CRWN Albion Crown Vct Plc

share during the year, offset by the total return for the year of 2.28 
pence per share. 
 
   The consolidated cash flow for the business has been a net outflow of 
GBP1,314,000 for the year (2013: inflow GBP1,039,000) due to the 
purchase of investments, dividends paid and the purchase of shares for 
cancellation and treasury offset by cash generated from operations, the 
disposal of investments and the issue of new share capital. 
 
   Review of business and future changes 
 
   A review of the Company's business during the year and future prospects 
is contained in the Chairman's statement. 
 
   In addition to the companies mentioned in the Chairman's statement, 
companies that are particularly worth noting include Lowcosttravelgroup, 
the online travel specialist, which has seen strong growth over the past 
year, particularly in Continental Europe; Mi-Pay Limited which merged 
its business with a company quoted on the Alternative Investment Market 
(AIM) on the London Stock Exchange, creating a combined business which 
is now called Mi-Pay Group Plc; and Process Systems Enterprise (computer 
simulation of complex industrial processes) continues to grow revenue at 
20 per cent. per annum - and counts five out of the top six oil majors 
as its clients.  Against this, it is disappointing that Helveta has gone 
into administration, following the removal of support for forestry 
projects by the international aid agencies. 
 
   The Directors do not foresee any major changes in the activity 
undertaken by the Company in the current year and have laid out their 
expectations on the direction of the portfolio above. The Company 
continues with its objective to invest in unquoted companies throughout 
the United Kingdom with a view to providing both capital growth and a 
reliable dividend income to shareholders over the long term. 
 
   Details of significant events which have occurred since the end of the 
financial year are listed in note 19. Details of transactions with the 
Manager are shown in note 4. The subsidiary undertakings affecting the 
profits and net assets of the Group in the year are listed in note 11 to 
the Financial Statements. 
 
   Future prospects 
 
   The key drivers for returns within the portfolio are those sectors that 
have exposure to longer term growth trends. These include healthcare in 
an ageing population, sustainable energy against a background of climate 
change, and the developing use of information technology in an 
environment of universal information. The portfolio is well positioned 
to take advantage of these changes. 
 
   Key performance indicators 
 
   The Directors believe that the following key performance indicators, 
which are typical for venture capital trusts, will provide shareholders 
with sufficient information to assess how effectively the Company has 
been applying its investment policy to meet its objectives. These are: 
 
   1.     Increase in total shareholder value 
 
   The graph on page 9 of the full Annual Report and Financial Statements 
shows the increase in total shareholder value. 
 
   Total shareholder value increased to 78.77 (2013: 76.49) pence per share 
for the year ended 30 June 2014. 
 
   2.     Dividend distributions 
 
   The graph on page 9 of the full Annual Report and Financial Statements 
shows the dividend distributions since Albion Ventures LLP became 
Manager on 6 April 2005. 
 
   Dividends paid in respect of the year ended 30 June 2014 were 2.50 pence 
per share (2013: 2.50 pence per share), in line with the Board's 
dividend objective. Cumulative dividends paid since launch (on 18 
January 1998) amount to 46.73 pence per share. 
 
   3.     Ongoing charges 
 
   The ongoing charges ratio for the year to 30 June 2014 was 2.7 per cent. 
(2013: 2.8 per cent.). 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) as a percentage of the average net assets attributable 
to shareholders. The Directors expect the ongoing charges ratio for the 
year ahead to be approximately 2.7 per cent. 
 
   4.     Running yield 
 
   The running yield on the portfolio (gross income divided by the average 
net asset value) for the year to 30 June 2014 was 3.4 per cent. (2013: 
3.7 per cent.). 
 
   VCT regulation 
 
   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 
22 of the full Annual Report and Financial Statements. 
 
   The relevant tests to measure compliance have been carried out and 
independently reviewed for the year ended 30 June 2014. These showed 
that the Company has complied with all tests and continues to do so. 
 
   As part of the Government's wider review of the VCT regime, new rules 
have been introduced under the Finance Act 2014, which include: 
 
 
   -- allowing investors to subscribe for shares via nominee accounts; 
 
   -- restricting individuals' entitlement to VCT income tax relief where 
      investments have been made within six months of a disposal of shares in 
      the same VCT; and 
 
   -- preventing VCTs from returning capital that does not relate to profits on 
      investments within three years of the end of the accounting period in 
      which shares were issued to investors. 
 
   Gearing 
 
   As defined by the Articles of Association, the Company's maximum 
exposure in relation to gearing is restricted to 10 per cent. of the 
adjusted share capital and reserves. The Directors do not currently have 
any intention to utilise long term gearing. 
 
   Management agreement 
 
   The Company has delegated the investment management of the portfolio to 
Albion Ventures LLP, which is authorised and regulated by the Financial 
Conduct Authority. Albion Ventures LLP also provides company secretarial 
and other accounting and administrative support to the Group. The 
management agreement 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. 
 
   Under the terms of the management agreement, the Manager is paid an 
annual fee equal to 1.75 per cent. of the net asset value of the Company 
plus GBP50,000 fee per annum for administrative and secretarial 
services. Total normal running costs, including the management fee, are 
limited to 3.5 per cent. of the net asset value. The Manager is entitled 
to an arrangement fee, payable by each portfolio company in which the 
Company invests, in the region of 2.0 per cent. on each investment made, 
and is also entitled to non-executive director fees when placing an 
investment executive from Albion Ventures LLP on the portfolio company 
Board. 
 
   Further details of fees paid to the Manager can be found in note 4. 
 
   Management performance incentive 
 
   In order to provide the Manager with an incentive to maximise the return 
to investors, the Manager is entitled to charge an incentive fee in the 
event that the returns exceed minimum target levels per share. 
 
   The target level requires that the aggregate of the growth in the net 
asset value per share and dividends paid by the Company or declared by 
the Board and approved by the shareholders during the relevant period 
(both revenue and capital), compared with the previous accounting date, 
exceeds the average base rate of the Royal Bank of Scotland plc plus 2.0 
per cent. If the target return is not achieved in a period, the 
cumulative shortfall is carried forward to the next accounting period 
and has to be made up before an incentive fee becomes payable. 
 
   There was no management performance incentive fee payable during the 
year (2013: nil). As at 30 June 2014 the cumulative shortfall of the 
target return was 7.42 pence per share and this amount needs to be made 
up in the next accounting period before an incentive fee becomes 
payable. 
 
   Evaluation of the Manager 
 
   The Board has evaluated the performance of the Manager based on the 
returns generated by the Company, the continuing achievement of the 70 
per cent. investment requirement for venture capital trust status, the 
long term prospects of current investments, a review of the management 
agreement and the services provided therein, and benchmarking the 
performance of the Manager to other service providers. The Board 
believes that it is in the interest of shareholders as a whole, and of 
the Company, to continue the appointment of the Manager for the 
forthcoming year. 
 
   Alternative Investment Fund Managers Directive ("AIFMD") 
 
   The Board has considered the impact on your Company of the AIFMD, an EU 
Directive that came into force in July 2013 to regulate the Managers of 
Alternative Investment Funds. The Board has agreed to appoint Albion 
Ventures LLP as the Company's AIFM, as required by the AIFMD. Albion 
Ventures LLP's registration as an AIFM was approved by the Financial 
Conduct Authority on 3 June 2014. This will not impact on the day-to-day 
investment activities. 
 
   Discount management and share buy-back policy 
 
   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 VCT's interest and it is the Board's 
intention for such buy-backs to be in the region of a 5 per cent. 
discount to net asset value, so far as market conditions and liquidity 
permit. 
 
   Further details of shares bought back during the year ended 30 June 2014 
can be found in note 14 of the Financial Statements. 
 

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