The announcement released on 17/3/04 did not contain the following dividend
information:
Dividends
The directors propose a final dividend of 1p per share for the period ended 31
December 2003.
Final dividend for the period ending
31 December 2003 paid 1 June 2004
Ex-dividend date 5 May 2004
Associated record date 7 May 2004
QUESTER VCT 5 PLC ("the Company")
Summary of results for the year ended 31 December 2003
Per Ordinary Share 2003 2002
(pence)
(69 weeks)
Capital Values
Net asset value 92.7 92.8
Share price 96.0 96.0
Return and Dividends
Dividend 1.0 0.5
Cumulative dividend 1.5 0.5
Total Return* 94.2 93.3
*Net asset value
plus cumulative
dividend
Shareholder information
Annual General Meeting 11.30 a.m. on 12 May 2004
Dividends
The directors propose a final dividend of 1p per share for the period ended 31
December 2003.
Final dividend for the period ending 31 December 2003 paid 1 June 2004
Ex-dividend date 5 May 2004
Associated record date 7 May 2004
CHAIRMAN'S STATEMENT
Introduction
We have continued to make positive progress towards the completion of the
Company's initial venture capital portfolio, in line with the stated investment
objectives. This remains a good time to invest, with the Company continuing to
benefit from current market conditions in which investments are attractively
priced.
Net assets and performance
During the year the Company's net assets grew from �18.2million to �
20.9million.This gain primarily resulted from the additional funds raised from
the two top-up issues that were open during the year. These, in total, raised a
further �2.9millionfor the Company. In terms of net asset value per share,
which stood at 92.7p as at 31 December 2003, shareholders have seen value
largely maintained.
During the year, a revenue profit of �224,000 was achieved, equivalent to 1p
per share, but there wasa capital loss of �132,000 or 0.6p per share, giving a
net total return to shareholders of �92,000. Further information is provided in
the statement of total return.
Investment progress
The Company has made satisfactory progress towards building its venture capital
portfolio, with �3.9million being invested in 12 new and three existing
investments. This took the number of venture capital investments held to 18, as
at 31 December 2003. Inclusive of reserves retained for follow-on investment in
existing investments, the Company has now effectively committed 61% of the
funds allocated for venture capital investment.
Further details on the Company's investments and investment performance are
provided in the Investment Manager's report.
Dividends and dividend reinvestment scheme
The directors propose a final dividend of 1p per share. Subject to shareholder
approval at the Company's annual general meeting, this dividend is to be paid
on 1 June 2004. Subscribers for shares under the offers announced on 14
November 2003 are not eligible for this dividend.
On account of the possible changes to the VCT legislation, which will
potentially have an impact on the reliefs available to new subscribers for
shares in VCTs after 5 April 2004, the directors have decided to suspend the
dividend reinvestment scheme operated by the Company until further notice.
Outlook
The focus for the coming year will be on the continued development of the
venture capital portfolio. Conditions for investment remain good and the
Company continues to benefit from a quality deal flow.We believe that the
existing portfolio holds great promise, although, as is the case for early
stage venture capital investments, it is likely to take several years for the
value to show through.
Bill Passmore
Chairman
17 March 2004
INVESTMENT MANAGER'S REPORT
Overview
During the second year of the Company's life, we have continued to build the
venture capital portfolio. We benefit from a strong flow of potential
investment propositions and have been able to take advantage of competitive
pricing. We are generally pleased with the progress achieved to date, both with
the number of new investments completed and with the underlying performance of
the companies in the portfolio.
Progress with venture capital investment
The Company is making positive progress with selection of appropriate venture
capital investments. In the year to 31 December 2003, a further 12 new
investments were made as detailed in the table below.
Company Industry Sector �'000
Advanced Valve Technologies Limited Industrial products & 259
services
Amino Holdings plc Electronics 143
Anadigm Limited Semiconductors 87
Arithmatica Limited Semiconductors 287
Cyclacel Limited Healthcare & life sciences 500
Digital Union Limited Software 214
Lorantis Holdings Limited Healthcare & life sciences 400
Mesophotonics Limited Electronics 304
Oxford Immunotech Limited Healthcare& life sciences 250
Oxxon Pharmaccines Limited Healthcare & life sciences 367
Reqio Limited Software 232
Xention Discovery Limited Healthcare & life sciences 167
3,210
In addition to these, three follow-on investments were made in existing
investments, as
follows:
CompanyIndustry Sector �'000
AIT Group plc Software 232
Antenova Limited Communications 150
Azea Networks, Inc. Communications 310
692
Following the year end, a further three new and one follow-on investment have
been made totalling �499,000.
The venture capital portfolio was comprised of 18 investments as at 31 December
2003, including 17 unquoted investments and one in a company whose shares are
traded on the Alternative Investment Market (AIM). It is currently expected
that the portfolio will grow to between 25 and 30 investments.
A well balanced portfolio
The portfolio so far established is balanced by sector and well spread, giving
a current average investment size of �309,000.A summary of the sectors covered
by the portfolio as at 31 December 2003 is provided in the table below:
Industry Sector Existing venture Cost Number of
capital portfolio at investments
cost �'000
%
Healthcare & life sciences 36.8 2,051 6
Software 25.4 1,411 4
Industrial products & 11.9 659 2
services
Communications 11.2 623 2
Electronics 8.0 447 2
Semiconductors 6.7 374 2
100.0 5,565 18
Reserves for follow-on investment
Early stage companies generally require additional funding to allow them to
achieve their goals. Consequently, the Company operates a reserving policy so
that liquid assets are available to meet these potential future requirements.
As at the year end, the notional reserves held for follow-on investment in
existing portfolio companies amounted to �5million.Taking these reserves for
follow-on investment into account, the Company has effectively committed 61% of
the funds allocated for its initial programme of venture capital investment.
Valuation of the venture capital portfolio
Out of the 17 unquoted investments heldby the Company at the year end, 16 were
valued at cost (as is usual at this early stage in the development of a venture
capital portfolio) whilst one was valued at an amount below cost. One further
investment of �400,000 in Bowman Power Systems Limitedhas been written off as
at 31 December 2003 having been written down by 25% at the half year stage.
This disappointing result follows a company performance, during 2003, which was
a long way below the investment plan. This led the company to be unable to
raise further finance from its broadly-based syndicate of investors: a small
recovery is anticipated from the administration process.
As at 31 December 2003, the Company held one quoted venture capital investment,
in AIT Group plc, whose shares are traded on AIM. The accounts show an
unrealised gain of �226,000 on this investment based upon the mid-market price
of its shares at 31 December 2003.
Listed equity and bond portfolio
Approximately 15% of the Company's funds is earmarked for investmentin a
portfolio of listed equities or fixed interest investments, managed by Newton
Investment Management Limited. As at 31 December 2003, of the total amount
earmarked, �1.5million had been committed to listed equities and showed an
unrealised gain of �77,000.This portfolio is held as a reserve to cover
possible future funding requirements in the venture capital portfolio as it
develops.
Funds awaiting investment in the venture capital portfolio are invested in
short dated, highly rated, sterling denominated corporate and government bonds.
During 2003, the amount of this portfolio has reduced as funds have been
switched into venture capital opportunities. As at 31 December 2003, the
holdings of fixed interest securities amounted to �11.1million.A further �
1.6million allocated to this portfolio was held as uninvested cash. Over the
period, the effective yield from the bond portfolio was 3.9%.
Conclusion
Satisfactory progress has been made in building the venture capital portfolio
and promisinginvestments have been made during the period. The majority of
investments remain valued at cost. Over the next few years we expect the
portfolio to translate its existing potential into increasing investment
values, but we should emphasise that these are very early days in a challenging
process.
Quester Capital Management Limited
Manager
17 March 2004
FUND SUMMARY AS AT 31 DECEMBER 2003
Ten largest venture capital Industry sector Cost Valuation % of
investments by value fund
�'000 �'000
by value
AIT Group plc* Software 565 791 3.8%
Cyclacel Limited Healthcare & life 500 500 2.4%
sciences
Workshare Limited Software 400 400 1.9%
Lorantis Holdings Limited Healthcare & life 400 400 1.9%
sciences
Footfall Limited Industrial products & 400 400 1.9%
services
Azea Networks, Inc. Communications 398 398 1.9%
Avidex Limited Healthcare & life 367 367 1.8%
sciences
Oxxon Pharmaccines Limited Healthcare &life 367 367 1.8%
sciences
Mesophotonics Limited Electronics 304 304 1.4%
Arithmatica Limited** Semiconductors 287 287 1.4%
3,988 4,214 20.2%
Other venture capital 1,577 1,448 6.9%
investments
Total venture capital investments 5,565 5,662 27.1%
Listed fixed interest 11,080 11,090 53.2%
investments
Listed equity investments 1,459 1,536 7.4%
Total investments 18,104 18,288 87.7%
Cash and other net assets 2,573 2,573 12.3%
Net assets 20,677 20,861 100.0%
* AIT Group plc is traded on the Alternative Investment Market (AIM)
** Formerly know as Automatic Parrallel Designs Limited
STATEMENT OF TOTAL RETURN (incorporating the revenue account)
FOR THE YEAR ENDED 31 DECEMBER 2003
Notes 2003 2003 2003 2002 2002 2002
Revenue Capital Total Total
Revenue Capital
�'000 �'000 �'000 �'000
�'000 �'000
Profit/ (loss) on - 64 64 - (135) (135)
investments
Income 1 647 - 647 507 - 507
Investment management 2 (196) (196) (392) (95) (95) (190)
fee
Other expenses 3 (227) - (227) (290)- (290)
Return on ordinary 224 (132) 92 122 (230) (108)
activities before tax
Tax on ordinary 5 - - - (23) 19 (4)
activities
Return on ordinary 224 (132) 92 99 (211) (112)
activities after tax
Dividends proposed 6 (221) - (221) (93) - (93)
Transfer to /(from) 3 (132) (129) 6 (211) (205)
reserves
Return per share 7 1.0p (0.6)p 0.4p 0.7p (1.4)p (0.7)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 prior year comparatives cover the 69-week period ended 31 December 2002.
The accompanying notes are an integral part of this statement.
BALANCE SHEET
AS AT 31 DECEMBER 2003
Note 2003 2002
�'000 �'000
Fixed assets
Investments 18,288 15,907
Current assets
Debtors 627 348
Cash at bank 2,354 2,346
2,981 2,694
Creditors (amounts falling due within one year) (362) (308)
Net current assets 2,619 2,386
Creditors (amounts falling due after more than (46) (46)
one year)
Net assets 20,861 18,247
Capital and reserves
Called-up equityshare capital 225 197
Share premium account 3,580 842
Special reserve 17,390 17,413
Capital reserve - realised (527) 63
- unrealised 184 (274)
Revenue reserve 9 6
Equity shareholders' funds 20,861 18,247
Net asset value per share 8 92.7p 92.8p
The financial statements were approved by the directors on 17 March 2004 and
aresigned 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 2003
2003 2002
�'000 �'000
Net cash inflow from operating activities 92 126
Corporation tax paid (2) -
Financial investment
Purchase of venture capital investments (3,920) (2,064)
Purchase of listed equities and fixed interest (8,951) (40,300)
investments
Sale/redemption of venture capital investments 18 -
Sale/redemption of listed equity and fixed 10,121 26,086
interest investments
Total financial investment (2,732) (16,278)
Equity dividends paid (93) -
Financing
Issue of ordinary shares pursuant to the offers 2,854 19,696
for subscription made during the year
Issue of shares in accordance with the dividend 13 -
reinvestment scheme
Share issue expenses (101) (1,207)
Issue of loan stock - 46
Buy back of ordinary shares (23) (37)
Total financing 2,743 18,498
Increase in cash for the period 8 2,346
Reconciliation of net cash flow to movement in net
funds
Increase in cash forthe period 8 2,346
Net funds at the start of the period 2,346 -
Net funds at the end of the period 2,354 2,346
The accompanying notes are an integral part of this statement.
NOTES TO THE FINANCIAL STATEMENTS
1 Income 2003 2002
�'000 �'000
Dividend income
Listed equity shares 40 8
Interest receivable
Listed fixed interest securities 515 327
Bank deposits 92 172
647 507
2 Investment Management Fee 2003 2003 2003 2002 2002 2002
Revenue Capital Total Revenue Capital Total �
�'000 '000
�'000 �'000 �'000 �'000
Investment management fee 196 196 392 95 95 190
Irrecoverable VAT 54 - 54 15 - 15
250 196 446 110 95 205
Quester Capital Management Limited ("QCML") provides investment management
services to the Company under an agreement dated 3 December 2001. QCML is a
wholly owned subsidiary of Querist Limited, a company in which APG Holmes and
JA Spooner are beneficial shareholders. APG Holmes and JA Spooner are executive
directors of QCML.
A charge of �392,000 (2002: �190,000) in respect of the management fee payable
to QCML was accrued during the year. Of this, �nil (2002: �4,000) remained
unpaid as at 31 December 2003.The fee, which is calculated monthly and is
payable in advance, was levied at a rate of 2% on the net assets during the
financial year ended 31 December 2003. This rate will increase to 2.5% with
effect from 1 January 2004.
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 �51,000 per annum (linked to the movement in the
RPI), which is included in other expenses (note 3).
* Other expenses 2003 2002
�'000 �'000
Administration and secretarial services 51 51
Directors' remuneration (note 4) 39 46
Auditor's remuneration - audit services 19 18
- non audit services 7 10
Legal and professional expenses 18 45
Other expenses 28 69
Irrecoverable VAT 65 51
227 290
* Directors' remuneration
2003 2002
�'000 �'000
Fees paid to directors 12 14
Amounts paid to third parties, excluding VAT, in 27 32
consideration of the services of directors
39 46
The total fees paid or payable in respect of individual directors for the year
is detailed in the Directors' remuneration section in the Annual Report.
5 Tax on ordinary activities
2003 2003 2002 2002
Revenue Capital Revenue Capital
�'000 �'000 �'000 �'000
Corporation tax payable
- current year - - 23 (19)
- prior year adjustment - - - -
- - 23 (19)
Reconciliation of profit on ordinary activities to taxation
2003 2003 2002 2002
Revenue Capital Revenue Capital
�'000 �'000 �'000 �'000
Profit on ordinary activities before tax 224 (132) 122 (230)
Tax on profit on ordinary activities at 67 (40) 37 (69)
standard UK corporation tax rate of 30%
(2002:30%)
Effects of:
(Profit)/loss on investments - (19) - 40
Managementfee charged to capital (59) 59 (29) 29
Non-taxable income (12) - (2) -
Disallowable items 4 - 17 (19)
- - 23 (19)
6 Dividends proposed
2003 2002
�'000 �'000
Final dividend: 1p per share (2002: 0.5p per share) 221 93
Subscribers for shares under the offers announced on 14 November2003 are not
eligible for the 2003 dividend.
7 Return per share
The revenue return per share of 1.0p (2002: 0.7p) is based on the aggregate of
the net return from ordinary activities after tax of �224,000 (2002: �99,000)
and on ordinary shares of 21,644,753 (2002: 14,645,210), being the weighted
average number of shares in issue during the year.
The capital loss per share of 0.6p (2002: 1.4p) is based on the net realised
and unrealised capital loss for the period after tax of �132,000 (2002: �
211,000) and on ordinary shares of 21,644,753 (2002: 14,645,210), being the
weighted average number of shares in issue during the year.
8 Net asset value per share
The net asset value per share as at 31 December 2003 of 92.7p (2002: 92.8p) is
based on net assets of �20,861,000 (2002: �18,247,000) divided by the
22,498,640 (2002: 19,655,218) 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 2003. The statutory accounts
for the year ended 31 December 2003 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 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
Copies of the full financial statements for the year ended 31 December 2003 are
expected to be posted to shareholders on 17th March 2004 and will be available
to the public at the registered office of the Company at 29 Queen Anne's Gate,
London, SW1H 9BU.
END
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