QUESTER VCT 5 PLC ("the Company")
Summary of results for the year ended 31 December 2004
Per Ordinary Share 2004 2003 2002
(pence)
(69 weeks)
Capital Values
Net asset value 91.6 92.7 92.8
Share price 85.5 96.0 96.0
Return and Dividends
Dividend - 1.0 0.5
Cumulative dividend 1.5 1.5 0.5
Total Return* 93.1 94.2 93.3
*Net asset value plus cumulative dividend
Shareholder information
Annual General Meeting 11.30 a.m. 19 April 2005
CHAIRMAN'S STATEMENT
INTRODUCTION
During the year ended 31 December 2004 steady progress has been made towards
the completion
of Quester VCT 5's initial investment phase. The year has seen favourable
conditions for investment in venture capital, and in technology-related
investments in particular. New investments completed during the year have
included opportunities resulting from Quester's association with the research
activities of several leading UK universities, as well as investments in more
established companies and companies raising capital on AIM.
INVESTMENTS COMPLETED
At 31 December 2004 the venture capital portfolio of Quester VCT 5 included 23
companies, including 18 unquoted companies and five companies whose shares are
traded on AIM.
In the current economic environment, the Board considers that a strategy of
investing in highgrowth sectors within the economy offers the best opportunity
for the achievement of superior investment returns. Accordingly, the portfolio
of Quester VCT 5 includes a strong weighting in the information and
communication technology ("ICT") and the healthcare and life sciences sectors.
Within these sectors, the portfolio is diversified and the companies that have
been selected operate in a range of different markets.
The unquoted investments of Quester VCT 5 have generally been made alongside
Quester's fund for institutional investors, the Quester Venture Partnership,
and other Quester funds. These coinvestment arrangements are appropriate to the
needs of ambitious high growth companies, which may require significant amounts
of capital to develop technology-based products or to grow their businesses
internationally.
PROGRESS OF THE PORTFOLIO
At the end of this third year, the portfolio still contains a relatively high
proportion of early stage businesses. Shareholders will appreciate that venture
capital is a long term investment which, in the first few years, may often show
a drop in net asset value before any significant uplift.
The Directors believe that Quester VCT 5's net asset value of 91.6p per share
at 31 December 2004 reflects a satisfactory performance at this stage in the
life of the Company. The net asset value reflects the successful realisation of
two AIM-traded investments as well as the write-off or writing down in value of
certain investments that have underperformed against plan. Among the unquoted
investments that are currently held at cost, a number of the companies have
shown encouraging underlying business progress, but it is too soon for this to
be reflected in their valuations.
Across the portfolio as a whole, the Board considers that progress is
satisfactory at this stage in Quester VCT 5's development and that there is
substantial upside potential in the longer term.
REALISATIONS
It is encouraging to report that successful realisations of two venture capital
investments were achieved during the year, together producing realised gains of
�433,000.
NET ASSETS, REVENUE AND DIVIDENDS
The net asset value per share of the Company was reduced by 1.2% over the year,
from 92.7p at 31 December 2003 to 91.6p at 31 December 2004. The movement is
summarised as follows:
�'000 Pence per
share
Net asset value at 31 December 2003 20,861 92.7
Income 618 2.6
Investment management fee, other expenses and tax (827) (3.4)
Realised net gains on disposal of investments 399 1.7
Write-off of investments (250) (1.1)
Net unrealised loss on revaluation of investments (235) (1.0)
Net proceeds from issue of shares 1,393 -
Shares issued under the dividend re-investment scheme 34 -
Share buy-backs (89) 0.1
Net asset value at 31 December 2004 21,904 91.6
The statement of total return for the year shows a loss of �295,000, equivalent
to 1.2p per share.
This comprises a loss of �362,000 on the capital account, partially offset by a
profit of �67,000 on revenue account (0.3p per share). Against this background,
the Directors do not recommend a final dividend.
CHANGE OF CORPORATE BROKER AND MARKET MAKERS
In July 2004 the Company changed its corporate broker to Noble & Company
Limited. Following this change, Winterflood Securities Limited became market
makers in the Company's shares.
FURTHER OFFERS FOR SUBSCRIPTION
As shareholders will already be aware, on 23 December 2004, the Company
launched further offers for subscription of up to 10,928,962 new ordinary
shares in the Company. As at 8 March 2005, the total number of ordinary shares
issued pursuant to these offers was 386,682. The 2004/05 and 2005/06 offers are
expected to remain open until 4 April 2005 and 30 June 2005, respectively.
OUTLOOK
Over the coming year further progress may be expected towards completion of
Quester VCT 5's initial investment phase, and further diversification of the
portfolio with the benefit of the additional capital being raised under the
current offers.
The higher level of merger and acquisition ("M&A") activity currently being
shown by larger companies and stock market conditions more conducive to the
achievement of successful flotations, particularly for smaller companies on
AIM, point to the opportunities that may be available in due course for
successful sales of businesses such as those in which Quester VCT 5 has
invested.
Bill Passmore
Chairman
16 March 2005
INVESTMENT MANAGER'S REPORT
PROGRESS WITH VENTURE CAPITAL INVESTMENT
During the year ended 31 December 2004, eight new investments were completed at
an initial cost of �1.6 million.
The new investments included three in unquoted companies: two in software,
Argelcom Limited (�36,000) and Celona Technologies Limited (�129,000); and one
in consumer services, HTC Healthcare Group plc (�214,000).
In pursuit of the Company's strategy to invest in attractive companies raising
capital on AIM, a total of �1.2 million was invested in five companies covering
a range of different sectors: Allergy Therapeutics plc (�500,000), Offshore
Hydrocarbon Mapping plc (�175,000), Polaron plc (�250,000), Public Recruitment
Group plc (�250,000) and Quadnetics Group plc (�57,000).
An additional �0.7 million was invested in eight of the existing portfolio
companies, either as further tranches of originally agreed commitment or as
follow-on investment. The follow-on investments included additional commitments
to Advanced Valve Technologies Limited (�154,000), Anadigm Limited (�150,000)
and Antenova Limited (�177,000).
As previously reported, the portfolio that we have been building for Quester
VCT 5 is an early stage venture capital portfolio, consisting largely of
technology-related companies serving markets with considerable potential over
the long term. The summary of the businesses of the ten largest investments
gives a flavour of the significant commercial opportunities that companies in
the portfolio are seeking to address.
It is emphasised, however, that most of the companies concerned are still at a
relatively early stage of development. For those involved in technology-related
opportunities, there may at this stage still be only limited, if any, sales
revenues and a reported financial loss. This pattern of financial results
should be appreciated as typical of early stage companies exploiting
technology-related opportunities and their business plans.
REALISATIONS
We are pleased to be able to report that successful realisations of two venture
capital investments were achieved during the year:
The holding in Amino Technologies plc, which had been acquired for �143,000 in
November 2003 as an unquoted investment, was sold in tranches following the
admission of the company's shares to trading on AIM in June 2004 and
subsequently, realising total proceeds of �522,000 and a gain of �379,000.
The holding in Offshore Hydrocarbon Mapping plc, which had been acquired for �
175,000 in March 2004 in a placing upon the admission of the company's shares
to trading on AIM, was sold in a series of market transactions up to July 2004,
realising a gain of �54,000.
A BALANCED PORTFOLIO
The portfolio so far established is balanced by sector and well spread. A
summary of the sectors covered by the portfolio at 31 December 2004 is provided
in the table below:
Industry sector Existing venture Valuation Number of
capital investments
portfolio at
valuation
% �'000
Healthcare & life sciences 41.2 2,834 7
Software 16.6 1,141 5
Electronics & communications 15.5 1,068 3
Business services 9.2 634 2
Industrial products 8.8 605 3
Semiconductors 5.6 383 2
Consumer services 3.1 214 1
100.0 6,879 23
RESERVES FOR FOLLOW-ON INVESTMENT
Many of the unquoted investments in Quester VCT 5's portfolio are early stage
companies in the ICT, healthcare and life sciences sectors, serving markets
with considerable growth potential over the long term. These young companies
generally will require further rounds of finance as they grow.
It is important that Quester VCT 5 should be in a position to contribute to
this funding process, provided the companies concerned continue to make
satisfactory progress. Accordingly, Quester VCT 5 holds reserves for further
investment in existing portfolio companies. Taking these reserves for possible
future follow-on investment into account, 53.4% of the fund (at cost) is now
allocated to the existing venture capital investments.
�'000 % of fund
(at cost)
Current portfolio at cost 7,345 33.4%
Outstanding commitments: existing portfolio companies 138 0.6%
Amounts reserved for follow-on investment: existing 4,266 19.4%
portfolio companies
11,749 53.4%
Under the VCT legislation, at least 70% of the Company's investments have to be
represented by qualifying holdings. In order to comply with this requirement
and maintain an appropriate level of reserves, �8.1 million was held in
non-interest bearing cash accounts at the year end (this balance is expected to
reduce significantly over the current year as further qualifying investments
are made).
This results in a lower level of interest income but is consistent with
managing the venture capital portfolio appropriately for current market
conditions and long term capital growth.
VALUATION OF THE VENTURE CAPITAL PORTFOLIO
The venture capital investments have been valued in line with the Company's
accounting policies, which are based on the valuation guidelines issued by the
British Venture Capital Association ("BVCA") in June 2003.
Holdings in companies whose shares are traded on AIM are valued on the basis of
mid-market prices on 31 December 2004. It was disappointing that AIT Group plc,
which had reported satisfactory results for its financial year ended 31 March
2004, was obliged in August 2004 to issue an announcement that revenue and
profit expectations for the year to 31 March 2005 would be lower than
anticipated. The share price fell following that announcement and stood at 31p
as at 31 December 2004. For Quester VCT 5, the effect was a reduction of �
386,000 over the year in carrying value of this investment (the valuation at 31
December 2004 being �405,000 against cost of �565,000). Other AIM investments
showed a net appreciation in value of �126,000.
Where companies in the unquoted portfolio have fallen behind plan, provisions
have been made against the cost of the investments concerned. The provisions
total �553,000 in respect of five unquoted investments: Anadigm Limited (�
39,000), Arithmatica Limited (�103,000), Digital Union UK Limited (�72,000),
Mesophotonics Limited (�89,000) and Reqio Limited (�250,000). The investment in
Reqio Limited has been treated in accounting terms as a write-off, although
some return may yet be achieved from this investment.
LISTED EQUITY AND BOND PORTFOLIOS
At 31 December 2004 the Company held a portfolio of bonds to a value of �2.5
million and a portfolio of listed equities valued at �3.2 million (showing an
unrealised capital profit of �384,000).
CONCLUSION
As at the date of this report, the initial investment phase of the Company is
well progressed. The total number of venture capital investments is expected to
increase in due course from the current 23 to around 30, dependent on the level
of funds raised from the current offers for subscription.
Quester Capital Management Limited
Manager
16 March 2005
FUND SUMMARY AS AT 31 DECEMBER 2004
Quoted venture Industry sector Original Valuation Equity % % of fund
capital
Investments Cost held by value
�'000 �'000
AIT Group plc Software 565 405 2.9% 1.8%
Allergy Therapeutics Healthcare and life 500 627 1.1% 2.9%
plc sciences
Polaron plc Industrial products 250 259 1.2% 1.2%
Public Recruitment Business services 250 234 0.8% 1.1%
Group plc
Quadnetics Group plc Industrial products 57 63 0.2% 0.3%
Total quoted venture capital investments 1,622 1,588 7.3%
Unquoted venture
capital investments
Advanced Valve Industrial products 413 283 10.2% 1.3%
Technologies Limited
Anadigm Limited Semiconductors 237 199 1.7% 0.9%
Antenova Limited Electronics & 402 402 2.2% 1.8%
communications
Argelcom Limited Software 36 36 2.5% 0.2%
Arithmatica Limited Semiconductors 287 184 2.5% 0.9%
Avidex Limited Healthcare & life 440 440 1.5% 2.0%
sciences
Azea Networks, Inc Electronics & 398 398 2.8% 1.8%
communications
Celona Technologies Software 129 129 3.6% 0.6%
Limited
Cyclacel Group plc Healthcare & life 500 500 0.6% 2.3%
sciences
Digital Union UK Business software 243 171 5.3% 0.8%
Limited
Footfall Limited Business services 400 400 3.1% 1.8%
HTC Healthcare Group Consumer services 214 214 3.5% 1.0%
plc
Lorantis Holdings Healthcare & life 400 400 0.9% 1.8%
Limited sciences
Mesophotonics Limited Electronics & 357 268 2.4% 1.2%
communications
Oxford Immunotec Healthcare & life 250 250 3.8% 1.1%
Limited sciences
Oxxon Therapeutics Healthcare & life 367 367 1.3% 1.7%
Holdings, Inc. sciences
Workshare Limited Software 400 400 2.6% 1.8%
Xention Discovery Healthcare & life 250 250 2.4% 1.1%
Limited sciences
Total unquoted venture capital 5,723 5,291 24.1%
investments
Total venture capital 7,345 6,879 31.4%
investments
Listed fixed interest 2,512 2,517 11.5%
investments
Listed equity investments 2,835 3,219 14.7%
Total investments 12,692 12,615 57.6%
Cash and other net assets 9,289 9,289 42.4%
Net assets 21,981 21,904 100.0%
STATEMENT OF TOTAL RETURN (incorporating the revenue account)
FOR THE YEAR ENDED 31 DECEMBER 2004
Notes 2004 2004 2004 2003 2003 2003
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
(Loss)/profit on - (86) (86) - 64 64
investments
Income 1 618 - 618 647 - 647
Investment management 2 (276) (276) (552) (196) (196) (392)
fee
Other expenses 3 (277) - (277) (227) - (227)
Return on ordinary 65 (362) (297) 224 (132) 92
activities before tax
Tax on ordinary 2 - 2 - - -
activities
Return on ordinary 67 (362) (295) 224 (132) 92
activities after tax
Dividends proposed - - - (221) - (221)
Transfer to/(from) 67 (362) (295) 3 (132) (129)
reserves
Return per share 5 0.3p (1.5)p (1.2)p 1.0p (0.6)p (0.4)p
The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
The Company has only one class of business and derives its income from
investments made in shares and securities and from bank deposits.
The accompanying notes are an integral part of this statement.
BALANCE SHEET
AS AT 31 DECEMBER 2004
2004 2003
Note �'000 �'000
Fixed assets
Investments 12,615 18,288
Current assets
Debtors 56 627
Cash at bank 9,373 2,354
9,429 2,981
Creditors (amounts falling due within one year) (94) (362)
Net current assets 9,335 2,619
Creditors (amounts falling due in over one (46) (46)
year)
Net assets 21,904 20,861
Capital and reserves
Called-up equity share capital 239 225
Share premium 4,992 3,580
Special reserve 16,544 17,390
Capital reserve - realised 130 (527)
- unrealised (77) 184
Revenue reserve 76 9
Equity shareholders' funds 21,904 20,861
Net asset value per share 6 91.6p 92.7p
The financial statements were approved by the directors on 16 March 2005 and
were signed on their behalf by:
Bill Passmore
Chairman
The accompanying notes are an integral part of this statement.
CASHFLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2004
2004 2003
�'000 �'000
Cash outflow from operating activities 557 92
Corporation tax refund/(paid) 2 (2)
Financial investment
Purchase of venture capital investments (2,348) (3,920)
Purchase of listed equities and fixed interest (6,285) (8,951)
investments
Sale of venture capital investments 776 18
Sale/redemption of listed equity and fixed 13,200 10,121
interest investments
Total financial investment 5,343 (2,732)
Equity dividends paid (221) (93)
Financing
Issue of ordinary shares pursuant to the offers 1,446 2,854
for subscription made during the year
Issue of shares in accordance with the terms of 34 13
the dividend reinvestment scheme
Share issue expenses (53) (101)
Buy back of ordinary shares (89) (23)
Total financing 1,338 2,743
Increase in cash for the period 7,019 8
Reconciliation of net cash flow to movement
in net funds
Increase in cash for the period 7,019 8
Net funds at the start of the period 2,354 2,346
Net funds at the end of the period 9,373 2,354
The accompanying notes are an integral part of this statement.
NOTES TO THE FINANCIAL STATEMENTS
1 Income 2004 2003
�'000 �'000
Dividend income
Listed equity shares 78 40
Interest receivable
Listed fixed interest securities 446 515
Bank deposits 94 92
618 647
2 Investment management fee
Quester Capital Management Limited ("QCML") provides investment management
services to the Company under an agreement dated 3 December 2001, as amended by
a supplemental agreement dated 23 December 2004.
A charge of �552,000 (2003: �392,000) in respect of the management fee payable
to QCML was accrued during the year together with irrecoverable VAT of �71,000
(2003: �54,000). The fee, which is calculated monthly and is payable in
advance, was levied at a rate of 2.5% (2003: 2%) on the Company's net assets
during the financial year ended 31 December 2004. With effect from 1 January
2005, this fee is to be capped to ensure that the Company's running costs do
not exceed 3.5% of closing net asset value at the end of each financial period.
The manager's appointment is for a fixed term which shall expire on the seventh
anniversary of the commencement of the fund and shall continue until terminated
by either party subject to a notice period. If such notice is given on or after
the seventh anniversary of the commencement of the fund, the notice period
shall be the longer of (i) twelve months and (ii) the period from the date on
which notice is given to the tenth anniversary of the commencement of the fund.
Thereafter the notice period shall be twelve months.
The management fee payable to Newton Investment Management Limited, to the
extent that it is not covered by transaction fees payable by the Company, will
be met by QCML out of the above fee.
QCML provides administrative and secretarial services to the Company for which
it is entitled to a fee of �53,000 per annum (linked to the movement in the
RPI). This fee is included in other expenses (note 3).
3 Other expenses
2004 2003
�'000 �'000
Administration and secretarial services 53 51
Directors' remuneration (note 4) 39 39
Auditor's remuneration
Audit services 18 19
Non audit services 8 7
Insurance 12 8
Legal and professional 15 18
UKLA, LSE and registrar fees 14 10
Other 19 10
Irrecoverable VAT 99 65
277 227
4 Directors' remuneration
2004 2003
�'000 �'000
Fees paid to directors 12 12
Amounts paid to third parties, excluding VAT, in 27 27
consideration of the services of directors
39 39
The total fees paid or payable in respect of individual directors for the
period is detailed in the Directors' Remuneration Report.
5 Return per share
The revenue return per share of 0.3p (2003: 1.0p) is based on the aggregate of
the net return from ordinary activities after tax of �67,000 (2003: �224,000)
and on ordinary shares of 23,610,383 (2003: 21,644,753), being the weighted
average number of shares in issue during the year.
The capital loss per share of 1.5p (2003: 0.6p) is based on the net realised
and unrealised capital loss for the period after tax of �362,000 (2003: �
132,000) and on ordinary shares of 23,610,383 (2003: 21,644,753), being the
weighted average number of shares in issue during the year.
6 Net asset value per share
The net asset value per share as at 31 December 2004 of 91.6p (2003: 92.7p) is
based on net assets of �21,904,000 (2003: �20,861,000) divided by the
23,905,023 (2003: 22,498,6400 ordinary shares in issue at that date.
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2004. The statutory accounts
for the year ended 31 December 2004 will be finalised on the basis of the
financial information presented by the directors in the preliminary
announcement and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
A copy of the above document will be submitted to the UK Listing Authority, and
will shortly be available for inspection at the UK Listing Authority's Document
Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Copies of the full financial statements for the year ended 31 December 2004 are
expected to be posted to shareholders on 17 March 2005 and will be available to
the public at the registered office of the Company at 29 Queen Anne's Gate,
London, SW1H 9BU.
END
Quester Vct 5 (LSE:QUV)
Historical Stock Chart
From Jun 2024 to Jul 2024
Quester Vct 5 (LSE:QUV)
Historical Stock Chart
From Jul 2023 to Jul 2024
