Interim Results
September 17 2003 - 10:06AM
UK Regulatory
Quester VCT 5 plc
Interim statement for the six months ended 30 June 2003
Financial highlights
Per ordinary share (pence) 6 months to 69 weeks to 42 weeks ended
30 June 2003 31 December 2002 30 June 2002
Capital values
Net asset value 93.3 92.8 94.8
Share price 96.0 96.0 93.0
Return and dividends
Dividend - 0.5 -
Cumulative dividend 0.5 0.5 -
Total return* 93.8 93.3 94.8
*Net asset value plus cumulative dividend per share
Highlights from the Chairman's statement and Investment manager's report
* The Company has performed in line with plan and has steadily continued to
build its venture
capital portfolio.
* The Company is continuing to build a portfolio that is well diversified by
sector. Sectors include:
*
+ Software
+ Biotechnology
+ Industrial products & services
+ Energy
+ Communications
* The portfolio is expected to grow to around 25 investments.
Chairman's statement
OVERVIEW
The Company has performed in line with plan and has steadily continued to build
its venture capital portfolio. The net asset value has remained relatively
stable and stood at 93.3p per share as at 30 June 2003.
INVESTMENT PROGRESS AND PORTFOLIO PERFORMANCE
Two new venture capital investments were made during the period at a cost of �
385,000.This takes the total number of venture capital investments to nine. In
addition, a further �163,000 was invested in existing investments as part of
follow-on rounds taking the total level of venture capital investment made
during the six months to �548,000. As can be seen in the table in the
Investment Manager's report, the creation of a diversified venture capital
portfolio is well underway.
At the period end, the majority of the Company's venture capital investments
continued to be valued at cost, as would be expected at this early stage.
However, provisions of �290,000 have been made against two investments.
RESULTS
The statement of total return for the six months to 30 June 2003 shows a loss
before tax of �17,000. Of this, a profit of �103,000 was attributable to the
revenue account, which is in effect the Company's profit and loss account, with
the balance of �120,000 being the capital loss for the period. There is no tax
charge. The directors are not declaring an interim dividend.
FUNDRAISING
During the half year, the share offers were closed having generated additional
gross subscription proceeds of �2.5 million. In total, �3.6 million was raised
by these offers, which were launched in October 2002.The Company will consider
whether a further offer for shares later in the current tax year is in the best
interests of the Company and of shareholders.
OUTLOOK
The venture capital portfolio is expected to grow to around 25 investments,
with reserves retained to cover future potential funding requirements. It is
likely that the process of selecting the remaining investments will be
essentially completed during the next twelve months. Given the improvement in
market sentiment and a good deal flow, we believe that the Company is well
placed to build an attractive venture capital portfolio for shareholders.
WW Passmore
Chairman
17 September 2003
Investment manager's report
OVERVIEW
During the half year to 30 June 2003, measured progress has been made in the
continued building of the Company's venture capital portfolio. We have
maintained a cautious rate of investment reflecting our selective investment
policy.
The recent upturn in stock markets generally has resulted in a recovery of
value in the Company's listed equity portfolio. The bond portfolio, which is
comprised of short dated instruments only, was valued marginally above cost as
at the period end.
VENTURE CAPITAL PORTFOLIO
The venture capital portfolio has now increased to nine investments, eight of
which are unquoted. The ninth, AIT Group plc, has a quotation on the
Alternative Investment Market (AIM). The composition of the portfolio is
provided in the Fund Summary table below.
During the period, new and follow-on investments were made as detailed below:
Investment New Follow-on
�'000 �'000
Advanced Valve Technologies Limited 18 -
Antenova Limited - 75
Azea Networks Limited - 88
Oxxon Pharmaccines Limited 367 -
385 163
Inclusive of these investments, the Company is continuing to build a portfolio
that is well diversified by sector, as shown in the following table:
Sector Cost Existing venture Number of
investments
�'000 Capital portfolio at
cost
%
Biotechnology 734 28.1 2
Software 733 28.1 2
Industrial products & 418 16.0 2
services
Energy 400 15.3 1
Communications 326 12.5 2
2,611 100.0 9
Since the end of the period, �508,000 has been invested in three follow-on
investments and �519,000 in a further two new companies.
In view of the present conditions in the venture capital market, we are placing
much emphasis on the need for the Company to retain prudent reserves for
expected follow-on investment. This policy is needed to enable the Company to
contribute to the further finance required by successful portfolio companies as
they grow, given the uncertainties in the availability of venture capital for
young companies. Taking both actual investments made and reserves for future
follow-on investment into account, the Company has effectively completed
approximately 30% of the total anticipated venture capital portfolio. It is
anticipated that the actual number of investments held in the portfolio will
eventually rise to approximately 25.
The unquoted investments have been valued in line with the Company's accounting
policies, which are based upon guidelines issued by the British Venture Capital
Association (BVCA).At this early stage, most companies remain valued at cost.
However, the investment in Bowman Power had been written down to 75% of cost
and the investment in the AIT Group, which is a quoted investment, had been
marked down following a fall in its share price. As at 1 September 2003, the
share price of AIT Group had recovered strongly.
LISTED EQUITY PORTFOLIO AND FIXED INTEREST PORTFOLIO
Since 31 December 2002, net additional funds of �465,000 have been invested in
the listed equity portfolio by Newton Investment Management Limited. During the
period, this portfolio has recovered some value, however, as at 30 June 2003,
it was showing a net unrealised loss of �100,000 on a cost of �1.1 million.
The bond portfolio, which is comprised of short dated instruments only, was
showing an unrealised profit of �85,000 on a cost of �13.5 million. This
portfolio will steadily reduce as funds are switched into venture capital
opportunities.
CONCLUSION
We have continued the steady progress of building the venture capital portfolio
and believe that the investments made to date have good potential, although it
should be stressed that these companies are at a very early stage. Going
forwards, shareholders will see a steady increase in the number of investments
held within the portfolio, up to an anticipated level of approximately 25
companies. With a strengthening deal flow and the possibility of somewhat more
positive global economic conditions, the Company is well placed to create a
portfolio of young companies with exciting potential.
Quester Capital Management Limited
Manager
17 September 2003
FUND SUMMARY
AS AT 30 JUNE 2003
Cost Valuation % of fund
�'000 �'000 by value
Venture capital investments
Advanced Valve Technologies 18 18 0.1%
Limited
AIT Group plc * 333 143 0.7%
Antenova Limited 150 150 0.7%
Avidex Limited 367 367 1.8%
Azea Networks Limited 176 176 0.9%
Bowman Power Limited 400 300 1.5%
Footfall Limited 400 400 1.9%
Oxxon Pharmaccines Limited 367 367 1.8%
Workshare Limited 400 400 1.9%
Total venture capital 2,611 2,321 11.3%
investments
Listed fixed interest 13,495 13,580 65.7%
investments
Listed equity investments 1,130 1,030 5.0%
Total investments 17,236 16,931 82.0%
Cash and other net assets 3,728 3,728 18.0%
Net assets 20,964 20,659 100.0%
* AIT Group plc is quoted on the Alternative Investment Market (AIM).
UNAUDITED FINANCIAL STATEMENTS
STATEMENT OF TOTAL RETURN
Incorporating the revenue account of the Company
Note 6 months ended 30 June 42 weeks ended 30 June 69 weeks
2003 2002 ended 31
December
2002
Revenue Capital Total Revenue Capital Total Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Losses on - (27) (27) - (17) (17) (135)
investments
Income 340 - 340 184 - 184 507
Investment (93) (93) (186) (30) (30) (60) (190)
management fee
Other expenses (144) - (144) (149) - (149) (290)
Return/(loss) on 103 (120) (17) 5 (47) (42) (108)
ordinary
activities before
taxation
Tax on ordinary - - - - - - (4)
activities
Return/(loss) on 103 (120) (17) 5 (47) (42) (112)
ordinary
activities after
taxation
Proposed dividend - - - - - - (93)
Transfer to/ 103 (120) (17) 5 (47) (42) (205)
(from) reserves
Earnings/(loss) 3 0.49p (0.57)p (0.08) 0.04p (0.44)p (0.40) (0.7)p
per share p 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.
UNAUDITED FINANCIAL STATEMENTS
(continued)
BALANCE SHEET
Note 30 June 30 June 31 December
2003 2002 2002
�'000 �'000 �'000
Fixed assets
Investments 16,931 12,691 15,907
Current assets
Debtors 346 480 348
Cash at bank 3,600 5,924 2,346
3,946 6,404 2,694
Creditors: amounts falling due (172) (1,493) (308)
within one year
Net current assets 3,774 4,911 2,386
Creditors: amounts falling due in
over one year
Loan Stock (46) (46) (46)
Net assets 20,659 17,556 18,247
Capital and reserves
Called up equity share capital 221 185 197
Share premium account 1 3,260 17,413 842
Special reserve 1 17,400 - 17,413
Capital reserve - realised 1 (24) (43) 63
- unrealised 1 (307) (4) (274)
Revenue reserve 1 109 5 6
Total equity shareholders' funds 20,659 17,556 18,247
Net asset value per share 93.3p 94.8p 92.8p
SUMMARISED CASH FLOW STATEMENT
6 months 42 weeks 69 weeks
ended ended ended
30 June 2003 30 June 2002 31 December
2002
�'000 �'000 �'000
Net cash (outflow)/inflow from (58) (264) 126
operating activities
Net capital expenditure and financial (1,038) (11,410) (16,278)
investment
Dividends paid (79) - -
Financing 2,429 17,598 18,498
Increase in cash for the period 1,254 5,924 2,346
Reconciliation of net cash flow to
movement in net funds
Increase in cash for the period 1,254 5,924 2,346
Net funds at the start of the period 2,346 - -
Net funds at the end of the period 3,600 5,924 2,346
Notes to the unaudited financial statements
1. MOVEMENT IN RESERVES
Share Special Capital Capital Revenue
premium reserve reserve reserve reserve
account realised unrealised
�'000 �'000 �'000
�'000 �'000
At 1 January 2003 842 17,413 63 (274) 6
Share issues 2,459 - - - -
Expenses of share issues (54) - - - -
Shares allocated under the 13 - - - -
dividend reinvestment scheme
Share buy back and cancellation - (13) - - -
Net profit on realisation of - - 15 - -
investments
Net unrealised depreciation of - - - (42) -
investments
Transfer from unrealised - - (9) 9 -
reserve
Investment management fee - - (93) - -
charged to capital
Net revenue retained for the - - - - 103
period
At 30 June 2003 3,260 17,400 (24) (307) 109
2. The financial information contained in this report has been prepared on the
basis of the accounting policies adopted by the Company and covers the six
months to 30 June 2003.
3. The calculation of the revenue, capital and total return per share for the
period is based
on the respective profit or loss after tax and on the weighted average number
of shares in
issue during the period of 21,096,443.
4. The unaudited financial statements set out above do not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985.
5. Copies of the unaudited interim results are expected to be sent to
shareholders on 17 September 2003. Further copies can be obtained from the
Company's registered office.
A copy of the above document has been 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
END