the role in 2023. Prior to joining
Starling, Raman was CEO of OVO, a leading energy retailer in the
UK, and before that was the Head of Digital Bank for HSBC's Retail
Banking and Wealth Management business in the UK and
Europe.
The second piece of news centres
around Engine by Starling ("Engine"), the Platform as a Service
("PaaS") offering which enables Engine to deliver a cloud native,
modular, API based banking platform. Effectively, this is the
software that runs Starling Bank, but which has been evolved for
rapid deployment by other entities.
Whereas many fintech providers
offer discrete banking services, such as onboarding or ledger
management, the Engine proposition has a full stack covering
transactional products, savings products, loans/credit cards as
well as onboarding, fraud and processing operations that banks need
to manage behind the scenes. In essence, it is a "bank in a
box".
Given Engine is effectively
already running a major UK bank with 4 million customers, the
technology is already "battle hardened", and what Engine offers is
the ability for customers to rapidly deploy and scale. The first
iteration has been a deployment by Salt Bank ("Salt") in Romania,
which went live in less than 12 months - a time the Investment
Adviser believes is market leading and thinks it reasonable to
expect that this duration will shorten on further
deployments.
Following Salt Bank's launch, the
platform onboarded 100,000 customers in two weeks, which Engine
believes makes Salt one of the fastest growing neobanks in
Southeast Europe.
In November 2023, AMP - a AUD2.9
billion financial services company listed in Australia - announced
a partnership with Engine to launch a digital bank division
targeting sole traders and small businesses. The company expects to
spend AUD60 million over 2024 and 2025 and to deliver its solution
in 1Q25.
With these two contracts, the
Investment Adviser believes that the strategic importance of
Starling's technology is beginning to become apparent. Assuming a
further successful deployment with AMP, Starling will have three
credible reference customers - including Starling - as well as real
world deployment experience. The Investment Adviser believes this
then makes it possible to build another profit generating division,
to sit alongside the core UK bank; importantly, valuation multiples
available in software are typically much higher than banking. Thus
Engine could offer a way to enhance Starling's overall valuation,
potentially by a material amount.
The carrying value of Starling was
written up over the period, reflecting ongoing strong profit
generation and less prominence placed on valuation metrics that
were calibrated back to the time of the Company's acquisition of
secondary stock in February 2023.
Wefox Holding AG ("wefox")
The Investment Adviser has
previously flagged that wefox has been focusing on demonstrating a
clear roadmap to profitability and it was encouraged that the
company reported its first full month of profitability in December
2023. This was achieved by growing revenues by over 60% in 2023 to
€770 million while reducing the cost base by approximately 6%
year-on-year; wefox now serves almost three million customers
across several European markets.
At an operational level, a number
of senior hires were made over the period, which have strengthened
the executive committee. Jonathan Wismer joined the Group in
October 2023 as CFO; Jonathan was most recently the CFO for
Resolution Life US and prior to that the Deputy CFO and Chief
Accounting Officer for AIG. Paul Hannen was appointed as CTO in
November 2023 and has more than 30 years' experience in founding,
directing, and executing business-to-consumer ("B2C") and
business-to-business ("B2B") SaaS platforms and products for
leading organisations, including Amazon, Google, Expedia and
Nordstrom.com.
The Investment Adviser is aware of
recent media commentary concerning wefox, which started with a news
article published by Sky News on 16 May 2024 regarding the
short-term solvency of wefox, and has been a leading voice in
proposing solutions to wefox's funding status over the last few
months. Negotiations are continuing and there remain a wide range
of possible outcomes, making it difficult at this time to provide
any precision on the likely impact on the Company's carrying
valuation. It has become clear that a further decrease in wefox's
assessed valuation, and thus the Company's carrying valuation, is
more likely than not, and the Investment Adviser remains focused on
protecting shareholder value.
The strategic options being
discussed are likely to involve a continued focus on profitability
in the current financial year, further reductions in the cost base,
a doubling-down on the most profitable business segments, and
possible disposals. Post period end, wefox raised approximately
€21million from shareholders, to which the Company contributed
€5.5million. The Investment Adviser continues to work with other
wefox stakeholders to find the best possible solution for the
company, and it will update shareholders as soon as reasonably
practicable in this regard.
The valuation of wefox fell in the
period, reflecting a deterioration in the assessed multiple of the
listed peer group against which wefox is marked, a fading of the
calibrated premium to the last funding round reflecting passage of
time, and the strategic repositioning within the
business.
The
Brandtech Group LLC ("Brandtech")
Brandtech acquired Jellyfish, a
leading global digital media and marketing group, in June 2023 and
has spent the last twelve months integrating that acquisition into
the Group. Jellyfish represented the largest acquisition in
Brandtech's history, and a significant amount of work has been done
to drive the performance of the business. Following this
acquisition the company now generates more than $1 billion in
revenue and has over 7,000 employees. This makes Brandtech the
world's leading digital-only marketing group and leading global
generative AI marketing company.
While organic growth was softer
over the course of 2023, given a challenging trading environment
for the media sector as a whole, we are hopeful that the adoption
of generative AI will drive pipeline momentum.
More recently, Pencil, Brandtech's
generative AI marketing platform, was named by Fast Company as one
of the World's Most Innovative Companies, the only generative AI
marketing company to be recognised. David Jones launched Brandtech
with the founding belief that all marketing could be done better,
faster and cheaper using technology and these technologies are
likely to bring benefits to customers. Pencil, founded in 2018 has
made over 1 million advertisements through generative AI, deploying
more than $1 billion in media spend across 5,000 brands, enabling
it to predict performance as well as generating content. Typically,
Pencil's advertisements are 10x faster, with 2x better performance
than a brand's usual baseline, as well as being significantly
cheaper.
Finally of note, Matthieu Bucaille
joined the company as Global CFO in March 2024. Matthieu was
previously the ex-CEO of Lazard International and held several
senior roles there including Global CFO of publicly listed Lazard
Ltd. from 2011 to 2017. This is an encouraging appointment and will
stand Brandtech in good stead ahead of a future IPO.
Deep Instinct Limited ("Deep Instinct")
Deep Instinct released its 2023
Bi-Annual Cyber Threat Report during the period which details the
most pressing cyber threats of the year. The report shows that the
total number of ransomware victims in 2023 compared to 2022 is
significantly higher, with the number of victims in the first half
of 2023 already exceeding all victims across 2022.
The first half of 2023 saw the
rise of Large Language Models ("LLMs") and as they become more
accurate and powerful, threat actors are likely to leverage them
aggressively. Deep Instinct is predicting that LLMs will soon be
able to perform standalone vulnerability research and execute
attacks; the Investment Adviser believes that AI will be needed to
combat these sophisticated threats, which formed part of the
initial investment case.
Deep Instinct continues to
innovate and develop cutting edge technologies and the company
launched two new products over the period.
In October 2023, it announced the
launch of Deep Instinct Prevention for Storage ("DPS"). This
solution applies a prevention-first approach to storage protection
and seamlessly integrates into existing environments to deliver
unparalleled efficacy and accuracy. In practice this means that
whenever a file is added or changed in a storage environment, it is
scanned immediately and malicious files are either quarantined or
deleted to prevent execution. Legacy solutions are insufficient in
protecting data as they provide low detection rates for unknown
malware. With the amount of data being stored in public and hybrid
cloud environments continuing to grow rapidly, and cloud vendors
only protecting the storage itself and not the integrity of files
stored, there would appear to be a market opportunity for this
product.
Deep Instinct subsequently
announced the launch of Deep Instinct Prevention for Applications
("DPA") v3.0, which includes enhanced file upload protection and
application storage security capabilities. DPA v3.0 is an
agentless, on-demand, anti-malware solution that is device and
system agnostic, seamlessly connecting to an organisation's
existing infrastructure to quickly scan files and provide a verdict
before the file is allowed into an application or storage
repository. It has a false positive rate of just 0.1%.
These two new solutions are
beginning to generate significant interest from prospective clients
with strong pipeline growth and momentum over the period. Delivery
of this pipeline would drive robust ARR growth over the course of
2024 and the Investment Adviser is encouraged by the company's
recent financial performance.
Cognitive Logic Inc. ("InfoSum")
InfoSum has developed an industry
leading first-party data collaboration platform using its patented
non-movement of data technology. With its data clean room solution,
InfoSum enables customer-centric organisations to instantly match
and analyse unlimited datasets in real-time without sharing or
moving data, eliminating the risk of exposure, leakage, or misuse.
This collaborative intelligence allows for faster and more seamless
marketing use cases, including deep consumer insights,
cross-channel activation, and measurement, with end-to-end
protection and security.
One of the likely drivers in the
market is the prospective deprecation of third-party cookies on
Google's Chrome browser. Plans for deprecation were first announced
in January 2020, but have been delayed by a number of years, which
has been a frustration to the company. However, it appears that 1%
of cookies were deprecated in January 2024 with Google hoping to
eliminate cookies entirely by the end of 2024. Identifier
deprecation and evolving legislation (particularly in the US)
continues to have a profound impact on the buying and selling of
advertising and this should translate into increased demand for
privacy-first advertising solutions.
Large technology companies such as
AWS, Snowflake and Microsoft are all beginning to recognise this
trend, and this is evidenced by an increased number of strategic
partnerships and investments being announced in recent months. Two
of InfoSum's peers were recently acquired, with Snowflake acquiring
Samooha and LiveRamp acquiring Habu in January 2024 for
$200m.
InfoSum recently announced a new
partnership with Experian, the world's leading global information
services company, that enables automotive brands to securely access
insights about in-market or current vehicle owners, extend match
rates, and improve targeting. This groundbreaking innovation gives
businesses the power to connect directly to consumers with a high
propensity to purchase a vehicle in a secure and privacy-compliant
manner.
Secret Escapes Limited ("Secret Escapes")
With the backdrop for travel much
improved over the last twelve months, Secret Escapes has fared
considerably better. Following a £31.7 million equity funding round
in July 2023 and debt refinancing, Secret Escapes has been able to
accelerate marketing spend to drive customer acquisition and
organic growth. This translated into double-digit organic growth in
2023 alongside a double-digit EBITDA margin outturn.
The company enters 2024 on a much
stronger footing and should be able to deliver revenue growth with
an improved margin profile. This is encouraging following a tough
couple of years where trade was materially impacted by the COVID-19
pandemic.
Wise PLC ("Wise")
Wise released it preliminary
results for the period ended 31 March 2024 post-period end. Active
customer numbers grew +29% year-on-year to 12.8 million, with the
number of personal customers increasing by +29% year-on-year to
12.2 million. Revenues increased by +24% year-on-year to £1.1
billion while interest income net of customer benefits increased by
+143% to £121 million.
While customer growth continues to
be very strong and higher interest rates continue to drive interest
income and elevate margins, the company guided down underlying
income growth for FY25 driven by price reductions at the beginning
of the period.
Wise is becoming more than just a
platform for sending money across borders, evidenced by the fact
that an increasing number of customers are using Wise for multiple
features. Nearly half of personal customers (48%) and 60% of
businesses use Wise for more than just transferring currency, which
should help drive revenue growth over the medium term.
Tactus Holdings Limited ("Tactus")
The assets of Tactus were sold to
a third-party for a nominal amount post-period end. Trading was
impacted by reduced credit insurance limits and a tough market
backdrop over the last twelve months and the decision was made to
prioritise investment into other portfolio assets. Tactus was
placed into Administration on 23 May 2024.
Sorted Holdings Limited ("Sorted")
Sorted was acquired by Location
Sciences Group in March 2024. While the company's revenues
continued to grow, the company had not demonstrated a clear roadmap
to profitability, and the decision was made to prioritise
investment into other portfolio assets.
Investment Objective and Policy
Investment objective
The investment objective of the
Company is to generate long term capital growth through investing
in a portfolio consisting primarily of equity or equity-related
investments in unquoted and listed companies.
Investment policy
Investments will be primarily in
equity and equity-related instruments (which shall include, without
limitation, preference shares, convertible debt instruments,
equity-related and equity-linked notes and warrants) issued by
portfolio companies. The Company will also be permitted to invest
in partnerships, limited liability partnerships and other legal
forms of entity where the investment has equity like return
characteristics.
For the purposes of this
investment policy, unquoted companies shall include companies with
a technical listing on a stock exchange but where there is no
liquid trading market in the relevant securities on that market
(for example, companies with listings on The International Stock
Exchange or the Cayman Islands Stock Exchange). Furthermore, the
Company shall be permitted to invest in unquoted subsidiaries of
companies whose parent or group entities have listed equity or debt
securities.
The Company may invest in publicly
traded companies (including participating in the IPO of an existing
unquoted company investment), subject to the investment
restrictions below. In particular, unquoted portfolio companies may
seek IPOs from time to time following an investment by the Company,
in which case the Company may continue to hold its investment
without restriction.
The Company is not expected to
take majority shareholder positions in portfolio companies but
shall not be restricted from doing so. Furthermore, there may be
circumstances where the ownership of a portfolio company exceeds
50% of voting and/or economic interests in that portfolio company
notwithstanding an initial investment in a minority position. While
the Company does not intend to focus its investments on a
particular sector, there is no limit on the Company's ability to
make investments in portfolio companies within the same sector if
it chooses to do so.
The Company will seek to ensure
that it has suitable investor protection rights through its
investment in portfolio companies where appropriate. The Company
may acquire investments directly or by way of holdings in special
purpose vehicles, intermediate holding vehicles or other funds or
similar structures.
Investment restrictions
The Company will invest and manage
its assets with the objective of spreading risk, as far as
reasonably practicable. No single investment (including related
investments in group entities) will represent more than 20% of
Gross Assets, calculated as at the time of that investment. The
market value of individual investments may exceed 20% of gross
assets following investment.
The Company's aggregate equity
investments in publicly traded companies that it has not previously
held an investment in prior to that Company's IPO will represent no
more than 20% of the Gross Assets, calculated at the time of
investment.
Subject in all cases to the
Company's cash management policy, the Company's aggregate
investment in notes, bonds, debentures and other debt instruments
(which shall exclude for the avoidance of doubt convertible debt,
equity-related and equity-linked notes, warrants or equivalent
instruments) will represent no more than 20% of the Gross Assets,
calculated as at the time of investment.
The Company will not be required
to dispose of any investment or rebalance its portfolio as a result
of a change in the respective value of any of its
investments.
Board Members
The Board comprises six
independent non-executive Directors (of whom one third are female)
and meets at least quarterly, in addition to ad hoc meetings
convened in accordance with the needs of the business, to consider
the Company's affairs in a prescribed and structured manner. All
Directors are considered independent of the Investment Adviser
(Jupiter Investment Management Limited ("JIML") to 31 March 2024)
and the new Investment Adviser (Chrysalis Investment Partners LLP
from 1 April 2024) for the purposes of the Association of
Investment Companies Code of Corporate Governance (the "AIC Code")
and Listing Rule 15.2.12A.
The Board is responsible for the
Company's long term sustainable success and the generation of value
for Shareholders and in doing so manages the business affairs of
the Company in accordance with the Articles of Incorporation, the
investment policy and with due regard to the wider interests of
stakeholders as a whole. Additionally, the Board have overall
responsibility for the Company's activities including its
investment activities and reviewing the performance of the
Company's portfolio. The Board are confident that the combination
of its members is appropriate and is such that no one individual or
small group of individuals dominates the Board's decision
making.
The Directors, in the furtherance
of their duties, may take independent professional advice at the
Company's expense, which is in accordance with provision 19 of the
AIC Code. The Directors also have access to the advice and services
of the Company Secretary through its appointed representatives who
are responsible to the Board for ensuring that the Board's
procedures are followed, and that applicable rules and regulations
are complied with.
To enable the Board to function
effectively and allow the Directors to discharge their
responsibilities, full and timely access is given to all relevant
information.
Comprehensive board papers are
circulated to the Board in advance of meetings by the Company
Secretary ("Apex Administration (Guernsey)
Limited"), allowing time for full review
and comment by the attending parties. In the event that Directors
are unable to attend a particular meeting, they are invited to
express their views on the matters being discussed to the Chairman
in advance of the meeting for these to be raised accordingly on
their behalf. Full and thorough minutes of all meetings are kept by
the Administrator.
The Directors are requested to
confirm their continuing professional development is up to date and
any necessary training is identified during the annual performance
reviews carried out and recorded by the Remuneration and Nomination
Committee.
The current Board have served
since the Company's inception in October 2018, with the exception
of Margaret O'Connor who was appointed on 6 September 2021, and
have been carefully selected against a set of objective criteria.
The Board considers that the combination of its members brings a
wealth of skills, experience and knowledge to the Company.
Following confirmation of continuation of the Company it is
expected that at least three directors will rotate off the Board
over a period of 24 months. Due regard will be given to equal
opportunity, diversity and inclusion for these
appointments.
Director Biographies
Andrew Haining (Chairman) (independent)
Andrew has had a 31-year career in
banking and private equity with Bank of
America, CDC (now Bridgepoint) and Botts & Company. During his
career, Andrew has been responsible for over 20 private equity
investments with transactional values in excess of $1
billion.
Andrew holds several Guernsey and
UK board positions.
Stephen Coe (senior independent)
Stephen serves as Chairman of the
Audit Committee. Stephen has been involved with offshore investment
funds and managers since 1990, with significant exposure to
property, debt, emerging markets and private equity investments.
Stephen qualified as a Chartered Accountant with Price Waterhouse
Bristol in 1990 and remained in audit practice, specialising in
financial services, until 1997. From 1997 to 2003 Stephen was a
director of the Bachmann Group of fiduciary companies and Managing
Director of Bachmann Fund Administration Limited, a specialist
third party fund administration company. From 2003 to 2006 Stephen
was a director with Investec in Guernsey and Managing Director of
Investec Trust (Guernsey) Limited and Investec Administration
Services Limited. Stephen became self-employed in August 2006,
providing services to financial services clients.
Simon Holden (independent)
Simon brings private equity
experience to the Chrysalis boardroom having previously worked in
private equity investing and interim executive operational roles in
several portfolio companies whilst working for Terra Firma Capital
Partners, and Candover Investments before that. Since 2015, Simon
has served as an independent director representing shareholders'
interests across FTSE250 listed equity capital markets, global
private equity funds as well as trading company boards, including a
pro-bono role to the States of Guernsey overseeing critical
infrastructure spanning airports, harbours and two maritime fuel
supply vessels.
Simon is a Chartered Director
(CDir) accredited by the UK Institute of Directors, graduated from
the University of Cambridge with an MEng and MA in Manufacturing
Engineering and is an active member of UK and Guernsey fund
management interest groups.
Anne Ewing (independent)
Anne has over 35 years of
financial services experience in banking, asset and fund
management, corporate treasury, life insurance and the fiduciary
sector. She has an MSc in Corporate Governance, is a Chartered
Fellow of the Securities Institute and has held senior roles in
Citibank, Rothschilds, Old Mutual International and KPMG and
latterly has been instrumental in the start-ups of a Guernsey fund
manager and two fiduciary licensees.
Anne has several non-executive
directorship roles in investment companies and a private wealth
banking and trust company group in the Channel Islands and in
London.
Tim Cruttenden (independent)
Tim is Chief Executive Officer of
VenCap International plc, a UK-based asset management firm focused
on investing in venture capital funds. He joined VenCap in 1994 and
is responsible for leading the strategy and development of the
firm. Prior to joining VenCap, Tim was an economist and
statistician at the Association of British Insurers in London. He
received his Bachelor of Science degree (with honours) in Combined
Science (Economics and Statistics) from Coventry University and is
an Associate of the CFA Society of the UK. Tim is a non-executive
director of Polar Capital Technology Trust.
Margaret O'Connor (independent)
Margaret has more than 30-year
career building value in technology companies and overseeing
regulatory risk mitigation strategies across the US, Asia, Africa,
and Europe as an operator, corporate executive, and investor.
Margaret earned her BA from Rutgers University and studied
International Relations at Princeton University before moving to
Seoul, Korea in 1987 to work for the Korean Ministry of Finance.
She currently Chairs the Launch Africa Venture Fund, the Investment
Committee of Five35 Ventures and the Management Engagement
Committee of Chrysalis Investments Limited. Margaret is an active
member of the Private Equity Women Investor Network
(PEWIN.org).
Valuation Committee
The Board is of the view that the
valuation process needs to be as efficient as possible while also
providing for comprehensive and independent oversight.
Consequently, the Board established an independent Valuation
Committee which comprises of the following members:
Lord Anthony Rockley (Committee Chairman)
Anthony Rockley was an audit
partner at KPMG until 2015 with a sector focus on private equity
and venture capital. Over a 34-year career with KPMG, Anthony was
responsible for auditing private equity and venture capital
companies and structures. Amongst other sector specific work,
Anthony was a member of the International Private Equity and
Venture Capital Guidelines Board for 9 years.
Diane Seymour-Williams
Diane Seymour-Williams has a
career spanning over 30 years in asset and wealth management. She
was a listed portfolio manager with Deutsche Morgan Grenfell,
ultimately running DMG's asset management business in Asia. After
returning to the UK, Diane subsequently held a number of board
positions in the financial services sector. Currently she sits,
inter alia, on the boards of Patria Private Equity Trust Plc
(formerly ABRDN Private Equity Opportunities Trust plc), Mercia
Asset Management Plc and SEI's European business. Diane brings
extensive fund management and portfolio oversight experience. In
addition to her public company roles Diane sits on the investment
committees of Newnham College, Cambridge and the Canal & River
Trust.
Jonathan Biggs
Jonathan Biggs worked at Accel, a
leading global venture and growth capital investor, for 20 years up
until 2021. One of the first hires in Europe, he was the COO of
Accel's European business. During his time at Accel, he raised over
$2.5 billion in five early-stage venture funds focused on Europe.
Jon has subsequently joined Top Tier Capital Partners as a Partner
where he leads the European funds business. Prior to that he was a
Managing Partner at SVB Capital.
The fourth member of the committee
is Tim Cruttenden who has been a director of the Company since its
formation.
Interim Management Report
For the 6 month period ended 31
March 2024
Risks and Uncertainties
There are several potential risks
and uncertainties which could have a material impact on the
Company's performance and could cause actual results to differ
materially from expected and historical results.
The Risk Committee has overall
responsibility for risk management and control within the context
of achieving the Company's objectives. The Board agrees the
strategy for the Company, approves the Company's risk appetite and
the Risk Committee monitors the risk profile of the Company. The
Risk Committee also maintains a risk management process to
identify, monitor and control risk concentration.
The Company's Investment Policy
requires a high appetite for risk and opportunity, and the Risk
Committee's terms of reference, controls and reporting have been
designed to manage this environment as far as practicable. The
Board's responsibility for conducting a robust assessment of the
principal and emerging risks is embedded in the Company's risk map,
which helps position the Company to ensure compliance with the
Association of Investment Companies Code of Corporate Governance
(the "AIC Code").
The main risks that the Company
faces arising from its financial instruments are:
(i) market risk,
including:
- price risk, being the risk that the value of investments will
fluctuate because of changes in market prices;
- interest rate risk, being the risk that the future cash flows
of a financial instrument will fluctuate because of changes in
interest rates; and
- foreign currency risk, being the risk that the value of
financial assets and liabilities will fluctuate because of
movements in currency rates.
(ii) credit risk, being the risk
that a counterparty to a financial instrument will fail to
discharge an obligation or commitment that it has entered with the
Company.
(iii) liquidity risk, being the
risk that the Company will not be able to meet its liabilities when
they fall due. This may arise should the Company not be able to
liquidate its investments.
(iv) company failure, being the
risk that companies invested in may fail and result in loss of
capital invested.
To manage such risks the Company
shall comply with the investment restrictions and diversification
limits provided for in the Prospectus. The Company will invest and
manage its assets with the objective of spreading risk. Further to
the investment restrictions discussed, the Company also seeks to
manage risk by:
· not
incurring debt over 20% of its NAV, calculated at time of drawdown.
The Company will target repayment of such debt within twelve months
of drawdown; and
· entering from time to time into hedging or other derivative
arrangements for the purposes of efficient portfolio management,
managing where appropriate, any exposure through its investments to
currencies other than Sterling.
The principal risks facing the
Company are:
· Investment and strategic risks - market, economic, political
and environmental risks; valuation risk; investment strategy risk;
discount risk; and sustainability risks.
· External risks - legal, political; and regulatory
risk.
· Operational risks - performance and reliance on third party
service providers and key professionals; and cyber security
threats.
Emerging Risks
In October 2023 an armed conflict
began between Israel and Hamas-led Palestinian militant groups,
largely in and around the Gaza Strip, the West Bank and on the
Israel-Lebanon border. Israel Defense Forces have conducted air
strikes on the Gaza Strip and in recent weeks Israel has expanded
its offensive in Rafah, claiming control of Gaza's border with
Egypt. The conflict continues, with casualties on both sides and
ongoing hostility.
The Company's portfolio company,
Deep Instinct, retains an operational presence in Tel Aviv, Israel.
Notwithstanding the continuing impact on the region, Deep
Instinct's operations remain undisrupted. The Board continues to
monitor the situation closely through its existing risk monitoring
framework.
Going Concern
The Directors have adopted the
going concern basis in preparing the Unaudited Condensed Interim
Financial Statements.
In assessing the going concern
basis of accounting, the Directors have assessed the guidance
issued by the Financial Reporting Council and considered the
Company's own financial position, the status of global financial
markets, various geopolitical events and conflicts, the current
macroeconomic climate and other uncertainties impacting on the
Company's investments, their financial position and liquidity
requirements.
At the period end, the Company has
total liquidity of £27,604,000, comprised of cash and cash
equivalents of £16,461,000 and liquid listed investments amounting
to £11,143,000.
In accordance with the Company's
Articles of Incorporation, at the first annual general meeting of
the Company following the fifth anniversary of IPO (such
anniversary being 6 November 2023), the Directors proposed an
ordinary resolution that the Company continues its business as a
closed-ended investment company. At the Company's annual general
meeting, on 15 March 2024, Shareholders were invited to vote on the
continuation of the Company. The Board recommended that
Shareholders vote in favour of continuation and such resolution was
duly passed. The Directors will now put a further Continuation
Resolution to Shareholders at the annual general meeting of the
Company every three years thereafter.
The Board considers that the
Company has sufficient resources to continue operating for at least
the next 12 months following the signing of the Interim Report and
Unaudited Condensed Interim Financial Statements, and so the going
concern basis of accounting has been adopted.
Important events and financial performance
Highlights from financial year to
date are as follows:
|
Ordinary
Shares
|
|
31 March
2024
|
Highlights
|
|
Net Asset Value per
share
|
147.46p
|
Share Price
|
83.00p
|
% of capital deployed
|
98%
|
The table below provides bi-annual
performance information:
Date
|
NAV per share
|
%
change in NAV per share
|
3 November 2018
|
98.85
|
|
31 March 2019
|
108.41
|
9.7%
|
30 September 2019
|
113.33
|
4.5%
|
31 March 2020
|
108.65
|
(4.1)%
|
30 September 2020
|
160.97
|
48.2%
|
31 March 2021
|
206.15
|
28.1%
|
30 September 2021
|
251.96
|
22.2%
|
31 March 2022
|
211.76
|
(16.0)%
|
30 September 2022
|
147.79
|
(30.2)%
|
31 March 2023
|
130.02
|
(12.0)%
|
30 September 2023
|
134.65
|
3.6%
|
31 March 2024
|
147.46
|
9.5%
|
The total gains before taxation in
the Unaudited Condensed Statement of Comprehensive Income for the
six month period ended 31 March 2024 were £76,288,000.
Further details of the Company's
performance for the period are included in the Investment Adviser's
Report on pages 5 to 19, which includes a review of investment
activity.
Discount
As at 31 May 2024, the share price
was trading at a discount to the last published NAV per share of 31
March 2024.
Related party transactions
Details of related party
transactions are given in note 14 to the Unaudited Condensed
Interim Financial Statements.
Statement of Directors' Responsibilities
The Directors confirm that to the
best of their knowledge:
· the
condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU; and
· the
interim management report (which includes the Chairman's Statement,
Interim Management Report and the Investment Adviser's Report)
includes a fair review of the information required by:
(a)
DTR 4.2.7R of the Disclosure Guidance and
Transparency Rules, being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the condensed set of financial statements, and a
description of the principal and emerging risks and uncertainties
for the remaining six months of the financial year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the financial year and that have materially affected
the financial position or the performance of the entity during that
period and any changes in the related party transactions described
in the last annual report that could do so.
The Directors are responsible for
the maintenance and integrity of the corporate and financial
information included on the Company's website, and for the
preparation and dissemination of the condensed set of financial
statements. Legislation in Guernsey governing the preparation and
dissemination of the condensed set financial statements may differ
from legislation in other jurisdictions.
Stephen Coe
Director
28 June 2024
Independent Review Report to Chrysalis Investments
Limited
Conclusion
We have been engaged by Chrysalis
Investments Limited (the "Company") to review the condensed set of
financial statements in the half-yearly financial report for the
six months ended 31 March 2024 of the Company, which comprises the
unaudited Condensed Statement of Financial Position, the unaudited
Condensed Statement of Comprehensive Income, the unaudited
Condensed Statement of Changes in Equity, the unaudited Condensed
Statement of Cash Flows and the related explanatory
notes.
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for
the six months ended 31 March 2024 is not prepared, in all material
respects, in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU and the Disclosure Guidance and Transparency
Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA").
Scope of review
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued by the
Financial Reporting Council for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures.
We read the other information contained in the half-yearly
financial report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Scope of review section of this report, nothing
has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or
that the directors have identified material uncertainties relating
to going concern that are not appropriately disclosed.
This conclusion is based on the
review procedures performed in accordance with ISRE (UK) 2410.
However future events or conditions may cause the Company to cease
to continue as a going concern, and the above conclusions are not a
guarantee that the Company will continue in operation.
Directors' responsibilities
The half-yearly financial report
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim financial
report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual
financial statements of the Company are prepared in accordance with
International Financial Reporting Standards as adopted by the
EU. The directors are responsible for preparing the condensed
set of financial statements included in the half-yearly financial
report in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless they either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express
to the Company a conclusion on the condensed set of financial
statements in the half-yearly financial report based on our review.
Our conclusion, including our conclusions relating to going
concern, are based on procedures that are less extensive than audit
procedures, as described in the scope of review paragraph of this
report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the
Company in accordance with the terms of our engagement letter to
assist the Company in meeting the requirements of the DTR of the UK
FCA. Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this report
and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the Company for our review work, for this report, or for the
conclusions we have reached.
Sarah Margaret Hume
For and on behalf of KPMG Channel
Islands Limited
Chartered Accountants
Guernsey
28 June 2024
Unaudited Condensed Statement of Comprehensive
Income
For the 6 month period ended 31
March 2024
|
|
|
Period
from
|
|
|
Period
from
|
|
|
|
1 October 2023
to
|
|
|
1 October 2022
to
|
|
|
|
31 March
2024
|
|
|
31 March
2023
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Note
|
Revenue
|
Capital
|
Total
|
|
Revenue
|
Capital
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
|
£'000
|
£'000
|
£'000
|
Investments
|
|
|
|
|
|
|
|
|
Net gains / (losses) on
investments held at fair value through
profit or loss
|
9
|
-
|
78,216
|
78,216
|
|
-
|
(102,926)
|
(102,926)
|
Losses on currency
movements
|
|
-
|
(13)
|
(13)
|
|
-
|
(22)
|
(22)
|
Net
investment gains / (losses)
|
|
-
|
78,203
|
78,203
|
|
-
|
(102,948)
|
(102,948)
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
431
|
-
|
431
|
|
154
|
457
|
611
|
Total income
|
|
431
|
-
|
431
|
|
154
|
457
|
611
|
|
|
|
|
|
|
|
|
|
Investment management
fees
|
5
|
(618)
|
-
|
(618)
|
|
(1,995)
|
-
|
(1,995)
|
Other expenses
|
6
|
(1,728)
|
-
|
(1,728)
|
|
(1,434)
|
-
|
(1,434)
|
|
|
|
|
|
|
|
|
|
Gains / (Losses) before taxation
|
|
(1,915)
|
78,203
|
76,288
|
|
(3,275)
|
(102,491)
|
(105,766)
|
Tax expense
|
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Total gains / (losses) and comprehensive gain / (loss) for
the period
|
|
(1,915)
|
78,203
|
76,288
|
|
(3,275)
|
(102,491)
|
(105,766)
|
|
|
|
|
|
|
|
|
|
Gains / (Losses) per
Ordinary Share (pence)
|
7
|
(0.32)
|
13.14
|
12.82
|
|
(0.55)
|
(17.22)
|
(17.77)
|
|
|
|
|
|
|
|
|
|
The total column of this statement
represents the Unaudited Condensed Statement of Comprehensive
Income of the Company prepared under IAS 34.
The supplementary revenue and
capital return columns are prepared under guidance published by the
Association of Investment Companies ("AIC").
All items in the above statement
derive from continuing operations.
The notes on pages 34 to 51 form
an integral part of these Unaudited Condensed Interim Financial
Statements.
Unaudited Condensed Statement of Financial
Position
As at 31 March 2024
|
|
|
31 March
|
|
30
September
|
|
|
|
2024
|
|
2023
|
|
|
|
£'000
|
|
£'000
|
|
Note
|
|
(unaudited)
|
|
(audited)
|
Non-current assets
|
|
|
|
|
|
Investments held at fair value
through profit or loss
|
9
|
|
861,852
|
|
780,376
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
16,461
|
|
22,626
|
Other receivables
|
|
|
127
|
|
50
|
|
|
|
16,588
|
|
22,676
|
|
|
|
|
|
|
Total assets
|
|
|
878,440
|
|
803,052
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Management fee payable
|
14
|
|
(322)
|
|
(1,022)
|
Other payables
|
|
|
(481)
|
|
(681)
|
|
|
|
|
|
|
Total liabilities
|
|
|
(803)
|
|
(1,703)
|
|
|
|
|
|
|
Net assets
|
|
|
877,637
|
|
801,349
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share Capital
|
10
|
|
860,890
|
|
860,890
|
Capital reserve
|
|
|
46,875
|
|
(31,328)
|
Revenue reserve
|
|
|
(30,128)
|
|
(28,213)
|
|
|
|
|
|
|
Total equity
|
|
|
877,637
|
|
801,349
|
|
|
|
|
|
|
Net Asset Value per Ordinary Share (pence)
|
11
|
|
147.46
|
|
134.65
|
|
|
|
|
|
|
Number of Ordinary Shares in issue
|
10
|
|
595,150,414
|
|
595,150,414
|
Approved by the Board of Directors
and authorised for issue on 28 June 2024 and signed on their
behalf:
Stephen Coe
Director
The notes on pages 34 to 51 form
an integral part of these Unaudited Condensed Interim Financial
Statements.
Unaudited Condensed Statement of Changes in
Equity
For the 6 month period ended 31
March 2024
|
|
Share
capital
|
|
Revenue
reserve
|
|
Capital
reserve
|
|
Total
|
|
|
|
2024
|
|
2024
|
|
2024
|
|
2024
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
For the period 1 October 2023
|
|
|
|
|
|
|
|
|
to 31 March 2024 (unaudited)
|
|
|
|
|
|
|
|
|
At 1 October 2023
|
|
860,890
|
|
(28,213)
|
|
(31,328)
|
|
801,349
|
Total gains / (losses) and
comprehensive gain / (loss) for the period
|
|
-
|
|
(1,915)
|
|
78,203
|
|
76,288
|
|
|
|
|
|
|
|
|
|
At 31 March 2024
|
|
860,890
|
|
(30,128)
|
|
46,875
|
|
877,637
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
Revenue
reserve
|
|
Capital
reserve
|
|
Total
|
|
|
2023
|
|
2023
|
|
2023
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
For the period 1 October 2022
|
|
|
|
|
|
|
|
|
to 31 March 2023 (unaudited)
|
|
|
|
|
|
|
|
|
At 1 October 2022
|
|
860,890
|
|
(22,670)
|
|
41,362
|
|
879,582
|
Total losses and comprehensive loss
for the period
|
|
-
|
|
(3,275)
|
|
(102,491)
|
|
(105,766)
|
|
|
|
|
|
|
|
|
|
At 31 March 2023
|
|
860,890
|
|
(25,945)
|
|
(61,129)
|
|
773,816
|
|
|
|
|
|
|
|
|
|
The notes on pages 34 to 51 form
an integral part of these Unaudited Condensed Interim Financial
Statements.
Unaudited Condensed Statement of Cash Flows
For the 6 month period ended 31
March 2024
|
|
Period
from
|
|
Period
from
|
|
|
1 October 2023
to
|
|
1 October 2022
to
|
|
|
31 March
|
|
31 March
|
|
|
2024
|
|
2023
|
|
Note
|
£'000
|
|
£'000
|
|
|
(unaudited)
|
|
(unaudited)
|
Cash flows from operating activities
|
|
|
|
|
Cash flows used in operating
activities
|
12
|
(3,323)
|
|
(6,161)
|
Interest income
|
|
431
|
|
611
|
Purchase of investments
|
9
|
(6,069)
|
|
(24,889)
|
Sale of investments
|
9
|
2,809
|
|
15,054
|
|
|
|
|
|
Net cash outflow from operating activities
|
|
(6,152)
|
|
(15,385)
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
(6,152)
|
|
(15,385)
|
Cash and cash equivalents at
beginning of period
|
|
22,626
|
|
58,712
|
Net losses on cash currency
movements
|
|
(13)
|
|
(22)
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
16,461
|
|
43,305
|
|
|
|
|
|
Cash and cash equivalents comprise
of the following:
|
|
|
|
|
Cash at bank
|
|
16,461
|
|
43,305
|
|
|
|
|
|
|
|
16,461
|
|
43,305
|
|
|
|
|
|
The notes on pages 34 to 51 form
an integral part of these Unaudited Condensed Interim Financial
Statements.
Notes to the Unaudited Condensed Interim Financial
Statements
For the 6 month period ended 31
March 2024
1. Reporting
Entity
Chrysalis Investments Limited (the
"Company") is a closed-ended investment company, registered in
Guernsey on 3 September 2018, with registered number 65432. The
Company's registered office is 1 Royal Plaza, Royal Avenue, St
Peter Port, Guernsey, GY1 2HL.
The Company is a Registered
Closed-ended Collective Investment Scheme regulated by the Guernsey
Financial Services Commission ("GFSC"), with reference number
2404263, pursuant to the Protection of Investors (Bailiwick of
Guernsey) Law 2020, as amended, and the Registered Closed-ended
Investment Scheme Rules 2021.
The Company's 595,150,414 shares
in issue under ticker CHRY, SEDOL BGJYPP4 and ISIN GG00BGJYPP46
have a premium listing and are admitted to trading on the London
Stock Exchange's Main Market for listed securities. The Unaudited
Condensed Interim Financial Statements of the Company are presented
for the 6 month period ended 31 March 2024. The Company invests in
a diversified portfolio consisting primarily of equity and
equity-related securities issued by unquoted companies.
The Company received discretionary
portfolio management services from Jupiter Investment Management
Limited ("JIML") during the 6 month period ended 31 March 2024. The
administration of the Company is delegated to Apex Administration
(Guernsey) Limited ("AAGL") (the "Administrator"). On 29 January
2024, the Company entered into an AIFM and Advisory Agreement with
G10 Capital Limited and Chrysalis Investment Partners LLP
respectively. Under this agreement, with effect from 1 April 2024,
G10 Capital Limited was appointed as the AIFM to Chrysalis
Investments Limited. Chrysalis Investment Partners LLP became
Investment Adviser to G10 Capital Limited. Chrysalis Investment
Partners LLP is an appointed representative of G10 Capital Limited
which is authorised and regulated by the Financial Conduct
Authority.
2. Material accounting
policies
(a) Basis of
accounting
The Unaudited Condensed Interim
Financial Statements have been prepared on a going concern basis in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU, and applicable Guernsey law. These Unaudited Condensed
Interim Financial Statements do not comprise statutory Financial
Statements within the meaning of the Companies (Guernsey) Law,
2008, they do not include all of the information required for full
annual financial statements and should be read in conjunction with
the financial statements of the Company as at 30 September 2023,
which were prepared in accordance with International Financial
Reporting Standards as adopted by the EU ("IFRS"). The accounting
policies adopted in these Unaudited Condensed Interim Financial
Statements are consistent with those of the previous financial
period and the corresponding interim reporting period, except for
the adoption of new and amended standards as set out in notes 3 and
4.
Where presentational guidance set
out in the Statement of Recommended Practice ("SORP") for
investment companies issued by the Association of Investment
Companies ("AIC") updated in July 2022 is consistent with the
requirements of IFRS, the Directors have sought to prepare the
Unaudited Condensed Interim Financial Statements on a basis
compliant with the recommendations of the SORP.
(b) Going
concern
The Directors have adopted the
going concern basis in preparing the Unaudited Condensed Interim
Financial Statements.
In assessing the going concern
basis of accounting, the Directors have assessed the guidance
issued by the Financial Reporting Council and considered the
Company's own financial position, the status of global financial
markets, various geopolitical events and conflicts, the current
macroeconomic climate and other uncertainties impacting on the
Company's investments, their financial position and liquidity
requirements.
At the period end, the Company has
total liquidity of £27,604,000, comprised of cash and cash
equivalents of £16,461,000 and liquid listed investments amounting
to £11,143,000.
In accordance with the Company's
Articles of Incorporation, at the first annual general meeting of
the Company following the fifth anniversary of IPO (such
anniversary being 6 November 2023), the Directors proposed an
ordinary resolution that the Company continues its business as a
closed-ended investment company. At the Company's annual general
meeting, on 15 March 2024, Shareholders were invited to vote on the
continuation of the Company. The Board recommended that
Shareholders vote in favour of continuation and such resolution was
duly passed. The Directors will now put a further Continuation
Resolution to Shareholders at the annual general meeting of the
Company every three years thereafter.
The Board considers that the
Company has sufficient resources to continue operating for at least
the next 12 months following the signing of the Interim Report and
Unaudited Condensed Interim Financial Statements, and so the going
concern basis of accounting has been adopted.
(c) Segmental
reporting
The chief operating decision maker
is the Board of Directors. The Directors are of the opinion that
the Company is engaged in a single segment of business with the
primary objective of investing in securities to generate capital
growth for Shareholders. Consequently, no business segmental
analysis is provided.
The key measure of performance
used by the Board is the Net Asset Value of the Company (which is
calculated under IFRS). Therefore, no reconciliation is required
between the measure of profit or loss used by the Board and that
contained in these Unaudited Condensed Interim Financial
Statements.
(d) Taxation
The Company has been granted
exemption from liability to income tax in Guernsey under the Income
Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 amended by the
Director of Income Tax in Guernsey for the current period.
Exemption is applied and granted annually and subject to the
payment of a fee, currently £1,600.
3. Use of estimates and critical
judgements
The preparation of Unaudited
Condensed Interim Financial Statements in accordance with IFRS
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the Unaudited
Condensed Interim Financial Statements and the reported amounts of
income and expenses during the period. Actual results could differ
from those estimates and assumptions.
The estimates and underlying
assumptions are reviewed on an ongoing basis. There were no
significant accounting estimates or significant judgements in the
current period, except for the use of estimates in the valuation of
the unquoted investments detailed in note 13.
4. Changes in material accounting
policies
Effective from 1 January
2023
The Company adopted Disclosure of
Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2) from 1 January 2023. Although the amendments did not
result in any changes to the accounting policies themselves, they
impacted the accounting policy information disclosed in the
financial statements.
The amendments require the
disclosure of "material" rather than "significant" accounting
policies. The amendments also provide guidance on the application
of materiality to disclosure of accounting policies, assisting
entities to provide useful, entity-specific accounting policy
information that users need to understand other information in the
financial statements.
The Directors reviewed the
accounting policies and made updates to the information disclosed
in Note 2 Material accounting policies (2023: Significant
accounting policies) in certain instances in line with the
amendments.
New and
revised standards
The following accounting standards
and their amendments were in issue at the period end but will not
be in effect until after this financial period end. The Directors
have considered their impact and have concluded that they will not
have a significant impact on the Unaudited Condensed Interim
Financial Statements.
Amendments to following
standards
· IAS 1 - Presentation of Financial Statements
Classification of Liabilities as
Current or Non-current: The amendments aim to promote consistency
in applying the requirements by helping companies determine
whether, in the statement of financial position, debt and other
liabilities with an uncertain settlement date should be classified
as current (due or potentially due to be settled within one year)
or non-current.
Effective date - 1 January
2024
· IAS 21 - The Effects of Changes in Foreign Exchange
Rates
Lack of Exchangeability: The
amendments require an entity to apply a consistent approach to
assessing whether a currency is exchangeable into another currency
and, when it is not, to determining the exchange rate to use and
the disclosures to provide.
Effective date - 1 January
2025
· IFRS 7 - Financial Instruments: Disclosures
The amendment supplements existing
disclosure requirements by requiring a company to disclose specific
information about its supplier finance arrangements that enables
users of financial statements to assess the effects of those
arrangements on the company's liabilities and cash flows and on the
company's exposure to liquidity risk.
Effective date - 1 January
2024
There are no other standards,
amendments to standards or interpretations that are effective for
annual periods beginning on 1 October 2023 that have a material
effect on the financial statements of the Company, apart from those
already disclosed.
5. Investment management
fees
|
1 October
2023
|
|
1 October
2022
|
|
to 31
March
|
|
to 31
March
|
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Investment management
fee
|
618
|
|
1,995
|
|
|
|
|
Total investment management fees
|
618
|
|
1,995
|
|
|
|
|
During the period, the Company
procured portfolio management services from JIML, under the
Portfolio Management Agreement dated 1 July 2022. On 29 January
2024, the Company entered into an AIFM and Advisory Agreement with
G10 Capital Limited and Chrysalis Investment Partners LLP
respectively. Under this agreement, with effect from 1 April 2024,
G10 Capital Limited was appointed as the AIFM to Chrysalis
Investments Limited. Chrysalis Investment Partners LLP became
Investment Adviser to G10 Capital Limited.
Chrysalis Investment Partners LLP
is an appointed representative of G10 Capital Limited which is
authorised and regulated by the Financial Conduct
Authority.
Management and Advisory fees
The Company has historically paid
a monthly "Management Fee" equal to 1/12 of 0.5% of the Net Asset
Value. As part of the changes to the Investment Management
arrangements, the Company agreed a reduction to the Management Fee,
effective from 1 October 2023 to 31 March 2024, from 0.5% to 0.15%,
leading to a saving in the Management Fee over the
period.
From 1 April 2024 the company will
pay an "Advisory Fee" equal to the sum of (a) 1/12 of 0.5% of the
Net Asset Value per month; and (b) 1/12 of 5bps of the Net Asset
Value per annum on the first £1,000,000,000 of the Net Asset Value
and then 3bps of the Net Asset Value per annum thereafter, such
amount to be calculated and paid monthly in arrears.
Management and Advisory Fees are
charged to Revenue in the Statement of Comprehensive
Income.
Performance fee
Up to the 31 March 2024, the
performance fee payable is the sum of which is equal to 20% of the
amount by which the Adjusted Net Asset Value at the end of a
Calculation Period exceeds the higher of: (i) the Performance
Hurdle; and (ii) the High Water Mark (the "Performance
Fee").
As at 31 March 2024, the Company
had not exceeded the High Water Mark and Performance Hurdle
therefore no accrual (30 September 2023: £nil) for performance fees
has been charged within these Unaudited Condensed Interim Financial
Statements.
At an Extraordinary General
meeting that took place on 15 March 2024, new Performance Fee terms
were approved. The revised Performance Fee, effective from 1 April
2024, is the sum of which shall be equal to 12.5 per cent. of the
amount by which the Adjusted Net Asset Value at the end of a
Calculation Period exceeds the higher of: (i) the Performance
Hurdle; and (ii) the High Water Mark. The last Performance Fee was
payable for the period ended 30 September 2021, at which time the
NAV per share was 251.96 pence. A full definition of the terms of
the new Performance Fee can be found in the Key Documents section
of the Investor Relations page on the Company's website.
Performance Fees are charged to
Capital in the Statement of Comprehensive Income.
6. Other
expenses
|
1 October 2023
to 31 March
|
|
1 October 2022
to 31 March
|
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Directors' fees
|
199
|
|
234
|
Directors' expenses
|
8
|
|
14
|
Administration fee
|
109
|
|
105
|
Auditor's remuneration
for:
|
|
|
|
- audit fees
|
80
|
|
73
|
- non-audit fees
|
30
|
|
21
|
Committee fees
|
78
|
|
78
|
Secretarial fees
|
23
|
|
23
|
Printing fees
|
15
|
|
15
|
Registrars' fees
|
19
|
|
17
|
Listing fees
|
11
|
|
20
|
FCA fees
|
11
|
|
20
|
Legal fee and professional
fees:
|
|
|
|
- ongoing operations
|
864
|
|
575
|
- purchases
|
145
|
|
100
|
Depositary fees
|
35
|
|
30
|
Directors' liability
insurance
|
30
|
|
34
|
Sundry
|
71
|
|
75
|
|
|
|
|
|
1,728
|
|
1,434
|
|
|
|
|
7. Gains /
(Losses) per Ordinary
Share
|
31 March
2024
|
|
31 March
2023
|
|
|
|
|
|
|
|
|
|
Net return
|
|
Per share
|
|
Net return
|
|
Per share
|
|
£'000
|
|
pence
|
|
£'000
|
|
pence
|
|
|
|
|
|
|
|
|
Revenue return
|
(1,915)
|
|
(0.32)
|
|
(3,275)
|
|
(0.55)
|
Capital return
|
78,203
|
|
13.14
|
|
(102,491)
|
|
(17.22)
|
|
|
|
|
|
|
|
|
At 31 March
|
76,288
|
|
12.82
|
|
(105,766)
|
|
(17.77)
|
|
|
|
|
|
|
|
|
Weighted average number of
Ordinary Shares
|
|
|
595,150,414
|
|
|
|
595,150,414
|
|
|
|
|
|
|
|
|
The return per share is calculated using the
weighted average number of ordinary shares.
8. Dividends
The Board has not declared an interim dividend (6
months ended 31 March 2023: £nil).
9. Investments held at fair
value through profit or loss
|
|
31 March
|
|
30
September
|
|
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Opening book cost
|
|
761,768
|
|
731,095
|
Opening investment holding
unrealised gains
|
|
18,608
|
|
91,268
|
|
|
|
|
|
Opening valuation
|
|
780,376
|
|
822,363
|
|
|
|
|
|
Movements in the period /
year
|
|
|
|
|
Purchases at cost
|
|
6,069
|
|
46,305
|
Sales proceeds
|
|
(2,809)
|
|
(15,632)
|
Net gains / (losses) on
investments held at fair value
|
|
|
|
|
through profit or loss
|
|
78,216
|
|
(72,660)
|
|
|
|
|
|
Closing valuation
|
|
861,852
|
|
780,376
|
|
|
|
|
|
Closing book cost
|
|
709,507
|
|
761,768
|
Closing investment holding
unrealised gains
|
|
152,345
|
|
18,608
|
|
|
|
|
|
Closing valuation
|
|
861,852
|
|
780,376
|
|
|
|
|
|
|
1 October
2023
|
|
1 October
2022
|
|
1 October
2022
|
|
|
to 31
March
|
|
to 30
September
|
|
to 31
March
|
|
|
2024
|
|
2023
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
£'000
|
Movement in unrealised gains
during the period / year
|
|
216,171
|
|
249,567
|
|
50,062
|
Movement in unrealised losses
during the period / year
|
|
(112,168)
|
|
(292,492)
|
|
(120,415)
|
Realised loss on sale of
investments
|
|
(27,941)
|
|
(36,558)
|
|
(36,558)
|
Realised gain on sale of
investments
|
|
2,154
|
|
6,823
|
|
3,985
|
|
|
|
|
|
|
|
Net gains / (losses) on investments held at fair value
through profit or loss
|
|
78,216
|
|
(72,660)
|
|
(102,926)
|
|
|
|
|
|
|
|
The Company holds all its
investments at fair value through profit or loss. Investments held
by the Company on 31 March 2024 where the ownership interest
exceeded 20% were as follows:
Name
|
Principal place
of
business
|
Principal activity
|
Ownership interest
%
|
|
|
|
|
Cognitive Logic Inc.
|
United States
|
Trading company
|
20-30%
|
Growth Street Holdings
Limited
|
United Kingdom
|
In liquidation
|
30-40%
|
Rowanmoor Group Limited
|
United Kingdom
|
In wind down
|
20-30%
|
10. Share
capital
|
|
No of
|
|
|
|
|
shares
|
|
£'000
|
|
|
|
|
|
Ordinary Shares at no par value
|
|
|
|
|
|
|
|
|
|
Opening balance as at 1 October
2022
|
|
595,150,414
|
|
860,890
|
|
|
|
|
|
At 30 September 2023
|
|
595,150,414
|
|
860,890
|
|
|
|
|
|
Opening balance as at 1 October
2023
|
|
595,150,414
|
|
860,890
|
|
|
|
|
|
As at 31 March 2024
|
|
595,150,414
|
|
860,890
|
|
|
|
|
|
The holders of Ordinary Shares
have the right to receive notice of and attend, speak and vote in
general meetings of the Company. They are also entitled to
participate in any dividends and other distributions of the
Company.
11. Net Asset Value per Ordinary
Share
The Net Asset Value per Ordinary
Share and the Net Asset Value at the period end calculated in
accordance with the Articles of Incorporation were as
follows:
|
31 March
2024
|
|
30 September
2023
|
|
|
|
|
|
|
|
|
|
NAV
|
|
NAV
|
|
NAV
|
|
NAV
|
|
per share
|
|
attributable
|
|
per share
|
|
attributable
|
|
pence
|
|
£'000
|
|
pence
|
|
£'000
|
|
|
|
|
|
|
|
|
Ordinary Shares: basic and
diluted
|
147.46
|
|
877,637
|
|
134.65
|
|
801,349
|
|
|
|
|
|
|
|
|
The Net Asset Value per Ordinary
Share is based on 595,150,414 (2023: 595,150,414) Ordinary Shares,
being the number of Ordinary Shares in issue at the period
end.
12. Cash flows used in operating
activities
|
31 March
|
|
31 March
|
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Total gains / (losses) for the
period
|
76,288
|
|
(105,766)
|
Net (gains) / losses on
investments held at fair value
|
|
|
|
through profit or loss
|
(78,216)
|
|
102,926
|
Interest income
|
(431)
|
|
(611)
|
Net losses on currency
movements
|
13
|
|
22
|
Movement in working capital
|
|
|
|
Increase in other
receivables
|
(77)
|
|
(51)
|
Decrease in payables
|
(900)
|
|
(2,681)
|
|
|
|
|
Cash flows used in operating
activities
|
(3,323)
|
|
(6,161)
|
|
|
|
|
13. Financial instruments and capital
disclosures
The Company's activities expose it
to a variety of financial risks; market risk (including other price
risk, foreign currency risk and interest rate risk), credit risk
and liquidity risk.
The Unaudited Condensed Interim
Financial Statements do not include all financial risk management
information and disclosures required in the annual financial
statements; they should be read in conjunction with the Company's
Audited Financial Statements as at 30 September 2023.
The Company measures fair values
using the following hierarchy that reflects the significance of the
inputs used in making the measurements.
Categorisation within the
hierarchy has been determined on the basis of the lowest level
input that is significant to the fair value measurement of the
relevant assets as follows:
Level 1 - Quoted prices
(unadjusted) in active markets for identical assets or
liabilities.
An active market is a market in
which transactions for the asset or liability occur with sufficient
frequency and volume on an ongoing basis such that quoted prices
reflect prices at which an orderly transaction would take place
between market participants at the measurement date. Quoted prices
provided by external pricing services, brokers and vendors are
included in Level 1, if they reflect actual and regularly occurring
market transactions on an arm's-length basis.
Level 2 - Inputs other than quoted
prices included within Level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that
is, derived from prices).
Level 2 inputs include the
following:
· quoted
prices for similar (i.e., not identical) assets in active
markets;
· quoted
prices for identical or similar assets or liabilities in markets
that are not active. Characteristics of an inactive market
include a significant decline in the volume and level of trading
activity, the available prices vary significantly over time or
among market participants or the prices are not current;
· inputs
other than quoted prices that are observable for the asset (for
example, interest rates and yield curves observable at commonly
quoted intervals); and
· inputs
that are derived principally from, or corroborated by, observable
market data by correlation or other means (market-corroborated
inputs).
Level 3 - Inputs for the asset or
liability that are not based on observable market data
(unobservable inputs).
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 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.
At 31 March 2024
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Quoted equity
|
11,143
|
|
-
|
|
-
|
|
11,143
|
Unquoted equity
|
-
|
|
-
|
|
850,709
|
|
850,709
|
|
|
|
|
|
|
|
|
|
11,143
|
|
-
|
|
850,709
|
|
861,852
|
At 30 September 2023
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Quoted equity
|
10,284
|
|
-
|
|
-
|
|
10,284
|
Unquoted equity
|
-
|
|
-
|
|
770,092
|
|
770,092
|
|
|
|
|
|
|
|
|
|
10,284
|
|
-
|
|
770,092
|
|
780,376
|
|
|
|
|
|
|
|
|
The following table shows the
valuation techniques used for Level 3 fair values, as well as the
significant unobservable inputs used for Level 3 items:
Unlisted Investments
2024
|
Valuation
Technique
|
Fair Value as at 31 March
2024 (£000s)
|
Significant Unobservable
Inputs
|
Weighted
Average
|
Range
|
Unobservable Inputs
Utilised
|
Sensitivity
%
|
Sensitivity to changes in
significant unobservable input (£000s)
|
Market approach using comparable
trading multiples
|
710,113
|
EV/LTM
Revenue
Multiple
EV/2024E Revenue
Multiple
EV/LTM
Earnings
Multiple
EV/2024E Earnings
Multiple
EV/Book
Value
Multiple
EV/Book
Value 2024E Multiple
Illiquidity discount
Implied
premium/(discount)
|
5.17x
6.97x
9.32x
8.50x
1.57x
1.50x
-10.0%
-16.6%
|
0.9x -
24.51x
0.75x -
18.84x
4.91x -
37.76x
4.27x -
28.93x
0.68x -
6.92x
0.61x -
6.58x
-
-
|
1/2/3/4/5/6
1/2/3/4/5/6
1/2/3/4/5/6
1/2/3/4/5/6
1/2/3/4/5/6
1/2/3/4/5/6
5
5
|
+/-
25%
+/-
25%
+/-
25%
+/-
25%
+/-
25%
+/-
25%
+/-
25%
+/-
25%
|
+
97,358 / -92,243
+
38,353 / -42,464
+ 9,709
/ -9,709
+ 9,222
/ -9,222
+ 5,548
/ -5,548
+ 6,768
/ -6,768
+
126,957 / -128,945
+
59,027 / -59,028
|
Recent Transaction
Price
|
105,151
|
-
|
-
|
-
|
-
|
-
|
-
|
Expected Proceeds
|
35,445
|
Execution Discount
|
-19.8%
|
-20.0%
- 0.0%
|
7
|
+/-
25%
|
+
13,696 / -17,215
|
Valuation Technique
The Company has adopted a
valuation policy for unquoted securities that provides an
objective, consistent and transparent basis for estimating the fair
value of unquoted equity securities in accordance with IFRS as well
as the Venture Capital Valuation Guidelines ("IPEVC"), revised
December 2022.
IFRS requires the Company to
measure fair value using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. IFRS
establishes a 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).
Level 3 reflects financial
instruments whose fair value is determined in whole or in part
using a valuation technique based on assumptions that are not
supported by prices from observable market transactions in the same
instrument and not based on available observable market data. These
are known as unobservable inputs.
When valuing an asset the
independent valuer is required to select the valuation technique
most appropriate for that asset, selecting the appropriate
unobservable inputs.
Unobservable Inputs
1. Trading
Multiples
Trading multiples are financial
ratios that allow an asset to be valued by reference to various
financial metrics, including revenue, earnings and book value. The
nature and stage of development of the asset will help to determine
the appropriate metric(s) to use. Revenue will generally be used
until such a time an asset is delivering sustainable earnings.
Industry specific metrics may also be used for specific assets. One
or more trading multiples may be used and an average taken when
arriving at the final
valuation.
2. Actual
and Estimated Financial Metrics
When applying a trading multiple
the independent valuer will generally utilise the most recently
available financial metrics, looking back over the last twelve
months for income statement metrics, or at the latest balance sheet
date for balance sheet metrics. Where estimated financial metrics
are deemed reliable these may also be used. Pro forma financial
metrics may be used where acquisitions and disposals have occurred.
The impact of one-time revenue or earnings events may also be
removed from actual or estimated financial metrics.
3.
Comparable Companies
In order to calculate a trading
multiple a set of comparable companies must be identified. These
companies will usually be listed companies with publicly available
financial information. When identifying comparable companies the
independent valuer will usually select those offering similar
products or services, to the same type of customers. The number of
comparable companies selected will vary depending on the number of
similar companies in the available universe. The set of comparable
companies will change from time to time depending on the evolution
of the asset and the companies considered comparable. Outliers
which skew a trading multiple may be removed from the
set.
4. Net
Cash/(Debt)
When arriving at the equity value
of an asset any net cash/(debt) will be added/(deducted) to/from
the enterprise value to arrive at the equity value of that
asset.
5.
Valuation Premiums/Discounts
Where a recent investment
transaction has taken place for a specific asset which allows for
the calculation of an implied valuation, subsequent valuations will
be calibrated to the implied valuation resulting in an implied
premium or discount to that recent transaction. This premium or
discount may be reduced over time or as company performance
evolves. If a calibrated approach is no longer deemed appropriate,
an illiquidity discount will be applied. The independent valuer
will use their knowledge of private markets to determine the
appropriate illiquidity discount.
6.
Anticipated Exit Route
The nature of an exit for an
unquoted asset, for example by way of IPO, trade sale or
liquidation, may often determine differing proceeds for the
Company. Where an exit route is known with virtual certainty then
the expected proceeds will be calculated based on the expected exit
route. Where a valuation is deeply discounted and there is a real
risk the asset may fall into administration the expected proceeds
will be calculated based on a liquidation. If an asset is valued
below cost and the Company has a preferred return, that preferred
return will be applied. If an asset is valued above cost and the
Company's preferred return would deliver an enhanced return, the
preferred return will be applied. If an asset is valued
significantly above cost and an investor with a preferred return
would benefit from a conversion to ordinary shares, a conversion
will be assumed.
7.
Execution Discount
When the full or partial disposal
of an asset has been negotiated and a price set, but the
transaction has not yet closed, the valuation of the asset may be
adjusted to take into account any uncertainty associated with the
pending transaction. The value of the execution discount will vary
depending on the conditions which need to be met before the
transactions closes and the expected timing of the
close.
The following table shows the
valuation techniques used for Level 3 fair values, as well as the
significant unobservable inputs used for Level 3 items:
Unlisted Investments
2023
|
Fair Value as at 30
September 2023 (£000s)
|
Valuation
Technique
|
Significant Unobservable
Inputs
|
Range
|
Sensitivity
%
|
Sensitivity to changes in
significant unobservable inputs
|
728,177
|
Market
approach using comparable traded multiples
|
EV/LTM
Revenue multiples
EV/2023E
Revenue multiples
EV/2024E
Revenue multiples
EV/2025E
Revenue multiples
EV/2026E
Revenue multiples
|
0.23 -
19.09x
|
25%
|
If
multiples changed by +/- 25%, the value of the companies in this
group would change by + £112,340,325 / - £127,156,208
|
25,030
|
Recent
Transaction Price
|
N/A
|
N/A
|
N/A
|
N/A
|
16,506
|
Scenario
Analysis
|
Probability
|
79%
|
25%
|
If
probability changed by +/- 25%, the value of the companies in this
group would change by - £16,505,837 / + £19,342,778
|
316
|
Expected
Proceeds
|
N/A
|
N/A
|
N/A
|
N/A
|
63
|
Wind
Down
|
N/A
|
N/A
|
N/A
|
N/A
|
The Company has an established
control framework with respect to the measurement of fair values.
The Company's Investment Adviser provides discretionary portfolio
management services, while the Company assumes direct
responsibility for the valuation process.
The Company's Valuation Committee
regularly reviews significant unobservable inputs and valuation
adjustments. Valuations are prepared by an independent third party
valuer and the Valuation Committee assesses the evidence prepared
to support the conclusion that these valuations meet the
requirements of the standards, including the level in the fair
value hierarchy in which the valuation should be
classified.
The following table shows a
reconciliation of the opening balance to the closing balance for
Level 1 and 3 fair values:
|
March
|
|
September
|
|
March
|
|
September
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
Level 1
|
|
Level 1
|
|
Level 3
|
|
Level 3
|
|
|
|
|
|
|
|
|
Opening balance
|
10,284
|
|
20,317
|
|
770,092
|
|
802,046
|
Purchases at cost
|
-
|
|
-
|
|
6,069
|
|
46,305
|
Sales at cost
|
(2,809)
|
|
(10,263)
|
|
-
|
|
(5,369)
|
Total gains / (losses) included in
net gains on investments in the Statement of Comprehensive
Income
|
|
|
|
|
|
|
|
- on assets sold
|
2,154
|
|
6,826
|
|
(27,941)
|
|
(36,556)
|
- on assets held at period/year
end
|
1,514
|
|
(6,596)
|
|
102,489
|
|
(36,334)
|
|
|
|
|
|
|
|
|
|
11,143
|
|
10,284
|
|
850,709
|
|
770,092
|
|
|
|
|
|
|
|
|
The change in unrealised gains or
losses (net gain) for the period included in the
Unaudited Condensed Statement of Comprehensive
Income relating to those Level 3 assets held at the reporting date
amounted to £102,489,000 (30 September 2023: net loss of
£36,334,000). Investments are transferred between levels at the
point of the trigger event. There were no transfers between the
levels of the fair value hierarchy during the period ended 31 March
2024.
There have been no significant
changes in the management of risk or in any risk management
policies since the last Statement of Financial Position
date.
14. Related parties and other
significant transactions
During the period, JIML provided
portfolio management services to the Company.
On 29 January 2024, the Company
entered into an AIFM and Advisory Agreement with G10 Capital
Limited and Chrysalis Investment Partners LLP respectively. Under
this agreement, with effect from 1 April 2024, G10 Capital Limited
was appointed as the AIFM to Chrysalis Investments Limited.
Chrysalis Investment Partners LLP became Investment Adviser to G10
Capital Limited. Chrysalis Investment Partners LLP is an appointed
representative of G10 Capital Limited, which is authorised and
regulated by the Financial Conduct Authority.
|
1 October
2023
|
|
1 October
2022
|
|
1 October
2022
|
|
31 March
|
|
30
September
|
|
31 March
|
|
2024
|
|
2023
|
|
2023
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Management fee charged by JUTM:
|
|
|
|
|
|
Total management fee
charged
|
-
|
|
11
|
|
-
|
Management fee
outstanding
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
Management fee charged by JIML:
|
|
|
|
|
|
Total management fee
charged
|
618
|
|
3,998
|
|
1,995
|
Management fee
outstanding
|
322
|
|
1,022
|
|
1,984
|
|
|
|
|
|
|
Directors' fees
|
|
|
|
|
|
Total Directors' fees charged
|
199
|
|
433
|
|
234
|
Directors' fees
outstanding
|
-
|
|
-
|
|
-
|
As at 31 March 2024 the following
Directors had holdings in the Company:
|
Number of
|
% Ordinary
Shares
|
Director
|
Ordinary
Shares
|
issue as at 31 March 2024
|
Andrew Haining
|
79,000
|
0.0133
|
Stephen Coe
|
60,909
|
0.0102
|
Simon Holden
|
89,500
|
0.0150
|
Anne Ewing
|
55,000
|
0.0092
|
Tim Cruttenden
|
21,298
|
0.0036
|
Margaret O'Connor
|
-
|
-
|
S Cruttenden (son of Tim
Cruttenden)
|
11,530
|
0.0019
|
As at 30 September 2023 the
following Directors had holdings in the Company:
|
Number of
|
% Ordinary
Shares
|
Director
|
Ordinary
Shares
|
issue as at 30 September
2023
|
Andrew Haining
|
79,000
|
0.0133
|
Stephen Coe
|
60,909
|
0.0102
|
Simon Holden
|
89,500
|
0.0150
|
Anne Ewing
|
55,000
|
0.0092
|
Tim Cruttenden
|
21,298
|
0.0036
|
Margaret O'Connor
|
-
|
-
|
S Cruttenden (son of Tim
Cruttenden)
|
11,530
|
0.0019
|
The following funds, which are
also managed by companies which are part of the Jupiter Fund
Management plc group ("Jupiter"), hold an investment in the
Company.
|
|
|
|
|
|
|
|
|
|
|
Total holdings
at
|
|
Shares
purchased
|
|
Shares
sold
|
|
Total holdings
at
|
|
Value of holdings
at
|
|
30
September
|
|
during
|
|
during
|
|
31
March
|
|
31 March
|
|
2023
|
|
the year
|
|
the year
|
|
2024
|
|
2024
|
|
|
|
|
|
|
|
|
|
£'000
|
Fund name
|
|
|
|
|
|
|
|
|
Jupiter UK Smaller Companies Focus
Fund
|
2,019,239
|
|
-
|
|
(1,803,122)
|
|
216,117
|
|
179
|
Jupiter UK Specialist Equity
Fund
|
1,093,790
|
|
-
|
|
(942,408)
|
|
151,382
|
|
126
|
Jupiter UK Mid-Cap Fund
|
54,348,251
|
|
-
|
|
(51,206,896)
|
|
3,141,355
|
|
2,607
|
Jupiter UK Smaller Companies
Fund
|
9,989,951
|
|
-
|
|
(6,310,399)
|
|
3,679,552
|
|
3,054
|
Jupiter Fund of Investment
Trusts
|
2,000,000
|
|
-
|
|
-
|
|
2,000,000
|
|
1,660
|
Jupiter UK Smaller Companies
Equity Fund
|
2,250,000
|
|
-
|
|
(1,402,350)
|
|
847,650
|
|
704
|
|
|
|
|
|
|
|
|
|
|
Total
|
71,701,231
|
|
-
|
|
(61,665,175)
|
|
10,036,056
|
|
8,330
|
|
|
|
|
|
|
|
|
|
|
The following funds, which are
also managed by Jupiter, hold an investment in the
Company.
|
|
|
|
|
|
|
|
|
|
|
Total holdings
at
|
|
Shares
purchased
|
|
Shares
sold
|
|
Total holdings
at
|
|
Value of holdings
at
|
|
30
September
|
|
during
|
|
during
|
|
30
September
|
|
30
September
|
|
2022
|
|
the year
|
|
the year
|
|
2023
|
|
2023
|
|
|
|
|
|
|
|
|
|
£'000
|
Fund name
|
|
|
|
|
|
|
|
|
Jupiter UK Smaller Companies Focus
Fund
|
4,390,111
|
|
-
|
|
(2,370,872)
|
|
2,019,239
|
|
1,256
|
Jupiter UK Specialist Equity
Fund
|
4,166,225
|
|
-
|
|
(3,072,435)
|
|
1,093,790
|
|
680
|
Jupiter UK Mid-Cap Fund
|
84,063,528
|
|
-
|
|
(29,715,277)
|
|
54,348,251
|
|
33,805
|
Jupiter UK Smaller Companies
Fund
|
15,958,557
|
|
-
|
|
(5,968,606)
|
|
9,989,951
|
|
6,214
|
Jupiter Investment Fund - Jupiter
Merlin Real Return Portfolio
|
1,259,639
|
|
-
|
|
(1,259,639)
|
|
-
|
|
-
|
Jupiter Fund of Investment
Trusts
|
2,000,000
|
|
-
|
|
-
|
|
2,000,000
|
|
1,244
|
Jupiter UK Smaller Companies
Equity Fund
|
2,250,000
|
|
-
|
|
-
|
|
2,250,000
|
|
1,400
|
|
|
|
|
|
|
|
|
|
|
Total
|
114,088,060
|
|
-
|
|
(42,386,829)
|
|
71,701,231
|
|
44,599
|
|
|
|
|
|
|
|
|
|
|
15. Post balance sheet
events
On 1 April 2024, G10 Capital
Limited was appointed as the AIFM to Chrysalis Investments Limited.
Chrysalis Investment Partners LLP became Investment Adviser to G10
Capital Limited. Chrysalis Investment Partners LLP is an appointed
representative of G10 Capital Limited, which is authorised and
regulated by the Financial Conduct Authority.
Post period end, the Company
entered into a convertible loan agreement with wefox Group Plus AG
for a consideration of €5,500,000.
The assets of Tactus were sold to
a third-party for a nominal amount post-period end. Tactus was
placed into Administration on 23 May 2024.
On 23 May 2024, Klarna completed
its redomiciliation to the UK from Sweden. The Company's holding in
Klarna was transferred to Klarna Group PLC.
During June 2024, the Company sold
shares in Wise for a total consideration of £6,215,469, at an
average price of 691 pence per share.
There has not been any other
matter or circumstance occurring subsequent to the end of the
interim financial period that has materially affected, or may
materially affect, the operations of the Company, the results of
those operations, or the state of affairs of the Company in future
financial period.
Corporate Information
Directors
Andrew Haining,
Chairman
Anne Ewing
Simon Holden
Stephen Coe (Senior Independent
Director)
Tim Cruttenden
Margaret O'Connor
Registered office
1 Royal
Plaza
Royal Avenue
St Peter Port
Guernsey, GY1 2HL
Investment Adviser
Jupiter Investment Management
Limited ("JIML")
The Zig Zag Building
70 Victoria Street
London, SW1E 6SQ
From 1 April 2024
Chrysalis Investment Partners
LLP
3 Orchard Place
London, SW1H 0BF
Chrysalis Investments Partners LLP
is the Investment Adviser to G10 Capital Limited and an appointed
representative of G10 Capital Limited. G10 Capital Limited is
authorised and regulated by the Financial Conduct
Authority.
AIFM
From 1 April 2024
G10 Capital Limited
4th Floor
3 More London Riverside
London, SE1 2AQ.
Financial Adviser and Corporate Broker
Liberum Capital Limited
Ropemaker Place Level
12
25 Ropemaker Street
London, EC2Y 9LY
Numis Securities Limited
45 Gresham Street
London, EC2V 7BF
Administrator and Company Secretary
Apex Administration (Guernsey)
Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey, GY1 2HL
Registrar
Computershare Investor Services
(Guernsey) Limited
1st Floor, Tudor House
Le Bordage
St Peter Port
Guernsey, GY1 DB
Depositary
Citibank UK Limited
Citigroup Centre
Canada Square
Canary Wharf
London, E14 5LB
English Legal Adviser to the Company
Travers Smith LLP
10 Snow Hill
London, EC1A 2AL
Guernsey Legal Adviser to the Company
Ogier (Guernsey) LLP
Redwood House
St Julian's Avenue
St Peter Port, GY1 1WA
Independent Auditor
KPMG Channel Islands
Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey,
GY1 1WR
Definitions
BENCHMARK PERFORMANCE
|
|
With reference to investment
valuation, application of the performance of a benchmark or pool of
comparable companies to an unlisted company to determine a
valuation.
|
|
NAV PER SHARE
|
|
Net Asset Value expressed as an
amount per share.
|
|
NAV PER SHARE GROWTH
|
|
With reference to fund
performance, NAV at end of stated year / NAV at beginning of stated
year as a percentage.
|
|
IRR
|
|
Internal Rate of Return - with
reference to investment performance, calculated using excel XIRR
formula.
|
|
TRADING MULTIPLE
|
|
With reference to investment
valuation, enterprise value / annual revenue of company.
|
|
DRAWDOWN
|
|
With reference to index
performance, the maximum percentage loss in value over a given time
period.
|
|
DISCOUNT / PREMIUM
|
|
The amount by which the market
price per share of an investment company is lower or higher than
its net asset value per share. The discount or premium is normally
expressed as a percentage of the net asset value per
share.
|
|
NET ASSET VALUE (NAV)
|
|
The Net Asset Value (NAV) is the
amount by which total assets exceed total liabilities, i.e., the
difference between what the Company owns and what it
owes.
|
|
|
|
|
|
EBITDA
|
|
Earnings before interest, tax,
depreciation and amortisation
|
|
|
|
EV
|
|
Enterprise Value
|
|
|
|
LTM
|
|
Last Twelve Months
|
|
|
|