Chrysalis Investments Limited
Annual Report and Audited Financial Statements
For the year ended 30 September 2024
Strategy
At Chrysalis we aim to deliver value for our shareholders and partners by investing in and supporting innovative
businesses with the potential to transform their sectors.
Backing Winning
Ideas
We seek high growth innovative businesses which are leading transformation
within their sectors.
Technology has the power to transform the world in which we live. We look to
invest in those businesses that have the ability to achieve meaningful change.
We identify opportunities for significant growth and help companies carve
out clear pathways to profit.
Operating in huge addressable markets, the companies we choose to
support offer best-in-class scalable technologies, enabling them to drive and
capitalise on societal change.
Capturing Growth
Empowering Our
Partners
We actively engage in building long-
term relationships with our partner
businesses.
Collaborating with businesses, we provide them with the support, knowledge,
experience, and flexible capital necessary to empower the delivery of
transformational technology.
We create value by taking a high conviction approach.
We de-risk and enhance the competitive edge of our partners, whilst offering
shareholders the opportunity to access and gain returns from these exciting
private and public companies.
Delivering Value
Contents
Strategic Report
Performance Headlines ................................................................................................................................................ 1
Chairman’s Statement .................................................................................................................................................. 2
Portfolio Statement ...................................................................................................................................................... 5
Investment Adviser’s Report ......................................................................................................................................... 6
Environmental, Social and Corporate Governance Report ...................................................................................... 21
Investment Objective and Policy ................................................................................................................................ 28
Governance
Corporate Governance Statement ........................................................................................................................... 29
Key Governance Disclosures ...................................................................................................................................... 30
The Board of Directors ............................................................................................................................................... 33
Report of the Remuneration and Nomination Committee ....................................................................................... 39
Report of the Management Engagement Committee ............................................................................................... 43
Report of the Risk Committee .................................................................................................................................... 45
Directors’ Report ........................................................................................................................................................ 48
Statement of Directors’ Responsibilities .................................................................................................................. 57
Audit Committee Report ............................................................................................................................................ 59
Audit Report
Independent Auditor’s Report to the Members of Chrysalis Investments Limited .................................................. 62
Audited Financial Statements
Statement of Comprehensive Income ...................................................................................................................... 70
Statement of Financial Position ................................................................................................................................ 71
Statement of Changes in Equity ................................................................................................................................ 72
Statement of Cash Flows ........................................................................................................................................... 73
Notes to the Audited Financial Statements ............................................................................................................... 74
Corporate Information .............................................................................................................................................. 101
Definitions .................................................................................................................................................................. 104
1
Performance Headlines
141.26p
– NAV per share increase of 6.61p or 5%
The increase in the fair value of the portfolio was 13.29p, offset by an adverse movement in foreign exchange of
5.59p. Increases in the value of Starling Bank, Klarna, Smart Pension and Featurespace were partially offset by a
material decline in the value of wefox and the write-off of Tactus.
93.30p
– Share price increase of 31.10p or 50%
The share price closed at a 34% discount to NAV, narrowing from 46% in the prior year.
£54 million
– Proceeds from realisations
The Company realised positions in Graphcore (£45 million) and Wise (£9 million) and post period end received £79
million from the sale of Featurespace.
£23 million
– Capital deployed
Capital was deployed in ongoing support of two existing portfolio companies, wefox (£17 million) and Smart
Pension (£6 million).
£47 million
– Available liquidity at 30 September 2024
The portfolio remains well funded, with the majority either profitable or funded to profitability. The Company
ended the year with an improved level of liquidity available to support both the existing portfolio, and the
commencement of the share buyback, which forms part of the Company’s Capital Allocation Policy.
£132 million
– Portfolio profitability
1
Portfolio profitability improved by 45% in the period and revenue growth remained robust. All portfolio companies
saw profits rise or losses narrow.
1
Measured as the sum of the product of the individual portfolio company profits/losses for the last twelve months
to 30 September 2024 (typically underlying EBITDA) and that company's weight in the portfolio. For the active
portfolio, excludes Wise PLC.
2
Chairman’s Statement
The year, which saw a welcome return to growth in NAV per share – up 5% over the year to 141.26 pence, driven by
Starling Bank and Klarna revaluations which offset the write downs on wefox and Tactus – was one of significant
change for Chrysalis Investments Limited (“Chrysalis” or “the Company”). Not only has it seen the market for exits
reopen, which I will cover in more detail below, but it has also witnessed a shift in the way the Company has been
managed.
Following lengthy discussions, the Board, Investment Adviser and Jupiter agreed to move the advisory team out of
the employment of Jupiter and into a separate structure. The Board has overseen this process, and I am pleased to
report this transition has passed off seamlessly. I believe this new structure provides a better foundation for the
management of your Company in the future.
The majority of the portfolio continues to perform strongly. As detailed in the Investment Adviser’s report, aggregate
revenue growth remained robust, at approximately 22% over the year; however, the reversal in value at wefox is
frustrating. The Investment Adviser has been working hard to refocus the business under new management with a
revised business plan which is covered in more detail in the Investment Adviser report. Despite this situation, I am
pleased to say that the year has been notable for the return of liquidity to the Company, which I had highlighted as a
possibility in my statement last year.
The first liquidity event came in the form of an exit from Graphcore, which generated initial cash proceeds of
approximately £45 million. This allowed a valuable recycling of capital, used to fund the initial tranche of the share
buyback and was, I believe, the best possible result for shareholders in the circumstances, generating a significant
uplift to the carrying value and recouping the bulk of the cost of the original investment.
The sale of Featurespace to Visa, which closed post period end, has generated strong returns for shareholders and is
likely to yield a 3.0x money-on-money multiple once full proceeds have been received (initial proceeds of
approximately £79 million were received post period end). The completion of this transaction unlocks the ability of
the Company to meet the second pillar of its Capital Allocation Policy (“CAP”), endorsed by shareholders, namely the
return of up to £100 million of capital.
I am optimistic that further liquidity will be generated in 2025 with the expected IPO of Klarna, which has been long
mooted, where the company recently announcing it had filed its F-1 with the SEC as a prelude to a listing. The
Investment Adviser believes the first half of 2025 offers an obvious window for its IPO, and notes that news flow
regarding product announcements has been building in recent months.
Capital Allocation
The Capital Allocation Policy (“CAP”) is the cornerstone of the Company’s three-year extension strategy, balancing
shareholder returns with long-term growth, and the Board was delighted that shareholders so comprehensively
supported all the proposals put to them at the Company’s AGM in March 2024. During this extension period, we
anticipated the Company would dispose of investments in an orderly way, to fund both buybacks and, potentially in
time, new investments. Within the first year of the extension, the Company has generated substantial liquidity,
demonstrating significant progress towards its commitments, thus placing itself in a good position from which to
refine its approach to reinvestment and long-term value creation.
As a recap, four core potential uses of capital were set out in the CAP:
i. to support existing portfolio companies
ii. to fund the Company’s working capital (for operating costs and fees)
iii. to invest in late-stage growth opportunities in accordance with the Company’s investment policy
iv. to return available capital to shareholders through share buybacks (or equivalent programmes) where it is
economically attractive to do so.
3
Chairman’s Statement (Continued)
Capital Allocation (Continued)
Further, the uses of capital in the future would consider:
i. the prevailing discount to NAV per share at which the Company’s shares are trading
ii. the likely timeline of realisations
iii. the likely uses of capital to fund existing investee companies
iv. the strength of any new investment opportunities
We remain committed to enacting the second pillar of the CAP – the return of up to £100 million of capital, as well as
supporting the existing portfolio – to ensure the best possible returns for our shareholders. We also expect to return
at least 25% of net realised gains on further asset sales, thus ensuring further capital returns to shareholders are
possible.
Shortly before the end of the year the Company agreed a two-year, £70 million debt facility with Barclays Bank plc,
the full £70 million being drawn down shortly after period end. The facility was designed to cover the “buffer” element
of the CAP, to support existing portfolio companies and fund working capital.
We were then able to commence the buyback programme at the end of September 2024; the Board, its advisers, and
the Investment Adviser continue to monitor its progress. As of the end of December, the Company had bought back
approximately 28 million shares at a cost of £26.5 million, representing 66% of the initial buyback size of £40 million,
and 27% of the maximum second pillar of the CAP, namely the return of up to £100 million.
Hitherto, we have chosen to return capital to shareholders via share buybacks, which we believe maximise the NAV
per share accretion available to shareholders, but the appropriate mechanism of capital return will be kept under
review. While only just over one quarter of the total capital return available under the full programme has been
enacted, our initial assessment of its “success” is positive. From a share price of 87 pence prior to the announcement
of the commencement of the share buyback, the shares closed the calendar year at 108 pence. In comparison, the
FTSE250 was broadly unchanged, meaning our shares outperformed their market segment by approximately 25%
over the three months to December 2024.
Way Forward
I am grateful for the time and input provided by several of our shareholders since we gave our trading update in
October, and I am sorry I have not been able to discuss our views with more, but those that I have spoken to account
for approximately 40% of the shareholder base.
Most shareholders with whom I have spoken recognise that private growth capital investing still has a place in
institutional and private portfolios and that there are very few vehicles through which to access that market. We agree
that there remains a need for late-stage venture capital provision in Europe and firmly believe that the platform that
Chrysalis has established since IPO provides just such a vehicle, with a collection of growth capital assets that we
expect will, over time, grow in value and generate capital returns for our shareholders.
However, as acknowledged by shareholders, the need to achieve and maintain “scale” for such a vehicle is paramount
to its future success. The CAP therefore looked to balance the demand to return capital to shareholders, where it is
economically attractive to do so – which, by its nature, will reduce scale – with the recycling of some of that capital
to cement the long-term viability of the product. If capital is simply returned, then portfolio concentration increases,
and firepower and scale decrease. If this continued, it would effectively imply a winding-down of the vehicle. Not only
is this contrary to the continuation vote of March 2024, but, as recognised by many shareholders, it is likely to limit
the Company’s ability to realise assets at fair value and is, consequently, a far from optimal outcome. To minimise
these risks, such a process is likely to take considerable time, and cost, to execute.
4
Chairman’s Statement (Continued)
Way Forward (Continued)
We believe there are further ramifications of a de facto wind-down, with decreased scale and increased concentration
in the portfolio potentially resulting in an increase in the perception of “risk” around the Company. This could lead
to the discount the shares trade at versus NAV beginning to widen again, thus undoing the impact of the capital return
undertaken to date.
With the prospect of liquidity improving in 2025 and the Company’s prevailing discount to NAV having materially
tightened, the Board and Investment Adviser continue to evaluate how to ensure that the Company can maximise
the value delivered to shareholders. Our overarching aims are twofold: first, to minimise the discount to NAV the
shares trade at and second, to maximise NAV growth potential in the portfolio. Further announcements will be made
in the first half of 2025, and I look forward to discussing this topic directly with as many shareholders as possible.
I would like to thank all those who have contributed to the Company’s development over the year – the management
teams and employees of all our investee companies, the team at the Investment Adviser, our legal and financial
advisers and all of my colleagues on the Board. It has been a very busy and productive year.
It only remains for me to thank our shareholders for their engagement and support over the year. I believe there are
grounds for optimism for the fiscal year ahead, with the prospects of further liquidity, and thus capital returns, that
hopefully will make 2025 another year of development.
5
Portfolio Statement
As at 30 September 2024
Principal
place of
business
Cost
(£’000)
Opening
value
(£’000)
Net
invested/
(returned)
(£’000)
Fair value
movements
(£’000)
Closing
value
(£’000)
% of
net
assets
Company
Starling Bank Limited
UK 118,349 141,696 - 112,745 254,441 30.3
Smart Pension Limited
UK 108,570 79,683 6,070 37,681 123,434 14.7
Klarna
Group PLC UK 71,486 56,913 - 63,649 120,562 14.3
Featurespace Limited
UK 29,546 49,588 - 31,803 81,391 9.7
The Brandtech Group LLC
USA 46,440 103,881 - (23,651) 80,230 9.5
Deep Instinct Limited
Israel 62,226 51,514 - (9,705) 41,809 5.0
wefox Holding AG
Switzerland
86,538 188,633 17,351 (169,767) 36,217 4.3
Cognitive Logic Inc.
USA 48,453 27,231 - 2,697 29,928 3.6
Secret Escapes Holding Limited
UK 28,009 25,030 - 298 25,328 3.0
Wise PLC
UK 655 10,284 (9,025) 756 2,015 0.2
Sorted Holdings Limited
UK 316 316 - - 316 0.1
Graphcore Limited
UK - 16,506 (44,866) 28,360 - 0.0
Growth Street Holdings Limited
UK - 63 (67) 4 - 0.0
Rowanmoor Group Limited
UK 13,363 - - - - 0.0
Tactus Holdings Limited
UK 42,129 29,038 - (29,038) - 0.0
Total investments
656,080
780,376
(30,537)
45,832
795,671
94.7
Cash and cash equivalents
44,612
5.3
Other net current assets
48
0.0
Total net assets
840,331
100.0
6
Investment Adviser’s Report
Market Context
As discussed at the Interim results, the Investment Adviser ("Chrysalis Investment Partners LLP" or "CIP LLP")
continues to believe that the market backdrop for growth assets is improving.
Despite some volatility, the NASDAQ 100 rose approximately 35.2% over the year to 30 September 2024, with the FTSE
All Share following suit, rising by 10.8%. US ten-year yields trended down from a recent peak of nearly 5% in October
2023 to approximately 3.8% by year end, which likely supported valuations to some extent, despite concerns in certain
quarters over the health of the US economy.
Post period end, yields have risen again, likely due to a combination of certain economic indicators proving more
optimistic than feared and then further fuelled by the expectation, and then reality, of the ramifications of a Trump
presidency. Despite the negative connotations of rising yield for growth stocks, the NASDAQ has performed well post
period end, helped by the expectation of benign conditions for certain sectors, including fintech, that the new political
backdrop will bring.
US 10-year yields (%, post period end shaded)
Source: Bloomberg and Chrysalis Investment Partners LLP
This environment has led to a more favourable backdrop for risk assets, as seen by the continued improvement in IPO
markets over the period. While the Investment Adviser has consistently pointed out that IPO is only one possible exit
route for the Company’s investments, it is of the view that it does provide a good indicator of investor risk appetite.
While the five-year picture of IPO activity in both Europe and the Americas (which is predominantly the US), remains
muted, volumes have picked up materially recently.
3.6
3.8
4.0
4.2
4.4
4.6
4.8
5.0
Oct-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
7
Investment Adviser’s Report (Continued)
Market Context (Continued)
IPO activity by region CY19-CY23 (US$ billions)
Source: PwC IPO Watch
IPO activity by region 1H22 – 2H23 (US$ billions)
Source: PwC IPO Watch
Evidence of this improvement in market dynamics has been seen in the portfolio over the year, namely both the sale
of Graphcore to SoftBank Group Corp (“SoftBank”) and Featurespace to Visa, the latter of which completed in
December 2024. While both of these deals were trade sales, it demonstrates that there is activity occurring in parts of
the market that the Company has invested in.
Klarna has also indicated that it is looking to IPO and announced it had made a draft filing to the SEC in November
2024 in relation to a public offering.
-50
50
150
250
350
FY19 FY20 FY21 FY22 FY23
US Europe
0
5
10
15
20
1H22 2H22 1H23 2H23 1H24
US Europe
8
Investment Adviser’s Report (Continued)
Market Context (Continued)
While no precise timetable has been publicly released, the Investment Adviser believes that the first half of 2025 could
be realistic. An exit of Klarna – a position valued at £121 million as of September 2024 – would not only provide the
Company with significant further liquidity, but could result in an uplift to the current valuation. This would be
consistent with other investments which have exited above their carrying value.
It is likely that pressure for exits is growing. As of July 2024, Forge Private Markets estimated that the total IPO pipeline
value for technology stocks stood at approximately $102 billion, which equates to roughly three years of the volume
of the annualised 1H24 issuance in the US.
Activity
With the Company’s shares still trading at a material discount to NAV per share, the Investment Adviser has continued
to focus on follow-ons to support existing investments, rather than looking to source new ideas.
Over the year, approximately £23 million was invested, of which:
• circa £6 million was injected into Smart Pension in two tranches to support the company’s growth ambitions
and enable it to drive towards profitability. The terms of this transaction led to a write up of the Company’s
carrying value of this asset; and,
• circa £17 million was invested in wefox to enable the company to continue to pursue profitability and to allow
it to consider its strategic direction.
On the other side of the coin, approximately £54 million was realised, of which:
• circa £45 million came from the sale of Graphcore to SoftBank via trade sale. While the original investment
thesis on Graphcore did not play out as envisaged – despite the strong growth experienced in the AI market
– the Company’s positioning in the capital structure enabled it to recover 74% of its initial investment in US
dollar terms; and,
• circa £9 million was realised from the holding in Wise, which has been used to fund other corporate activities
The upshot of these transactions has been a net capital inflow into Chrysalis of almost £31 million. This has rebuilt
the Company’s liquidity position substantially, to the extent that once the “cash buffer” element of the CAP was
advanced by the debt facility from Barclays Bank PLC (“Barclays”), net realised proceeds were used to commence the
buyback of the Company’s shares, starting on 30 September 2024.
Net investment over the year (£ millions)
Source: Chrysalis Investments Limited
-6.1
-17.4
44.9
9.0 30.5
Smart Pension
wefox
Graphcore
Wise
Net investment
-30
-20
-10
0
10
20
30
40
9
Investment Adviser’s Report (Continued)
Activity (Continued)
During the period, the Company entered into a debt facility agreement with Barclays, with the following
characteristics:
• A two-year tenor, which the Investment Adviser believes should provide sufficient time for further
realisations to occur in the portfolio, while falling within the three-year continuation period;
• A committed facility of £70 million;
• An uncommitted accordion of £15 million;
• A margin over SONIA that the Investment Adviser believes is market standard; and
• The ability to repay after one year with no cost
As of period end, the Company had a liquidity position of approximately £46.6 million (representing a position in Wise
of £2 million and cash of £44.6 million). Post period end, the Company called down the full £70 million committed
facility, which has substantially increased liquidity. In addition, the sale of Featurespace to Visa post-period end has
yielded a further £79 million of capital initially, eventually rising to £89 million once proceeds deferred in escrow are
received. If both of these events had occurred at year end, the Company would have had a liquidity position of
approximately £195 million (net of facility fees), representing 35% of the Company’s market capitalisation as of
September 2024.
Year end and pro-forma liquidity position (Sep-24)
Source: Chrysalis Investments Limited
Outlook
At the interim stage, the Investment Adviser described an emphasis on two areas, which remain its key focus. These
are:
i. Maximising investee company potential to boost valuations; and
ii. Closing the discount to NAV at which the Company’s shares trade
Sep-24
Facility
Initial Featurespace…
Pro forma total
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
10
Investment Adviser’s Report (Continued)
Outlook (Continued)
Maximising investee company potential to boost valuations
The process of driving towards profitability has been a constant trend of the last few years in the market and this has
been replicated in the portfolio.
Over the course of the year, material progress has been made at an individual investee company level, which has
driven increased profitability at a portfolio level. This has meant that portfolio profitability, as measured by
cumulative weighted average profits/losses, has improved by approximately 45%. Revenue growth remained robust
at 22%.
Portfolio profitability
0F
1
(year-on-year to September, £ millions)
Source: Chrysalis Investments Limited
Across the active portfolio, all companies either saw profits rise, or losses narrow, which the Investment Adviser
believes demonstrates the dedication of the portfolio company management teams to drive towards profitability.
Examples of this include Featurespace and Smart Pension (“Smart”).
At Featurespace, the company continued to invest in its offering as well as developing new products, such as
TallierLTM, which the company believes is the first application of a large AI model to the fraud market. As a result of
this investment, growth over calendar year 2023 was 47% year-on-year, up from 28% in 2022. Due to strong
operational gearing, losses fell from £20.9 million in 2022 to £8.1 million in 2023.
As previously mentioned, the Company invested approximately £6 million into Smart in early 2024, in a Series E
extension round, to enable it to continue to pursue its growth agenda, including providing firepower for M&A; the
main Series E round having taken place in early 2023. In July 2024 Smart signed a deal with STM Group PLC to take on
members of the Options Workplace Pension Trust through a bulk transfer to the Smart Pension Master Trust; in the
Investment Adviser’s experience, these types of replatforming deals can generate high unit economics for the
acquirer.
1
Measured as the sum of the product of an individual company’ profits/losses (typically as underlying EBITDA) and
that company’s weight within the portfolio.
0
20
40
60
80
100
120
140
Prior Current
11
Investment Adviser’s Report (Continued)
Outlook (Continued)
As part of the extension round, Smart made the difficult decision to rationalise its cost base, including headcount,
which was reduced by 150 to 427 as of June 2024. The Investment Adviser has witnessed this decision being played
out across the technology sector in recent years, as unprofitable firms aim to narrow losses.
Published accounts show underlying EBITDA for Smart as significantly negative in calendar year 2023 – in fact losses
widened – but this does not include the full benefit of the above mentioned cost savings. As a result, the Investment
Adviser believes that the financial performance of Smart will be much improved in 2024, and this is reflected in the
aggregated numbers depicted in the portfolio profitability chart.
Closing the discount to NAV
There are levers the Investment Adviser believes it can pull in order to begin to swing the balance of opinion on the
Company’s shares. These include:
i. Generating liquidity; and
ii. Enacting the Capital Allocation Policy
All other things being equal, converting unlisted asset positions into cash should be seen by investors as a reduction
in risk, and should imply a high “cash adjusted” discount, as demonstrated in the table below.
Deducting the cash from the market value (“MV”) gives the amount of market cap attributable to just the portfolio. In
the below example, shifting £20 from portfolio value to cash – i.e. leaving NAV unchanged – increases the implied
discount of the portfolio from 45% to 56%.
Impact of cash on implied discount (£)
Low cash
High cash
Portfolio
100
80
Cash
0
20
NAV
100
100
MV
55
55
MV cash adjusted
55
35
MV/NAV
-45%
-45%
MV cash adjusted/NAV
-45%
-56%
Source: Chrysalis Investment Partners LLP
Across the portfolio, the Investment Adviser is discussing exit plans with investee companies, including timing and
potential method of exit. While sentiment has an important impact on whether or not an exit is possible, early
preparation allows a wider range of timing options.
Looking at Featurespace again, the work done in upskilling members of the senior management team were
undoubtedly crucial in putting the company in a place where an exit could be effected. As an example, the Investment
Adviser would call out the appointment of John Shipsey as CFO as critical in instilling improvements in the finance
function, which led to a significantly better cash flow performance. This type of enhancement ultimately places
businesses in a better state to either float or sell themselves privately.
12
Investment Adviser’s Report (Continued)
Outlook (Continued)
In terms of the CAP, the Investment Adviser worked closely with the Board to generate a policy that it believes will
have the maximum impact on the discount. Following the achievement of the £50 million “cash buffer” element, the
next two phases were designed to:
i. Return a significant quantum of capital immediately, aiming to take advantage of the current discount (this
was expressed in the CAP as a return of up to £100 million to shareholders; at the time of proposal, this
represented approximately 40% of the Company’s market capitalisation); and
ii. Offer a way for part of future realisations to continue to address the discount, if it proves difficult to close (at
the time of proposal, this was expressed as at least 25% of net realised gains on future disposals)
Both liquidity and the CAP are interlinked, as delivery of the former should allow the latter to be able to take effect.
To this end, the Investment Adviser has worked on a number of processes over the period, of which it can comment
on three, namely:
i. The sale of Graphcore to SoftBank;
ii. Setting up a debt facility with Barclays; and
iii. The sale of Featurespace to Visa
The sale of Graphcore to SoftBank on 12 July 2024 significantly rebuilt the Company’s liquidity position, with the
injection of approximately £43.8 million of initial proceeds. This took total liquidity at the time to approximately £50
million, net of further expected investment into wefox, which subsequently occurred.
The signing of the Barclays debt facility allowed the Buffer element of the CAP to be covered, thus freeing up the
Graphcore proceeds for distribution. As a result of this, a share buyback programme of up to £40 million was
commenced on 30 September 2024.
It is hoped that the facility will also serve as a “bridge” in certain circumstances. Often there is a time delay between
signing a realisation and receipt of funds. For Graphcore, the Company first announced a “likely disposal” on 5
December 2023, but the process took until mid-July 2024 before initial proceeds were received. The debt facility could
be used to accelerate the ability of the Company to return capital to shareholders in these situations, with due
consideration taken regarding the risk mitigation over the completion of any transaction.
Finally, the agreement with Visa to acquire Featurespace, which was announced before year end, completed on 19
December 2024. Receipt of approximately £79 million of initial proceeds now means there is sufficient capital to
continue the buyback up to £100 million.
Conclusion
The year has provided good news in terms of realisations. While the Graphcore investment thesis did not play out as
originally planned, the intellectual property (“IP”) that the company had generated, combined with the Company’s
positioning in the capital structure, meant that a meaningful recovery was made against cost.
The Investment Adviser believes the sale of Featurespace further underlines the reopening of the markets for
disposals.
With both listed and private markets appearing to have regained a degree of momentum, the Investment Adviser
believes the outlook for future realisations remains promising. Most eagerly awaited is probably Klarna, where its
recent announcement suggests an IPO could occur in the first half of 2025. Elsewhere, the Investment Adviser
continues to work with portfolio companies to seek the best outcome for them, and by inference, the Company’s
shareholders.
13
Investment Adviser’s Report (Continued)
Starling Bank Limited (“Starling”)
The key developments over the year for Starling were:
i. The appointment of Raman Bhatia as CEO;
ii. The initial contracts signed by Engine; and
iii. Post period-end, a fine for failings in its financial crime systems and controls
Raman took over from John Mountain, the interim CEO, in the summer of 2024. 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 Investment Adviser believes having a permanent CEO for Starling is important to allow proper consideration of a
medium to long-term strategy for the bank. This is especially critical following the £29 million fine recently imposed
by the FCA. The fine was paid in full and final settlement of concerns over its AML and sanctions framework, during a
period spanning December 2019 to November 2023. Since these issues have been raised by the regulator, a significant
strengthening in the management team has occurred, including the appointment of Cyrille Salle de Chou as Chief
Risk Officer, who joined from HSBC.
Engine by Starling (“Engine”) is a Platform as a Service (“PaaS”) offering which delivers 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. Engine offers third party access to Starling’s highly efficient software.
At the backend of 2023, Engine got off to a flying start, announcing two contracts in quick succession. The first was
with Salt Bank in Romania, which was to power a new retail customer offering. This project went live in April 2024 and
saw 100,000 customers onboarded in just two weeks. The second was with AMP, a listed Australian financial services
firm, which intends to launch an offering targeting SMEs; it is expected to go-live in 1Q 2025. AMP expects to invest
approximately A$60 million over its fiscal 2024 and 2025.
Overall, the bank has continued to perform well. While Starling has put in place significant structural hedges, with a
shift down in the yield curve over the course of the last 12 months, the Investment Adviser continues to work with the
company to consider new products and offerings to drive top line growth.
Starling – Revenue and PBT progression (Mar-21 to Mar-24, £ millions)
Source: Starling
-100
0
100
200
300
400
500
600
700
Mar-21 Mar-22 Mar-23 Mar-24
Revenue PBT
14
Investment Adviser’s Report (Continued)
Smart Pension Limited (“Smart”)
Smart saw continued progress over calendar 2023 – the last period with publicly available data – but this was masked
somewhat by the mix of revenue. Over its fiscal year, Smart saw headline revenue fall, but this was due to a significant
amount of implementation work undertaken in the prior period. Recurring revenue, which includes “pension service
revenue” (mainly from the Smart Pension Master Trust) and “Keystone service revenue”, rose 51% in the year from
£29 million to £44 million.
Smart revenue performance
Source: Smart and Chrysalis Investments Limited
The December 2023 exit run rate – effectively the annualised revenue in December 2023 – shows further embedded
growth into 2024 at over £55 million.
On the profit front, the company remained significantly loss making in the year ended December 2023, with losses
after tax of approximately £74 million. However, in the first quarter of 2024, the company undertook a substantial
restructuring, which included a rationalisation of the workforce with headcount reduced by 150 to 427, as of June
2024.
The Investment Adviser believes this cost action will significantly reduce the company’s loss profile and put it on the
road to profitability in 2025.
Smart has continued to expand both organically, as well as by acquisition. In June 2024, Smart announced that it had
taken on the assets of the Options Master Trust ("Options"), which it believed had the potential to add up to £545
million of AuM and would boost total AuM to £6 billion. This acquisition comes on the heels of the July 2023 purchase
of Evolve, which added £750 million in AuM, and Ensign in October 2022, which added £158 million.
Prospects for further growth led Jamie Fiveash – the CEO of the Smart Pension Master Trust (“SPMT”) – to give an
interview in March 2024 in which he stated that Smart anticipates reaching £10 billion of AuM within three years.
The Keystone division, which is the software platform that is sold to third parties as well as powering SPMT, completed
a complex migration onto its platform of an existing €2 billion book of pension assets and customers, from a legacy
technology solution within a leading insurer in the Irish market. The solution is expected to deliver a significant
reduction in ongoing cost to serve and a market leading customer experience.
0
10
20
30
40
50
60
Dec-22 Dec-23 Dec-23 exit
Recurring One off
15
Investment Adviser’s Report (Continued)
Smart (Continued)
The company believes the addressable market for Keystone is substantial and it is hopeful of adoption, given its
superior unit economics, ability to transform existing business models and the ease at which it can be deployed. In
the near term, the focus will be on opportunities in the UK and Middle East.
Klarna Group PLC (“Klarna”)
Klarna has demonstrated solid growth over the first six months of 2024, which has, importantly, also driven a
progression in profits.
Klarna – Progression of Adjusted Operating Income (US$ millions, 1H22 estimated by Chrysalis Investment
Partners LLP)
Source: Klarna and Chrysalis Investment Partners LLP
The Investment Adviser estimates that Klarna, based on its new metric of “Adjusted Operating Income”
1
, lost
approximately $500 million in the first half of 2022, but became profitable in 1H24. This turnaround was partly driven
by uninterrupted growth in revenues, but also a result of a significant cost reduction programme. The latter was
originally forecast to remove approximately 10% of heads from the business, but it is clear from recent data that this
trajectory has continued. This ties in with the significant focus Klarna has placed on generative AI (“GenAI”), and its
ability to replace more mundane roles with technology.
Klarna – Average FTEs versus GMV
Source: Klarna
1
Operating result adjusted for Depreciation and amortisation, Share based payments, Restructuring and other, and
Other income (expense).
-600
-500
-400
-300
-200
-100
0
100
1H22e 1H23 1H24
0
20
40
60
2,500
3,500
4,500
5,500
6,500
1H20 1H21 1H22 1H23 1H24
GMV ($bn)
FTEs (no.)
Average FTEs GMV $
16
Investment Adviser’s Report (Continued)
Klarna (Continued)
In terms of announcements, Klarna has continued to sign new collaborations with other platforms. Recent news
includes:
i. Klarna being made an official Apple reseller, allowing customers to buy Apple products using Klarna’s
payment options;
ii. A deal with Xero, to allow SMEs to accept payments from customers wanting a Buy Now Pay Later (“BNPL”)
solution;
iii. The launch of Klarna’s payment options on Adyen’s physical payment terminals across Europe, North
America and Australia;
iv. Probably most importantly, Klarna went live as an option on Apple Pay online and in apps in the UK and US,
and has stated it will soon be available as an option on Google Pay.
In addition, there have been other corporate developments, including:
i. The establishment of a UK holding company;
ii. The sale of Klarna Checkout, purportedly for $520 million, which served mainly the Nordic markets;
iii. The establishment of a forward flow arrangement with the US hedge fund, Elliott, which could see $30 billion
of loans transferred over the coming years.
The Investment Adviser sees all these developments as either being beneficial to growth, or driving capital efficiency,
but in aggregate all supportive of an equity story leading up to IPO.
Post period end, Klarna announced that it had submitted a draft Registration Statement to the Securities and
Exchange Commission in the US, regarding a possible IPO of its shares. Such an event is likely to be transformational
for the Company, adding significant liquidity to its already strong capital position.
Featurespace Limited (“Featurespace”)
Featurespace has continued to experience good growth over the year, building on the 47% revenue growth it showed
over its year to December 2023.
Featurespace financial performance (£ millions)
Source: Featurespace and Chrysalis Investments Limited
0%
10%
20%
30%
40%
50%
-30
-20
-10
0
10
20
30
40
50
60
Dec-19 Dec-20 Dec-21 Dec-22 Dec-23
Revenue growth %
£ milllions
Revenue PAT Revenue growth %
17
Investment Adviser’s Report (Continued)
Featurespace (Continued)
Over the last four years, Featurespace’s revenue growth has accelerated, implying significant increases in the absolute
quantum of new business won in those years; the Investment Adviser believes this shows the potency of the
company’s offering.
Over the last five years, Featurespace has operated at a loss, but losses narrowed substantially in 2023, and it is
expected that the company will continue its journey towards profitability over the course of 2024.
The company continued to win awards for its products over the year, including the “Best Innovation by a Financial
Institution” award at the 2023 Fraud and AML Impact Awards for the deployment of the ARIC Risk Hub, alongside
NatWest. The implementation led to 57% and 135% increases in the value of fraud and scams detected respectively.
The company has also been shortlisted in five categories for The Card and Payments Awards 2025. In addition,
Featurespace launched TallierLTM, which it believed was the first adoption of GenAI in the fraud space, which it
claimed could improve fraud detection rates by 71%.
The key news in the period was Visa signing a definitive agreement to acquire Featurepsace on 26 September 2024.
Visa is a world leader in digital payments and the Investment Adviser considers it a natural home for Featurespace.
The sale completed post period end and the Company received approximately £79 million in late December. A further
£11 million is expected if the amount held in escrow is paid in full. At point of announcement of the deal, if the gross
proceeds were applied for valuation purposes, this represented a 20% premium (equating to an uplift in NAV per share
of circa 2.5 pence) to the Company's previous carrying value of Featurespace (£74.2 million) as of 30 June 2024.
Chrysalis first invested in Featurespace in May 2020, with a capital injection of £20 million; it increased its position
with secondary share purchases over 2021 (aggregating to approximately £4.5 million) and a follow-on capital
injection of £5 million was provided in July 2022, summing to a total investment of £29.5 million. As such, the gross
proceeds represent a money multiple return of 3.0 times and an IRR of c32% (assuming gross proceeds were received
at time of announcement).
The Investment Adviser views Featurespace as an exemplar of the type of investment it is looking for: having the
ability to operate in significant end markets and providing scalable, efficient technology that can bring benefit to its
clients.
The Brandtech Group LLC (“Brandtech”)
Brandtech acquired Jellyfish, a leading global digital media and marketing group, in June 2023 and the key focus for
management since that time has been successfully integrating the acquisition into the Group. Jellyfish represented
the ninth and largest acquisition made since inception, so the transaction naturally presented some level of risk.
Since that time, a significant amount of work has been done to streamline the cost base, build the sales pipeline and
reaccelerate organic growth and the Investment Adviser is particularly pleased with the progress that has been made
over recent months. The acquisition of Jellyfish has allowed Brandtech to accelerate in all areas, given the agency’s
skills in data, creation and especially media. Jellyfish also enables the group to accelerate its AI strategy due to the
relationships the company has established with the major platforms, and due to its team’s ability to train on new
technologies at scale. This allows these innovations to be deployed faster than competitors, who do not have the
same resources in-house.
Despite a tough backdrop, the rest of the group has continued to generate positive organic growth year to date and in
more recent months has seen improved momentum. The Investment Adviser is particularly excited about the
potential of Pencil, Brandtech’s GenAI marketing platform.
18
Investment Adviser’s Report (Continued)
Brandtech (Continued)
Within weeks of acquiring the company, Pencil was used to target global brands with the release of Pencil Pro, an AI-
driven ad generation engine with predictive models of those advertisements’ success. Pencil Pro, which debuted with
Unilever and Bayer as launch partners, has already shown to produce an average 48% drop in an advertisement’s cost
per action (where advertisers pay only when a specific action is completed by a user) and a 78% boost in return on ad
spend, compared to a brand’s baseline. Pencil was also named by Fast Company as one of the world’s Most Innovative
Companies in the advertising and marketing category, the only GenAI marketing company to be recognized.
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 should stand Brandtech in good stead ahead of a future IPO.
Deep Instinct Limited (“Deep Instinct”)
Deep Instinct, the prevention-first cybersecurity company with a purpose-built, AI-based deep learning framework,
announced the launch of Deep Instinct Prevention for Applications (DPA) v3.0 in January. The new solution 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 malicious-vs-benign verdict before a file is
allowed into an application or storage repository.
File transfers are often not scanned, or are scanned with inadequate solutions that cannot scale to meet the volume
and velocity of cyber threats brought on by adversarial AI. Additionally, these technologies have not evolved to stop
unknown malware and are largely reliant on signature-based and machine-learning models that require constant
human intervention. Powered by deep learning, the company believes that DPA v3.0 is the only solution on the market
that can truly mitigate risks posed by file transfer, while requiring only one to two updates per year.
In May, the company also announced the launch of the Deep Instinct Artificial Neural Network Assistant (DIANNA), one
of the industry’s first AI-based cybersecurity companions that provides explainability into unknown threats. Powered
by a large language model (LLM), DIANNA serves as a virtual AI team of malware analysts and incident response
specialists, providing deep analysis into all attacks, including never-before-seen threats, revealing the techniques
employed and the behaviours of files.
In the period, Deep Instinct also won the CRN 2024 Tech Innovator Award for its Prevention for Storage (DPS) solution.
DPS provides data storage threat prevention across network attached storage (NAS) and cloud storage environments,
demonstrating its innovative approach to data security. Continued innovation should ultimately widen the company’s
addressable market and lead to a growing sales pipeline, with sales conversion ultimately driving ARR progression
and the strategic value of the asset.
wefox Holding AG (“wefox”)
There has been significant change at wefox over the past twelve months. In March, wefox appointed Mark Hartigan as
its Executive Chairman and CEO, with Julian Teicke transitioning into the role of Non-executive President. A
permanent CEO was later identified, with Joachim Muller appointed in September 2024.
Joachim Muller is a highly experienced leader in the retail and commercial insurance industry, with expertise in
business transformation and digitalization in multinational markets. He was previously CEO of Allianz Global
Corporate & Specialty SE, and CEO of Allianz Commercial, where he was responsible for bringing together Allianz’s
Commercial insurance businesses under one global umbrella.
The focus of the management team during the period has been to streamline the company’s operations, disposing of
non-core assets and enhancing its core strengths. This period of restructuring has included a reduction in the cost
base, optimisation of processes and investment in keys areas, to build a more resilient and efficient organisation.
Going forward, wefox will only focus on markets where it has profitable operations of critical size or is on track to
achieving this within the next 12 months.
19
Investment Adviser’s Report (Continued)
wefox (Continued)
In this context, the company is likely to look to further build out its market positions in the Netherlands, Austria and
Switzerland, and will withdraw from the German market.
The new strategy also means that the insurance carrier, wefox Insurance AG, will no longer be part of the group’s core
business. The sale of the insurance carrier was completed post period end.
A €25 million funding round was completed in June 2024 to support the ongoing restructuring plan and further capital
was raised through the sale of certain assets of the business. In July, wefox Germany Holding GmbH reached an
agreement with Ecclesia Group on the sale of Assona GmbH. In addition, the company reached an agreement with
IWV Versicherungsservice AG to transfer its insurance brokerage activities in the German market through the sale of a
subsidiary. These two transactions largely complete the exit of wefox from the German market.
As a result of the restructuring activities outlined above, the valuation of wefox was written down materially over the
period, reflecting a more cautious assessment of the company’s valuation, insertion of a variety of downside scenarios
in the blended valuation put through the share capital waterfall, and the treatment of certain CLA instruments as debt.
The Company has invested €20 million in wefox since period end.
It is also noted that Richard Watts was appointed to the company board in June.
Cognitive Logic Inc (“InfoSum”)
In January 2020, Google formally announced its intention to deprecate third-party cookies in Chrome, stating that it
aimed to complete the phase-out within two years. After a series of delays to this timeline, Google announced in July
2024 that it was abandoning its longstanding plans to deprecate third-party cookies in Chrome. While this is
disappointing news, the initiative has highlighted the need for publishers and advertisers to invest in privacy
compliant technologies and accelerated the trajectory towards enhanced privacy and user consent.
InfoSum has designed a platform that enables secure and privacy-first data collaboration. The platform uses patented
technology to connect customer records between companies without exposing or transferring the data; this ensures
that organisations can collaborate and analyse first-party data in a completely secure and compliant environment,
and without a reliance on third-party cookies. In recent months, the company achieved the Amazon Web Services
(AWS) Advertising and Marketing Technology Competency in the category of Privacy-Enhanced Data Collaboration.
This designation reinforces InfoSum’s position as an industry contender in data collaboration.
In the period, InfoSum announced a number of strategic partnerships that extends its data collaboration network. In
March, the company announced a solution with Experian that enables automotive brands to securely access insights
about vehicle owners, extend match rates and improve targeting. In August, a partnership with Netflix, the world’s
biggest streaming platform, was announced that will enable advertisers to securely match their first-party data
against Netflix’s audience to create powerful advertising experiences, without having to share or centralise data. A
further partnership was announced that month with WPP’s global data and technology company, Choreograph, to
streamline and futureproof campaign planning and audience profiling capabilities for GroupM clients.
In a planned management transition, Lauren Wetzel was announced as InfoSum’s new Chief Executive Officer in July.
Lauren Wetzel was previously the Group’s Chief Commercial Officer and replaces Brian Lesser, who has led InfoSum
as Chairman and CEO since 2020. Two further hires have been made. Aline Zenses was appointed as Managing
Director of the DACH region. Aline has nearly 20 years in the marketing and adtech industry and was previously MD
for Northern Europe at SilverBullet, a leading consultancy that helps clients derive value from their first-party data.
Adele Burke has also been appointed as Sales Director to help the group expand in Australia and New Zealand.
20
Investment Adviser’s Report (Continued)
Secret Escapes Holding Limited (“Secret Escapes”)
Secret Escapes released its results for the year ended 31 December 2023 during the period. The group delivered a
strong financial and operational performance over the course of the year with gross bookings increasing +19% year-
on-year to £523.8 million and revenues growing +14% to £104.1 million. Growth in early 2023 was driven by increased
demand post-COVID. Across the year, 2023 saw robust consumer demand, despite ongoing cost-of-living pressures,
as consumers continued to prioritise experiences, albeit with a greater emphasis on value.
Actions were taken towards the end of 2022 to streamline the cost base and operate more efficiently, and this led to
improved profitability through 2023. Underlying EBITDA grew to £11.4 million in 2023 (2022: £4.0 million) while
operating profit increased to £1.6 million (2022: £14.8 million loss). It is also exploring further initiatives to enhance
its operational efficiency, including additional consolidation of its central support teams.
Secret Escapes has had an encouraging start to 2024 and continues to grow profitability. It continues to execute its
strategy to consolidate and grow market share in Europe, while driving operational efficiency goals. Supported by a
strengthened balance sheet and differentiated customer offering, the long-term outlook for the business remains
positive.
Wise PLC (“Wise”)
In the half year to 30 September 2024 (1H 2025), Wise moved £68.4 billion around the world for 11.4 million customers,
a 19% increase on the same period in the prior year (1H 2024). The company also reported revenue of £807.8 million
for the half (up 23% from 1H 2024) and net income of £217.3 million (up 55% from 1H 2024), beating expectations.
In its results announcement, Wise also confirmed the launch of its sixth live direct connection to a domestic payment
system, with the Philippines. Wise has also received regulatory approvals to integrate directly with the domestic
payment systems in Brazil and Japan, taking the number of direct connections to eight once these two territories are
launched. Enhancing its infrastructure is making Wise increasingly efficient: 63% of transfers are now completed
instantly and reducing unit costs allowed the company to lower prices, with the average cross border take rate at
62bps, 5bps lower than a year ago.
The Company maintains a modest position in Wise.
Tactus Holding Limited (“Tactus”)
In the Investment Adviser’s last update in the Annual Report and Accounts for 2023, it was highlighted that Tactus had
faced significant structural headwinds, as hardware sales had declined materially across the industry. Trading post
period end did not improve, and the Investment Adviser made the decision not to invest further capital in Tactus. The
company was placed into administration in May 2024 and the investment in Tactus was subsequently written off.
21
Environmental, Social and Corporate Governance Report
The role of ESG in the investment process
The Board and the Investment Adviser recognise their responsibility to investors to provide clear and transparent
information in respect of the Company’s approach to ESG.
ESG Objective
The Company does not have a specific sustainability objective and, for the purposes of the Sustainable Finance
Disclosure Regulation (“SFDR”), has declared itself an Article 6 firm. The Company does not intend to adopt a label
under the Sustainable Disclosure Requirements (“SDR”).
ESG Strategy
The Investment Adviser does not seek out investments that have a sustainability focus. However, as part of its
investment process, it recognises the necessity to assess the ESG risks and practices of an investment as a
contributing factor to its overall success. The Investment Adviser contributes to positive ESG outcomes through
active stewardship.
The following ESG factors are considered as part of the investment process:
- Governance practices
- Human Capital management
- Social matters
- Greenhouse gas emissions, carbon reduction and net zero targets
In this report, the Investment Adviser, provides an update on the progress of ESG practices within the portfolio over
the last twelve months. All data provided is on a like-for-like basis and looks at companies in the current, active
portfolio (ten portfolio companies), allowing for a direct assessment of progress over the period. As such, data for the
prior period may differ to that previously reported, as exited or inactive portfolio companies have been removed.
The case studies that the Investment Adviser has selected are designed to demonstrate good ESG practices in
those companies and are not necessarily indicative of practices across the portfolio.
Stewardship
Stewardship is a core aspect of the Investment Adviser’s approach. There is regular dialogue between the Investment
Adviser and the leadership teams of portfolio companies. Where the Investment Adviser has a board seat or board
observer status, members of the Investment Team attend board meetings and provide input where they believe they
can help companies achieve their strategic objectives. This includes regular dialogue on ESG related topics, and the
Investment Adviser seeks to influence companies where they believe the management of material ESG factors can be
improved.
One of the principal challenges of ESG integration in a private company context is data availability. Unlike listed
companies, many private companies do not disclose ESG related data, either publicly or to third party data providers.
This reality can hinder the identification of material ESG risks and potential issues which may require engagement.
On behalf of the Company, the Investment Adviser developed an internal dashboard of metrics to assess the ESG
performance of portfolio companies to address these challenges. This data is collected directly from portfolio
companies or from publicly available information. The Investment Adviser uses the resulting metrics to assess each
company’s ESG performance relative to its level of corporate development and maturity, and incorporates insights
gained into its dialogue with company leadership teams, to assist with their continued development.
22
Environmental, Social and Corporate Governance Report (Continued)
Stewardship (Continued)
Where potential material ESG risks, or areas of group governance which require development, are identified, the
Investment Adviser communicates these conclusions to management and seeks to work collaboratively with them
to make improvements. Company action plans and any material ESG incidents are reported to the Risk Committee
and monitored over time to assess progress.
Corporate Governance
• 50% (2023: 50%) of portfolio companies have an independent chairperson
• 80% (2023: 80%) of portfolio companies have at least one independent director
• 50% (2023: 20%) of portfolio companies are ISO 27001 certified
To grow successfully, companies and their founders must not only execute strategically, but they must also lay the
foundations for future growth by creating appropriate corporate governance structures. It is critical that private
companies considering listing prepare themselves for the additional scrutiny which comes with going public. It is also
vital that founders, who may not have previously run listed businesses, are prepared to bring in experienced
independent non-executive directors who can help their companies develop. Building capacity at board and
executive level – reducing key man risk and reliance on individual founders over time – is crucial to a company’s
future development.
The Investment Adviser assesses company governance on a range of issues, recognising that good practice will differ
depending on a company’s jurisdiction, size and ownership structure. Following the changes to investment
management arrangements during the period, the Investment Adviser has now also been able to appoint
representatives to the board of several portfolio companies. We consider this to be an important step in the effective
oversight of these investments.
Metrics
A total of 8 portfolio companies have at least one independent director on their board, consistent with the prior
period on a like-for-like basis. During the period, two portfolio companies appointed new independent chairs, Gordon
Wilson at Smart and Mark Hartigan at wefox.
There is an increasing focus on cyber security governance and the approach portfolio companies are taking to ensure
they have a comprehensive framework in place to prevent the interruption of activities due to cyber threats or
attacks. Five portfolio companies now have an ISO 27001 certification, which is an international standard for
information security management. This compares to just two portfolio companies in the prior period.
Case Study
Following the two successful terms of Ruston Smith as Independent Non-Executive Director and Chair of Smart, the
Investment Adviser, following consultation with other major investors, recognised the need to identify a new
Chairperson who could help steer Smart through its next phase of growth.
In June 2024, Smart announced the appointment of Gordon Wilson as the company’s new Chair of the Board,
succeeding Ruston Smith. Gordon brings a wealth of experience and a proven track record in the technology and
pensions sectors, further strengthening Smart’s leadership team as the company continues its global expansion.
Gordon’s distinguished career spans three decades, during which he has held key leadership positions and driven
significant growth in various organisations, including both technology and pensions businesses. Gordon was the CEO
of Advanced for over eight years and recently stepped down to start his non-executive career.
23
Environmental, Social and Corporate Governance Report (Continued)
Corporate Governance (Continued)
Case Study (Continued)
Gordon is also a member of the board of TechUK, and chairs three other tech businesses: Zenitech, Imagesound and
The Polaris Group. During his executive career, he notably led the management team at Aquila Heywood, a leading
pension software provider, achieving substantial growth.
Human Capital
• 20% (2023: 20%) of portfolio companies have female CEOs
• 30% (2023: 30%) average proportion of women in senior leadership roles
Good human capital management supports both value creation and business resilience, and the Investment Adviser
believes that investing in human capital correlates with longer-term business success. Human capital management
can both upskill and educate a workforce, increase abilities, and retain and motivate employees.
The Investment Adviser recognises that approaches to human capital management, including DE&I will differ from
company to company, and seeks to understand a portfolio company’s operating model and engage to advise on best
practice and potential improvements.
Metrics
While Anne Boden was replaced by Raman Bhatia as the CEO of Starling Bank, the period closed with 2 female CEOs
across the portfolio. Lauren Wetzel was appointed as the CEO of InfoSum in July 2024, taking over from Brian Lesser
in a planned management transition.
The average proportion of women in senior leadership roles in the portfolio also remained stable over the period.
Case Study
During the period, Smart Pension joined the Diversity Project, a cross-company initiative, which champions shared
learning and promotion of best practice in order to achieve a truly diverse, equitable and inclusive UK investment
and savings industry.
In signing up to the initiative, Smart Pension joins other notable industry members such as Fidelity International,
Franklin Templeton, AXA Investment Managers, Legal & General Investment Management, Mercer, Natixis Investment
Managers and Octopus Investments.
With its membership, Smart Pension commits to striving for progress in diversity, equity and inclusion (DE&I) and to
take action to drive wider change in the industry. The Diversity Project’s aims include reductions in gender pay gap
levels, a 90% ethnicity disclosure rate amongst participating businesses, and support of graduate and school leaver
recruitment programmes focused on socioeconomic diversity.
The membership signifies a commitment to supporting and promoting diversity, equity and inclusion at Smart
Pension, through peer discussions, shared learning and events, all working towards a more inclusive culture within
the investments and savings industry. This covers many areas including socio-economic background, disability, age,
gender, sexuality, neurodiversity, mental health, race and ethnicity.
Social Impact
The current portfolio includes companies which provide solutions to urgent business problems and in some
instances, the development and application of technology is accelerating the ability of those companies to enact
change, which in turn provides an opportunity to have a positive impact on society.
24
Environmental, Social and Corporate Governance Report (Continued)
Case Study
The Brandtech Group recently announced that it is launching several initiatives to promote and regulate the ethical
use of GenAI. Among these, is the introduction of a blueprint for creating ethical generating AI policies and the
unveiling of Bias Breaker, a proprietary technology aimed at combating bias in AI foundation models.
Brandtech’s own research revealed significant biases in existing AI models. When prompted for an image of a CEO,
several major models generated 98% to 100% pictures of males, a stark contrast to reality, with the McKinsey’s
Women in the Workplace study showing that 28% of C-Suite roles and 10.4% of Fortune 500 chief executive positions
were held by women. Bias Breaker addresses this issue by adding a probability-based layer of inclusivity to prompts,
covering aspects such as age, race, gender identity and religion.
Environmental Impact
• 60% (2023: 30%) of portfolio companies have calculated their Scope 1 and 2 emissions
• 40% (2023: 30%) of portfolio companies have made a net zero commitment
• 40% (2023: 30%) of portfolio companies have set at least one short or medium-term carbon reduction
target
• 0% (2023: 0%) portfolio exposure to companies engaged in extraction or production of fossil fuels
Limiting global temperature rises to 1.5 degrees above pre-industrial levels, in line with the Paris Agreement, is an
urgent challenge facing the global economy. The Investment Adviser uses its influence to encourage companies to
identify, manage and mitigate climate change risks or opportunities.
The Investment Adviser believes that the Company’s portfolio of tech-enabled, predominately digital businesses is
not exposed to material climate risks and has limited direct environmental impacts, mainly due to the comparatively
low levels of their carbon emissions. However, its view is that the scale of climate change will impact all sectors,
industries, and asset classes and so acknowledges the positive role that it can play in tackling it through investment
decisions and capital allocation.
Metrics
Progress was made by some companies in the portfolio over the course of the year, with three additional portfolio
companies now calculating and disclosing their Scope 1 and 2 emissions, namely Klarna, Featurespace and Secret
Escapes.
Klarna has also now made a net zero commitment and set at least one short or medium-term carbon reduction target,
with an increase in the number of portfolio companies doing so from 30% to 40%.
Case Study
During the period, Klarna announced its sustainability achievements for the past year. In 2023, it saw a significant
uptick in the use of its features that provide consumers with information about the sustainability efforts of merchants
and promote conscious shopping, contributing to 4.75 million purchases from more conscious brands. A standout
achievement from their report was the 150% year-over-year increase in the usage of Klarna’s CO2e Emissions Tracker,
highlighting a shift towards more conscious consumer behaviour. In addition, the company saw a 25% reduction in
its greenhouse gas (GHG) emissions and had, to date of the report, committed $24.5 million to planet health
initiatives. These environmental and social contributions underscore the company’s continued commitment to
addressing environmental sustainability, focusing on reducing its carbon footprint and promoting conscious
consumption among its vast network of 150 million consumers and 550,000 retail partners worldwide.
25
Environmental, Social and Corporate Governance Report (Continued)
Klarna’s 2023 sustainability highlights include:
• Driving 4.75 million conscious purchases through tech innovation: In 2023, Klarna introduced a number
of advancements to its products and services that furthered its mission of empowering its 150 million
consumers with information to make more conscious purchasing decisions. Klarna’s CO2e Emissions
Tracker, which was updated to include expanded insights for over 170 million products, drew in 460,000
monthly users—a 150% jump from the previous year. Additionally, new features including sustainability
search filters in Klarna’s intelligent search & compare feature, a resell feature in the Klarna app, conscious
brands ratings displaying brands’ sustainability achievements, as well as an online sustainability hub,
contributed to Klarna customers making 4.75 million purchases from brands recognized for their
sustainability efforts .
• Enabling thousands of consumers to contribute to planet health: In 2023, Klarna introduced a donations
feature for US shoppers as part of its commitment to planet health with a focus on climate, people, and
biodiversity. This feature allows shoppers to add a $1 donation to their purchases using the interest-free Pay
in 4 service at participating retailers, with donations supporting the WRLD Foundation's work towards
achieving UN Sustainable Development goals. In just 7 months since its June 2023 launch, the initiative has
received a powerful response with over 193,000 consumers contributing to date, raising over USD $200K
total.
• Achieving 25% GHG reduction: Klarna has made significant progress in cutting its greenhouse gas (GHG)
emissions, achieving a 25% reduction in its overall absolute carbon footprint in 2023 compared to the
previous year, with a 66% decrease in scope 1 and 2 emissions and a 39% reduction in carbon intensity.
These figures represent significant strides towards Klarna’s 2030 goal of halving carbon intensity from a 2019
baseline.
• Committing $24.5M to planet health initiatives: Since its pledge in April 2021, Klarna has dedicated 1%
from each of its funding rounds to planet health initiatives via its Give One initiative. This commitment
resulted in a total contribution of USD $24.5 million by the end of 2023, supporting over 50 organizations
worldwide in regions including North America, South America, Africa, Europe, and Asia. Notable
achievements from this support included the planting of 3.4 million trees to restore and reforest important
ecosystems and 900,000 hectares (approx. 2.2 million acres) of habitat across the globe seeing positive
impact through organizations backed by Klarna.
In recognition of its efforts, Klarna was named the Most Sustainable Bank in Sweden 2023 by the Sustainable Brand
Index and received several other accolades throughout the year including being awarded the Most Disruptive Global
Climate Action Initiative in the CSR Excellence Awards, and receiving a finalist position in the Reuters Responsible
Business Awards within the Net Zero Transition Award category.
ESG Roadmap
Following the changes to the Company’s investment management arrangements in the period, the Company and
Investment Adviser have been engaging with advisors to assess the current ESG strategy. Those advisers have
reviewed the ESG Policies in place as well as the relevance of the data and ESG metrics collected and used to make
assessments on portfolio companies, to drive ESG outcomes and to report to its investors. This process has identified
opportunities for the Company to close gaps in its approach to ESG, particularly considering increased regulatory
scrutiny of ESG reporting.
ESG Data
There is recognition that more can be done to improve the transparency and depth of data that the Company collects.
As a result, the Company is aiming to implement the ESG Data Convergence Initiative (“EDCI”) framework, to
supplement the current metrics collected from the portfolio.
26
Environmental, Social and Corporate Governance Report (Continued)
ESG Roadmap (Continued)
ESG Data (Continued)
The EDCI framework is a collaborative effort aimed at standardising the collection and reporting of ESG data within
the private equity industry. The initiative seeks to create a unified approach to ESG metrics, making it easier to
benchmark and compare ESG performance across different portfolio companies and investment vehicles.
Key Features of the EDCI Framework:
Standardised Metrics: The EDCI framework includes a core set of ESG metrics such as greenhouse gas emissions,
net zero commitments, renewable energy usage, board and C-suite diversity, work-related accidents, net new hires,
and employee engagement. Some of which the Company is already collecting today.
Benchmarking: By using these standardised metrics, the Company can compare its portfolio companies’ ESG
performance against industry benchmarks, providing valuable insights and driving improvements.
Transparency: The initiative promotes greater transparency in ESG reporting, enabling more consistent and
comparable data for investors.
Collaboration: The EDCI is supported by a wide range of stakeholders, including over 450 investors, representing
approximately $38 trillion in assets under management.
In summary, the initiative helps streamline ESG reporting processes and enhances the quality and comparability of
ESG data in the private equity sector. The EDCI framework has been established by some of the largest private market
investors and managers for collecting information from their private portfolio companies.
The Investment Adviser will integrate the EDCI metrics into the investment process, the Company’s risk management
framework and reporting over the course of 2025. A further update will be provided on progress here in the Interim
Report and Financial Statement to 31 March 2025.
ESG Regulation
The Company is exposed to ESG regulation in the form of:
1. The Sustainable Finance Disclosure Regulation (“SFDR”)
The SFDR exists to increase transparency on how financial market participants integrate sustainability risks
and opportunities into their investment decisions and processes.
2. The Sustainable Disclosure Requirements (“SDR”)
The SDR is designed to provide clear and comparable information about the sustainability characteristics of
financial products, helping consumers make clear and informed decisions and to reduce the risk of
greenwashing.
The Company has considered the requirements of both the SFDR and SDR regulation, including the anti-
greenwashing rules applicable from 31 May 2024, and has made changes to its practices and the disclosures
in this document to ensure compliance with that regulation.
27
Environmental, Social and Corporate Governance Report (Continued)
ESG Regulation (Continued)
3. The Task Force on Climate-related Financial Disclosures (“TCFD”)
The TCFD is a global initiative established to develop voluntary climate-related financial disclosures that
companies and financial institutions can use to provide clear, comprehensive and high-quality information
on the impacts of climate change.
The Company falls under the TCFD regulation by virtue of having a UK-based AIFM, which has AUM of greater
than £5 billion on a 3 year rolling average. Given the new investment management arrangements have only
been in place since 1 April 2024 the Company will provide an update regarding compliance with TCFD in the
Interim Report and Financial Statement to 31 March 2025.
4. The Modern Slavery Act 2015
Several of the Company’s portfolio companies are required to make a Modern Slavery Prevention Statement
(“MSS”). The statement is voluntary for those who are not. The Investment Adviser plans on engaging with
portfolio companies who have not yet made an MSS.
28
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.
29
Corporate Governance Statement
Chrysalis has a listing on the Closed Ended Investment Fund segment of the London Stock Exchange Main Market and
is a member of the Association of Investment Companies (AIC). The Board has considered the Principles and
Provisions of the 2019 AIC Code of Corporate Governance (AIC Code), and a full scope review of the Company’s
corporate governance processes and procedures has been conducted with reference to the AIC Code by the Board
and the Company Secretary. The AIC Code addresses the relevant Principles and Provisions set out in the UK
Corporate Governance Code (the UK Code), as well as setting out additional Provisions on issues that are of specific
relevance to the Company.
The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed
by the Financial Reporting Council and the Guernsey Financial Services Commission, provides more relevant
information to shareholders. The Company has complied with the Principles and Provisions of the AIC Code and in
doing so has met its associated disclosure requirements under paragraph 9.8.6 of the Listing Rules.
The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code
adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies.
30
Key Governance Disclosures
Section 172(1) Statement
Through adopting the AIC Code, the Board acknowledges its duty to apply and demonstrate compliance with section
172 of the UK Companies Act 2006
1F
2
and to act in a way that promotes the success of the Company for the benefit of
its Shareholders as a whole, having regard to (amongst other things):
a) consequences of any decision in the long-term;
b) the need to foster business relationships with suppliers, customers and others;
c) impact on community and environment;
d) maintaining reputation; and
e) acting fairly as between members of the Company.
The Board considers its duties under S.172 to be integrated within the Company’s culture and values. The Company’s
culture is one of respect for the opinions of stakeholders, with an aim of carrying out its operations in a fair and
sustainable manner that is both instrumental to the Company’s long term success and upholds the Company’s
ethical values. The Board encourages diversity of thought and opinion in accordance with its Diversity Policy and
would like to encourage stakeholders to engage freely with the Board of Directors on matters that are of concern to
them.
Stakeholders may contact the Company via the Company’s dedicated e-mail address
(ChrysalisGSYTeam@iqeq.com)
, the Company’s LinkedIn page (https://www.linkedin.com/company/chrysalis-
investments-investment-trust/) or by post via the Company Secretary on any matters that they wish to discuss with
the Board of Directors.
2
Section 172 of the UK Companies Act 2006, imposes on a director the duty to ‘act in a way he/she considers, in good faith, would be most likely
to promote the success of the company for the benefit of its members as a whole’ and, in so doing, to have regard to a series of factors listed in the
section which refer to the promotion of social, environmental and governance objectives.
31
Key Governance Disclosures (continued)
Section 172(1) Statement (continued)
The Company is an externally administered investment company, has no employees, and as such is operationally
quite simple. The Board does not believe that the Company has any material stakeholders other than those set out
in the following table.
Investors
Service providers
Community and environment
Issues that matter to them
Performance of the shares
Growth of the Company
Liquidity of the shares
Corporate Governance
Reputation of the Company
Compliance with Law and
Regulation
Remuneration
Compliance with Law and Regulation
Impact of the Company and its
activities on third parties
Engagement process
Annual General Meeting
Frequent meetings with investors by
brokers and the Investment Adviser
and subsequent reports to the Board
Quarterly factsheets
Key Information Document
The main service providers
engage with the Board in
formal quarterly meetings,
giving them direct input to
Board discussions.
Communication between
Board and service providers
also occurs informally on an
ongoing basis during the year.
Adherence to principles of
appropriate ESG policies exists at
both Company and investment level.
Principles of socially responsible
investing form a key part of the
Company’s investment strategy.
Rationale and example outcomes
The Board have engaged with
investors in relation to the Company
business over the course of the year.
The Company relies on service
providers as it has no systems
or employees of its own.
The Board seeks to act fairly
and transparently with all
service providers, and this
includes such aspects as
prompt payment of invoices.
The Investment Adviser works to
ensure that sustainability and ESG
factors are carefully considered and
reflected in the Company’s
investment decisions.
The Board of Directors travel as
infrequently as possible and instead
communicate, where they are able
to, by video and conference call.
Going Concern Statement
The Going Concern Statement is made on page 49.
Viability Statement
The Viability Statement is made on page 49 and 50.
Fair, Balanced and Understandable Statement
The annual report and accounts taken as a whole are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company’s performance, business model and strategy. Further information
on how this conclusion was reached can be found within the Audit Committee Report.
32
Key Governance Disclosures (continued)
Appointment of the New Investment Adviser
Further details relating to the appointment of the New Investment Adviser and how this is in the interests of members
as a whole can be found within the Report of the Management Engagement Committee.
Appointment of the New Administrator and Company Secretary
On 1 August 2024, IQ-EQ Fund Services (Guernsey) Limited ("IQ-EQ") was appointed as Administrator and Company
Secretary. The Administrator is responsible for the maintenance of the books and financial accounts of the Company
and the calculation, in conjunction with the Investment Adviser, of the Net Asset Value of the Company and the
shares.
Assessment of Principal and Emerging Risks
The Board has undertaken a robust assessment of the Company’s principal and emerging risks, together with the
procedures that are in place to identify emerging risks. Further information on this assessment and an explanation
on how these risks are being mitigated and managed can be found on page 53.
Review of Risk Management and Internal Control
The Board confirms that it has reviewed the Company’s system of risk management and internal controls for the year
ended 30 September 2024, and to the date of the approval of this annual report and audited financial statements. For
further details of the key risks and uncertainties the Directors believe the Company is exposed to together with the
policies and procedures in place to monitor and mitigate these risks, please refer to pages 88 to 98 and note 18 of the
annual report and audited financial statements.
33
The Board of Directors
The Board comprises six independent non-executive Directors, two of whom are female, who meet 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. Further details concerning the meetings attended during the year by
the Board and its Committees can be found on page 36. All Directors are considered independent of the Investment
Adviser for the purposes of 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. For further
information on how the Board considers the interests of stakeholders in its decision making please see the S.172(1)
statement on page 30. 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, 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
Company Secretary.
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 as illustrated in their biographies below:
Director Biographies
Andrew Haining (Chairman) (independent)
Andrew has had a 30-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.
34
The Board of Directors (continued)
Director Biographies (continued)
Stephen Coe (senior independent)
Stephen serves as Chairman of the Audit Committee. He is currently a Non-Executive Director of a number of private
companies. 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 in 1990.
Simon Holden (independent)
Simon is a Chartered Director (“CDir”) accredited by the Institute of Directors. Previously an investment director with
portfolio company responsibilities at Terra Firma Capital Partners and Candover Investment prior to that, since 2015
Simon has been an active independent director to complex listed alternative investment company, private equity
fund and private operating company boards. In addition, Simon is the pro-bono Business Adviser to Guernsey Ports;
a States of Guernsey enterprise responsible for the safe, secure and available airports and harbours critical
infrastructure.
Simon received an MEng and MA graduate in Manufacturing Engineering from the University of Cambridge, he is an
active member of UK and Guernsey fund management interest groups including a director member of the Association
of Investment Companies (“AIC”).
Anne Ewing (independent)
Anne has over 40 years of financial services experience in banking, asset and fund management, corporate treasury,
life insurance and the fiduciary sector. Anne has an MSc in Corporate Governance, an ACCA Diploma in Accounting &
Finance, 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 directorships roles in investment companies and a London based private wealth
banking group and related subsidiaries in Jersey and Guernsey.
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. Tim is also a NED of Polar Capital Technology Trust, where he is Senior Independent Director. 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.
Margaret O’Connor (independent)
Margaret brings 30 years of international experience commercialising technology and evolving the governance
structure and growth strategy of companies from the early- stage to realizations. Her plural career includes serving
on the board of a Guernsey investment trust and as Chairman of a Mauritius Venture Capital fund. Her past roles as a
US AdTech operator, that led EU and Asia market expansions before a successful trade sale, and as a MasterCard
International executive, inform her board mindset and skill set. She is active in the Institute of Directors and the
Private Equity Women Investor Network.
She earned her BA from Rutgers University and studied International Relations at Princeton University before moving
to Seoul, Korea to work for the Korean Ministry of Finance.
35
The Board of Directors (continued)
Public Company Directorships
The following details are of all other public Company Directorships and employment held by each Director and shared
Directorships of any commercial company held by two or more Directors:
Anne Ewing
None to be disclosed
Andrew Haining
None to be disclosed
Simon Holden
HICL Infrastructure PLC
JPMorgan Global Core Real Assets Limited
Stephen Coe
None to be disclosed
Tim Cruttenden
Polar Capital Technology Trust PLC
Margaret O’ Connor
None to be disclosed
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 uses 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 (“DMG”), and became CIO and CEO of the 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, 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.
36
The Board of Directors (continued)
Valuation Committee (continued)
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.
Director Attendance
During the year ended 30 September 2024, the Board and Committee meetings held and attended by the Directors
were as follows:
Quarterly
Board
Meeting
Audit
Committee
Meeting
Remuneration
and nomination
Meetings
Risk
Committee
Meetings
Management
Engagement
Meetings
Ad-hoc
Meetings
Director
Attended/
Eligible
Attended/
Eligible
Attended/
Eligible
Attended/
Eligible
Attended/
Eligible
Attended/
Eligible
Anne Ewing
3/3
3/3
1/2
0/1
n/a
4/4
Andrew Haining
3/3
n/a
n/a
n/a
n/a
4/4
Simon Holden
3/3
3/3
n/a
1/1
1/1
4/4
Stephen Coe
3/3 3/3 n/a 1/1 n/a 4/4
Tim Cruttenden
2/3
3/3
2/2
1/1
1/1
4/4
Margaret
O’Connor
3/3
3/3
2/2
1/1
1/1
4/4
Valuation Committee
Meetings
Member
Attended/ Eligible
Lord Rockley
14/14
Diane Seymour-Williams
14/14
Jonathan Biggs
13/14
Tim Cruttenden
12/14
37
The Board of Directors (continued)
Division of Responsibilities
A schedule of matters reserved for the Board is maintained by the Company and can be summarised as follows:
• Strategic Issues
• Financial Items such as approval of the half-yearly reports, any quarterly announcements, any preliminary
announcement of the final results and the annual report and accounts including the corporate governance
statement
• Treasury Items
• Legal and Administration
• Communications with Shareholders
• Board Appointments and Arrangements
• Miscellaneous such as to approve the appointments of professional advisers for any Group company in addition
to the Company’s Auditors
• Monetary Limits
The Directors have also delegated certain functions to other parties such as the Valuation Committee, the Alternative
Investment Fund Manager ("AIFM"), the Investment Adviser, the Administrator, the Company Secretary, the
Depositary and the Registrar.
The Investment Adviser reports to the Board on a regular basis both outside of and during quarterly board and
Committee meetings, where the operating and financial performance of the portfolio, together with valuations, are
discussed at length between the Board and the Investment Adviser. The Directors have responsibility for exercising
supervision of the Valuation Committee and the Investment Adviser.
Board Committees
The Company has an Audit Committee, Remuneration and Nomination Committee, Management Engagement
Committee, Risk Committee and an Independent Valuation Committee (together the “Committees”). The Terms of
Reference for each committee is available on the Company’s website.
The Board believes that its established Committees are adequately composed, and that each member has the
necessary skills and experience to discharge their duties effectively. All new Committee members will be provided
with an induction on joining the relevant Committee. The actions carried out by each Committee since the previous
quarterly board meeting are reported at each meeting to the Board of Directors by the respective Committee chair.
Each Committee meeting is attended by the Company Secretary and comprehensive minutes are kept, as well as a
schedule of the action points arising from each meeting.
Stephen Coe is the Chairman of the Audit Committee with Anne Ewing and Simon Holden as members, with Margaret
O’Connor as an observer. A full report regarding the Audit Committee’s activities during the year can be found in the
Audit Committee Report on page 59.
Anne Ewing is Chairman of the Remuneration and Nomination Committee, with Margaret O’Connor and Tim
Cruttenden as members. The Remuneration and Nomination Committee meets at least once a year in accordance
with the terms of reference and reviews, inter alia, the structure, size and composition of the Board. A full report
regarding the Remuneration and Nomination Committee’s activities during the year can be found on page 39.
Margaret O’Connor is Chairman of the Management Engagement Committee, with Simon Holden, Stephen Coe and
Tim Cruttenden as members. The Management Engagement Committee will meet formally at least once a year for
the purpose, amongst other things, of reviewing the actions and judgments of the Investment Adviser and the AIFM,
and the terms of the AIFM and Investment Advisory Agreement. A full report regarding the Management Engagement
Committee’s activities during the year can be found on page 43.
38
The Board of Directors (continued)
Board Committees (continued)
Simon Holden is Chairman of the Risk Committee, with Anne Ewing, Margaret O’Connor, Stephen Coe and Tim
Cruttenden as members. The Risk Committee will meet formally, at a minimum once a year, though it has been
agreed, that the Risk Committee is convened twice a year, aligned with the Company’s financial reporting cycle and
at such other times as the Chairman of the Committee deems appropriate, for the purpose of, amongst other things,
to ensure that there is proper consideration and assessment risks and stresses ensuring that the Investment Adviser
develops appropriate strategies to protect the Group’s portfolio of investments. A full report regarding the Risk
Committee’s activities during the year can be found on page 45.
39
Report of the Remuneration and Nomination Committee
Statement: Chairman of Committee
I am pleased to present the Remuneration and Nomination Committee report for the year ended 30 September 2024.
The composition of the Remuneration and Nomination Committee meets with the requirements of the AIC Code and,
in line with good practice, membership is reviewed annually.
During the year, there have been no changes to the Directors’ Remuneration Policy or the Terms of Reference of the
Remuneration and Nomination Committee. No new Directors were appointed to the Board during the year.
In 2025 the Remuneration & Nomination Committee will revive its recruitment process to help the Company further
achieve its targets.
I am satisfied that the Remuneration and Nomination Committee is discharging its responsibilities proficiently and
recommend this report to the Board.
Anne Ewing, Chair of the Remuneration and Nomination Committee
Purpose and Aim of the Remuneration and Nomination Committee
The terms of reference of the Remuneration and Nomination Committee are set out on the Company's website at
https://chrysalisinvestments.co.uk/investor-relations/
. The primary responsibility of the Remuneration and
Nomination Committee is, in relation to remuneration, to determine and agree with the Company's Board of directors
(together the "Board" and individually a "Director") the framework or broad policy for the remuneration of the
Company's chairman and non-executive Directors in accordance with the Company's articles of incorporation (the
"Articles") and applicable law and, in relation to nominations, to review the structure, size and composition
(including the skills, knowledge and experience) required of the Board compared to its current position and make
recommendations to the Board with regard to any changes as necessary.
Membership and Meetings of the Remuneration and Nomination Committee
The Remuneration and Nomination Committee met formally twice during the reporting period.
The members of the Remuneration and Nomination Committee are as follows:
• Anne Ewing (Chairperson)
• Tim Cruttenden
• Margaret O’Connor
Composition, Succession and Evaluation of the Board
At its meetings, the Remuneration and Nomination Committee reviewed and reaffirmed the Company's policy
whereby no Director will serve for more than nine years (such policy being aligned to the AIC Code). The
Remuneration and Nomination Committee confirms that no Director has served for longer than nine years, due to
the Company being incorporated in October 2018.
No new directors were appointed to the Board during the financial year as the Board focused on, amongst other
things, the Continuation Vote which was successfully passed at the Company’s 2024 Annual General Meeting.
40
Report of the Remuneration and Nomination Committee (continued)
Composition, Succession and Evaluation of the Board (continued)
The Board continues to work towards meeting the targets set by the Hampton-Alexander Review on gender balance
and the Parker Review into ethnic diversity in FTSE leadership.
The Company provides information as set out in the table below, on the progress made on board diversity targets:
• At least 40% of the Board is female
• At least one senior position on the Board is held by a woman
• At least one individual on the Board is from a minority ethnic background
Gender Identity/Ethnic background
Number of Board
members
% of the Board
Number of Senior
Positions Held
Female
2
33%
2
Male
4
67%
3
White British or other White group
6
100%
5
Black/African/Caribbean/Black
British/Asian/Other
0 0 0
The data detailed above has been obtained from and confirmed by each Board Director.
The Board notes that as an externally managed investment company, with a Board comprised entirely of non
executive directors, the senior positions of the Board include the roles of the Chair, SID and Chair of any permanent
committee of the Board.
The Company has yet to achieve the appointment of a candidate from a minority ethnic background. In its
recruitment processes the Board seeks to ensure that it is presented with a diverse set of candidates from which it
appoints the candidate best suited to the role. A major factor in the Board’s current succession planning process is
to maintain and demonstrate management and control of the Company in the jurisdiction of its incorporation in
relation to the size of the Board. This can significantly impact the size of the candidate pool from which the company
can recruit.
The updated report from the Parker Review in 2022 also recognised such constraints where the size of typical
Investment Trusts such as Chrysalis can reduce the opportunity to make further diverse appointments.
During 2024, and after the successful Continuation Vote, the Committee refreshed its succession planning and
undertook a review of the attributes and skills of the current board and made recommendations to the Board.
Accordingly, and post financial year end, a search for a new director was made using external consultants. The Board
wishes to ensure the best possible fit for the Company and will, therefore, continue its deliberations on Board
composition in 2025.
During any future search, due regard will be given to equal opportunity, diversity and inclusion for this appointment.
41
Report of the Remuneration and Nomination Committee (continued)
Committee Memberships
Audit Committee
Risk Committee
Valuations
Committee
Management
Engagement
Committee
Remuneration and
Nomination
Committee
Chaired by:
S Coe
A Ewing
S Holden
Chaired by:
S Holden
S Coe
A Ewing
T Cruttenden
M O’Connor
Chaired by:
Lord Rockley*
D Seymour- Willliams*
J Biggs*
T Cruttenden (Board
Representative)
*Independent
Chaired by:
M O’Connor
S Coe
T Cruttenden
S Holden
Chaired by:
A Ewing
T Cruttenden
M O’Connor
Review of Board Performance
The board has established a three year cycle for the evaluation of its own performance which is initiated by the
Committee and led by the Chair. The Chair’s performance is evaluated by the Senior Independent Director. An
external review was conducted in October 2023 by Board Alpha, followed by an internal review post financial year
end 2023.
The output from the 2023 review was positively received by the Board and a number of actions are in progress to
address various matters, together with focused externally led training, such as Cyber Risk and Listing Rule changes
and continuing obligations. The results of the internal 2024 review have yet to be assessed at the time of this report.
The next externally led board effectiveness review will be carried out in relation to the financial year ending
September 2026.
Review of Remuneration
The Company’s policy is that the fees payable to the Directors should reflect the time spent by the Board on the
Company’s affairs and the responsibilities borne by the Directors, and should be sufficient to retain high calibre
directors.
The policy is for the Chairman of the Board, the chairs of the Audit Committee and Risk Committee to be paid a higher
fee than the other Directors in recognition of their more onerous roles and more time spent. The Board may only
amend the level of remuneration paid within the limits of the Articles (i.e. £500,000 per annum maximum).
The table below is provided to enable Shareholders to assess the relative importance of spend on Director
remuneration and the size of the Board. The figures below provide a comparison against advisory fees payable to the
Investment Adviser and Director Remuneration relative to the Company’s Net Asset Value ("NAV").
Total Director Remuneration (Note 19)
£397,500
Investment Adviser Fees (Note 19)
£2,368,766
NAV at year end
-£840,331,149
A comparison of the Company’s Director remuneration against its competitors was undertaken by the Committee
and a view taken on current market conditions, noting the trajectory of inflation rates and the time commitment
and activities of the Board.
42
Report of the Remuneration and Nomination Committee (continued)
The Remuneration and Nomination Committee recommended, and the Board resolved, that there should be no
increase in remuneration for male directors for the financial year commencing 1 October 2024. However modest
increases for the two female directors were agreed. These increases serve to equalise directors’ remuneration levels
and to fairly reflect the work undertaken by each director on their respective committees.
Director base fees p.a.
FY/E2F
3
2024
£
Director base fees
proposed FY/E 2025
£
Chairman – A Haining
85,000
85,000
Audit Committee Chairman/SID – S Coe
67,500
67,500
Risk Committee Chairman – S Holden
67,500
67,500
Valuation Committee Board Representative – T Cruttenden
62,500
62,500
Directors – M O’Connor/A Ewing
57,500
62,500
_____________________
Anne Ewing
Chairman of the Remuneration and Nomination Committee, Chrysalis Investments Limited
3
Financial year end
43
Report of the Management Engagement Committee
I am pleased to present the Management Engagement Committee (“MEC”) report for the year ended 30 September
2024. The composition of the MEC meets with the requirements of the AIC Code and, in line with good practice,
membership is reviewed annually.
During the year, the Terms of Reference of the Committee were updated to enable an annual review of board
appointments to the committee and to remove committee term limits.
I am satisfied that the Committee is discharging its responsibilities proficiently and recommend this report to the
Board.
Margaret O’Connor, Chair of the MEC
Purpose and Aim of the Management Engagement Committee
The terms of reference of the MEC are set out on the Company’s website. The primary responsibility of the MEC is to
review, annually, the compliance of the AIFM and Investment Adviser with the Company's investment policy and AIFM
and Investment Advisory Agreement, as well as to keep under review the performance of all other key service
providers involved in supporting the Company and its operations, to agree with the Company’s Board of Directors
the framework for annual evaluations of these professional services, and to make recommendations to the Board
with regards to any changes as necessary.
Membership and Meetings of the Management Engagement Committee
The MEC met formally on September 20, 2024.
The members of the MEC are as follows:
• Margaret O’Connor (Chairperson)
• Tim Cruttenden
• Simon Holden
• Steve Coe
Priorities This Past Year
1. To ensure appropriate resourcing at and reporting from the Investment Adviser.
2. To ensure an orderly transition to the new investment management arrangements.
3. To ensure appropriate investor engagement.
Review of Service Providers
• The MEC was pleased to receive comprehensive feedback from all service providers during its annual review.
• The MEC commended the Investment Adviser on moving quickly and thoughtfully to establish itself in the
new investment management structure, whilst acknowledging the opportunity to evolve operational
effectiveness as it becomes better established, with a focus on forward looking investment strategy.
• As part of a wider cybersecurity review, the MEC interrogated the cybersecurity policies and practices of
select third-party service providers. Recommendations for strengthening cybersecurity infrastructure were
noted and the MEC will monitor progress against addressing those recommendations during 2025. One key
recommendation was the development of a co-ordinated cybersecurity response plan, to ensure a clear
strategy for all service providers, and the Board, in the event of a cyber security event impacting the
Company.
44
Report of the Management Engagement Committee (continued)
Review of Service Providers (Continued)
• Finally, the MEC recommended to the Board that they request assurance from IQ-EQ Fund Services
(Guernsey) Limited (“IQ-EQ”) regarding the Company’s compliance with the Financial Conduct Authority
2024 listing rules.
_____________________
Margaret O’Connor
Chair of the Management Engagement Committee, Chrysalis Investments Limited
45
Report of the Risk Committee
I am pleased to present the Report of the Risk Committee (the “Committee”) of the Company for the year ended 30
September 2024.
Overview
The terms of reference of the Risk Committee are set out on the Company's website at
https://chrysalisinvestments.co.uk/investor-relations/.
The role of the Risk Committee is to ensure that the Board receives due consideration and assessment of the
opportunities, risks and stress scenarios within which the Company operates and to ensure that the recommended
actions of the Investment Adviser protect its portfolio of investments.
Specifically, the Risk Committee:
• Recommends an overall risk appetite to the Board, monitors the principal risks to which the Company is
exposed and evaluates the strength of the mitigating controls;
• Reviews the policies and process for identifying and assessing business risks and the management of those
risks by the Company;
• Monitors key risk exposures ensuring that the Investment Adviser is exercising appropriate control to reduce
the likelihood of risk crystallisation resulting in financial loss, reputational damage or regulatory concern;
• Reviews, challenge, approve and monitor stress and scenario tests;
• Monitors investments so that they are aligned within the agreed risk appetite;
• Reviews major initiatives such as related party acquisitions or initiatives in new geographies or sectors and
be assured that appropriate due diligence has been carried out and that any associated movement in risk
profile remains within risk appetite; and
• Provides oversight and advice to the Board in relation to current and emerging risk exposures of the
Company.
The members of the Risk Committee are as follows:
• Simon Holden (Chairman)
• Stephen Coe
• Tim Cruttenden
• Anne Ewing
• Margaret O’Connor
• Andrew Haining (Company Chairman) – invited as an Observer
Status of the Risk Committee
I mentioned in last year’s Risk Committee Report that the Company became a self-managed Alternative Investment
Fund (“AIF”) from 1 July 2022. The Board’s original decision to insource our risk management was to instigate a more
tailored risk management function than was available under third-party AIFM management. The goal was to deliver
more insightful risk disclosure appropriate to holding minority positions in higher risk, higher growth potential,
illiquid private company holdings; consistent with the risk profile and investment policy of the Company.
The Risk Committee established, from first principles, a much improved risk management oversight and control
function. More than two years on, I am pleased to reflect on this step change and conclude that it has proved to be a
successful decision. Risk management now follows a robust and repeatable process with a framework that guides
the recommendations of the Investment Adviser under the Board’s oversight.
46
Report of the Risk Committee (continued)
Status of the Risk Committee (continued)
Effective 1 April 2024, the Company shifted back to a managed risk structure with G10 Capital Limited (“G10”)
appointed as Alternative Investment Fund Manager (“AIFM”). G10 was selected as part of a review and tender process
for a suite of corporate services, following the migration of portfolio management and investment advisory services
from Jupiter Investment Management Limited to G10 and
Chrysalis Investment Partners LLP ("CIP LLP"). With time
and effort invested in improving risk frameworks since 2022, I’m pleased to say this has been a smooth transition
during the year.
As of September 2024, the Risk Committee convenes semi-annually (within its Terms of Reference), reflecting the
scrutiny deemed necessary to changes in the Company’s risk factors. In the other quarters, the Board receives a more
streamlined risk report from the AIFM that includes operational risk reporting from the Investment Adviser. Beyond
this, the Chair of the Risk Committee is the primary point of alert for material risk indicators as Reportable Risk Events
on an ‘as-arising’ basis.
Risk Classes
The Committee reviews the risk profile of the Company under a series of pre-defined risk classes. Eash risk class is
composed of separately identified and scored risks and mitigating controls.
Risk classes are then prioritised in order of their highest overall residual risk ratings and this process is refreshed (at
least) annually:
1. Relative Performance – the Company’s longer terms sustainability will depend on risk-adjusted returns
outperforming adjacent asset classes.
2. Portfolio Performance – risks to tracking each portfolio company’s progress towards measurable
milestones along the ‘equity roadmap’ and evidence of the strategy and influence over profitable
realisations. Movements in the fair values of our holdings have led to an overall increase in the concentration
risk within the portfolio during the year.
3. Financial/ Capital Markets – risks related to shareholder understanding, confidence in the Company’s
growth capital mandate and implications of shares trading at a discount to NAV.
4. Conflict and Compliance Management – verification of robust governance in all stakeholder relationships
including but not limited to the fiduciary responsibilities the Investment Adviser assumes where it exercises
the Company’s right to board representation within our portfolio companies.
5. Liquidity Management – risks to the funding runway and allocation of resources that the Company has
available to deploy to support and optimise the value of its investments.
6. Portfolio Construction – ensuring that the portfolio remains sufficiently diversified and that the Investment
Adviser’s span of control and management of the Company’s holdings remains effective. Movements in the
fair value of the Company's investments have led to an overall increase in the concentration risk within the
portfolio during the year.
Risk class assessed to be well controlled but with the potential for high impact if crystallised:
7. Regulatory and political – risk monitoring over routine regulatory compliance (e.g., FCA in the UK) and/or
politically exposed sectors within which certain portfolio companies must operate.
Risk classes currently judged to have a lower overall residual risk rating:
8. The Environment, Social Impact and Good Governance (“ESG”) – the Company’s policy is addressed in
Environmental, Social and Corporate Governance report of the Annual Report.
47
Report of the Risk Committee (continued)
Risk Classes ( continued
9. Investment Decisions – evidence that the Investment Adviser has undertaken appropriate due diligence,
risk assessments and origination processes at the point of committing the Company to new investments;
cognisant of the announced capital allocation policy.
10. Central Management – governance, depositary, foreign exchange and treasury risk management controls;
some under delegation to specialist third party service providers.
11. Valuation – the Independent Valuation Committee’s role in provide insightful and consistent oversight of
the quarterly portfolio valuation process.
Finally, as a standing item, the Risk Committee considers:
12. Horizon Risks – themes emerging that could have an outsize impact or influence on the prospects of clusters
of our target sectors and/or portfolio companies.
In September 2024, the Committee Chair conducted the annual refresh of the risk register with the Investment Adviser
before presenting the findings to the Risk Committee in October 2024. Each existing and new risk was considered
individually, combining in the prioritised risk classes above.
In relative terms, it was pleasing to see a year of improvement with consistent and clear risk reporting by the
Investment Adviser throughout a year of significant change, including the Continuation Vote, migration of the
Investment Advisory relationship, migration of corporate administration to IQ-EQ, liquidity events from realisations,
follow-on investments against a challenging backdrop for growth equity, several operational risk matters that
required careful consideration, and finally, the introduction and execution of the capital allocation policy which
made use of borrowed funds against a Barclays debt facility, drawn down after the end of the period.
In absolute terms, the risk profile of the Company improved with increased visibility over both valuations and
liquidity with realisation events in the year and further positive developments in several of the Company’s largest
holdings. Notwithstanding this, a persistent discount in the Company’s shares is undermining the value of the long-
term shareholder proposition and to manage this, the Board introduced a package of measures, set within a near
term capital allocation policy.
As a special measure in 2024, the Risk Committee commissioned a 3-part study with a specialist cyber security
consultancy to scrutinise the quality and preparedness of cyber risk frameworks and governance of both the
Company and its three key suppliers; CIP LLP, IQ-EQ and G10. The Board noted compliance with leading standards,
adopted its Cyber Security Strategy and now has several initiatives underway as part of ongoing monitoring and
management of cyber risk.
Recommendation
Growth equity as an asset class accepts a higher appetite for risk to find investment opportunities in companies that
have the potential for outsize returns. Whilst there have been some notable failures in our portfolio, this year has
crystalised profitable returns and the portfolio, whilst smaller, contains several high conviction holdings. 2025 holds
great promise for this portfolio and my report highlights the approach we take to ensuring the risks accepted
continue to be overseen and managed. I am satisfied that the Risk Committee is discharging its responsibilities
proficiently and so recommend this report to the Board.
_____________________
Simon Holden
Chairman of the Risk Committee, Chrysalis Investments Limited
48
Directors’ Report
The Directors present their Annual Report and the Audited Financial Statements of the Company for the year ended
30 September 2024.
Principal Activities and Business Review
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 companies.
The Directors do not envisage any change in these activities for the foreseeable future. A description of the activities
of the Company in the year under review is given in the Chairman’s Statement and the Investment Adviser’s Report.
Business and Tax Status
The Company has been registered with the GFSC as a closed-ended investment company under RCIS Rule and
Protection of Investors (“POI”) Law and was incorporated in Guernsey on 3 September 2018. The Company operates
under The Companies (Guernsey) Law, 2008 (the “Law”).
The Company’s shares have a listing and are admitted to trading on the Closed Ended Investment Fund segment of
the London Stock Exchange’s Main Market for listed securities.
The Company’s management and administration takes place in Guernsey and the Company has been granted
exemption from income tax within Guernsey by the Administrator of Income Tax. It is the intention of the Directors
to continue to operate the Company so that each year this tax-exempt status is maintained.
In respect of the Criminal Finances Act 2017, which has introduced a new corporate criminal offence of ‘failing to take
reasonable steps to prevent the facilitation of tax evasion’, the Board confirms that they are committed to zero
tolerance towards the criminal facilitation of tax evasion.
Alternative Investment Fund Managers Directive
The Company is a non-EEA-domiciled ‘Alternative Investment Fund’ (“AIF”), as defined by the Alternative Investment
Fund Managers Directive (“AIFMD”). From 1 October2023 to 31 March 2024, the Company was a self-managed AIF and
procured portfolio management services from Jupiter Investment Management Limited ("JIML"), under a Portfolio
Management Agreement dated 1 July 2022. On 29 January 2024, the Company entered into an AIFM and Advisory
Agreement with G1O and CIP LLP respectively. Under this agreement, with effect from 1 April 2024, G10 was appointed
as the AIFM to the Company. CIP LLP became Investment Adviser to G10. CIP LLP is an appointed representative of
G10 which is authorised and regulated by the Financial Conduct Authority.
The AIFMD, as transposed into the FCA Handbook in the UK, requires that certain pre-investment information be
made available to investors in AIFs (such as the Company) and that certain regular and periodic disclosures are made.
Foreign Account Tax Compliance Act (“FATCA”)
FATCA requires certain financial institutions outside the United States (“US”) to pass information about their US
customers to the US tax authorities, the Internal Revenue Service (the “IRS”). A 30% withholding tax is imposed on
the US source income and disposal of assets of any financial institution within the scope of the legislation that fails
to comply with this requirement.
The Board of the Company has taken all necessary steps to ensure that the Company is FATCA compliant and confirms
that the Company is registered and has been issued a Global Intermediary Identification Number (“GIIN”) by the IRS.
The Company will use its GIIN to identify that it is FATCA compliant to all financial counterparties.
49
Directors’ Report (continued)
Common Reporting Standard
The Common Reporting Standard is a global standard for the automatic exchange of financial account information
developed by the Organisation for Economic Co-operation and Development (“OECD”), which has been adopted in
Guernsey and which came into effect in January 2016.
The Company is subject to Guernsey regulations and guidance on the automatic exchange of tax information and the
Board will therefore take the necessary actions to ensure that the Company is compliant in this regard.
Going Concern
The Directors have adopted the going concern basis in preparing the Audited 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 year end, the Company has liquidity including a current cash position of £44,612,000 (2023: £22,626,000), a net
current asset position of £44,660,000 (2023: £20,973,000) and liquid listed investments amounting to £2,015,000
(2023: £10,284,000).
The Company generates liquidity by raising capital and from exiting investments. It uses liquidity by making new and
follow-on investments, paying company expenses and making returns to Shareholders. The Directors ensure it has
adequate liquidity by regularly reviewing its financial position and forward-looking liquidity requirements. The
Directors' going concern assessment includes consideration of a range of likely downside scenarios which measure
the impact on the Company’s liquidity of differing assumptions for portfolio valuation, exits, new and follow-on
investment requirements, capital raising and company expenses.
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.
On 24 September 2024, the Company agreed a £70,000,000 debt facility with Barclays Bank PLC which was fully drawn
on 1 October 2024. Interest accrues at a market-rate margin plus the daily SONIA rate. The facility matures on 30
September 2026. The purpose of the facility is to cover the Company's working capital requirements and potential
follow-on investments. As at the date of this report, the facility continues to be fully drawn.
Taking all matters into account, the Directors have a reasonable expectation that the Company will continue in
operational existence for at least twelve months from the date of approval of the of the Annual Report and Audited
Financial Statements, and continue to adopt the going concern basis in preparing them.
Viability Statement
The Directors have assessed the viability of the Company over the three-year period to September 2027. The Directors
consider that three years is an appropriate period to assess viability given the Company’s style of investment and is
a sufficient investment time horizon to be relevant to shareholders.
50
Directors’ Report (continued)
Viability Statement (continued)
Choosing a longer time period can present difficulties, given the lack of longer-term economic visibility and the need
for adaptation that this will inevitably create for the Company and its portfolio.
In their assessment of the viability of the Company, the Directors have considered the Company’s principal and
emerging risks and uncertainties, organised into Risk Classes by the Risk Committee (page 47).
The Directors have reviewed financial projections which consider:
– Available liquidity (Risk Class 1: Liquidity Management)
– The ability of the Company to raise capital (Risk Class 2: Financial/Capital Market)
– The performance (Risk Class 3: Portfolio Performance) and value of the existing portfolio (Risk Class 11:
Valuation)
– The ongoing expenses of the Company
The Directors’ considered a severe downside scenario which models:
- A significant economic event, which results in a deterioration of portfolio company performance and a
recalibration of public and private markets leading to a compound 25% per annum decrease in the
aggregate portfolio value over a three-year economic cycle.
- The Company honours the committed capital return under the CAP and does not raise further capital
- Dislocation of public and private markets, including the prolonged closure of the IPO market, resulting in the
inability to make portfolio exits.
- A sustained period of inflation of approximately 10% per annum.
The Directors, having considered the above and having carried out a robust assessment of the principal and emerging
risks facing the Company, have concluded that there is a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the three-year period to September 2027.
Results and Dividends
The results attributable to shareholders for the year are shown in the Statement of Comprehensive Income.
The Directors have not declared a dividend for the year (2023: £nil).
Directors
The Directors of the Company who served during the year and to date are set out on pages 33 to 38
51
Directors’ Report (continued)
Directors’ Interests
The Directors held the following interests in the share capital of the Company either directly or beneficially as at 30
September 2024, and as at the date of signing these Audited Financial Statements:
Number of
% Ordinary Shares in
Ordinary Shares
issue as at 30 September 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)
11,170
0.0019
As at 30 September 2023 the following Directors had holdings in the Company:
Number of
% Ordinary Shares in
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)
11,170
0.0019
Under their terms of appointment, the Directors’ total remuneration (including one-off fees) are as disclosed below:
The Directors’ compensation is reviewed annually and effective 1 October 2024, each Director is paid a basic fee of
£62,500 (2023: £57,500) per annum by the Company. In addition to this, the Chairman will receive an extra £22,500
(2023: £27,500) per annum.
Lord Rockley, Diane Seymour-Williams and Jonathan Biggs receive £40,000 each per annum as members of the
Valuation Committee. Lord Rockley, Diane Seymour-Williams and Jonathan Biggs are not Directors of the Company.
Effective 1 October 2024, each Valuation Committee member is paid £42,000 per annum.
At year end, the Company has liquidity including a current cash position of £44,612,000, a net current asset position
of £44,660,000 and liquid listed investments amounting to £2,015,000. This available liquidity would sustain the
business over the course of the viability period.
A one-off fee was awarded to the Chairman of £nil (2023: £35,000). The Risk Committee Chairman will receive an extra
£5,000 (2023: £10,000) per annum and the Audit Committee Chairman will receive an extra £5,000 (2023: £10,000) per
annum. Refer to pages 41 and 42 for more information regarding Directors’ remuneration.
52
Directors’ Report (continued)
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 Board’s responsibility for conducting a robust assessment of the principal and emerging risks is embedded in the
Company’s risk map and stress testing, which helps position the Company to ensure compliance with the Association
of Investment Companies Code of Corporate Governance (the “AIC Code”).
The principal risks to which the Company will be exposed are given in note 18 to the Annual Report and Audited
Financial Statements.
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 more investee-
company specific performance as well as market pricing of comparable businesses;
– 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 into 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.
For further details with respect to the processes for identifying, monitoring and controlling risks to which the Company
is exposed, see the Report of the Risk Committee on pages 45 to 47.
53
Directors’ Report (continued)
Ongoing Charges
The ongoing charges figure for the year was 0.72% (2023: 0.78%). The ongoing charges represent ongoing annual expenses
of £6,217,319 (2023: £6,669,787) divided by total average Net Asset Value for the year of £858,854,011 (2023: £788,273,640).
The ongoing charges have also been prepared in accordance with the recommended methodology provided by the
Association of Investment Companies where investment purchase costs of £33,564 (2023: £515,724) and performance fees
of £nil have been excluded and represent the percentage reduction in shareholder returns as a result of recurring
operational expenses.
Emerging Risks
The Middle East region is currently experiencing multiple conflicts.
Despite ongoing diplomatic efforts, tensions remain high between Israel and Gaza, and the situation continues to be
volatile, with ongoing violence and humanitarian concerns.
The Syrian conflict has evolved with the recent toppling of President Bashar al-Assad. Rebel forces have entered Damascus,
leading to a shift in power dynamics. This change has increased humanitarian needs, with millions of people requiring aid.
Iran’s nuclear program is a point of international concern. The International Atomic Energy Agency (IAEA) having reported
significant advancements in Iran’s uranium enrichment capabilities. The US has levied sanctions on Iran’s oil tankers,
aiming to disrupt Iran’s use of oil revenue to finance its nuclear program.
The Board will continue to monitor developments in the region. Deep Instinct maintains a presence in Israel but has not
suffered material disruption to its operations.
ESG and Climate Change Risks and Considerations
The Board of Directors have carefully considered the impact of climate change and ESG related risks on the Company’s
business strategy and the impact of the Company’s operations on the local community and environment. This analysis has
taken place at both the level of the Company and at the investment portfolio level.
As an investment company with no employees, the Company itself has only a minimal footprint on the local community
and environment, but recognises that everyone has a part to play in the reduction of adverse environmental impacts and
ensuring the company’s operations have a positive impact on society and the generation of long term sustainable value.
Further information on how the Board and CIP LLP manage the Company’s ESG and climate change related risks at the
investment portfolio level can be found within the Environmental, Social and Corporate Governance Report on pages 21 to
27. This includes the integration of ESG analysis into the investment process.
Investment Management and Administration
AIFM and Investment Advisory Agreement and Fees
The Directors are responsible for managing the business affairs of the Company in accordance with the Articles of
Incorporation and the investment policy and have overall responsibility for the Company’s activities including its
investment activities and reviewing the performance of the Company’s portfolio.
The Directors have, however, appointed G10 to perform delegated investment management functions.
The Company entered into a tripartite agreement with G10 and CIP LLP, with effect from 1 April 2024. G10 is the AIFM to the
Company. CIP LLP is the investment adviser to G10. CIP LLP is an appointed representative of G10, which is authorised and
regulated by the Financial Conduct Authority.
54
Directors’ Report (continued)
Administrator
IQ-EQ has been appointed as Administrator and Company Secretary to the Company pursuant to a master services
agreement. The Administrator is responsible for the maintenance of the books and financial accounts of the Company and
the calculation, in conjunction with the Investment Adviser, of the Net Asset Value of the Company and the shares.
Depositary
The Depositary of the Company is Citibank UK Limited.
Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
Board Responsibilities
The Board comprises six non-executive Directors, who meet at least quarterly to consider the affairs of the Company in a
prescribed and structured manner. All Directors are considered independent of the Investment Adviser for the purposes of
the AIC Code and Listing Rule 15.2.12A. Biographies of the Directors for the year ended 30 September 2024 appear on pages
33 to 36 which demonstrate the wide range of skills and experience they bring to the Board.
The Directors, in the furtherance of their duties, may take independent professional advice at the Company’s expense,
which is in accordance with principle 13 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.
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.
At each annual general meeting of the Company, each director shall retire from office and each director may offer
themselves for election or re-election by the shareholders.
Conflicts of Interest
None of the Directors nor any persons connected with them had a material interest in any of the Company’s transactions,
arrangements or agreements at the date of this report and none of the Directors has or had any interest in any transaction
which is or was unusual in its nature or conditions or significant to the business of the Company, and which was affected
by the Company during the reporting year.
At the date of this Annual Report, there are no outstanding loans or guarantees between the Company and any Director.
Committees
The Company has established: the Audit Committee, the Remuneration and Nomination Committee, the Risk Committee,
Valuation Committee and the Management Engagement Committee (together the “Committees”). Terms of Reference for
each committee is available on request from the Administrator and on the Company’s website
https://chrysalisinvestments.co.uk/investor-relations/
.
55
Directors’ Report (continued)
The Audit Committee
Stephen Coe is the Chairman of the Audit Committee. A full report regarding the Audit Committee can be found in the Audit
Committee Report.
Remuneration and Nomination Committee
In accordance with the AIC Code, a Remuneration and Nomination Committee has been established. Anne Ewing has been
appointed as Chairman. The Remuneration and Nomination Committee meets at least once a year in accordance with the
terms of reference and reviews, inter alia, the structure, size and composition of the Board.
Details of the Directors’ remuneration can be found in note 19 and pages 41 and 42.
Management Engagement Committee
Margaret O’Connor has been appointed Chairman of the Management Engagement Committee. The Management
Engagement Committee will meet formally at least once a year for the purpose, amongst other things, of reviewing the
actions and judgments of the Investment Adviser and the terms of the Portfolio Management Agreement. Details of the
management and performance fees can be found in note 6.
Risk Committee
Simon Holden is the Chairman of the Risk Committee. A full report regarding the Risk Committee can be found in the Risk
Committee Report.
Valuation Committee
Lord Anthony Rockley is the Chairman of the Valuation Committee with Tim Cruttenden, Diane Seymour-Williams and
Jonathan Biggs as members.
Substantial Shareholdings
On 31 December 2024, the latest practicable date for disclosure in this Annual Report, funds managed by Asset Value
Investors held 14.5% of the share capital of the Company. No other shareholder had a holding of greater than 10% of the
Company.
Shareholder Communication
The Company’s main method of communication with Shareholders is through its published Half Yearly and Annual Reports
which aim to provide Shareholders with a fair, balanced and understandable view of the Company’s results and objectives.
This is supplemented by the publication of the Company’s quarterly net asset values on its ordinary shares on the London
Stock Exchange.
In line with principle 16 of the AIC Code, the Investment Adviser communicates with both the Chairman and shareholders
and is available to communicate and meet with major shareholders. The Company has also appointed Panmure Liberum
Limited and Deutsche Numis to liaise with all major shareholders together with the Investment Adviser, all of whom report
back to the Board at quarterly board meetings ensuring that the Board is fully aware of shareholder sentiment,
expectations and analyst views.
The Company’s website, which is maintained by the Investment Adviser, is regularly updated with news and
announcements. Information published online is accessible in many countries each with differing legal requirements
relating to the preparation and dissemination of financial information. Users of the Company’s website are responsible for
informing themselves of how the requirements in their own countries may differ from those of Guernsey.
56
Directors’ Report (continued)
Relations with Shareholders
All holders of Ordinary Shares in the Company have the right to receive notice of, attend and vote at the general meetings
of the Company.
At each general meeting of the Company, the Board and the Investment Adviser are available to discuss issues affecting
the Company.
Shareholders are additionally able to contact the Board directly outside of meetings via the Company’s dedicated e-mail
address (chrysalisgsyteam@iqeq.com) or by post via the Company Secretary. Alternatively, Shareholders are able to
contact the Investment Adviser directly (enquiries@chrysalisllp.co.uk) or the Senior Independent Director
(chrysalisgsyteam@iqeq.com) for issues they feel they may be unable to raise directly with the Company itself.
The Company has adopted a zero-tolerance policy towards bribery and is committed to carrying out business fairly,
honestly and openly.
Stewardship code
The Company is committed to the principles of the Financial Reporting Council’s UK Stewardship Code and this also
constitutes the disclosure of that commitment required under the rules of the FCA (Conduct of Business Rule 2.2.3).
Signed on behalf of the Board by:
_____________________
Andrew Haining
Chairman
57
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and Audited Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Audited Financial Statements for each financial year. Under that law
they are required to prepare the Audited Financial Statements in accordance with International Financial Reporting
Standards as adopted by the EU and applicable law.
Under company law the Directors must not approve the Audited Financial Statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Company and of its profit or loss for that year. In preparing
these Audited Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
• state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the Financial Statements;
• assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern; and
• use 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.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that its Financial Statements comply with the Companies (Guernsey) Law, 2008. They are
responsible for such internal control as they determine is necessary to enable the preparation of Financial
Statements that are free from material misstatement, whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and
detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website. Legislation in Guernsey governing the preparation and dissemination of Financial
Statements may differ from legislation in other jurisdictions.
Disclosure of information to auditors
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are aware,
there is no relevant audit information of which the Company’s Auditor is unaware; and that each Director has taken
all the steps that they ought to have taken as a director to make
themselves aware of any relevant audit information
and to establish that the Company’s Auditor is aware of that information.
Responsibility statement of the Directors in respect of the Annual Report
We confirm that to the best of our knowledge:
• the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
• the Directors’ Report (comprising the Chairman’s Statement, the Investment Adviser’s Report, and Directors’
Report) includes a fair review of the development and performance of the business and the position of the
Company, together with a description of the principal risks and uncertainties that it faces.
58
Statement of Directors’ Responsibilities (continued)
Responsibility statement of the Directors in respect of the Annual Report (continued)
We consider the Annual Report and Audited Financial Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
Signed on behalf of the Board by:
_____________________
Andrew Haining
Chairman
9 January 2025
59
Audit Committee Report
In accordance with the AIC Code, an Audit Committee has been established consisting of Anne Ewing, Simon Holden,
Margaret O’Connor and Stephen Coe, who is the Chairman of the Audit Committee.
Membership and Role of the Committee
The Audit Committee meets at least twice a year and, when requested, provides advice to the Board on whether the
Annual Report and Audited Financial Statements, taken as a whole, is fair, balanced and understandable and provides
information necessary for the shareholders to assess the Company’s performance, business model and strategy. The
Audit Committee also reviews, inter alia, the financial reporting process and the system of internal control and
management of financial risks, including understanding the current areas of greatest financial risk and how these are
managed by the Investment Adviser, reviewing the Annual Report and Audited Financial Statements, assessing the
fairness of Audited Financial Statements and disclosures and reviewing the external audit process. The Audit Committee
is responsible for overseeing the Company’s relationship with the external auditor (the “Auditor”), including making
recommendations to the Board on the appointment of the Auditor and their remuneration.
The Audit Committee considers the nature, scope and results of the Auditor’s work and reviews, and develops and
implements a policy on the supply of any non-audit services that are to be provided by the Auditor. The Audit Committee
annually reviews the independence and objectivity of the Auditor and considers the appointment of an appropriate
Auditor.
The continuation of the Auditor was considered and the Board subsequently decided that the Auditor was sufficiently
independent and was appropriately appointed in order to carry out the audit of the Company for the year ended 30
September 2024. Appointment of the Auditor will be reviewed each year before the AGM. The level of non-audit versus
audit services is monitored. The table below summarises the remuneration for services provided to the Company to
KPMG Channel Islands Limited (“KPMG”) for audit and non-audit services during the year ended 30 September 2024.
30 September
30 September
2024
2023
Annual audit fee
160,000
135,000
Reporting accountant services
-
15,000
Interim review
51,600
45,000
211,600 195,000
Non-audit services provided in the year arose in connection with the review of the Company’s interim financial
statements. Notwithstanding such services, the Audit Committee considers KPMG to be independent of the Company
and that the provision of such non-audit services is not a threat to the objectivity and independence of the conduct of
the auditor as appropriate safeguards are in place.
Internal Control
The Company is responsible for the process surrounding the valuation of its investment portfolio. The Company has
delegated these processes to its independent Valuation Committee which reviews third party valuations of unlisted
investments. The Audit Committee liaises with the Valuation Committee regularly and reviews minutes of Valuation
Committee meetings. For all other processes of the Company responsibility for internal control lies within the services
provided by CIP LLP and other service providers. These controls are monitored by the Board reviewing and challenging
reports from these service providers and through segregation of duties between them.
60
Audit Committee Report (continued)
Internal Control (continued)
The Audit Committee monitors the financial reporting process and tasks undertaken in the production of the Annual
Report and Audited Financial Statements. The administration and company secretarial duties of the Company are
performed by IQ-EQ.
Registrar duties are performed by Computershare Investor Services (Guernsey) Limited.
The custody of financial assets is undertaken by Citibank UK Limited.
The Company does not have an internal audit department. All the Company’s management and administration
functions are delegated to independent third parties and it is therefore felt there is no need for the Company to have an
internal audit function. The Audit Committee have assessed the Company’s internal controls and found them to be
satisfactory.
Fair Value Estimation
The valuation of the Company’s investments is considered to be a significant area of focus given that they represent the
majority of the net assets of the Company and in view of the significance of the estimates and judgments that may be
involved in the determination of their fair value. In discharging its responsibilities, the Audit Committee has specifically
considered the valuation of investments as follows:
• Independent third-party valuation firms are engaged to provide assistance, advice, assurance, and
documentation in relation to the portfolio valuations. Valuations are then submitted to the the AIFM, Investment
Adviser and the Company's Valuation Committee for review. The Board reviews these portfolio valuations on a
regular basis throughout the year. The Audit Committee’s ultimate responsibility is to review the portfolio
valuations.
• Reporting to the Board on the significant judgment made in the preparation of the Company’s Annual Report
and Audited Financial Statements and recommending valuations of the Company’s investments to the Board.
• The Audit Committee will recommend the Board and or Independent Valuation Committee engages
independent valuers for specific assets where it considers it appropriate.
External Audit
The Audit Committee will hold an annual meeting to approve the Company’s Annual Report and Audited Financial
Statements before its publication. During the current year the Audit Committee met with the Auditor to discuss the audit
plan and approach.
During this meeting it was agreed with the Auditor that the area of significant audit focus related to the valuation of
investments given that they represent the majority of net assets of the Company and their valuation involves significant
judgement. The scope of the audit work in relation to this asset class was discussed. The Auditor has also identified the
Company's going concern status as an area of focus.
The Audit Committee reviews cash flow and working capital reports as part of the review of annual and semi-annual
financial statements, together with taking into consideration significant events such as the continuation vote. At the
conclusion of the audit, the Audit Committee met with the Auditor and discussed the scope of their annual audit work
and their audit findings.
61
Audit Committee Report (continued)
External Audit (continued)
The Audit Committee reviews the scope and results of the audit, its cost effectiveness, and the independence and
objectivity of the Auditor. The Audit Committee has particular regard to any non-audit work that the Auditor may
undertake and the terms under which the Auditor may be appointed to perform non-audit services. In order to safeguard
the Auditor’s independence and objectivity, the Audit Committee ensures that any other advisory and/or consulting
services provided by the Auditor does not conflict with their statutory audit responsibilities.
To fulfil its responsibilities regarding the independence of the Auditor, the Audit Committee considered:
• a report from the Auditor describing their arrangements to identify, report and manage any conflicts of interest;
and
• the extent of the non-audit services provided by the Auditor.
To assess the effectiveness of the Auditor, the committee reviewed:
• the Auditor’s fulfilment of the agreed audit plan and variations from it;
• the audit findings report highlighting any major issues that arose during the course of the audit; and
• the effectiveness and independence of the Auditor having considered the degree of diligence and professional
scepticism demonstrated by them.
The Audit Committee is satisfied with KPMG‘s effectiveness and independence as Auditor.
During the year the Audit Committee met three time with all members present (refer to Director Attendance on page 36).
Reappointment of auditor
The Auditor, KPMG Channel Islands Limited, has expressed its willingness to continue in office as Auditor. A resolution
proposing their reappointment will be submitted at the forthcoming general meeting to be held pursuant to section 199
of the Law.
_____________________
Stephen Coe
Chairman of the Audit Committee, Chrysalis Investments Limited
62
Independent Auditor’s Report to the Members of Chrysalis Investments Limited
Our opinion is unmodified
We have audited the financial statements of Chrysalis Investments Limited (the “Company”), which comprise the
statement of financial position as at 30 September 2024, the statements of comprehensive income, changes in equity
and cash flows for the year then ended, and notes, comprising material accounting policies and other explanatory
information.
In our opinion, the accompanying financial statements:
• give a true and fair view of the financial position of the Company as at 30 September 2024, and of the Company’s
financial performance and cash flows for the year then ended;
• are prepared in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”); and
• comply with the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the
Company in accordance with, UK ethical requirements including the FRC Ethical Standard as required by the Crown
Dependencies' Audit Rules and Guidance. We believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the
financial statements and include the most significant assessed risks of material misstatement (whether or not due to
fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the
key audit matter was as follows (unchanged from 2023):
The risk
Our response
Valuation of unquoted investments
held at fair value through profit or
loss
£793,656,000 (2023: £770,092,000)
Refer to page 60 of the Audit
Committee Report, notes 2(h), 3, 10
and 18
Basis:
The Company’s unquoted
investments are classified,
recognised and measured at fair
value through profit or loss in
accordance with IFRS 9. The
investments comprise of equity and
equity-related instruments in
unquoted companies (the
“investments”) and represent 94.5%
(2023: 96.1%)
Our audit procedures included but
were not limited to:
Internal Controls:
We evaluated the design and
implementation of the controls in
place over the valuation of the
Company’s investments.
63
Independent Auditor’s Report to the Members of Chrysalis Investments Limited
(continued)
Key audit matters: our assessment of the risks of material misstatement (continued)
The risk
Our response
of the Company’s net assets as at 30
September 2024.
The Company’s investments are
valued by using recognised
valuation methodologies and
models, in accordance with the
International Private Equity and
Venture Capital Valuation (“IPEV”)
Guidelines, 2022.
The Company utilises an
independent third-party valuation
firm (the “Valuation firm”) to assist
and advise on their valuation
process.
Risk:
The valuation of the Company’s
investments is a significant area of
audit focus, given that it represents
a significant portion of the net
assets of the Company.
The valuation risk of the
investments incorporates both a
risk of fraud and error given the
significance of estimates and
judgements that may be involved in
the determination of fair value.
On the basis of the above we
determined that the valuation of
investments have a high degree of
estimation uncertainty giving rise to
a potential range of reasonable
outcomes greater than our
materiality for the financial
statements as a whole. The
financial statements disclose in
note 18 the sensitivities estimated
by the Company.
Challenging managements’
assumptions and inputs including use
of our KPMG valuation specialist:
For the investments, with the support
of our KPMG valuation specialist, we:
• assessed the objectivity,
capabilities and competence of
the Valuation firm;
• assessed the scope of the services
provided by the Valuation firm
and read the valuation reports
produced by them in order to
understand the specific
methodologies and the valuation
assumptions applied;
• assessed the scope of the services
provided by the Investment
Adviser and read the memoranda
produced by them in order to
understand the key judgements
affecting the investee company
valuations;
• held discussions with the
Investment Adviser and the
Valuation firm to understand the
key judgments made and the
valuation approaches applied to
the valuation of the investments;
• attended in an observation
capacity the Board of Directors
(“the Board”) meeting where the
valuation of the investments were
tabled, to obtain evidence of
governance over the valuation
process and observe challenge
from the members of the Board
on the inputs in the valuation
preparation;
64
Independent Auditor’s Report to the Members of Chrysalis Investments Limited
(continued)
Key audit matters: our assessment of the risks of material misstatement (continued)
The risk
Our response
• read the minutes of meetings of
the Company’s Valuation
Committee and the Board held
where the valuations of the
investments were discussed to
obtain evidence of governance
over the valuation process and
observe challenge from members
of the Committee and Board on
the inputs to the valuations;
• assessed the reasonableness and
appropriateness of the valuation
approach and methodology
applied to each investment;
• benchmarked the key
assumptions used in the
valuation models employed to
observable market data (where
possible);
• corroborated key investee
company inputs used in the
valuation models, and recent
investment transactions to
supporting documentation;
• considered market transactions
in close proximity to the year-end
and assessed their
appropriateness as being
representative of fair value;
• obtained an understanding of
how the impact of global
economic factors and the
resultant increase in uncertainty
have been reflected in the
valuation of the investments.
65
Independent Auditor’s Report to the Members of Chrysalis Investments Limited
(continued)
Key audit matters: our assessment of the risks of material misstatement (continued)
The risk
Our response
Assessing disclosures:
We also considered the Company’s
disclosures (see notes 3 and 18) in
relation to the use of estimates and
judgements regarding the valuation
of investments and the Company’s
investment valuation policies
adopted in note 2(h) and fair value
disclosures in note 18 for compliance
with the relevant accounting
standards.
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at £17,500,000, determined with reference to a benchmark
of net assets of £877,637,000, of which it represents approximately 1.99% (2023: 2.0%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to
a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material amount across the financial statements as a whole.
Performance materiality for the Company was set at 75% (2023: 75%) of materiality for the financial statements as a
whole, which equates to £13,100,000. We applied this percentage in our determination of performance materiality
because we did not identify any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding £875,000, in
addition to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified above, which has informed our identification
of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed
above.
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded that the Company's financial position means that this is
realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over
its ability to continue as a going concern for at least a year from the date of approval of the financial statements (the
“going concern period").
In our evaluation of the directors' conclusions, we considered the inherent risks to the Company's business model and
analysed how those risks might affect the Company's financial resources or ability to continue operations over the going
concern period. The risks that we considered most likely to affect the Company's financial resources or ability to continue
operations over this period were availability of capital to meet operating costs and other financial commitments.
66
Independent Auditor’s Report to the Members of Chrysalis Investments Limited
(continued)
Going concern (continued)
We considered whether these risks could plausibly affect the liquidity in the going concern period by comparing severe,
but plausible downside scenarios that could arise from these risks individually and collectively against the level of
available financial resources indicated by the Company’s financial forecasts.
We considered whether the going concern disclosure in note 2 (b) to the financial statements gives a full and accurate
description of the directors' assessment of going concern.
Our conclusions based on this work:
• we consider that the directors' use of the going concern basis of accounting in the preparation of the financial
statements is appropriate;
• we have not identified, and concur with the directors' assessment that there is not, a material uncertainty
related to events or conditions that, individually or collectively, may cast significant doubt on the Company's
ability to continue as a going concern for the going concern period; and
• we have nothing material to add or draw attention to in relation to the directors' statement in the notes to the
financial statements on the use of the going concern basis of accounting with no material uncertainties that
may cast significant doubt over the Company's use of that basis for the going concern period, and that
statement is materially consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a
guarantee that the Company will continue in operation.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
• enquiring of management as to the Company’s policies and procedures to prevent and detect fraud as well as
enquiring whether management have knowledge of any actual, suspected or alleged fraud;
• reading minutes of meetings of those charged with governance; and
• using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards, and taking into account possible incentives or pressures to misstate performance and
our overall knowledge of the control environment, we perform procedures to address the risk of management override
of controls, in particular the risk that management may be in a position to make inappropriate accounting entries, and
the risk of bias in accounting estimates such as valuation of unquoted investments. On this audit we do not believe there
is a fraud risk related to revenue recognition because the Company’s revenue streams are simple in nature with respect
to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement
for estimation from management. We did not identify any additional fraud risks.
We performed procedures including:
• identifying journal entries and other adjustments to test based on risk criteria and comparing any identified
entries to supporting documentation;
• incorporating an element of unpredictability in our audit procedures; and
• assessing significant accounting estimates for bias.
67
Independent Auditor’s Report to the Members of Chrysalis Investments Limited
(continued)
Fraud and breaches of laws and regulations – ability to detect (continued)
Identifying and responding to risks of material misstatement due to fraud (continued)
Further detail in respect of valuation of unquoted investments is set out in the key audit matter section of this report.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with management (as required by auditing standards),
and from inspection of the Company’s regulatory and legal correspondence, if any, and discussed with management the
policies and procedures regarding compliance with laws and regulations. As the Company is regulated, our assessment
of risks involved gaining an understanding of the control environment including the entity’s procedures for complying
with regulatory requirements.
The Company is subject to laws and regulations that directly affect the financial statements including financial reporting
legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of
our procedures on the related financial statement items.
The Company is subject to other laws and regulations where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or
impacts on the Company’s ability to operate. We identified financial services regulation as being the area most likely to
have such an effect, recognising the regulated nature of the Company’s activities and its legal form. Auditing standards
limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of
management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from
the events and transactions reflected in the financial statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to
detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected
to detect non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report but does not include the financial statements and our auditor's report thereon. Our opinion on the financial
statements does not cover the other information and we do not express an audit opinion or any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
68
Independent Auditor’s Report to the Members of Chrysalis Investments Limited
(continued)
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the viability statement, and the financial statements and our
audit knowledge. We have nothing material to add or draw attention to in relation to:
• the directors’ confirmation within the Viability Statement (pages 49 and 50) that they have carried out a robust
assessment of the emerging and principal risks facing the Company, including those that would threaten its business
model, future performance, solvency or liquidity;
• the emerging and principal risks disclosures describing these risks and explaining how they are being managed or
mitigated;
• the directors’ explanation in the Viability Statement (pages 49 and 50) as to how they have assessed the prospects of
the Company, over what period they have done so and why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on pages 49 and 50 under the Listing Rules. Based on the
above procedures, we have concluded that the above disclosures are materially consistent with the financial statements
and our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the directors’
corporate governance disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the financial
statements and our audit knowledge:
• the directors’ statement that they consider that theannual report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information necessary for shareholders to assess theCompany’s
position and performance, business model and strategy;
• the section of theannual report describing the work of the Audit Committee, including the significant issues that the
audit committee considered in relation to the financial statements, and how these issues were addressed; and
• the section of theannual report that describes the review of the effectiveness of theCompany’s risk management and
internal control systems.
We are required to review the part of Corporate Governance Statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report
in this respect.
We have nothing to report on other matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
• the Company has not kept proper accounting records; or
• the financial statements are not in agreement with the accounting records; or
• we have not received all the information and explanations, which to the best of our knowledge and belief are
necessary for the purpose of our audit.
69
Independent Auditor’s Report to the Members of Chrysalis Investments Limited
(continued)
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on pages 57 and 58, the directors are responsible for: the preparation
of the financial statements including being satisfied that they give a true and fair view; such internal control as they
determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error; 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.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities
.
The purpose of this report and restrictions on its use by persons other than the Company's members as
a body
This report is made solely to the Company’s members, as a body, in accordance with section 262 of the Companies
(Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s 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 and the Company’s members, as a
body, for our audit work, for this report, or for the opinions we have formed.
Sarah Margaret Hume
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Guernsey
9 January 2025
70
Statement of Comprehensive Income
For the year ended 30 September 2024
Note Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investments
Net gains / (losses) on
investments
held at fair value 10 - 45,832 45,832 - (72,660) (72,660)
Net losses on currency
movements
- (1,230) (1,230) - (33) (33)
Net investment
gains / (losses)
- 44,602 44,602 - (72,693) (72,693)
Interest income 5 834 - 834 1,127 3 1,130
Total income 834 - 834 1,127 3 1,130
Advisory and
management fees
6 (2,987) - (2,987) (4,009) - (4,009)
Other expenses 7 (3,230) - (3,230) (2,661) - (2,661)
(5,383) 44,602 39,219 (5,543) (72,690) (78,233)
Gains / (losses)
before taxation
(5,383) 44,602 39,219 (5,543) (72,690) (78,233)
Tax expense - - - - - -
for the year
Basic and diluted
gain/(loss) per
Ordinary Share
(pence)
8 (0.90) 7.49 6.59 (0.94) (12.21) (13.15)
30 September 2024
Year ended
Year ended
30 September 2023
(5,543)
(72,690)
(78,233)
Gains / (losses) before finance
costs and taxation
comprehensive gain / (loss)
(5,383)
44,602
39,219
Total gains / (losses) and
The total column of this statement represents the Statement of Comprehensive Income of the Company prepared in
accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”).
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 74 to 100 form an integral part of these Audited Financial Statements.
71
Statement of Financial Position
As at 30 September 2024
2024 2023
Note £'000 £'000
Non-current assets
Investments held at fair value through profit or loss 10
795,671 780,376
Current assets
Cash and cash equivalents 11
44,612 22,626
Other receivables 12
1,376 50
45,988 22,676
Total assets
841,659 803,052
Current liabilities
Advisory and management fees payable 6
(385) (1,022)
Other payables 13
(943) (681)
Total liabilities
(1,328) (1,703)
Net assets
840,331 801,349
Equity
Share capital 14
860,890 860,890
Treasury shares acquired 15
(237) -
Capital reserve
13,274 (31,328)
Revenue reserve
(33,596) (28,213)
Total equity
840,331 801,349
Net asset value per ordinary share (pence) 16
141.26 134.65
Number of Ordinary Shares in issue 14
594,892,952 595,150,414
Approved by the Board of Directors and authorised for issue on 9 January 2025 and signed on its behalf:
Stephen Coe
Director
The notes on pages 74 to 100 form an integral part of these Audited Financial Statements.
72
Statement of Changes in Equity
For the year ended 30 September 2024
Share Treasury Capital R
evenue
capital shares reserve re
serve Total
Note £'000 £'000 £'000 £'000 £'000
At 30 September 2022
860,890 - 41,362 (
22,670) 879,582
Total losses and comprehensive loss for
the year
- - (72,690) (5,543) (78,233)
At 30 September 2023
860,890 - (31,328) (
28,213) 801,349
Total gains/(losses) and comprehensive
gain/(loss) for the year
- - 44,602 (5,383) 39,219
Treasury shares acquired 15 - (237) - - (237)
At 30 September 2024
860,890 (237) 13,274 (33,596) 840,331
The notes on pages 74 to 100 form an integral part of these Audited Financial Statements.
73
Statement of Cash Flows
For the year ended 30 September 2024
2024 2023
Notes £'000 £'000
Cash flows from operating activities
Cash used in operating activities 17 (8,384) (10,330)
Interest income 731 1,130
Purchase of investments 10 (23,421) (46,305)
Sale of investments 10,12 53,029 19,423
Net losses/(gains) on currency movements 1,230 (33)
Net cash inflow/(outflow) from operating activities 23,185 (36,115)
Net increase/(decrease) in cash and cash equivalents 23,185 (36,115)
Cash and cash equivalents at the beginning of the year 22,626 58,712
Net (losses)/gains on cash currency movements (1,199) 29
Cash and cash equivalents at the end of the year 11 44,612 22,626
Cash and cash equivalents comprise of the following:
- Cash at bank 44,612 4,382
- Treasury bills - 18,244
44,612 22,626
The notes on pages 74 to 100 form an integral part of these Audited Financial Statements.
74
Notes to the Audited Financial Statements
For the year ended 30 September 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 PO Box 60, Fourth Floor, Plaza
House, Admiral Park, St Peter Port, Guernsey, GY1 4BF (Royal Plaza, Royal Avenue, St Peter Port, Guernsey, GY1 2HL from
1 October 2023 to 31 July 2024).
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 (per note 16, of which 257,462 are treasury shares) under ticker CHRY,
SEDOL BGJYPP4 and ISIN GG00BGJYPP46 have a listing on the Closed Ended Investment Fund segment and are
admitted to trading on the London Stock Exchange’s Main Market for listed securities. The Company invests in a
diversified portfolio consisting primarily of equity and equity-related securities issued by unquoted companies.
From 1 October 2023 to 31 March 2024 the Company was a self-managed Alternative Investment Fund ("AIF") and
received discretionary portfolio management services from Jupiter Investment Management Limited ("JIML").
On 29 January 2024, the Company entered into an AIFM and Advisory Agreement with G10 Capital Limited (“G10”)
and Chrysalis Investment Partners LLP (“CIP LLP”) respectively. Under this agreement, with effect from 1 April
2024, G10 was appointed as the Alternative Investment Fund Manager (“AIFM”) to the Company and CIP LLP
became Investment Adviser to G10. CIP LLP is an appointed representative of G10, which is authorised and
regulated by the Financial Conduct Authority.
From 1 August 2024 to the date of this report, the administration of the Company has been delegated to IQ-EQ
Fund Services (Guernsey) Limited, PO Box 60, Fourth Floor, Plaza House, Admiral Park, St Peter Port, Guernsey,
GY1 4BF, an IQ-EQ Group company ("IQ-EQ") (the "Administrator"). From 1 October 2023 to 31 July 2024, the
administration of the Company was delegated to Apex Administration (Guernsey) Limited, Royal Plaza, Royal
Avenue, St Peter Port, Guernsey, GY1 2HL, an Apex Group company.
2. Material accounting policies
(a) Basis of accounting
The Audited Financial Statements have been prepared in compliance with International Financial Reporting
Standards as adopted by the European Union (“IFRS”). The Audited Financial Statements give a true and fair view
and comply with the Companies (Guernsey) Law, 2008.
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 February 2019 is consistent
with the requirements of IFRS, the Directors have sought to prepare the Audited 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 Audited 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 year end, the Company has liquidity including a current cash position of £44,612,000 (2023: £22,626,000), a
net current asset position of £44,660,000 (2023: £20,973,000) and liquid listed investments amounting to
£2,015,000 (2023: £10,284,000).
75
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
2. Material accounting policies (continued)
(b) Going concern (continued)
The Company generates liquidity by raising capital and from exiting investments. It uses liquidity by making new
and follow-on investments, paying company expenses and making returns to the Shareholders. The Directors
ensure it has adequate liquidity by regularly reviewing its financial position and forward-looking liquidity
requirements. The Directors' going concern assessment includes consideration of a range of likely downside
scenarios which measure the impact on the Company’s liquidity of differing assumptions for portfolio valuation,
exits, new and follow-on investment requirements, capital raising and company expenses.
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.
On 24 September 2024, the Company agreed a £70,000,000 debt facility with Barclays Bank PLC which was fully
drawn on 1 October 2024. Interest accrues at a market-rate margin plus the daily SONIA rate. The facility matures
on 30 September 2026. The purpose of the facility is to cover the Company's working capital requirements and
potential follow-on investments. As at the date of this report, the facility continues to be fully drawn.
Taking all matters into account, the Directors have a reasonable expectation that the Company will continue in
operational existence for at least twelve months from the date of approval of the of the Annual Report and
Audited Financial Statements, and continue to adopt the going concern basis in preparing them.
(c) Functional and presentational currency
The Audited Financial Statements of the Company are presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purpose of the Audited Financial Statements,
the results and financial position of the Company are presented in pound sterling (“£”).
(d) 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 Audited Financial Statements.
(e) Income
Interest income is accounted for on an accruals basis and recognised in profit or loss in the Statement of
Comprehensive Income. Interest income includes interest earned on convertible loan notes, cash held at bank
on call or on deposit and cash assets held as cash equivalents, including UK treasury bills.
(f) Expenses
Expenses are accounted for on an accruals basis. The Company’s portfolio management and administration fees,
finance costs and all other expenses are charged through the Statement of Comprehensive Income and are
charged to revenue. Performance fees are charged to capital in the Statement of Comprehensive Income.
76
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
2. Material accounting policies (continued)
(g) 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
year. Exemption is applied and granted annually and subject to the payment of a fee, currently £1,600 (2023:
£1,200).
(h) Financial instruments
Recognition and initial measurement
The Company initially recognises transactions in financial instruments at Fair Value through Profit and Loss
(“FVTPL”) on the trade date, which is the date on which the Company becomes party to the contractual provisions
of the instrument.
Classification and measurement of financial assets
On initial recognition, the Company classifies financial assets as measured at amortised cost or FVTPL.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
as at FVTPL:
• It is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• Its contractual terms give rise on specified dates to cash flows that are Solely Payments of Principal and
Interest (“SPPI”).
All other financial assets of the Company are measured at FVTPL.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows. At initial recognition, the Company measures a financial asset at its fair value, plus,
in
the case of a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable
to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in the Statement of Comprehensive Income.
Business model assessment
In assessing the objective of the business model in which a financial asset is held, the Company considers all
the relevant information about how the business is managed, including:
• the documented investment strategy and the execution of this strategy in practice. This includes whether the
investment strategy focuses on earning contractual interest income, maintaining a particular interest rate
profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash
outflows or realising cash flows through the sale of the assets;
• how the performance of the portfolio is evaluated and reported to the Company's management;
• the risks that affect the performance of the business model (and the financial assets held within that business
model) and how those risks are managed;
• how the investment manager is compensated: e.g. whether compensation is based on the fair value of the
assets managed or the contractual cash flows collected; and
• the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and
expectations about future sales activity.
77
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
2. Material accounting policies (continued)
(h) Financial instruments (continued)
Business model assessment (continued)
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered
sales for this purpose, consistent with the Company's continuing recognition of the assets.
The Company has determined that it has two business models:
• Held-to-collect business model: this includes cash and cash equivalents, balances due from brokers and
receivables from sale agreements. These financial assets are held to collect contractual cash flows.
• Other business model: this includes debt securities, equity investments, investments in unlisted open-ended
investment funds, unlisted private equities and derivatives. These financial assets are managed, and their
performance is evaluated, on a fair value basis.
Assessment whether contractual cash flows are SPPI
For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial
recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period and for other basic lending risks and costs (e.g.
liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are SPPI, the Company considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a contractual term that could change the
timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment,
the Company considers:
• contingent events that would change the amount or timing of cash flows;
• leverage features;
• prepayment and extension features;
• terms that limit the Company's claim to cash flows from specified assets (e.g. non-recourse features); and
• features that modify consideration of the time value of money (e.g. periodical reset of interest rates).
Subsequent measurement of financial assets
Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, any interest
or dividend income and expense, and foreign exchange gains and losses are recognised in ‘Net gains/(losses) on
investments held at fair value’ in the Statement of Comprehensive Income.
Debt securities, equity investments, investments in unlisted open-ended investment funds, unlisted private
equities and derivative financial instruments are included in this category.
Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective
interest method. Interest income is recognised in 'Interest income’, foreign exchange gains and losses are
recognised in ‘Net gains/(losses) on currency movements’ and impairment is recognised in 'Impairment losses on
financial instruments' in the Statement of Comprehensive Income. Any gain or loss on derecognition is also
recognised in the Statement of Comprehensive Income.
Cash and cash equivalents, balances due on unsettled trades and receivables from sale agreements are included
in this category.
78
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
2. Material accounting policies (continued)
(h) Financial instruments (continued)
Fair value measurement
For investments actively traded in organised financial markets, fair value will generally be determined by
reference to Stock Exchange quoted market bid prices at the close of business on the valuation date, without
adjustment for transaction costs necessary to realise the asset.
In respect of unquoted instruments, including associates, or where the market for a financial instrument is not
active, fair value is established by using recognised valuation methodologies, in accordance with International
Private Equity and Venture Capital Valuation Guidelines (“IPEVC”), revised December 2022.
The Company has adopted a valuation policy for unquoted securities to provide an objective, consistent and
transparent basis for estimating the fair value of unquoted equity securities in accordance with IFRS as well as
IPEVC.
The unquoted securities valuation policy and the associated valuation procedures are subject to review on a
regular basis, and updated as appropriate, in line with industry best practice. In addition, the Company works
with independent third-party valuation firms, to obtain assistance, advice, assurance, and documentation in
relation to the ongoing valuation process.
The Company considers it impractical to perform an in-depth valuation analysis for every unquoted investment on
a daily basis (whether internally or with the assistance of an independent third party). Therefore, it is expected that an
in- depth valuation of each investment will be performed independently by an independent third-party valuation
firm: (i) on a quarterly basis; and (ii) where the Company, in conjunction with its advisors, determines that a
Triggering Event
has occurred.
A "Triggering Event" may include any of the following:
• a subsequent round of financing (whether pro rata or otherwise) by the relevant investee company;
• a significant or material milestone achieved by the relevant investee company;
• a secondary transaction involving the relevant investee company on which sufficient information is
available;
• a change in the makeup of the management of the relevant investee company;
• a material change in the recent financial performance or expected future financial performance of the
relevant investee company;
• a material change in the market environment in which the relevant investee company operates; or
• a significant movement in market indices or economic indicators.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The change in fair value is recognised in profit or loss and
is presented within the “net gains/(losses) on investments held at fair value through profit or loss” in the Statement
of Comprehensive Income.
IFRS requires the Company to measure fair value using the following 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).
79
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
2. Material accounting policies (continued)
(h) Financial instruments (continued)
Fair value measurement (continued)
The three levels of fair value hierarchy under IFRS are as follows:
•
Level 1 reflects financial instruments quoted in an active market.
•
Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable
current market transactions in the same instrument or based on a valuation technique whose variables
include only data from observable markets.
•
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. For investments that are
recognised
in the Audited Financial Statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by reassessing the categorisation (based on the
lowest significant input) at the date of the event that caused the transfer.
Derecognition of financial assets
A financial asset (in whole or in part) is derecognised either (i) when the Company has transferred substantially
all the risks and rewards of ownership; or (ii) when it has neither transferred nor retained substantially all the risks
and rewards and when it no longer has control over the assets or a portion of the asset; or (iii) when the
contractual right to receive cash flow has expired. The derecognised investments are measured at the weighted
average method. Any gain or loss on derecognition is recognised in the Net gains/(losses) on investments held
at fair value through profit or loss in the Statement of Comprehensive Income.
Classification and subsequent measurement of financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL.
A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated
as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains or losses,
including any interest, are recognised in the Statement of Comprehensive Income.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognised in the Statement of Comprehensive
Income.
Any gain or loss on derecognition is also recognised in the Statement of Comprehensive Income.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged,
cancelled or they expire.
(i) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, which may include UK treasury bills, are short-term,
highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of
changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment
or other purposes. Included in cash and cash equivalents at the year end was cash at bank of £44,612,000 (2023:
£4,382,000) and treasury bills of £Nil (2023: £18,244,000). Refer to note 11 for further details of the cash balance held
at 30 September 2024.
80
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
2. Material accounting policies (continued)
(j) Other receivables
Other receivables do not carry interest and are short-term in nature and are accordingly recognised at amortised
cost.
(k) Foreign currency
Transactions and balances
At each Statement of Financial Position date, monetary assets and liabilities that are denominated in foreign
currencies are translated at the rates prevailing at that date.
Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates
prevailing at the date fair value is measured. Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the year in which they arise. Transactions denominated
in foreign currencies are translated into pound sterling (£) at the rate of exchange ruling at the date of the
transaction.
Foreign exchange gains and losses arising from translation are included in the Statement of Comprehensive
Income.
Where foreign currency items are held at fair value, the foreign currency movements are presented as part of the
fair value change.
(l) Treasury shares
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly
attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares
and are presented as treasury shares. When treasury shares are sold or reissued subsequently, the amount
received is recognised as an increase in equity and the resulting surplus or deficit in the transaction is presented
within share premium.
(m) Capital reserve
Profits achieved by selling investments and changes in fair value arising upon the revaluation of investments that
remain in the portfolio are all charged to capital the Statement of Comprehensive Income and allocated to the
capital reserve. The capital reserve is also used to fund dividend distributions.
(n) Revenue reserve
The balance of all items allocated to the revenue in the Statement of Comprehensive Income for the year is
transferred to the Company’s revenue reserve.
(o) Investment entities
In accordance with IFRS 10 an investment entity is an entity that:
• obtains funds from one or more investors for the purpose of providing those investor(s) with investment
management services;
• commits to its investor(s) that its business purpose is to invest funds solely for returns from capital
application, investment income, or both; and
• measures and evaluates the performance of substantially all of its investments on a fair value basis.
The Directors are satisfied that the Company meets each of these criteria and hence is an investment entity in
accordance with IFRS 10.
81
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
3. Use of estimates and critical judgements
The preparation of Audited 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 Audited Financial Statements and the reported amounts of income and expenses
during the year. 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 year, except for the use of estimates in the
valuation of the unquoted investments detailed in note 18.
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 year end and will be adopted by the
Company from 1 October 2024. The Directors have considered their impact and have concluded that they will not
have a material impact on the Audited Financial Statements for the year ended 30 September 2025 onwards.
Non-current Liabilities with Covenants and Classification of Liabilities as Current or Non-current
(Amendments to IAS 1 Presentation of Financial Statements)
(Effective for reporting periods beginning on or after 1 January 2024)
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.
Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures)
(Effective for reporting periods beginning on or after 1 January 2024)
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.
82
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
4. Changes in material accounting policies (continued)
New and revised standards (continued)
Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates)
(Effective for reporting periods beginning on or after 1 January 2025)
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.
IFRS 18 Presentation and Disclosure in Financial Statements
(Effective for reporting periods beginning on or after 1 January 2027, subject to adoption by the European
Financial Reporting Advisory Group)
IFRS 18 Presentation and Disclosure in Financial Statements will replace IAS 1 Presentation of Financial Statements.
The new standard introduces the following key new requirements:
• Entities are required to classify all income and expenses into five categories in the statement of profit or loss,
namely the operating, investing, financing, discontinued operations and income tax categories. Entities are
also required to present a newly-defined operating profit subtotal. Entities' net profit will not change.
• Management-defined performance measures (“MPMs”) are disclosed in a single note in the financial
statements.
• Enhanced guidance is provided on how to group information in the financial statements.
• In addition, all entities are required to use the operating profit subtotal as the starting point for the statement
of cash flows when presenting operating cash flows under the indirect method.
The Company is still in the process of assessing the impact of the new standard, particularly with respect to the
structure of the Company's statement of profit or loss, the statement of cash flows and the additional disclosures
required for MPMs. The Company is also assessing the impact on how information is grouped in the financial
statements, including for items currently labelled as 'other'.
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.
83
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
5. Interest income
2024 2023
£'000 £'000
Interest accounted for using the effective interest rate method on
assets held at fair value through profit or loss (FVTPL):
4
- 3
Interest on assets held at amortised cost:
Cash at bank 474 255
UK treasury bills 360 872
834 1,130
6. Advisory and management fees
2024 2023
£'000 £'000
Jupiter Unit Trust Managers Limited ("JUTM") - 11
Jupiter Investment Management Limited ("JIML") 618 3,998
Chrysalis Investment Partners LLP ("CIP LLP") 2,369 -
Total advisory and management fees 2,987 4,009
From 1 October 2023 to 31 March 2024, the Company procured portfolio management services from JIML, under
a Portfolio Management Agreement dated 1 July 2022. On 29 January 2024, the Company entered into an AIFM
and Investment Advisory Agreement with G10 and CIP LLP respectively. Under this agreement, with effect from 1
April 2024, G10 was appointed as the AIFM to the Company and CIP LLP became Investment Adviser to G10. CIP
LLP is an appointed representative of G10 which is authorised and regulated by the Financial Conduct Authority.
Advisory and management fees
The Company paid a monthly “Management Fee” to JIML, equal to 1/12 of 0.5% of the Net Asset Value up to 30
September 2023. As part of the changes to 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 pays an “Advisory Fee” to CIP LLP, 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 Fees (for the period from 1 October 2023 to 31 March 2024) and Advisory Fees (for the period from
1 April 2024 to 30 September 2024) are charged to Revenue in the Statement of Comprehensive Income.
4
The comparative amount of £3,438 relates to a residual amount of interest received in the year ended 30 September 2023 on a loan which
converted in the year ended 30 September 2021.
84
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
6. Advisory and management fees (continued)
Performance fee
To 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”).
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 (2024: 141.26 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 ordinarily charged to Capital in the Statement of Comprehensive Income.
As at 30 September 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 Audited Financial
Statements.
7. Other expenses
2024 2023
£'000 £'000
Administration fee 260 210
Auditor's remuneration for:
– audit fees (current year) 160 135
– audit fees ((over)/under accrual in prior year) (16) 10
– non-audit fees 52 60
Committee fees 158 151
Depositary fees 69 63
Directors' expenses 12 15
Directors' fees 398 433
Directors' liability insurance 59 68
FCA fees 23 31
Legal fee and professional fees:
– ongoing operations 1,363 313
– valuation fees 350 281
– due diligence fees - 77
– fees relating to purchases of investments 34 516
Listing fees 24 31
Design fees 38 44
Registrars' fees 35 33
Secretarial fees 51 45
Sundry 160 145
3,230 2,661
85
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
8. Losses per ordinary share
Net return Per share Net return Per share
£'000 pence £'000 pence
Revenue return (5,383) (0.90) (5,543) (0.94)
Capital return 44,602 7.
49 (72,690) (12.21)
39,219 6.59 (78,233) (13.15)
Weighted average
number of ordinary
shares
595,149,710 595,150,414
30 September 2024
30 September 2023
The return per share is calculated using the weighted average number of ordinary shares.
9. Dividends
The Board has not declared a dividend (2023: £nil).
10. Investments held at fair value through profit or loss
2024 2023
£'000 £'000
Opening book cost 732,033 731,095
Opening investment holding unrealised gains 48,343 91,268
Opening valuation 780,376 822,363
Movements during the year:
Purchases at cost 23,421 46,305
Sale of investments (53,958) (15,632)
Net gains/(losses) on investments held at fair value 45,832 (72,660)
Closing valuation 795,671 780,376
Closing book cost
5
656,080 732,033
Closing investment holding unrealised gains
5
139,591 48,343
Closing valuation 795,671 780,376
Movement in unrealised gains during the year 339,125 249,567
Movement in unrealised losses during the year (247,877) (292,492)
Realised loss on sale of investments (52,430) (36,558)
Realised gain on sale of investments 7,014 6,823
Net gains/(losses) on investments held at fair value through
profit or loss
45,832 (72,660)
5
The presentation of the prior year note has been updated from that which was presented in the prior year audited financial statements. The
updated presentation does not impact the prior year valuation and the presentation update within this note does not give rise to a
restatement of the financial statements.
86
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
10. Investments held at fair value through profit or loss (continued)
The Company holds all its investments at fair value through profit or loss. Investments held by the Company on
30 September 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%
11. Cash and cash equivalents
2024
2023
£'000 £'000
Cash and cash equivalents comprise of the following:
Cash at bank 44,612 4,382
Treasury bills - 18,244
44,612 22,626
12. Other receivables
2024
2023
£'000 £'000
Other receivables 1,376 50
1,376 50
Included within “Other receivables” is an amount of $1,206,381 (equivalent to £902,000). This relates to deferred
consideration receivable on the disposal of Graphcore.
Total expected proceeds on the sale of Graphcore are $57,385,584 (equivalent to £44,866,000, on the date of
disposal). This amount is included within “Sale of investments” in Note 10: Investments held at fair value through
profit or loss.
On 12 July 2024, the Company received initial proceeds of $56,179,203 (equivalent to £43,937,000, on the date of
disposal). This amount is included within “Sale of investments” in the statement of cash flows.
At 30 September 2024, $1,206,381 of proceeds remained unpaid. On 30 September 2024 this amount was
revalued to £902,000, generating an unrealised loss of £27,000 within "Net (losses)/gains on currency
movements" within the statement of comprehensive income.
87
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
13. Other payables
2024 2023
£'000 £'000
Administration fees 28 53
Audit fees 160 150
Legal fees 382 -
Valuation fees 17 290
Custodian fees 23 16
Amounts due in respect of shares repurchased 237 -
Other creditors 96 172
943 681
14. Share capital
No. of
shares £'000
Ordinary Shares at no par value
At 30 September 2022 595,150,414 860,890
At 30 September 2023 595,150,414 860,890
Repurchase of shares (257,462) (236)
Share repurchase costs - (1)
At 30 September 2024 594,892,952 860,653
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.
There were no changes for the year in the share capital of the Company.
15. Treasury shares acquired
No. of
shares £'000
Ordinary Shares at no par value
At 30 September 2023 - -
Repurchase of shares 257,462 236
Share repurchase costs - 1
At 30 September 2024 257,462 237
On 26 September 2024, the Company announced a Share Buyback Programme (the “Programme”) in
accordance with its Capital Allocation Policy. The Programme includes an initial buyback allocation of up to
£40,000,000 and potential additional buyback allocations of up to £60,000,000. As approved by shareholders at
the Company’s annual general meeting on 15 March 2024, the maximum number of shares which may be
repurchased is currently 89,213,047. If required, shareholders’ approval for an additional buyback authority will
be sought at or before the 2025 annual general meeting.
The purpose of the Programme is to return capital to shareholders while also accreting net asset value per share
for the benefit of long-term shareholders.
88
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
15. Treasury shares acquired (continued)
The Company has engaged its Corporate Brokers to implement the Programme on its behalf.
16. Net asset value per ordinary share
The Net Asset Value per Ordinary Share and the Net Asset Value at the year end calculated in accordance with
the Articles of Incorporation were as follows:
NAV NAV NAV NAV
per share attributable per share attributable
pence £'000 pence £'000
Ordinary Shares: basic and diluted 141.26 840,331 134.65 801,349
30 September 2024
30 September 2023
The Net Asset Value per Ordinary Share is based on 594,892,952 (2023: 595,150,414) Ordinary Shares, being the
number of Ordinary Shares in issue at the year end.
17. Cash used in operating activities
2024 2023
£'000 £'000
Total gains/(losses) for the year 39,219 (78,233)
Net (gains)/losses on investments held at fair value through profit or loss (45,832) 72,660
Interest income (834) (1,130)
Net (gains)/losses on currency movements (4) 4
Movement in working capital
(Increase)/decrease in other receivables (2024: excluding interest (321) 19
receivable and deferred consideration receivable)
Decrease in payables (2024: excluding amounts due (612) (3,650)
in respect of shares repurchased)
(8,384) (10,330)
18. 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.
Certain financial assets and financial liabilities of the Company are carried in the Statement of Financial Position
at their fair value. The fair value is the amount at which the asset could be sold, or the liability transferred in a
current transaction between market participants, other than a forced or liquidation sale. For investments
actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange
quoted market mid prices and Stock Exchange Electronic Trading Services (“SETS”) at last trade price at the year
end date, without adjustment for transaction costs necessary to realise the asset. Other financial instruments
not carried at fair value are typically short-term in nature and reprice to the current market rates frequently.
Accordingly, their carrying amount is a reasonable approximation of fair value. This includes cash and cash
equivalents, other receivables and payables.
89
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
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 30 September 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Quoted equity
2,015 - - 2,015
Unquoted equity
- - 793,656 793,656
2,015 - 793,656 795,671
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
90
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
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:
EV/LTM Revenue Multiple 5.84x 1.17x - 9.26x
1/2/3/4/5/6 +/- 25% + 77,257 / -82,054
EV/2024E Revenue Multiple 6.46x 1.94x - 10.26x
1/2/3/4/5/6 +/- 25% + 32,600 / -20,947
EV/LTM Earnings Multiple 10.11x No range
1/2/3/4/5/6 +/- 25% + 8,962 / -8,962
EV/2024E Earnings Multiple 11.15x No range
1/2/3/4/5/6 +/- 25% + 9,568 / -9,567
EV/Book Value Multiple 2.17x No range
1/2/3/4/5/6 +/- 25% + 9,233 / -9,233
EV/Book Value 2024E Multiple 2.11x No range
1/2/3/4/5/6 +/- 25% + 9,702 / -9,702
Illiquidity discount -10.0% -
5 +/- 25% + 162,027 / -148,637
Implied premium/(discount) -14.8% - 5 +/- 25% + 289 / -17,834
Expected Proceeds
99,038 Execution Discount -8.2% -10.0% - 0.0% 7 +/- 25% + 7,539 / -23,176
Insolvency
- Likelihood of insolvency 75.0% No range 8 +/- 25% + 40,367 / -
Market approach
using comparable
traded multiples
694,618
Unlisted Investments 2024
Valuation
Technique
Fair Value as at
30 September
2024 (£000s)
Significant Unobservable Inputs
Unobservable Inputs
Utilised
6
Sensitivity %
Sensitivity to changes in significant
unobservable input (£000s)
Weighted
Average
Range
6
A description of the Unobservable Inputs can be found on the next page.
91
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
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 and the
International Private Equity and 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.
92
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
Unobservable Inputs (continued)
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 transaction closes and the expected timing of the close.
8. Likelihood of insolvency
When insolvency becomes a potential outcome for an investment then the valuer may assume that it will not
return any value. A probability is usually assigned to a zero value scenario in the form of a percentage. The
percentage assigned to a zero value scenario may increase or decrease over time depending on whether
insolvency is deemed to be more or less likely at each valuation point.
93
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
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:
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
Unlisted Investments 2023
Sensitivity to changes in significant unobservable inputs
If multiples changed by +/- 25%, the value of the companies in this
group would change by + £112,340,325 / - £127,156,208
728,177
Market approach using
comparable traded
multiples
EV/LTM Revenue
multiples
EV/2023E Revenue
multiples
EV/2024E Revenue
multiples
EV/2025E Revenue
mu
ltiples
EV/2026E Revenue
multiples
0.23 – 19.09x
25%
Fair Value as at 30
September 2023
(£000s)
Valuation Technique
Significant
Unobservable Inputs
Range
Sensitivity %
94
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
The Company has an established control framework with respect to the measurement of fair values.
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:
2024 2023 2024 2023
Level 1 Level 1 Level 3 Level 3
£'000 £'000 £'000 £'000
Opening balance 10,284 20,317 770,092 802,046
Transferred to/(from) Level 1/(Level 3)
- - -
Purchases - - 23,421 46,305
Sales (9,025) (10,263) (44,933) (5,369)
Total gains/(losses) included in net
gains/(losses) on investments in the statement
of comprehensive income
- on assets sold 6,405 6,826 (51,821) (36,556)
- on assets held at year end (5,649) (6,596) 96,897 (36,334)
Closing balance 2,015 10,284 793,656 770,092
There have been no transfers between levels in the current year or in the prior year. The change in unrealised
gains or losses (net loss) for the year included in the Statement of Comprehensive Income relating to those
Level 3 assets held at the reporting date amounts to a net gain of £96,897,000 (2023: net loss of £36,334,000).
Investments are moved between levels at the point of the trigger event.
The main risks that the Company faces arising from its financial instruments are:
(i) market risk, including:
– other price risk, being the risk that the value of investments will fluctuate as a result 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;
– 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 into with the Company; and
(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.
95
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
Other price risk
The management of price risk is part of the portfolio management process and is characteristic of investing in
equity securities. The investment portfolio is managed with an awareness of the effects of adverse price
movements through detailed and continuing analysis with an objective of maximising overall returns to
shareholders. Although it is the Company’s current policy not to use derivatives, they may be used from time
to time for the purpose of efficient portfolio management and managing any exposure to assets denominated
in currencies other than pound sterling.
If the investment portfolio valuation rose or fell by 25% at 30 September 2024 (25% at 30 September 2023), the
impact on net asset value and the comprehensive gain for the year would have been £198,917,798 (2023:
£195,093,937). The calculations are based on the investment portfolio valuation as at the Statement of
Financial Position date and are not necessarily representative of the year as a whole.
Interest rate risk
The Company is exposed to interest rate risk on its cash and cash equivalent balances. Interest rate risk arises
when prevailing market interest rates fluctuate. The Investment Adviser manages interest rate risk by ensuring
that it obtains market rates on the Company's cash and cash equivalent balances, whilst simultaneously
managing liquidity and credit risk.
In one year Greater than 2024
or less one year Total
£'000 £'000
£'000
Cash and cash equivalents 44,612 - 44,612
44,612 - 44,612
In one year Greater than 2023
or less one year Total
£'000 £'000
£'000
Cash and cash equivalents 22,626 - 22,626
22,626 - 22,626
If interest rates rose or fell by 1% compared to those available at 30 September 2024 (2023: 1%), the impact on
net asset value and the comprehensive gain for the year would be £446,000 (2023: £226,000). These calculations
are based on cash balances at the Statement of Financial Position date.
96
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
Foreign currency risk
The Company does not normally hedge against foreign currency movements but takes account of this risk
when making investment decisions. The Company invests in securities denominated in foreign currencies
which give rise to currency risks.
Foreign currency exposure:
2024
Investments Cash Debtors Creditors
£'000
£'000 £'000 £'000
2024
Assets
US Dollar 151,968 18,841 983 64
Euro 36,064 858 1 -
Swedish Krona 120,562 264 - -
Swiss Franc 153 107 - -
308,747 20,070 984 64
2023
Investments Cash Debtors Creditors
£'000
£'000 £'000 £'000
2023
Assets
US Dollar 199,132 10 - 3
Euro 185,785 16 - -
Swedish Krona 56,913 3,581 - -
Swiss Franc 2,848 - - -
444,678 3,607 - 3
During the year, pound sterling weakened by an average of 2.24% (2023: 4.85%) against all of the currencies in
the investment portfolio (weighted for exposure at 30 September 2024). In a similar scenario, where the value
of pound sterling had strengthened against each of the currencies in the portfolio by 2% (2023: 5%), the impact
on Net Asset Value and the total comprehensive gain for the year would have been negative £6,053,868 (2023:
negative £21,175,126). If the value of the pound sterling had weakened against each of the currencies in the
investment portfolio by 2% (2023: 5%), the impact on the Net Asset Value and total gains and comprehensive
gain would have been positive £6,300,964 (2023: positive £23,404,082). The calculations are based on the
investment portfolio valuation and cash balances as at the year end and are not necessarily representative of
the year as a whole.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or
commitment that it has entered into with the Company. The Risk Committee has in place a monitoring
procedure in respect of counterparty risk which is reviewed on an ongoing basis.
The carrying amounts of financial assets best represent the maximum credit risk exposure at the Statement of
Financial Position date, and the main exposure to credit risk is via the Company’s Depositary who is responsible
for the safeguarding of the Company’s cash balances.
97
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
Credit risk (continued)
At the reporting date, the Company’s financial assets exposed to credit risk amounted to the following:
2024 2023
£'000 £
'000
Cash and cash equivalents 44,612 22,626
Sorted Holdings Convertible Loan Note
7
316 316
wefox Holding AG Convertible Loan Notes
8
17,351 -
Other receivables 1,376 50
6
3,655 22,992
All the assets of the Company which are traded on a recognised exchange are held on its behalf by Citibank UK
Limited, the Company’s Depositary. Bankruptcy or insolvency of the Depositary may cause the Company’s
rights with respect to securities held by the Depositary to be delayed or limited.
The credit risk on cash is managed by using counterparties or banks with high credit ratings assigned by
international credit rating agencies. Bankruptcy or insolvency of such financial institutions may cause the
Company’s ability to access cash placed on deposit to be delayed, limited or lost.
At the reporting date, total cash held with Citibank UK Limited and Butterfield Bank (Guernsey) Limited
amounted to the following:
2024 2023
'000 '000
GBP £24,542 £4,091
US Dollar $25,190 $10
Euro €1,031 €15
Swedish Krona SEK3,581 SEK3,581
Swiss Franc CHF121 -
The credit ratings of Citibank UK Limited and Butterfield Bank (Guernsey) Limited were A-1 and A-2,
respectively, at 30 September 2024 (2023: A-1 and A-2, respecitvely)
9
.
Liquidity risk
Liquidity risk is defined as the risk that the Company does not have sufficient liquid resources to meet its
obligations as they fall due. In managing the Company’s assets, the Company will seek to ensure that it holds at
all times a portfolio of assets (including cash) to enable the Company to discharge its payment obligations as they
fall due. The Company may also maintain a short-term overdraft facility that it may utilise from time to time to
manage short-term liquidity.
The Company invests in a number of unquoted securities which are not readily realisable. These investments
make up 94% (2023: 97%) of the net assets as at 30 September 2024.
7
The loan note can be converted to shares at any time or is repayable on demand. No interest has been accrued on this loan note.
8
The loan notes will convert into a number of shares, which will be determined at the date of conversion. Interest accrues at a fixed rate of 6% per the loan note
agreement.
9
Credit rating obtained from Standard & Poor's (S&P). S&P is a leading index provider and data source of independent credit ratings.
98
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
18. Financial instruments and capital disclosures (continued)
Liquidity risk (continued)
The Company’s liquidity risk is maintained by the Risk Committee in accordance with established policies,
procedures and governance structures in place. Cash flow forecasting is reviewed by the Risk Committee to
ensure that it has sufficient cash to meet obligations as they fall due.
The maturity profile of the Company’s current assets and liabilities is presented in the following table.
Between Between
Up to
3 and 12 1 and 5
3 months
months years
T
otal
£'000 £'000 £'000 £'000
2024
Assets
Cash and cash equivalents 44,612 - - 44,612
wefox Holding AG Convertible Loan Notes - -
17,351 17,351
Sorted Holdings Convertible Loan Note 316 - - 316
Other receivables 1,376 - - 1,376
Liabilities
Other current liabilities (1,328) -
- (1,328)
44,976 - 17,351 62,327
Between Between
Up to
3 and 12 1 and 5
3 months
months years
T
otal
£'000 £'000 £'000 £'000
2023
Assets
Cash and cash equivalents 22,626 -
- 22,626
Sorted Holdings Convertible Loan Note 316 - - 316
Other receivables 50 -
- 50
Liabilities
Other current liabilities (1,703) - - (1,703)
21,289 - - 21,289
Capital management objectives, policies and procedures
The structure of the Company’s capital is described in note 14 and details of the Company’s reserves are shown
in the Statement of Changes in Equity on page 72.
The Company’s capital management objectives are:
• to ensure that it is able to continue as a going concern; and
• to generate long-term capital growth through investing in a portfolio consisting primarily of equity or
equity-related investments in unquoted companies.
The Board, with the assistance of the Investment Adviser, regularly monitors and reviews the broad structure
of the Company’s capital. These reviews include:
• the level of gearing, set at limits in normal market conditions, between 5% and 25% of net assets, which
takes account of the Company’s position and the views of the Board and the Investment Adviser on the
market;
• the extent to which revenue reserves should be retained or utilised; and
• ensuring the Company’s ability to continue as a going concern.
99
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
19. Related parties
2024 2023
£'000
£'000
Directors' fees
Total Directors' fees charged
398
433
Directors' fees outstanding
-
-
As at 30 September 2024 the following Directors have holdings in the Company:
Number of
% Ordinary Shares in issue
Ordinary Shares as at 30 September 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)
11,170
0.0019
As at 30 September 2023 the following Directors had holdings in the Company:
Number of
% Ordinary Shares in issue
Ordinary Shares as at 30 September 2023
Director
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) 11,170 0.0019
20. Post balance sheet events
On 1 October 2024, the Company fully drew a £70 million debt facility from Barclays Bank PLC. The loan has
a two-year tenor and accrues interest at a market standard margin over SONIA.
Between 1 October 2024 and the date of signing of these audited financial statements, the Company
repurchased 32,325,799 ordinary shares for a total consideration of £31,139,129.
On 6 November 2024, the Company purchased 27,264 warrants in Klarna Holding AB. On 29 November 2024,
the warrants converted into shares in Klarna Group plc. The total investment amounted to SEK 113,549,543
plus transaction costs.
On 13 November 2024, Klarna Group plc announced that it had confidentially submitted a draft Registration
Statement on Form F-1 to the Securities and Exchange Commission (the “SEC”) relating to the proposed
initial public offering of its ordinary shares. The number of shares to be offered and the price range for the
proposed offering had not been determined. The initial public offering is expected to take place after the SEC
completes its review process, subject to market and other conditions.
The Company entered into a convertible loan agreement with wefox Group Plus AG on 13 November 2024,
and has advanced a total of €20 million since the end of the period.
100
Notes to the Audited Financial Statements (continued)
For the year ended 30 September 2024
20. Post balance sheet events (continued)
On 19 December 2024, the Company completed the sale of Featurespace for a gross consideration of £89
million, £79 million of which has been received since the period end.
On 31 December 2024, the Company announced that it had agreed and entered into a settlement agreement
with Revolution Beauty in full and final satisfaction of its claim. Under the terms of the settlement, Revolution
Beauty has agreed to pay the Company a non-material sum, being less than 1% of the Company's market
capitalisation (as at the date of the announcement).
There has not been any other matter or circumstance occurring subsequent to the end of the financial year
that has significantly affected, or may significantly affect, the operations of the Company, the results of those
operations, or the state of affairs of the Company in the future financial year.
101
Corporate Information
Directors
Andrew Haining, Chairman
Anne Ewing
Simon Holden
Stephen Coe (Senior Independent Director)
Tim Cruttenden
Margaret O’Connor
Registered office
IQ-EQ Fund Services (Guernsey) Limited
PO Box 60
Fourth Floor
Plaza House
Admiral Park
St Peter Port
Guernsey, GY1 4BF
(1 August 2024 to present)
Apex Group
Royal Plaza, Royal Avenue
St Peter Port
Guernsey, GY1 2HL
(1 October 2023 to 31 July 2024)
Investment Adviser
Chrysalis Investment Partners LLP
3 Orchard Place
London, SW1H 0BF
(1 April 2024 to present)
Jupiter Investment Management Limited
The Zig Zag Building
70 Victoria Street
London, SW1E 6SQ
(1 October 2023 to 31 March 2024)
AIFM
G10 Capital Limited
4th Floor
3 More London Riverside
London, SE1 2 AQ
(1 April 2024 to present)
102
Corporate Information (continued)
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
IQ-EQ Fund Services (Guernsey) Limited
PO Box 60
Fourth Floor
Plaza House
Admiral Park
St Peter Port
Guernsey, GY1 4BF
(1 August 2024 to present)
Apex Group
Royal Plaza, Royal Avenue
St Peter Port
Guernsey, GY1 2HL
(1 October 2023 to 31 July 2024)
Registrar
Computershare Investor Services (Guernsey) Limited
1st Floor, Tudor House
Le Bordage
St Peter Port
Guernsey, GY1 1DB
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
103
Corporate Information (continued)
Guernsey Legal Adviser to the Company
Ogier (Guernsey) LLP
Redwood House
St Julian's Avenue
St Peter Port
Guernsey, GY1 1WA
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey, GY1 1WR
104
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 the 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
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