Crystal Amber Fund Proposes Management Overhaul and New Investment Strategy

Crystal Amber’s interim results and a big strategy reset

Crystal Amber Fund’s half-year update mixes steady portfolio work with a clear shift in direction. NAV per share slipped 0.5% to 177.5p over the six months to 31 December 2025, largely due to buybacks and currency headwinds, while the Deutsche Numis Small Cap Index including AIM rose 4.6%. Longer term, the Fund still looks strong, with NAV per share up 68.5% since December 2022 versus 18.5% for the benchmark.

The headline is strategic: the current manager is stepping down and the Board is asking shareholders to approve a new investment policy, a new Investment Manager (Global Fund Management Services Limited) and a new Investment Adviser (Tarncourt Asset Management Limited). An EGM circular was published on 31 March 2026.

Key numbers retail investors should know

Metric	Figure
NAV per share (31 Dec 2025)	177.5p
Total NAV	£107.4 million
Change in NAV per share (period)	-0.5%
Share buybacks	£6.6 million at 142.97p, c.19.45% discount to NAV
Shares repurchased	4,648,847 (to be cancelled)
Cash and cash equivalents	£17.5 million
Profit/(loss) for the period	£(2.19) million
EPS (basic and diluted)	(3.48)p
Shares in issue (excl. treasury)	60,503,500
Treasury shares	24,120,262
MMI fair value within portfolio	£83.58 million
Ownership of MMI	c.97.8% (418,944,800 shares)
MMI funding in 2025	$14.0 million at $0.48 per share

Quick jargon check: NAV is net asset value, or assets minus liabilities per share. CE mark is European regulatory clearance. NUB in Germany is a pathway that lets hospitals seek supplementary reimbursement for innovative devices. FDA approval is the key US regulatory milestone.

Buybacks at a chunky discount – accretive to remaining holders

Crystal Amber spent £6.6 million buying in shares at an average 19.45% discount to NAV. That’s textbook value accretion: cancelling shares bought below NAV lifts NAV per share for those who stay invested. It also tightens the capital base, which partly explains the tiny 0.5% decline in NAV per share despite a larger drop in absolute NAV.

On the flip side, there’s an opportunity cost. Cash used for buybacks is cash not available for portfolio work or cushioning volatility. With £17.5 million still on hand, liquidity looks comfortable for now.

Morphic Medical is the engine – and it’s a long game

Morphic Medical Inc (MMI) dominates the portfolio and the story. Its Reset system is a thin, flexible implant that lines the upper small intestine to mimic aspects of gastric bypass surgery. It’s reversible, minimally invasive and inserted via a 20-minute endoscopic procedure, typically worn for nine months. The focus is type 2 diabetes and metabolic control.

• Regulatory and commercial progress: CE mark and UK approval in place; procedures performed in the UK and India; distributors signed in Spain, Belgium, Netherlands, Czech Republic and the Middle East.
• Reimbursement: Germany has awarded NUB status, enabling hospitals to apply for supplementary reimbursement while broader pathways are developed.
• US pathway: patient enrolment for the pivotal FDA study is accelerating. Completion is expected between late 2027 and early 2028, with FDA approval targeted for 2028 or 2029.
• Manufacturing: contract manufacturers are lined up to scale production.
• Funding: the Fund invested $14.0 million since the start of 2025 at $0.48 per share and may invest further alongside cornerstone investors.

Why it matters: if the FDA timeline holds, value is likely back-end loaded into 2028–2029. The Fund’s Board has acknowledged this longer runway, which is a key reason for the proposed manager change. Valuation-wise, MMI was marked at £83.58 million using a blend of discounted cash flow and a probability-weighted outcomes method, with detailed sensitivities disclosed. That’s robust methodology for a Level 3 (unlisted) asset, but by nature it carries estimation risk.

What’s left in the portfolio beyond MMI

The remaining holdings – Allied Minds Plc, Sigma Broking Limited and Sutton Harbour Plc – are under 10% of NAV combined, with an active monetisation plan.

• Sigma Broking: advanced talks to dispose of its London Metal Exchange business. Completion needs regulatory approval. On closing, the Fund expects a capital distribution. Size and timing not disclosed. Sigma will retain its wealth management arm.
• Allied Minds: valued at NAV less a 25% liquidity discount. Its largest investment, Federated Wireless, reported 2025 revenue of $18.6 million, recurring revenue up 36% year on year and now 86% of total, reduced operating costs and positive EBITDA. Management targets further revenue and EBITDA growth from Verizon deployments, the expected Comcast migration, new federal projects and expansion within the existing base.
• Sutton Harbour: held, with valuation reflecting low trading volumes.

New manager, new mandate – alignment mechanisms to note

The existing Investment Manager has resigned. Subject to shareholder approval, Global Fund Management Services Limited will become Investment Manager and Tarncourt Asset Management Limited will become Investment Adviser. A periodic continuation vote will be reinstated via new Articles. The current Manager will remain a shareholder, which is a helpful alignment signal. The Chairman will not stand for re-election at the next AGM.

Fees will move to revised fixed and performance structures. An interesting alignment feature is how any performance fee is paid:

• If the shares trade at a discount to NAV when the fee falls due, it is paid in cash and the manager must buy Fund shares in the market of equal value within one month.
• If the shares trade at or above NAV, the fee is settled in shares issued or sold out of treasury.

Exact fee rates under the proposed setup are not disclosed in this interim report. No performance fee was earned in the period.

Performance context and moving parts

The reported £2.19 million loss reflects capital markdowns and £1.0 million of negative FX, partly offset by interest income of £340,792. Cash rose to £17.5 million thanks to £18.0 million of equity sales outpacing £4.1 million of purchases, despite £6.8 million spent on buybacks. The portfolio is highly concentrated in unlisted Level 3 assets, so reported NAV is sensitive to valuation assumptions, clinical milestones and FX.

Against the benchmark, the half-year is soft. Against the last two years, performance remains impressive. Both can be true when you concentrate capital in a single catalyst path like MMI.

What to watch between now and summer 2026

• EGM vote on 22 April 2026 and smooth transition to the proposed manager and adviser. The effective date is expected by 30 April 2026 if approved.
• MMI’s US trial recruitment pace and any further protocol enhancements agreed with the FDA.
• Commercial traction for Reset in Europe and the UK, including utilisation under Germany’s NUB pathway and early manufacturing scale-up.
• Regulatory approval and completion of Sigma’s LME-business sale, plus the size and timing of any capital distribution to the Fund – not disclosed.
• Capital allocation signals under the new mandate – buybacks versus follow-on funding into MMI alongside cornerstone investors.
• Any FX impact given the predominantly USD exposure in MMI.

Josh’s view: steady hands needed for a concentrated bet

This update tells you three things. First, buybacks at near 20% discounts are doing useful work for NAV per share. Second, MMI is progressing – regulatory clearances, distribution, reimbursement, study momentum and manufacturing – but the value unlock is on a long fuse to 2028–2029. Third, the proposed manager change is pragmatic: the Fund needs a team willing to lean in for several more years.

Positives: continued operational momentum at MMI, a clean balance sheet with £17.5 million cash, and alignment features in the proposed fee mechanics. Negatives: near-term performance lag versus the index, FX drag, and concentrated Level 3 exposure where valuations can move on news flow.

If you own Crystal Amber, your thesis now leans even more on MMI. The upcoming EGM is pivotal, because execution through the FDA timeline is where most of the value sits. If you are comfortable underwriting that journey – and the Board’s plan to manage it – the discount and buyback discipline remain an attraction. If not, this is the moment to reassess.