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Quester VCT PLC (KAY)

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Tuesday 30 September, 2003

Quester VCT PLC

Interim Results


                                Quester VCT plc                                

            Interim statement for the six months ended 31 July 2003            

Financial highlights

Per ordinary share (pence)        6 months to      6 months to          Year to
                                                                               
                                 31 July 2003     31 July 2002  31 January 2003
                                                                               
Capital values                                                                 
                                                                               
Net asset value                          59.3             67.4             58.4
                                                                               
Share price                              44.0             58.5             54.0
                                                                               
Return and dividends                                                           
                                                                               
Dividend                                    -                -                -
                                                                               
Cumulative dividend                      41.5             41.5             41.5
                                                                               
Total return*                           100.8            108.9             99.9

*Net asset value plus cumulative dividend per share

Highlights from the Chairman's statement and Investment manager's report

  * Following the very difficult conditions of the last two years, the six
    months ended 31 July 2003 have been a period of greater stability for the
    venture capital portfolio as a whole.
   
  * The Company's portfolio of unquoted investments, which contains a
    relatively high proportion of early stage businesses operating in a number
    of technology areas, has shown some signs of more positive developments in
    business activity.
   
  * We remain of the view that the realisation of value from many of the
    investments will take time.
   
  * The Manager continues to work very closely with many of the portfolio
    companies to rebuild value and improve the prospects for growth. The
    Company retains a satisfactory level of cash reserves to contribute to the
    further funding of existing portfolio companies.
   
Chairman's statement

OVERVIEW

The most recent half-year has seen a stabilisation in the value of the venture
capital portfolio and improved stock market conditions. These factors have
combined to produce a modest improvement in the net asset value per share of
the Company from 58.4 pence at 31 January 2003 to 59.3 pence at 31 July 2003.

Overall, after taking account of share buy-backs at a cost of £125,000, the net
asset value of the Company increased from £20.3 million at 31 January 2003 to £
20.4 million at 31 July 2003.

PORTFOLIO PERFORMANCE

Following the very difficult conditions of the last two years, the six months
ended 31 July 2003 have been a period of greater stability for the venture
capital portfolio as a whole.

Movements in stock market prices resulted in an improvement of £0.4 million in
the valuation of quoted venture capital investments. In the case of certain
residual holdings resulting from earlier trade sales or IPOs of portfolio
companies, the opportunity has been taken to realise cash at the improved
market prices which prevailed towards the latter stages of the period under
review.

The Company's portfolio of unquoted investments, which contains a relatively
high proportion of early stage businesses operating in a number of technology
areas, has shown some signs of more positive developments in business activity.
Provisions made during the half year have been limited to a downward adjustment
in valuation of £0.4 million across the unquoted portfolio as a whole.

We continue with our policy of contributing to the further funding of those
portfolio companies which we believe have good potential and have committed a
further £510,000 during the half-year to these companies. Against the
background of the difficult conditions of the last two years, it is encouraging
that a number of our key portfolio companies that are still at early stage have
been able to conclude new financing rounds that will enable them to move
forward with the next phase of development of their businesses.


INCOME STATEMENTS AND DIVIDENDS

The profit and loss account for the six months to 31 July 2003 shows a loss of
£117,000, equivalent to 0.3 pence per share. In these circumstances it is
inappropriate for the Company to pay an interim dividend.

The Statement of Total Recognised Gains and Losses shows a net unrealised gain
on revaluation of £380,000, reflecting the improvement in value of the quoted
venture capital investments and the portfolio of FTSE 350 equities, less the
downward adjustment in respect of the unquoted venture capital investments. In
terms of the total return attributable to shareholders for the half-year, the
result is a net gain of £263,000 or 0.8 pence per share.

CONCLUSION

We remain cautious but rather more positive about the outlook for the Company
and its investments. The portfolio includes investments which we believe have
significant potential for the future. However we remain of the view that the
realisation of value from many of the investments will take time.

As stated in the Annual Report for the year ended 31 January 2003 in connection
with the proposal for the continuation of the Company, it will be the intention
of the Board to continue with a policy which seeks (subject to legal
requirements and the need to retain cash to meet ongoing financial
requirements) to maximise the dividend payable from available distributable
profits including capital gains achieved on investment realisations. However,
at the present time, it is not possible to predict either the timing or level
of the realisation of capital profits, and accordingly the amount and timing of
future dividends remains uncertain.

Tom Scruby

Chairman

30 September 2003

Investment manager's report

OVERVIEW

The half-year to 31 July 2003 has seen a stabilisation in the value of the
venture capital portfolio and improved stock market conditions, which have
combined to produce a modest improvement in the Company's net asset value per
share.

PERFORMANCE OF THE VENTURE CAPITAL PORTFOLIO

Following the very difficult conditions of the last two years, the six months
ended 31 July 2003 have been a period of greater stability for the venture
capital portfolio as a whole, although business conditions have varied in the
different industry sectors in which the Company holds investments.

As has been emphasised in previous reports, a number of the companies in which
Quester VCT has invested are still at a relatively early stage of development.
Some of those involved in technology-related opportunities, for example, may
still have only limited sales revenues and may still be loss-making.

It has, however, been encouraging that a number of our key portfolio companies
that are still at early stage have been able to conclude new financing rounds
(including contributions from Quester VCT) which will enable them to move
forward with the next phase of development of their businesses.

While in a number of sectors our portfolio companies are beginning to see
prospects of improving sales, other companies have continued to suffer from
slower than expected market development. Additional provisions have been made
against cost of investments where necessary to reflect such conditions. Across
the portfolio as a whole, changes in provisions against unquoted venture
capital investments have resulted in a valuation reduction of £0.4 million,
while in the quoted venture capital investments stock market price movements
have produced valuation increases of a similar amount.

The opportunity was taken during the half year to sell the remaining holding in
ADVA A.G. Optical Networking and, since 31 July, part of the remaining holding
in SurfControl plc, these transactions together realising proceeds of some £0.3
million.

VENTURE CAPITAL INVESTMENTS MADE DURING THE PERIOD

Follow-on investments were made during the half year as shown below:

Investment                          Industry sector                   £'000
                                                                           
Advanced Valve Technologies Limited Industrial products &               207
                                    services                               
                                                                           
Anadigm Limited                     Semiconductors                      122
                                                                           
Elateral Holdings Limited           Software                             61
                                                                           
Other investments (4)                                                   120
                                                                           
                                                                        510

FURTHER VENTURE CAPITAL INVESTMENT

As previously reported, the only investments likely to be made in the near term
will be further investments in companies in the existing portfolio. The
portfolio holds a number of attractive investments with good potential and it
is the intention that Quester VCT will continue to contribute to the funding of
these investments.

Once a number of the existing unquoted investments have been realised, the
potential will be created for reinvestment of the original cost in fresh
venture capital opportunities.

FTSE 350 EQUITY AND FIXED INTEREST PORTFOLIOS

The portfolio of FTSE 350 equities and fixed interest securities is retained as
a reserve for potential future venture capital investment and is managed on
behalf of the Company by Laing & Cruickshank Investment Management Limited.

The FTSE 350 holdings, covering 20 investments, stood at a valuation of some £
2.0 million at 31 July 2003 (against cost of £2.1 million), reflecting a
recovery in value of some £0.4 million over the half-year. The fixed interest
holdings with an amortized cost of £3.8 million were at break-even.

CONCLUSION

While it is too soon to predict any immediate recovery in the net asset value
per share of the Company, and business conditions vary in the different sectors
in which the Company holds investments, the performance and prospects of a
number of companies in the portfolio give cause for optimism.

We continue to work very closely with many of our portfolio companies to
rebuild value and improve the prospects for growth. The Company retains a
satisfactory level of cash reserves to contribute to the further funding of
existing portfolio companies.

Quester Capital Management Limited

Manager

30 September 2003

COMPOSITION OF THE FUND

AS AT 31 JULY 2003

                                           Cost       Valuation   % of fund
                                                                           
                                           £'000      £'000        by value
                                                                           
Ten largest venture capital                                                
investments                                                                
                                                                           
CDC Solutions Limited                      1,020      1,770            8.7%
                                                                           
Anadigm Limited                            1,385      1,385            6.8%
                                                                           
Bowman Power Systems Limited               1,526      1,030            5.0%
                                                                           
HTC Healthcare Group plc                   1,000      1,000            4.9%
                                                                           
Advanced Valve Technologies Limited        2,237      996              4.8%
                                                                           
Sift Group Limited                         875        972              4.8%
                                                                           
Methuen Publishing Limited                 751        751              3.7%
                                                                           
Sibelius Software Limited                  700        700              3.4%
                                                                           
Communication & Control Electronics        563        563              2.8%
Limited                                                                    
                                                                           
SurfControl plc                            137        520              2.5%
                                                                           
                                           10,194     9,687           47.4%
                                                                           
Other venture capital investments          12,000     4,084           20.0%
                                                                           
Total venture capital investments          22,194     13,771          67.4%
                                                                           
Listed fixed interest securities           3,816      3,805           18.6%
                                                                           
Listed FTSE 350 equities                   2,097      2,010            9.8%
                                                                           
Total investments                          28,107     19,586          95.8%
                                                                           
Cash and other net current assets          847        847              4.2%
                                                                           
Net assets                                 28,954     20,433         100.0%

UNAUDITED FINANCIAL STATEMENTS

PROFIT AND LOSS ACCOUNT

                                      6 months      6 months         Year ended
                                      ended         ended                      
                                                                  31 January   
                                      31 July 2003  31 July 2002  2003         
                                                                               
                                              £'000         £'000         £'000
                                                                               
Net profit/(loss) on realisation                 62         1,672       (2,373)
of investments                                                                 
                                                                               
Income                                          231           161           412
                                                                               
Investment management fee                     (243)         (343)         (494)
                                                                               
Other expenses                                (167)         (167)         (263)
                                                                               
(Loss)/profit on ordinary                     (117)         1,323       (2,718)
activities                                                                     
                                                                               
before taxation                                                                
                                                                               
Tax on ordinary activities                        -             -             -
                                                                               
(Loss)/profit on ordinary                     (117)         1,323       (2,718)
activities                                                                     
                                                                               
after taxation                                                                 
                                                                               
Dividends                                         -             -             -
                                                                               
Transfer (from)/to reserves                   (117)         1,323       (2,718)
                                                                               
(Loss)/earnings per share                    (0.3)p          3.8p        (7.8)p

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

                                      6 months      6 months         Year ended
                                      ended         ended                      
                                                                  31 January   
                                      31 July 2003  31 July 2002  2003         
                                                                               
                                              £'000         £'000         £'000
                                                                               
(Loss)/profit for the period                  (117)         1,323       (2,718)
                                                                               
Net unrealised gain / (loss) on                 380       (5,199)       (4,308)
revaluation of investments                                                     
                                                                               
Total recognised gains/(losses)                 263       (3,876)       (7,026)
relating to the period                                                         
                                                                               
Total recognised gains/(losses)                0.8p       (11.0)p       (20.1)p
per share                                                                      

All items in the above statement are derived 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 July     30 July     31 January   
                                          2003        2002        2003         
                                                                               
                                          £'000       £'000       £'000        
                                                                               
Fixed assets                                                                   
                                                                               
Investments                               19,586      21,849      18,866       
                                                                               
Current assets                                                                 
                                                                               
Debtors                                   1,058       676         847          
                                                                               
Cash at bank                              87          1,601       944          
                                                                               
                                          1,145       2,277       1,791        
                                                                               
Creditors: amounts falling due            (298)       (575)       (362)        
within one year                                                                
                                                                               
Other creditors                                                                
                                                                               
Net current assets                        847         1,702       1,429        
                                                                               
Net assets                                20,433      23,551      20,295       
                                                                               
Capital and reserves                                                           
                                                                               
Called up equity share capital            1,722       1,747       1,736        
                                                                               
Share premium account              1      2,787       2,780       2,787        
                                                                               
Special reserve                    1      17,448      29,139      17,559       
                                                                               
Revaluation reserve                1      (3,631)     (9,939)     (4,691)      
                                                                               
Profit and loss account            1      2,107       (176)       2,904        
                                                                               
Total equity shareholders' funds          20,433      23,551      20,295       
                                                                               
Net asset value per share                 59.3p       67.4p       58.4p        

SUMMARISED CASH FLOW STATEMENT

                                        6 months     6 months     Year ended   
                                        ended        ended                     
                                                                  31 January   
                                        31 July 2003 31 July 2002 2003         
                                                                               
                                        £'000        £'000        £'000        
                                                                               
Net cash outflow from operating         (406)        (388)        (670)        
activities                                                                     
                                                                               
Net capital expenditure and financial   (326)        776          507          
investment                                                                     
                                                                               
Financing                               (125)        (187)        (293)        
                                                                               
(Decrease)/increase in cash for the     (857)        201          (456)        
period                                                                         
                                                                               
Reconciliation of net cash flow to                                             
movement in net funds                                                          
                                                                               
(Decrease)/increase in cash for the     (857)        201          (456)        
period                                                                         
                                                                               
Net funds at the start of the period    944          1,400        1,400        
                                                                               
Net funds at the end of the period      87           1,601        944          

Notes to the unaudited financial statements

1. MOVEMENT IN RESERVES

                                  Share      Special   Revaluation Profit   
                                  premium    reserve   reserve     and loss 
                                  account £                        account  
                                  '000       £'000     £'000                
                                                                   £'000    
                                                                            
At 1 February 2003                2,787      17,559    (4,691)     2,904    
                                                                            
Shares bought back                -          (111)     -           -        
                                                                            
Net unrealised gain on            -          -         380         -        
revaluation of investments                                                  
                                                                            
Transfer of net realised loss to  -          -         680         (680)    
profit and loss account                                                     
                                                                            
Retained loss for the period      -          -         -           (117)    
                                                                            
At 31 July 2003                   2,787      17,448    (3,631)     2,107    

 2. The financial information contained in this report has been prepared on the
    basis of the accounting policies set out in the Annual Report.
   
3. The number of ordinary shares in issue as at 31 July 2003 was 34,441,775 (31
July 2002: 34,933,085).

4. The calculation of earnings per share for the period is based on the loss
after tax of £117,000 divided by the weighted average number of shares in issue
during the period being 34,639,976 ordinary shares of 5p each.

5. The unaudited financial statements set out above do not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985.

6. Copies of the unaudited interim results are expected to be sent to
shareholders on 30 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