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  Print      Mail a friend       Annual reports

Thursday 20 September, 2007


Interim Statement

Quester VCT 5 plc

Interim Statement for the six months ended 30 June 2007

Financial highlights

Per ordinary share (pence)      30 June    31 December     30 June
                                   2007           2006        2006
Capital values                                                    
Net asset value                    77.8           84.9        85.9
Share price                        65.0           77.0        77.0
Return and dividends                                              
Dividend *                          1.0            1.0         1.0
Cumulative dividend (tax            3.5            2.5         2.5
Total return **                    81.3           87.4        88.4

*A final dividend in respect of the year ended 31 December 2006 of 1p per share
was paid on 28 March 2007, increasing cumulative dividends to 3.5p per share

**Net asset value plus cumulative dividend per share

Interim report


In May 2007 we announced that Quester Capital Management Limited, the company
that manages Quester VCT 5 plc, had been acquired by NewMedia SPARK plc
(`SPARK'). SPARK is a venture capital investment company traded on the
Alternative Investment Market (AIM) of the London Stock Exchange, focused on
early stage investment in the ICT and media sectors and is one of the few
specialist and successful companies with expertise similar to Quester.

SPARK's current market capitalisation is £56 million. Its net assets at 31
March 2007 were £72 million and it had 21 investments at that date. It
specialises in digital media, software applications, technology and
communications, which complements Quester's own activities in these areas.
Quester's strong healthcare business will be developed alongside SPARK's new
focus in this area.

The combined group is responsible for managing funds of over £275 million:
SPARK, the three Quester-managed VCTs - the Company, Quester VCT plc and
Quester VCT 4 plc - the Quester Venture Partnership, an institutional fund, and
University linked funds.

The Board believes that the acquisition of Quester by SPARK and subsequent
combination of resources has the potential to deliver enhanced long-term
returns to investors in Quester VCT5. Over the past year there have been
several successful investment realisations by SPARK: their experience brings a
fresh focus on building value from Quester VCT 5 investments and planning for
exits.  For example, the SPARK investment in Mergermarket generated expected
proceeds of £27.8 million against an initial cost of £1.2 million. The combined
team continues to invest in first class early stage businesses as well as
start-up companies.

Net assets and dividends

The movement in net assets is summarised in the table below:

                                               £'000  Pence per
Net asset value at 31 December 2006           20,153       84.9
Income                                           165        0.7
Operating expenses                             (441)      (1.9)
Net realised gain on investments                 113        0.5
Net unrealised loss on investments           (1,313)      (5.6)
Net assets before dividends and share         18,677       78.6
Dividends paid net of amounts                  (225)      (1.0)
Share buy-backs                                (291)        0.2
Net asset value at 30 June 2007               18,161       77.8

The reduction in net assets since 31 December 2006 reflects mixed and slower
progress than planned by some investments over the last six months. The
majority of the portfolio investments have just passed the mid-point in their
maturity cycle and provisioning has been made against weaker investments
without the benefit of profit from revaluations or realisations of the more
successful companies.

The return (IRR - % pa) to date from Quester VCT 5 of -3.7% (+0.3% inclusive of
20% income tax relief), whilst disappointing nonetheless has a similar profile
to venture capital funds of the same vintage. For example, the five year return
from technology funds was -4.8% pa IRR (BVCA Private Equity and Venture Capital
Performance Measurement Survey 2006).

A final dividend in respect of the last financial year of 1p per share was paid
on 28 March 2007. The Board do not propose an interim dividend at this stage
and will consider whether a small final dividend is appropriate when the
accounts for the full year are available.

Venture capital portfolio: investment activity

New investment

The Company has completed three new venture capital investments during the
first six months of the year:

Symetrica Limited                Diagnostics & devices              44
UniServity Limited               Software                          700
We7 Limited                      Software                          102

Symetrica: Symetrica is a spin out company from the Department of Physics and
Astronomy at the University of Southampton set up to commercialise proprietary,
high performance gamma-ray spectroscopy, imaging hardware and software for use
in nuclear, medical and process control industries. The investment was part of
an overall financing to assist Symetrica in fulfilling a teaming agreement with
Smiths Group to deliver a US Department of Defense contract with the balance
provided by other Quester funds along with syndicate partners.

UniServity: £700,000 was invested in a £2.4 million first funding round for
UniServity, with the balance provided by other Quester managed funds.
UniServity is a leading provider of web-based learning platforms to the
educational sector. UniServity's learning platforms provide schools with a
customised online suite of tools to support innovative ways of teaching and
learning, thereby extending the classroom to the internet.

We7: the investment was part of a £1.5 million first funding round. We7's
technology inserts targeted adverts on to audio and video content which can
then be legally downloaded for free by the consumer with the advert content
being paid for by the advertiser. The company is at an early stage in
developing advertising supported internet content in the fast growing downloads

Follow-on investments

A feature of the current period is that several portfolio companies have been
raising new rounds of finance to fund their ongoing development. Accordingly,
the number of follow-on investments has continued to be substantial.

Antenova Limited                 Communications                     41
Arithmatica Limited              Semiconductors                     31
Azea Networks Inc                Communications                     71
Celona Technologies Limited      Software                          164
Cluster Seven Limited            Software                          193
Genosis plc                      Diagnostics & devices             113
HTC Healthcare Limited           Consumer services                  23
Identum Limited                  Software                           71
Level Four Software Limited      Software                          166
Oxford Immunotec Limited         Diagnostics & devices              82
Oxxon Therapeutics Holdings Inc  Biotechnology                      97
Pelikon Limited                  Hardware                          115

(1) Bridging investment realised immediately upon the company's acquisition by
Oxford Biomedica plc.

The most significant of these transactions in the half year were as follows:

Cluster Seven: Cluster Seven provides technology for managing, analysing and
auditing the activity and data generated by Microsoft Excel spreadsheets, its
product being used principally in the investment banking industry. Following
good progress achieved during 2006, the company raised £1.5 million in
additional equity from Quester funds as sole institutional investor. This is
bridge finance and the first step towards raising additional equity finance to
fund further growth.

Level Four: Level Four supplies advanced software products for the testing and
development of ATM services to major banks and financial institutions
worldwide. The company raised £800,000 in February 2007 from Quester funds as
sole institutional investor; the new investment being expected to fund the
expansion of the company.

Celona Technologies: Celona is a developer of data migration software for
communications service providers (CSPs) enabling them to transform the software
platforms which manage their operations without affecting customer service. The
company has recently reached an important milestone with the closing of a £7
million Series B funding round with Caledonia Investments plc. This will enable
Celona to build out its sales and support activities and will fund further
product development.

Venture capital portfolio: realisations and M&A activity

Realisations from the portfolio of quoted venture capital investments generated
£266,000 in proceeds and a net gain of £59,000 over carrying value at 31
December 2006. These transactions included the sale of the entire holding in
Polaron and part of the unquoted holding in Oxxon Therapeutics at the time of
its acquisition by the AIM-traded company, Oxford Biomedica plc in a
paper-for-paper transaction.

Venture capital portfolio: valuation changes

The changes in the valuations of unquoted investments as a result of the
management team review have resulted in a net reduction in valuations of £1,772,000.

Down valuations have been made to Celona Technologies, Identum and Oxford
Immunotech ahead of third party funding rounds. In respect of Oxford
Immunotech, the Company has received notification from its lawyers of the
filing of a s459 claim brought by minority shareholders of Oxford Immunotech.
The suit claims unfairly prejudicial conduct by venture capital investors
including the Company. The Board has been advised that the case is unlikely to
succeed and accordingly it is the Company's intention to defend this action.

Down valuations have also been made to Advanced Valve Technologies,
Arithmatica, Celldex, HTC Healthcare and Mesophotonics where progress over the
past six months has been slower than planned.

Quoted venture capital investments, which comprise 11 stocks, are 26% of the
value of the venture capital portfolio and increased in valuation by £114,000
during the period.

Listed equity portfolio

The listed equity portfolio has performed well over the half year with the
valuation increasing by 11 % and a total of £1.1 million has been realised from
the portfolio to provide liquidity for the new and follow-on venture capital


Investment in new companies has slowed down as the fund approaches full

It is difficult to predict the timing of a significant build up in exit
activity, not least because this will be affected by general market conditions
as well as by the progress of individual portfolio companies. As stated in the
2006 Annual Report, we do not anticipate any significant short term
realisations. We were then anticipating a build up in exit activity in 2008 and
2009. The slower progress made by portfolio companies now suggest that this
timescale is likely to prove too demanding and we anticipate that the majority
of the portfolio should be ready for sale between 2009 and 2012.

We expect net asset value to continue to decline further as a result of normal
running costs and provisioning against weaker investments and then to increase
in the medium term as exits are achieved.

Our focus is now working with the established portfolio to build value towards

Michael Inwards
20 September 2007

Fund summary
As at 30 June 2007

                       Industry sector       Original Valuation      %     % of
                                             cost               equity     fund
                                             £'000        £'000   held by value   
Quoted venture capital investments                                                     
Allergy Therapeutics   Biotechnology         700      1,053       1.1%     5.8%
Cyclacel               Software              500      137         0.5%     0.8%
Pharmaceuticals Inc                                                            
Genosis plc            Diagnostics & devices 713      225         4.2%     1.2%
Imagesound plc         Industrial products & 500      491         0.5%     2.7%
Landround plc          Other services        73       54          2.6%     0.3%
MediGene AG            Biotechnology         624      360         0.5%     2.0%
Oxford Biomedica plc   Biotechnology         428      225         0.0%     1.2%
Phoqus Group plc       Biotechnology         145      88          0.4%     0.5%
Portrait Software plc  Software              565      275         1.3%     1.5%
Public Recruitment     Industrial products & 250      79          0.6%     0.4%
Group plc              services                                                
Quadnetics Group plc   Electronics           57       79          0.1%     0.4%
Total venture capital                        4,555    3,066               16.8%
Unquoted venture                                                               
capital investments                                                            
Advanced Valve         Industrial products & 673      -          11.9%     0.0%
Technologies Limited   services                                                
Antenova Limited       Communications        443      403         1.8%     2.2%
Arithmatica Limited    Semiconductors        318      80          2.5%     0.4%
Azea Networks Limited  Communications        802      573         2.5%     3.2%
Celldex Therapeutics   Biotechnology         400      360         1.0%     2.0%
Celona Technologies    Software              824      523         5.4%     2.9%
Cluster Seven Limited  Software              510      510         4.7%     2.8%
Global Silicon Limited Semiconductors        333      -           4.2%     0.0%
Haemostatix Limited    Biotechnology         61       61          3.1%     0.3%
HTC Healthcare Group   Consumer services     308      -           3.5%     0.0%
Identum Limited        Software              609      304         2.7%     1.7%
Keronite Limited       Chemicals & materials 386      386         2.9%     2.1%
Lectus Therapeutics    Biotechnology         364      364         3.0%     2.0%
Level Four Software    Software              580      580         4.1%     3.2%
Mesophotonics Limited  Electronics           357      89          3.0%     0.5%
Nanotecture Group      Chemicals & materials 88       88          0.8%     0.5%
Oxford Immunotec       Diagnostics & devices 638      418         3.7%     2.3%
Pelikon Limited        Hardware              487      487         2.9%     2.7%
Perpetuum Limited      Electronics           185      185         3.4%     1.0%
Secerno Limited        Software              108      108         1.7%     0.6%
Symetrica Limited      Diagnostics & devices 44       44          0.9%     0.2%
UniServity Limited     Software              700      700        11.6%     3.9%
Vivacta Limited        Diagnostics & devices 390      390         5.6%     2.1%
We7 Limited            Software              102      102         3.9%     0.6%
Workshare Limited      Software              764      1,037       2.9%     5.7%
Xention Discovery      Biotechnology         700      738         3.4%     4.1%
Total unquoted venture capital investments   11,174   8,530               47.0%
Total venture capital                        15,729   11,596              63.8%
Listed fixed interest                        1,547    1,545                8.5%
Listed equity                                2,205    3,449               19.0%
Total investments                            19,481   16,590              91.3%
Cash and other net assets                     1,571    1,571               8.7%
                                                                                                                         Net assets                                   21,052   18,161             100.0%                               

Unaudited financial statements

Profit and loss account
                                  Note       6 months      6 months  Year ended
                                                ended         ended 31 December           
                                         30 June 2007  30 June 2006        2006
                                                £'000         £'000       £'000
Net losses on investments at fair       (1,200)       (168)         (206)      
value through profit or loss                                                   
Income                                  165           145           292        
Investment management fee               (257)         (277)         (540)      
Other expenses                          (183)         (156)         (295)      
Loss on operating activities            (1,475)       (456)         (749)      
Interest payable on loan notes          (1)           (1)           (2)        
Loss on ordinary activities             (1,476)       (457)         (751)      
before taxation                                                                
Tax on ordinary activities              -             -             -          
Loss on ordinary activities after       (1,476)       (457)         (751)      
Basic and diluted loss per share    4   (6.3)p        (1.9)p        (3.1)p     

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.

A statement of total recognised gains and losses has not been presented because
all gains and losses are included in the statement above.

Balance sheet

                                 30 June   31 December 30 June
                                    2007          2006    2006   
                                   £'000         £'000   £'000
Fixed assets                                                
Investments                       16,590     17,212   15,597
Current assets                                              
Debtors                              336        278      101
Cash at bank                       1,481      2,847    5,365
                                   1,817      3,125    5,466
Creditors: amounts                 (200)      (138)    (264)
falling due within one                                      
Other creditors                                             
Net current assets                 1,617      2,987    5,202
Creditors: amounts                  (46)       (46)     (46)
falling due in over one                                     
Net assets                        18,161     20,153   20,753
Capital and reserves                                        
Called-up equity share               233        237      242
Capital redemption                    19         15       10
Share premium account              5,996      5,982    5,982
Special reserve                   14,590     14,986   15,323
Fair value reserve               (2,893)    (1,468)  (1,303)
Profit and loss account              216        401      499
Total equity                      18,161     20,153   20,753
shareholders' funds                                         
Net asset value per share          77.8p      84.9p    85.9p

Summarised cash flow statement

                               30 June   30 June 31 December
                                 2007      2006        2006
                                £'000     £'000       £'000    
Net cash outflow from operating (37)     (91)      (623)     
Net capital expenditure and     (813)    (770)     (2,450)   
financial investment                                         
Dividends paid net of amounts   (225)    (230)     (232)     
Buy-back of ordinary shares     (291)    (320)     (626)     
Issue of shares pursuant to     -        -         2         
offers for subscription made                                 
during 2004                                                  
Decrease in cash for the period (1,366)  (1,411)   (3,929)   
Reconciliation of net cash flow to movement in net funds                                                              
Decrease in cash for the period (1,366)  (1,411)   (3,929)   
Net funds at the start of the   2,847    6,776     6,776     
Net funds at the end of the     1,481    5,365     2,847     

Reconciliation of movement in shareholders' funds

              Share      Capital    Share    Special  Fair     Profit   Total
              capital   redemption  premium  reserve  value   and loss         
                         reserve    account           reserve  account         
              £'000      £'000      £'000    £'000    £'000    £'000    £'000
At 1 January  237        15         5,982    14,986   (1,468)  401      20,153  
Shares issued -          -          14       -        -        -        14      
under the                                                                       
Shares bought (4)        4          -        (291)    -        -        (291)   
Realisation   -          -          -        -        (112)    112      -       
of prior                                                                        
years' net                                                                      
profits on                                                                      
Transfer from -          -          -        (105)    -        105      -       
reserve to                                                                      
profit and                                                                      
loss account                                                                    
Transfer of   -          -          -        -        (1,313)  1,313    -       
loss on                                                                         
to fair value                                                                   
Loss on       -          -          -        -        -        (1,476)  (1,476) 
Dividend paid -          -          -        -        -        (239)    (239)   
At 30 June    233        19         5,996    14,590   (2,893)  216      18,161  


 1. The financial information contained in this report has been prepared on the
    basis of the accounting policies set out in the Annual Report for the year
    ended 31 December 2006.
 2. A final dividend in respect of the prior year of 1p per share totalling £
    239,000 was paid on 28 March 2007.
 3. The number of ordinary shares in issue as at 30 June 2007 was 23,341,324
    (30 June 2006: 24,145,351).
 4. The calculation of earnings per share for the period is based on the loss
    after tax of £1,476,000 (2006: loss of £457,000) divided by the weighted
    average number of shares in issue during the period being 23,544,305 (2006:
    24,443,013) ordinary shares of 1p 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. The statutory accounts for the period ended 31 December 2006 have
    been delivered to the Registrar of Companies and received an audit report
    which was unqualified and did not contain any statements under Section 237
    (2) and (3) of the Companies Act 1985.
 6. Copies of the unaudited interim results are expected to be sent to
    shareholders on 20 September 2007. Further copies can be obtained from the
    Company's registered office.
A copy of the above document is to 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