Crown Place VCT PLC(i)      Prior to 6 April 1999, Venture Capital Trusts were able to add 20% to dividends and figures for the period up until 6 April 1999 are included at the gross equivalent rate actually paid to shareholders.The year saw the Company’s portfolio facing a challenging macroeconomic and geopolitical backdrop due to high inflation, rising interest rates and political instability which has caused the valuation of quoted technology companies to fall sharply. In spite of this, I am pleased to report an increase in total shareholder value of 1.06 pence per share for the year ended 30 June 2023, representing a 3.1% uplift on the opening net asset value.As at 30 June 2023, the net asset value (“NAV”) was £94.0 million or 33.13 pence per share compared with £85.8 million or 33.70 pence per share at 30 June 2022. The continuing progress of a number of our portfolio companies is discussed later in this statement and in the Strategic report below.Our portfolio has performed well despite the global uncertainties faced, and this has contributed to the total uplift in value of £3.8 million to the Company’s investments for the year (30 June 2022: £6.4 million). Quantexa, the largest company within our portfolio (18% of net asset value), was the main contributor to the net gain, increasing its value by £6.8 million following an externally led $129 million Series E fundraising which completed in April 2023. Other unrealised gains in the year, again driven by strong trading and revenue growth, included Convertr of £0.6 million and Solidatus of £0.5 million. These gains were partially offset by write downs in Black Swan which decreased by £1.5 million, uMotif by £0.9 million and Oviva by £0.8 million.I have had the privilege of serving as a Director of the Company for nine years, including three as Chairman, and I will retire at the Annual General Meeting in November 2023. I am delighted that James Agnew, an existing Board member, will succeed me as Chairman.The Company faces a number of significant risks, including higher interest rates, high levels of inflation, the ongoing impact of geopolitical tensions, and an expected period of economic stagnation in the UK and other markets. This complex backdrop is factored into how the Company is managed, including in its management of cash.It remains the Board’s primary objective to maintain sufficient resources for investment in existing and new portfolio companies and for the continued payment of dividends to shareholders. The Board’s policy is to buy back shares in the market, subject to the overall constraint that such purchases are in the Company’s interest. It is the Board’s intention for such buy-backs to be in the region of a 5% discount to net asset value, so far as market conditions and liquidity permit.Your Board, in conjunction with the boards of the other five VCTs managed by Albion Capital Group LLP, launched a prospectus top up Offer of new Ordinary shares on 10 October 2022. On 10 March 2023 the Offer was fully subscribed and closed to further applications raising £11.5 million including the overallotment facility. The Board was pleased to see the high level of demand for the Company’s shares from existing and new shareholders.The AGM will be held virtually at noon on 22 November 2023 via the Lumi platform. Information on how to participate in the live webcast can be found on the Manager’s website www.albion.capital/vct-hub/agms-eventsFollowing a formal and rigorous audit tender process, the intention is to appoint Johnston Carmichael LLP (“Johnston Carmichael”) as the new Auditor of the Company in October 2023. Johnston Carmichael will conduct the audit of the Annual Report and Financial Statements for the year ended 30 June 2024. Shareholders will be asked to confirm the appointment of Johnston Carmichael at the forthcoming Annual General Meeting. BDO conducted the audit of the Annual Report and Financial Statements for the year ended 30 June 2023 and their report can be found on pages 64 to 70 of the full Annual Report and Financial Statements. The Board would like to express their gratitude to BDO for their diligent service over 16 years. Further details on the tender process can be found in the Statement of corporate governance on page 56 of the full Annual Report and Financial Statements.The next Shareholder Seminar will be held at the Royal College of Surgeons, Lincoln’s Inn Fields, London WC2A 3PE on 15 November 2023 and the Board will be delighted to see as many shareholders as possible at the event. The Board and Manager are keen to interact with shareholders and look forward to sharing with you further portfolio updates, as well as answering any questions. Places are limited and to reserve a place please email [email protected] with subject heading “Shareholder Seminar” and include your full name. You will receive an email confirmation of your place, subject to availability.The Board is encouraged by the positive results for the year just ended in what are uncertain times, principally outside the Company’s control. The Board believes the portfolio is well diversified in terms of maturity and target sectors, many of which do not depend on consumer sentiment. Therefore, the Board continues to have confidence that the Company is well positioned in the current economic environment to generate long term value for shareholders.Chairman
11 October 2023As a Venture Capital Trust, the Company has no employees and has outsourced the management of all its operations to Albion Capital Group LLP, including secretarial and administrative services. Further details of the Investment Management Agreement can be found below.The pie charts at the end of this announcement are a useful way of showing the split of the portfolio valuation as at 30 June 2023 by: sector; stage of investment measured by revenues; and size measured by number of employees. Details of the principal investments made by the Company are shown in the Portfolio of investments on pages 27 to 29 of the full Annual Report and Financial Statements.The analysis of the Company’s investment portfolio shows that it is well diversified and spread across the FinTech, healthcare (including digital healthcare), software and technology, renewable energy, and education sectors.        
The net cash flow for the Company has been a net outflow of £3,018,000 for the year (2022: inflow of £598,000), reflecting new investments, dividends paid, ongoing expenses and the buy-back of shares, offset by disposal proceeds, loan stock income, and the issue of new Ordinary shares under the Top Up Offer.A detailed review of the Company’s business during the year is contained in the Chairman’s statement above.The Company’s financial results for the year ended 30 June 2023 demonstrate that the portfolio remains well balanced across sectors and risk classes, and is largely weathering the ongoing global issues caused as a result of high levels of interest rates and inflation, and other economic headwinds. Although there remains much uncertainty, the Board considers that the current portfolio and the pipeline of opportunities should enable the Company to maintain a predictable stream of dividend payments to shareholders, as well as delivering long term growth for shareholders. Further details on the Company’s outlook and prospects can be found in the Chairman’s statement above.The Directors believe that the following KPIs (some of which are APMs), which are typical for Venture Capital Trusts, used in its own assessment of the Company, will provide shareholders with sufficient information to assess how effectively the Company is applying its investment policy to meet its objectives. The Directors are satisfied that the results shown in the following KPIs and APMs give a good indication that the Company is achieving its investment objective and policy. These are:The ongoing charges ratio for the year ended 30 June 2023 was 2.20% (2022: 2.18%). The ongoing charges ratio has been calculated using The Association of Investment Companies’ (“AIC”) recommended methodology. This figure shows shareholders the total recurring annual running expenses (including investment management fees charged to capital reserve, but excluding any performance incentive fees) as a percentage of the average net assets attributable to shareholders. The Directors expect the ongoing charges ratio for the year ahead to remain stable at approximately 2.20%.The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. In order to maintain its status under Venture Capital Trust legislation, a VCT must comply on a continuing basis with the provisions of Section 274 of the Income Tax Act 2007, details of which are provided in the Directors’ report on page 46 of the full Annual Report and Financial Statements.As defined by the Articles of Association, the Company’s maximum exposure in relation to gearing is restricted to the adjusted share capital and reserves. The Directors do not currently have any intention to utilise gearing for the Company.The Company has delegated the investment management of the portfolio to the Manager, Albion Capital Group LLP, which is authorised and regulated by the Financial Conduct Authority. The Manager also provides company secretarial and other accounting and administrative support to the Company.Under the Investment Management Agreement (“IMA”), the Manager provides investment management, secretarial and administrative services to the Company. The IMA can be terminated by either party on 12 months’ notice and is subject to earlier termination in the event of certain breaches or on the insolvency of either party. The Manager is paid an annual fee equal to 1.75% of the net asset value of the Company, and an annual secretarial and administrative fee of £50,000 per annum. Total annual expenses, including the management fee, are limited to 3% of the net asset value.In order to align the interests of the Manager and shareholders with regards to generating positive returns, the Manager is entitled to charge an incentive fee in the event that the returns exceed minimum target levels. Under the incentive arrangements, the Company will pay an incentive fee to the Manager of an amount equal to 20% of such excess return that is calculated for each financial year.The Company co-invests with other Venture Capital Trusts and funds managed by the Manager. Allocation of investments is on the basis of an allocation agreement which is based, inter alia, on the ratio of funds available for investment.The Board has evaluated the performance of the Manager based on:
•        the returns generated by the Company;
•        the continuing achievement of the HMRC tests for VCT status;
•        the long term prospects of the current portfolio of investments;
•        the management of treasury, including use of buy-backs and participation in fund raising; and
•    benchmarking the performance of the Manager to other service providers including the performance of other VCTs that the Manager is responsible for managing.The Board appointed the Manager as the Company’s AIFM in 2014 as required by the AIFMD. The Manager is a full-scope Alternative Investment Fund Manager under the AIFMD. Ocorian Depositary (UK) Limited is the appointed Depositary and oversees the custody and cash arrangements and provides other AIFMD duties with respect to the Company.The Consumer Duty came into effect from 31 July 2023. These new rules set a higher standard of consumer protection in financial services. The Manager as AIFM is within scope of the FCA’s Consumer Duty, but the Company itself is not.Under Section 172 of the Companies Act 2006, the Board has a duty to promote the success of the Company for the benefit of its members as a whole in both the long and short term, having regard to the interests of other stakeholders in the Company, such as suppliers, and to do so with an understanding of the impact on the community and environment and with high standards of business conduct, which includes acting fairly between members of the Company.The Board recognises the requirement under section 414C of the Act to detail information about social and community issues, employees and human rights; including any policies it has in relation to these matters and effectiveness of these policies. As an externally managed investment company with no employees, the Company has no formal policies in these matters, however, it is at the core of its responsible investment strategy as detailed above.The General Data Protection Regulation (“GDPR”) has the objective of unifying data privacy requirements across the European Union. GDPR forms part of the UK law after Brexit, now known as UK GDPR. The Manager continues to take action to ensure that the Manager and the Company are compliant with the regulation.The Company has adopted a number of further policies relating to:The Board carries out a regular review of the risk environment in which the Company operates, together with changes to the environment and individual risks. The Board also identifies emerging risks which might impact on the Company. In the period the most noticeable risks have been rising interest rates and inflation, caused in part as a result of the geopolitical tensions, and pricing volatility in world markets, particularly affecting growth stocks. The full impact of these risks are likely to continue to be uncertain for some time.The Audit and Risk Committee reviews the Internal Audit Reports prepared by the Manager’s internal auditors, Azets and has access to their internal audit partner to whom it can ask specific detailed questions in order to satisfy itself that the Manager has strong systems and controls in place including those in relation to business continuity and cyber security, as mentioned below.
Ocorian Depositary (UK) Limited is the Company’s Depositary, appointed to oversee the custody and cash arrangements and provide other AIFMD duties. The Board reviews the quarterly reports prepared by Ocorian Depositary (UK) Limited to ensure that the Manager is adhering to its policies and procedures as required by the AIFMD.
In addition, the Board annually reviews the performance of its key service providers, particularly the Manager, to ensure they continue to have the necessary expertise and resources to deliver the Company’s investment objective and policy. The Manager and other service providers have also demonstrated to the Board that there is no undue reliance placed upon any one individual.The Manager takes cyber risks seriously and the need to guard against these are in the Service level agreement with our key outsourced service provider. During the year, further investment was made in the Manager’s IT infrastructure and awareness training.
In addition, the Manager also has a business continuity plan which includes off-site storage of records and remote access provisions. This is revised and tested annually and is also subject to Compliance, Group Risk and Internal Audit reporting. Penetration tests are also carried out to ensure that IT systems are not susceptible to cyber-attacks.
The Manager’s Internal Auditor performs reviews on IT general controls and data confidentiality and makes recommendations where necessary. The most recent internal audit focused specifically on IT systems, and was completed in February 2023.In accordance with the FRC UK Corporate Governance Code published in 2018 and provision 36 of the AIC Code of Corporate Governance, the Directors have assessed the prospects of the Company over three years to 30 June 2026. The Directors believe that three years is a reasonable period in which they can assess the ability of the Company to continue to operate and meet its liabilities as they fall due. This is the period used by the Board as part of its strategic planning process, which includes: the estimated timelines for finding, assessing and completing investments; the potential impact of any new regulations; and the availability of cash.Chairman
11 October 2023Chairman30 June 202330 June 2022Chairmancapital30 June2023£’00030 June
2022
£’000The Financial Statements have been prepared in accordance with applicable United Kingdom law and accounting standards, including Financial Reporting Standard 102 (“FRS 102”), and with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (“SORP”) issued by The Association of Investment Companies (“AIC”). The Financial Statements have been prepared on a going concern basis and further details can be found in the Directors’ report on page 45 of the full Annual Report and Financial Statements.Fixed asset investmentsThe Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed, and its performance evaluated on a fair value basis, in accordance with a documented investment policy, and information about the portfolio is provided internally on that basis to the Board.Receivables (including debtors due after more than one year), payables and cash are carried at amortised cost, in accordance with FRS 102. Deferred consideration meets the definition of a financing transaction held at amortised cost, and interest will be recognised through capital over the credit period using the effective interest method. There are no financial liabilities other than payables.Dividend incomeDividend income is included in revenue when the investment is quoted ex-dividend.Fixed returns on non-equity shares and debt securities are recognised when the Company’s right to receive payment and expect settlement is established. Where interest is rolled up and/or payable at redemption then it is recognised as income unless there is reasonable doubt as to its receipt.Funds income is recognised on an accruals basis using the agreed rate of interest.Interest income is recognised on an accruals basis using the rate of interest agreed with the bank.All expenses have been accounted for on an accruals basis. Expenses are charged through the other distributable reserve except the following which are charged through the realised capital reserve:Taxation is applied on a current basis in accordance with FRS 102. Current tax is tax payable (refundable) in respect of the taxable profit (tax loss) for the current period or past reporting periods using the tax rates and laws that have been enacted or substantively enacted at the financial reporting date. Taxation associated with capital expenses is applied in accordance with the SORP.Called-up share capitalThis accounts for the nominal value of the Company’s shares.This accounts for the difference between the price paid for shares and the nominal value of the shares, less issue costs and transfers on cancellation of share premium once consent of the court is given.This reserve accounts for amounts by which the issued share capital is diminished through the repurchase and cancellation of the Company’s own shares, less any transfers on cancellation of share premium once consent of the court is given.Increases and decreases in the valuation of investments held at the year end against cost are included in this reserve.The following are disclosed in this reserve:The special reserve, treasury share reserve and the revenue reserve were combined in 2012 to form a single reserve named other distributable reserve.Dividends by the Company are accounted for when the liability to make the payment (record date) has been established.The Directors are of the opinion that the Company is engaged in a single operating segment of business, being investment in smaller companies principally based in the UK.30 June 202330 June 202230 June 202330 June 202230 June 202330 June 2022The amounts paid to and on behalf of the Directors during the year are as follows:30 June 2023£’00030 June 2022
£’00030 June 2023£’00030 June 2022
£’000(ii)         Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate and allocating the relief between revenue and capital in accordance with the SORP.
(iii)         The Company has excess management expenses of £21,392,000 (2022: £20,279,000) that are available for offset against future profits. A deferred tax asset of £5,348,000 (2022: £3,853,000) has not been recognised in respect of these losses as they will be recoverable only to the extent that the Company has sufficient future taxable profits.30 June 202330 June 2022£’000£’000                £’000£’000Movement in unrealised gains30 June 2023£’000(pence per share)The principal activity of the Company is to select and hold a portfolio of investments in unquoted securities. Although the Company, through the Manager, will, in some cases, be represented on the board of the portfolio company, it will not take a controlling interest or become involved in the management of a portfolio company. The size and structure of the companies with unquoted securities may result in certain holdings in the portfolio representing a participating interest without there being any partnership, joint venture or management consortium agreement.£’000(£’000)(pence per share)(£’000)(pence per share)(£’000)(pence per share)(£’000)(pence per share)As a Venture Capital Trust, it is the Company’s specific nature to evaluate the market risk of its portfolio in unquoted companies. Market risk is the exposure of the Company to the revaluation and devaluation of investments as a result of macroeconomic changes. The main driver of market risk is the dynamics of market quoted comparators, as well as the financial and operational performance of portfolio companies. The Board seeks to reduce this risk by having a spread of investments across a variety of sectors. More details on the sectors the Company invests in can be found in the pie chart at the end of this announcement.Investment risk (including investment price risk) is the risk that the fair value of future investment cash flows will fluctuate due to factors specific to an investment instrument or to a market in similar instruments. The management of risk within the venture capital portfolio is addressed through careful investment selection, by diversification across different industry segments, by maintaining a wide spread of holdings in terms of financing stage and by limitation of the size of individual holdings. The Manager receives management accounts from portfolio companies and members of the investment management team often sit on the boards of unquoted portfolio companies; this enables the close identification, monitoring and management of investment risk. The Directors monitor the Manager’s compliance with the investment policy, review and agree policies for managing this risk and monitor the overall level of risk on the investment portfolio on a regular basis.It is the Company’s policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On the basis of the Company’s analysis, it is estimated that a rise of 1% in all interest rates would have increased total return before tax for the year by approximately £265,000 (2022: £139,000). Furthermore, it was considered that a material fall in interest rates below current levels during the year would have been unlikely.£’000£’000£’000£’000£’000£’000Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company is exposed to credit risk through its receivables, investment in unquoted loan stock, and through the holding of cash on deposit with banks.Liquid assets are held as cash on current account, on deposit or short term money market account. Under the terms of its Articles, the Company has the ability to borrow up to the amount of its adjusted capital and reserves of the latest published audited Balance sheet, which amounts to £91,615,000 as at 30 June 2023 (2022: £83,700,000).£’000£’000£’000£’000£’000£’000£’000£’000All the Company’s financial assets and liabilities as at 30 June 2023 are stated at fair value as determined by the Directors, with the exception of receivables, payables and cash which are carried at amortised cost. There are no financial liabilities other than payables. The Company’s financial liabilities are all non-interest bearing. It is the Directors’ opinion that the book value of the financial liabilities is not materially different to the fair value and all are payable within one year.The Company had no financial commitments in respect of investments at 30 June 2023 (2022: £nil).Since the year end, the Company has completed the following material investment transactions:Other than transactions with the Manager as disclosed in note 5, and the Directors’ remuneration disclosed in the Directors’ remuneration report on page 61 of the full Annual Report and Financial Statements, there are no other related party transactions or balances requiring disclosure.The information set out in this announcement does not constitute the Company’s statutory accounts within the terms of section 434 of the Companies Act 2006 for the years ended 30 June 2023 and 30 June 2022, and is derived from the statutory accounts for those financial years, which have been, or in the case of the accounts for the year ended 30 June 2023, which will be, delivered to the Registrar of Companies. The Auditor reported on those accounts; the reports were unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006.The full audited Annual Report and Financial Statements are being sent to shareholders and copies will be made available to the public at the registered office of the Company, Companies House, the National Storage Mechanism and also electronically at www.albion.capital/funds/CRWN, where the Report can be accessed via a link in the ‘Financial Reports and Circulars’ section.
(GlobeNewsWire)