Final Results
September 12 2002 - 11:22AM
UK Regulatory
Quester VCT 5 plc
Financial highlights
42 weeks ended 30 June 2002
Revenue return per share (pence) 0.04
Total return per share (pence) (0.40)
Shareholders' funds (�'000) 17,556
Net asset value per share (pence) 94.8
Mid-market price per share (pence) 93.0
Highlights from the Chairman's statement and Investment Manager's report
* Positive rate of investment on the back of a steady deal flow
* Currently depressed markets offer a good opportunity to make investments at
relatively low prices
* Good progress made towards constructing a well-balanced portfolio which has
the potential to achieve attractive returns. Sectors include:
* Computer software
* Energy
* Industrial products and services
* Healthcare and life sciences
* Communications
CHAIRMAN'S STATEMENT
INTRODUCTION
The offers for subscription for shares in Quester VCT 5 were closed on 31 May
2002 having raised gross funds of �18.6 million. This has allowed the Company
to start to build its venture capital portfolio. There has been a positive rate
of investment to date.
VENTURE CAPITAL INVESTMENT
As at 30 June 2002, three investments had been made at an average cost of
approximately �300,000. The currently depressed markets offer a good
opportunity for the Company to start to make investments at relatively low
initial prices, which potentially improves the future returns to shareholders.
Further information on the Company's investments is provided in the Investment
Manager's report.
Subsequent to the period end, a further four investments have been made taking
the total amount invested, including reserves for follow-on investments, to
approximately �3.3 million, or approximately 19% of net funds raised.
NET ASSET VALUE
As at 30 June 2002, the net asset value was 94.8 pence per share. This compares
to the initial net assets of 95.0 pence after providing for launch costs, which
were capped at 5% of gross funds raised. At this early stage in the Company's
life, there have not been any material changes to the value of the venture
capital portfolio, which remains valued at cost.
DISTRIBUTABLE RESERVES AND DIVIDENDS
At the period end, distributable reserves of �5,000 had been retained, which is
approximately equivalent to a total return for the period of 0.04 pence per
share. As indicated in the prospectus, the Company will not be paying an
interim dividend. However, it is possible that a small final dividend may be
proposed.
In line with the indication given in the prospectus and following Court
approval, the share premium account was cancelled on 14 August 2002.
PLANS TO RAISE FURTHER EQUITY
The Company proposes to seek to raise further funds which would enable it to
achieve a more diversified investment portfolio. It is planned to issue a
prospectus and application forms in respect of further offers for subscription
in the early Autumn. Existing shareholders will be given priority at the start
of the application process.
OUTLOOK
The Company has started to build a portfolio of investments in a range of
sectors with the potential to deliver attractive growth over the longer term.
With a steady flow of investment proposals, the prospects for continuing to
build this portfolio remain good.
WW Passmore
Chairman
12 September 2002
INVESTMENT MANAGER'S REPORT
OVERVIEW
We have begun to build the Company's venture capital portfolio slowly and
cautiously, with the first investment being made in May 2002. We intend to
structure steadily a diversified portfolio of investments designed to deliver
an attractive return to shareholders.
We are making investment judgements about the potential of young companies,
which plan to build their businesses over the medium to longer term, three to
five years and beyond. Many business plans are being substantially adjusted or
slowed to accommodate the current subdued business climate. Our challenge is to
look beyond these current conditions and balance scepticism against the
positive fact that successful management teams, who capitalise effectively on
innovation and technology change, will deliver attractive returns over the
longer term.
VENTURE CAPITAL INVESTMENT TO DATE
During the period to 30 June 2002, three venture capital investments were made
at an aggregate cost of �888,000. We have subsequently made a further four
investments as at the date of this report, increasing the amount invested to �
2.0 million at an average of approximately �300,000 per investment. In the
majority of cases we expect to invest further amounts in these portfolio
companies beyond the initial investment, depending on progress against plan of
the company concerned. We therefore carry notional reserves to cover this
further investment.
The seven investments completed to date have already created a degree of
diversification within the portfolio. The sectors covered include computer
software, energy, industrial products and services, healthcare and life
sciences and communications. This is consistent with the objective of building
a broad portfolio as stated in the prospectus.
Given the current level of funding, we anticipate making around 20 investments
and so are now approaching a third of the way towards achieving our initial
portfolio.
VALUATION OF THE VENTURE CAPITAL PORTFOLIO
The venture capital investments are currently held at cost, primarily
reflecting the fact that they are recent investments. The Company's basis for
valuing investments derives from the guidelines issued by the British Venture
Capital Association.
LISTED EQUITY PORTFOLIO AND FIXED INTEREST PORTFOLIO
It is intended that up to 15% of the funds raised from the launch are to be
invested in equities quoted on a recognised stock exchange. This portfolio is
managed by Newton Investment Management Limited. Newton have made a cautious
start, on account of the current uncertainty surrounding global stock markets,
and have invested approximately 20% of the funds earmarked for this portfolio.
Funds awaiting investment in venture capital opportunities or listed equities
are largely invested in short dated fixed interest securities. This portfolio,
which is also managed by Newton, will reduce over time as the funds are
switched into venture capital opportunities.
CONCLUSION
A steady rate of investment has been achieved during the period and
subsequently. We believe that we have made good progress towards constructing a
well balanced portfolio which has the potential to achieve attractive returns.
We are optimistic about the future prospects for these investments, although it
should be stressed that at this very early stage none of the companies have yet
achieved financial results which demonstrate this potential.
Quester Capital Management Limited
Manager
12 September 2002
Fund summary
As at 30 June 2002
Cost Valuation % of fund
�'000 �'000 by value
Unquoted venture capital investments
Bowman Power Limited 400 400 2.3%
Footfall Limited 400 400 2.3%
Azea Limited 88 88 0.5%
Total venture capital investments 888 888 5.1%
Listed fixed interest investments 11,229 11,242 64.0%
Listed equity investments 578 561 3.2%
Total investments 12,695 12,691 72.3%
Cash and other net assets 4,865 4,865 27.7%
Net assets 17,560 17,556 100.0%
UNAUDITED FINANCIAL STATEMENTS
Statement of Total Return
Incorporating the revenue account of the Company
42 weeks ended 30 June 2002
Note Revenue Capital Total
�'000 �'000 �'000
Losses on investments - (17) (17)
Income 184 - 184
Investment management fee (30) (30) (60)
Other expenses (149) - (149)
Return/(loss) on ordinary 5 (47) (42)
activities before taxation
Tax on ordinary activities - - -
Return/(loss) on ordinary 5 (47) (42)
activities after taxation
Dividend proposed - - -
Transfer to/(from) reserves 5 (47) (42)
Return per share 3 0.04p (0.44)p (0.40)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.
Balance sheet
Note 30 June
2002
�'000
Fixed assets
Investments 12,691
Current assets
Debtors 480
Cash at bank and in hand 5,924
6,404
Creditors: amounts falling due within one year (1,493)
Other creditors
Net current assets 4,911
Creditors: amounts falling due in over one year (46)
Loan stock
Net assets 17,556
Capital and reserves
Called up equity share capital 185
Share premium account 1 17,413
Capital reserve - realised 1 (43)
- unrealised 1 (4)
Revenue reserve 1 5
Total equity shareholders' funds 17,556
Net asset value per share 94.8p
Summarised Cashflow Statement
42 weeks ended
30 June 2002
�'000
Net cash outflow from operating activities (264)
Net capital expenditure and financial investment (11,410)
Financing 17,598
Increase in cash for the period 5,924
Reconciliation of net cashflow to movement in net funds
Increase in cash for the period 5,924
Net funds at the start of the period -
Net funds at the end of the period 5,924
Notes to the unaudited financial statements
1. Movement in reserves
Share Capital Capital Revenue
premium reserve reserve reserve
account realised unrealised
�'000
�'000 �'000 �'000
Shares issued 18,375 - - -
Expenses of share issues (925) - - -
Share buy back and cancellation (37) - - -
Net loss on realisation of - (13) - -
investments
Net unrealised loss on - - (4) -
revaluation
of investments
Investment management fee - (30) - -
charged to capital
Net revenue retained for the - - - 5
period
At 30 June 2002 17,413 (43) (4) 5
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
period from 6 September 2001, the date of incorporation, to 30 June 2002.
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 10,587,796.
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 16 September 2002. Further copies can be obtained from the
Company's registered office.
END
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