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Quester VCT PLC (KAY)

  Print      Mail a friend       Annual reports

Wednesday 30 April, 2008

Quester VCT PLC

Final Results

                                QUESTER VCT PLC                                



Per ordinary share (pence)              31.12.2007 28.02.2007 28.02.2006
Net asset value                               33.2       41.6       44.5
Dividends paid                                 4.2        3.9        1.3
Cumulative dividend                           50.9       46.7       42.8
Total return                                                            
Quester VCT plc                               84.1       88.3       87.3
Return including tax benefits                104.1      108.3      107.3
Total return to former shareholders of:                                 
Quester VCT 2 plc                             69.4       73.5       72.4
Return including tax benefits                 89.4       93.5       92.4
Quester VCT 3 plc                             44.3       48.6       47.6
Return including tax benefits                 64.3       68.6       67.6


The recommended dividend of 2.8p per share would bring the total cumulative
dividends to Quester VCT plc shareholders to 53.7p per share. This dividend
would trigger a performance incentive fee of £1,040,000.

Payment date 15 October 2008

Ex-dividend date 17 September 2008

Associated record date 19 September 2008


Change of name

Following the acquisition of the Quester management company by NewMedia SPARK
plc (since renamed SPARK Ventures plc) in May 2007, the two teams have been
successfully integrated. Several investments have seen a transition to new
managers within SPARK, while long standing and valuable relationships with
former Quester managers have been retained, particularly where they have been
able to contribute to an exit process. The name of the Manager of Quester VCT
plc has been changed to SPARK Venture Management Limited ("SPARK").

As advised in the half yearly financial report, the accounting date has been
changed to 31 December, to simplify the administration of the three Quester
VCTs under SPARK's management, which now all report on the same date. This
report therefore covers the 10 month period from 28 February to 31 December
2007. Shareholders' approval is being sought at the Annual General Meeting to a
change in the name of your Company to SPARK VCT plc.

Results for the 10 months ended 31 December 2007

The movement in net assets and net assets per share is summarised in the table

                                 Unquoted      Quoted   Bonds, Total £    Pence
                                  venture     venture equities    '000      per
                                  capital     capital  and net            share
                             investments  investments  current                 
                                    £'000       £'000 assets £                 
Net asset value at 28              20,744       6,331   21,253  48,328     41.6
February 2007                                                                  
Income and net gains on                 -         164      641     805      0.7
Operating expenses                      -           -  (1,208) (1,208)    (1.1)
Write-off of investments net      (3,778)     (1,139)        - (4,917)    (4.3)
of recoveries                                                                  
Net gain/(loss) on                  2,362     (1,376)    (552)     434      0.4
revaluation of investments                                                     
Net assets before dividends        19,328       3,980   20,134  43,442     37.3
and share buy-backs                                                            
Dividend paid net of amounts            -           -  (4,798) (4,798)    (4.2)
Share buy-backs                         -           -    (968)   (968)      0.1
Net investment                      3,030       (704)  (2,326)       -        -
Net asset value at 31              22,358       3,276   12,042  37,676     33.2
December 2007                                                                  

Net assets per share, before the payment of dividends and share buy-backs, fell
by 4.3p in the 10 months ended 31 December 2007. Dividends paid in the 10 month
period amounted to 4.2p per share.

The net asset value at 31 December 2007 is stated before accounting for the
recommended final dividend of 2.8p per share, amounting to £3.2 million (see

This year's performance

The combined SPARK team has carried out an in depth review of the unquoted
portfolio, involving a number of meetings with each company to reassess their
strategies, opportunities and potential for value. The team has classified the
investee companies into those that are key to producing a good return for the
whole portfolio; companies with potential for growth; and companies where the
plan is simply for cash recovery of the existing valuation. This has resulted
in a number of adjustments, though by no means for every company in the
portfolio. The overall effect for the period is a write-off of £3,778,000,
offset by a net gain on revaluation of £2,362,000

(including the profit of £3,658,000 on the sale of Nomad, valued at its trade
sale price at 31 December 2007).

Over the same period the quoted venture capital portfolio lost £2,393,000, of
which £1,139,000 represents write- offs.

Bonds and equity investments performed well until the autumn, but were affected
by the subsequent severe drop in equity values across the UK market which
resulted in a net loss over the period of £505,000.

As indicated in the half yearly financial report, the pace of new investment
slowed during the SPARK team's review of the existing portfolio. The fund has,
however, benefited from new deal flow of £1.4 million, principally the closing
of a £1.0 million investment in a revenue generating software company Skinkers
Limited, plus a further £2.4 million committed as follow-on investment in
existing portfolio companies.

Performance since merger

Over the period from the date of the merger, the total return has dropped by
1.7p per share or

3.9%. The net asset value per share has been reduced on a pro forma basis by
13.9p per share since the date of the merger and dividends amount to 12.2p per

Review of strategy and investment objectives

Following the integration of the SPARK and Quester teams (including the
adoption and refinement of Quester's healthcare team and strategy), and the
review of the portfolio discussed above, the Board reassessed your Company's
strategy and investment objectives.

Your portfolio has been invested in early stage companies, with a significant
bias towards technology. Your Board is satisfied that SPARK has longstanding
skills, and a better record over recent years than Quester, in this area. The
technology sub-sector of VCTs accounts for circa 9% of total VCT funds under
management. The three VCTs managed by SPARK, including your Company, form the
second largest group in this sub-sector.

Your Board believes that it should be possible to achieve low to mid-teen
annualised returns from early stage investing, based on evidence going back
beyond the technology boom era of 1999 to

2001, though the technology sector is likely to be more volatile than the
average. A common feature of this type of investing is the high investment of
money and time in early years which negatively impact the returns in the early
life of these companies. Your Company, however, still has a good proportion of
companies which are beyond this point. Successful technology early stage
portfolios also typically require a few stellar successes to achieve
satisfactory returns for the portfolio as a whole. SPARK has achieved a few
since its inception some 9 years ago.

The Board decided that the broad objectives will remain as before, subject to
important changes in emphasis mentioned below.

The principal changes in SPARK's investment approach from those of Quester are:

- A greater focus on revenue producing companies, which may also require less

- A shorter target holding period than Quester (under 5 years)

- SPARK's traditional expertise in media technology

- In healthcare, a focus away from capital intensive pharma opportunities

- SPARK's experience in achieving returns from struggling companies

- An overriding concentration on market opportunities that are appropriate for
early stage companies, rather than backing novel technologies

- A general disinclination to invest in AIM companies, unless they match the
core risk/return and pricing criteria in SPARK's area of expertise.


Andrew Holmes, formerly managing director and chairman of the Quester
management company, will retire from the Board at the AGM. I would like to
record the Board's warmest appreciation of the contribution he has made to the
affairs of the Company since its establishment in 1996.

Andrew Carruthers, CEO of SPARK, joined the Board in June 2007. In accordance
with the Articles of Association, he will stand for election at the AGM.

Dividends, performance incentive and outlook

At the time of the merger of the Company with Quester VCT 2 plc and Quester VCT
3 plc in 2005, the Board set an objective to achieve exits from long-standing
venture capital investments and the resumption of regular dividend payments.
There had been no material dividend payments during the three year period 2002
to 2004. A two-tier performance incentive fee was put in place at the time of
the merger to encourage the Manager to achieve significant realisations. These
have since totalled £23.6 million, including £7.3 million from the sale of
Nomad. After the payment of dividends (including the recommended dividend)
there remains, on a pro forma basis, £7.8 million in liquid resources available
to the Company.

Accordingly, in line with the indication given in the half yearly financial
report, the Board recommends a final dividend of 2.8p per share, amounting to £
3.2 million, for approval at the AGM. This dividend would be payable on 15
October 2008 at which date VAT will not be payable on the related performance
incentive fee.

The recommended final dividend of 2.8p per share would bring the total of
dividend payments since the date of the merger to 12.2p per share or £14.3
million. This means that the terms of the performance incentive put in place at
the time of the merger would be satisfied at the lower threshold, with an
average annual dividend payout of 6.4% per annum (based on the merger NAV of
43.4p per share) having been achieved over the four years, against a target of
5.0% per annum. Accordingly, if shareholders approve the recommended final
dividend, the performance incentive fee will become payable at the lower level
at a cost to the Company of £1,040,000.

The Board has taken the view, with SPARK, that at that point the existing
performance incentive scheme will have fulfilled its purpose and accordingly it
intends to bring that scheme to an end eight months before it would otherwise
expire and establish a new performance incentive scheme. This will reward
(accrued on an annual basis) the achievement of higher levels of cumulative
total returns starting from 31 December 2007 based on net asset values plus
cumulative dividends paid. Full details will be set out in a separate circular
and shareholders' approval will be sought at an Extraordinary General Meeting
to be held immediately following the AGM on 18 June 2008.

The process of reinvestment in new opportunities by the Manager is expected to
continue during

2008. In addition, a run-rate of around £2.1 million per annum has been
reserved for follow-on investments. The Manager has informed the Board that it
sees good deal flow in both technology and medical sciences in line with the
investment policy described above. With the bulk of realisations from the
existing portfolio arising in two years, the Board anticipates a further
significant reduction in liquid resources in 2008 and 2009.

Looking ahead, the Board believes that SPARK's modified investment policy
provides better prospects for growth in net asset values and total returns.
However it also recognises the potential volatility in returns from an early
stage technology portfolio.

In the half yearly financial report I highlighted that, while the policy of a
high dividend payout would be maintained in respect of the period to 31
December 2007, future dividends would depend much more on the rate of
reinvestment of the Company's liquid resources and the overall performance of
the portfolio. Accordingly shareholders should expect dividends in future to be
lower and based to a greater degree than before on net income and gains on
disposal of investments.

Jock Birney


30 April 2008


                            Industry       Cost     Valuation Equity   % of    
                                           £'000    £'000     % held   fund by 
15 largest venture capital investments                                         
Nomad Payments Limited           TMT       2,675    7,263     18.7     19.3    
Sift Group Limited               TMT       2,395    2,249     19.8     6.0     
Imagesound plc AIM               TMT       2,848    1,859     11.8     4.9     
Vivacta Limited               Healthcare   1,067    1,336     8.5      3.5     
Cluster Seven Limited            TMT       1,196    1,196     11.1     3.2     
Elateral Holdings Limited        TMT       1,009    1,009     24.3     2.7     
Skinkers Limited                 TMT       1,000    1,000     5.6      2.7     
Uniservity Limited               TMT       1,000    1,000     16.5     2.7     
Teraview Limited              Healthcare   1,172    827       5.4      2.2     
Perpetuum Limited                TMT       686      780       7.0      2.1     
Antenova Limited                 TMT       1,134    764       4.7      2.0     
Level Four Software Limited      TMT       725      725       5.1      1.9     
Workshare Limited                TMT       695      695       1.9      1.8     
International Diagnostics     Healthcare   690      690       23.9     1.8     
Group plc                                                                      
We7 Limited                      TMT       674      674       10.0     1.8     
                                           18,966   22,067             58.6    
Other venture capital                                                          
Secerno Limited                  TMT       446      446       4.2      1.2     
MediGene AG FRANKFURT         Healthcare   601      356       0.3      0.9     
Allergy Therapeutics plc      Healthcare   772      327       1.1      0.9     
Community Internet Europe        TMT       317      317       20.0     0.8     
Haemostatix Limited           Healthcare   247      247       5.9      0.7     
Oxonica plc AIM               Healthcare   210      240       2.2      0.6     
Lectus Therapeutics Limited   Healthcare   854      214       7.0      0.6     
HTC Healthcare Group plc        Other      210      210       36.7     0.6     
Phoqus Pharmaceuticals plc    Healthcare   497      203       1.3      0.5     
Landround plc AIM                TMT       178      133       6.3      0.3     
Arithmatica Limited              TMT       494      124       12.5     0.3     
Artisan Software Tools           TMT       120      120       23.4     0.3     
Casella Group Limited           Other      110      110       17.8     0.3     
Symetrica Limited                TMT       108      108       2.4      0.3     
Other investments:                         968      412                1.1     
valuations less than £                                                         
                                           6,132    3,567              9.4     
Total venture capital investments          25,098   25,634             68.0    
Total quoted venture                       5,263    3,276              8.7     
capital investments                                                            
Total unquoted venture                     19,835   22,358             59.3    
                                           25,098   25,634             68.0    
Listed fixed interest                      4,841    4,860              12.9    
Listed equity investments                  5,411    5,800              15.4    
Total investments                          35,350   36,294             96.3    
Cash and other net current                 1,382    1,382              3.7     
Net assets                                 36,732   37,676             100.0   


Management changes

Following the acquisition of Quester Capital Management Limited by NewMedia
SPARK plc (since renamed SPARK Ventures plc) on 11 May 2007, the investment
team now responsible for the management of Quester VCT plc is led by Andrew
Carruthers, CEO of SPARK, along with Jay Patel, Executive Director, and Tom
Teichman, Chairman of SPARK, and ongoing members of the Quester team.

Portfolio update and overview

The combined SPARK team has conducted a detailed review of the portfolio,
including reassessment of the business strategy, progress to date,
opportunities and potential for value of each of the investee companies. The
companies have been classified into those that are key

to producing a good return for the whole portfolio; companies with potential
for growth; and companies where the plan is simply for cash recovery of the
existing valuation.

In parallel with this review, the SPARK team has reviewed the fair values of
the investments. This review, coupled with events affecting the investee
companies and stock market and financing conditions generally, has resulted in
the write-off of a number of investments and a net positive revaluation in
respect of others (including Nomad Payments Limited at its subsequent trade
sale price). Further details are given under `Valuations' below.

The Fund summary lists the venture capital investments held by the Company at

31 December 2007 with their cost and valuation at that date. The 15 largest
venture capital investments (including Nomad Payments Limited which has since
been sold) collectively account for 58.6% of the net assets at the balance
sheet date.

Realisation of investments

We are pleased to report the achievement of a successful exit from Nomad
Payments Limited:

the trade sale to Metavante Technologies, Inc. (NYSE: MV), a leading provider
of banking and payments technologies for financial services firms and
businesses worldwide, closed on 10 January

2008 realising £7,263,000 (of which £5,888,000 has been received in cash and £
1,375,000 is held in escrow for a period of 18 months or more), for a multiple
of 2.0 times original cost.

From the date of the merger in 2005 to 31 December 2007, the realisation of
venture capital investments produced £16.3 million in realisation proceeds: the
Nomad transaction has increased this to £23.6 million.

M&A activity

The merger of Celldex Therapeutics, Inc. with the NASDAQ-listed AVANT
Immunotherapeutics, Inc. was announced in October 2007 and closed in March
2008. While the terms on which the merger has taken place represent a
significant reduction in valuation from that previously reported for the
holding in Celldex, the transaction leaves Quester VCT with a holding in a
publicly-traded company with a substantial pipeline of product candidates and
technology platforms, on the basis of which the SPARK team is optimistic as to
the prospects for recovery of value.

New investments

During the 10 month period to 31 December 2007 the pace of new investment
slowed during the SPARK team's review of the existing portfolio. More recently,
the fund has benefited from new deal flow sourced from SPARK and towards the
end of the year £1.0 million was committed to an investment in revenue
generating software company Skinkers Limited.

Skinkers Limited is involved in information broadcast technology. Its
enterprise software product enables organisations to deliver priority
notifications and distribute content through a controlled, highly versatile and
secure universal communication platform, with such clients as BBC, Cisco,
Bloomberg, FT and CNN. In addition its `Livestation' product is a revolutionary
live streaming internet broadcasting solution built on technology co-developed
with Microsoft research and designed specifically to deliver uninterrupted live
TV to large audiences at dramatically reduced costs.

The table below summarises the new investments completed during the 10 month
period to

31 December 2007:

Company                  Sector                       £'000
Aim traded companies:                                      
Oxonica plc              Healthcare                     210
Unquoted companies:                                        
Academia Networks Ltd    TMT                             51
Skinkers Ltd             TMT                          1,000
Symetrica Ltd            TMT                            108

Oxonica Limited is an AIM-traded company focused on developing commercial
solutions for international markets in the design of nanomaterials. Academia
Networks Limited is an early stage social networking website catering for the
academic and scientific research community. Symetrica Limited is an early stage
company set to commercialise proprietary, high performance gamma ray
spectroscopy, imaging hardware and software for use in the nuclear, medical and
process control industries.

Since the year end, the Company has closed one further investment, with £1.0
million being committed to Isango! Limited, an early stage company operating an
online travel website offering users an authoritative source of travel
experiences such as holiday tours, sightseeing, attractions and activities in
more than 50 countries across the world.

Follow-on investments

The table below sets out the follow-on investments completed during the
10-month period to

31 December 2007:

Company                                          Sector                £'000
Participation in share placings by AIM traded                               
Genosis plc                                      Healthcare              215
Phoqus Pharmaceuticals plc                       Healthcare              141
Vernalis plc                                     Healthcare                9
Follow-on rounds in unquoted companies:                                     
Haemostatix Limited                              Healthcare              131
Pelikon Limited                                  TMT                     219
Perpetuum Limited                                TMT                     252
Secerno Limited                                  TMT                     181
Teraview Limited                                 Healthcare              117
Vivacta Limited                                  Healthcare              152
We7 Limited                                      TMT                     426
Restructuring or bridge finance ahead of planned                            
Arithmatica Limited                              TMT                      78
Artisan Software Tools Limited                   TMT                      23
HTC Healthcare Group plc                         Other                   451

A number of the follow-on investments in the early part of the period produced
disappointing results. Since the take-over of management responsibility, and
with the benefit of the SPARK team's review of the portfolio, a stringent
approach has been adopted, designed to ensure that the Company's follow-on
investment resources are most effectively applied.

Particular setbacks relate to the AIM-traded Genosis plc, which has reported
disappointing UK and US sales of its over-the-counter fertility test, Pelikon
Limited and HTC Healthcare Group plc, where the business plan objectives of the
respective follow-on rounds were not achieved. In the case of HTC Healthcare
Group plc, additional bridge finance has been advanced in recent months based
on a plan for the stabilisation of the business and designed to permit an early

In other cases, the unquoted follow-on rounds relate to opportunities which,
while still at early stage and with the associated risks, are considered to
offer more positive prospects as venture capital investments for the longer
term. We are pleased with the business progress achieved by the early stage
healthcare company Haemostatix Limited and diagnostics business Vivacta
Limited, with the latter company successfully closing a new financing round
during the year at an uplift in the Company's original cost of investment. A
substantial additional investment was made alongside syndicate partners in a £
3.0 million round in We7 Limited, an advertising funded music download service
backed by a highly experienced management team.

We are pleased with our first investment in the `green tech' sector, energy
harvesting company Perpetuum Limited, which has achieved good early progress
and has successfully closed a new funding round during the period at an uplift
on the Company's original cost of investment.

Looking ahead - new investment opportunities

The investment policy of the Company is unchanged in substance from that set
out in the listing particulars dated 20 May 2005 issued in connection with the
merger. However, in the description of the portfolio focus, to reflect the
particular experience and reputation of the SPARK investment team, the term TMT
(technology, media and telecoms) is used instead of ICT (information and
communication technologies) and it is made clear that, looking ahead, initial
investment in unquoted companies may be made in companies at early stage or
development stage (rather than, as previously stated, generally in companies at
early stage).

In selecting new investments to add to the portfolio, within the context of
that policy, the SPARK

investment team intends to give greater emphasis to:

• the identification of later-stage venture capital opportunities (i.e. in
companies that are revenue- generating at date of first investment) and

• investments for which the holding period (the period from date of first
investment to ultimate realisation for cash) may be expected to be less than
the 5+ years typically the case hitherto.

Having regard to the particular experience and reputation of the SPARK
investment team, the programme of new investment may be expected to include,
within the TMT sector, a greater emphasis on opportunities in the digital media
and software applications sectors and a reduced exposure to `hardware'
investments which tend to involve longer holding periods and are typically
highly demanding in terms of capital requirements. In healthcare, for similar
reasons, a reduced exposure to drug discovery and a greater emphasis on areas
such as medical devices and diagnostics may be expected.

In the selection of new venture capital investments, the emphasis is expected
to be on unquoted companies; where investment in an AIM-traded company is being
considered, the investment decision will be made by reference to the underlying
risk and return criteria in SPARK's area of expertise rather than against a
plan for the building of a quoted venture capital portfolio.

Valuation changes
Events during the period, and the results of the SPARK team's review, have
necessitated significant changes in the valuations of the venture capital
investments. In some cases the changes reflect the terms of recent
transactions, or market prices in respect of the quoted investments, while in
others the changes reflect the management team's own review of the companies'
current stage of development and their prospects.

Unquoted venture capital investments

During the 10 months to 31 December 2007, in respect of unquoted investments,
the review has resulted in write-offs totalling £3,778,000 in respect of
investments that have failed or are considered to have suffered an impairment
in value, offset by a net positive revaluation of £2,362,000 in respect of
investments considered to have future potential.

The following valuation changes have been made in respect of investments
considered to have future potential:

- Nomad Payments Limited increased to reflect the terms of the trade sale which
was in the final stages of negotiation at 31 December 2007 (increase of £

- Perpetuum Limited and Vivacta Limited increased to reflect the terms of the
most recent financing rounds (increases of £94,000 and £269,000 respectively).

- Celldex Therapeutics, Inc. reduced to reflect the terms of the agreed merger
with AVANT Immunotherapeutics, Inc. (reduction £155,000).

- Antenova Limited, Arithmatica Limited, Lectus Therapeutics Limited and
Teraview Limited reduced to reflect the management team's assessment of the
companies' value at this stage in their development (total reduction £

The write-offs are as follows:

- Efforts to find a trade buyer for Advanced Valve Technologies Limited within
the timeframe dictated by the company's dwindling financial resources proved
unsuccessful and the company has been placed into administration (write-off £

- Keronite Limited and Pelikon Limited were unsuccessful in implementing the
business plans which formed the basis of the Company's investment and the terms
of further funding rounds in each case eliminated any value in the original
holdings (write-off £1,874,000).

- In respect of Artisan Software Tools Limited, Community Internet Europe
Limited and HTC Healthcare Group plc, the valuations have been reduced as an
impairment in value to reflect the management team's assessment of the
companies' value at this stage in their development or estimated to be
recoverable in a trade sale (write-off in the period £1,613,000).

Quoted venture capital investments

The period ended 31 December 2007 has seen poor performance of the companies in
Quester VCT's quoted venture capital portfolio. Market movements, and a number
of individual setbacks, have resulted in an overall reduction in valuation of
quoted venture capital investments of

£2,393,000, of which £1,139,000 has been written off as representing an
impairment in value. The most severe losses in value have been in the cases of
healthcare companies Allergy Therapeutics plc (£681,000), Genosis plc (£
341,000), Phoqus Pharmaceuticals plc (£231,000) and Vernalis plc (£798,000) and
the TMT company Imagesound plc (£411,000).

The share prices of Allergy Therapeutics plc and Vernalis plc, which were
reported on in the half year results, suffered following adverse decisions by
the US Food and Drug Administration (FDA), while the share price of Genosis plc
saw a sharp decline following the disappointing UK and US sales of its
over-the-counter fertility test as referred to earlier.

Listed equity and bond portfolio

Approximately £4.5 million was withdrawn from the equity and bond portfolio
during the period to fund new and follow-on investments and the operations of
the Company.


The SPARK team's review of the portfolio has confirmed encouraging prospects
for a number of the most significant venture capital investments.

It is emphasised, however, that the majority of these companies are still at
early stage and remain vulnerable, in the case of certain of the healthcare
companies, to the risk of adverse results in scientific development or clinical
programmes and, in the case of the TMT companies, to the normal risks of early
stage commercial development when there may be a critical dependence on key
customer contracts, as well as ongoing funding risk.

On the assumption of successful progress of the key investments, and subject to
favourable business and market conditions, it should be expected that the bulk
of the profitable realisations of investments from within the existing
portfolio will be concentrated in the period 2010 to 2011, although it is
always possible that earlier opportunities may arise for the crystallisation of
strategic value.

SPARK Venture Management Limited


30 April 2008



                                              Note Ten months    Twelve months 
                                                   to 31.12.07   to 28.02.07   
                                                   £'000         £'000         
(Loss)/gain on investments at fair           1     (4,314)       1,712         
value through profit or loss                                                   
Income                                       2     636           909           
Investment management fee                    3     (776)         (1,183)       
Other expenses                               4     (432)         (455)         
(Loss)/profit on ordinary activities               (4,886)       983           
before taxation                                                                
Tax on (loss)/profit on ordinary             6     -             -             
(Loss)/profit on ordinary activities               (4,886)       983           
after taxation                                                                 
Basic and fully diluted (loss)/              8     (4.3)p        0.8p          
earnings per share                                                             

All 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.

There are no gains and losses for the period other than those passing through
the profit and loss account of the Company.



                                                   31 December 200 28 February 
                                                   7               2007        
                                           Note    £'000           £'000       
Fixed assets                                                                   
Investments at fair value through                  36,294          42,659      
profit or loss                                                                 
Current assets                                                                 
Debtors                                            177             989         
Cash at bank                                       1,417           5,014       
                                                   1,594           6,003       
Creditors: amounts falling due within              (212)           (334)       
one year                                                                       
Net current assets                                 1,382           5,669       
Net assets                                         37,676          48,328      
Capital and reserves                                                           
Called-up equity share capital                     5,673           5,805       
Share premium account                              150             51          
Capital redemption reserve                         611             465         
Special reserve                                    27,615          38,820      
Revaluation reserve                                945             (1,102)     
Profit and loss account                            2,682           4,289       
Total equity shareholders' funds                   37,676          48,328      
Net asset value per share                   9      33.2p           41.6p       



                                               Ten months   Twelve months 
                                               to 31.12.07  to 28.02.07   
                                               £'000        £'000         
Cash inflow/(outflow) from operating           125          (828)         
Financial investment                                                      
Purchase of venture capital investments        (3,764)      (8,769)       
Purchase of listed equities and fixed interest (7,514)      (4,083)       
Sale of venture capital investments            1,237        5,409         
Sale/redemption of listed equity and fixed     11,926       3,572         
interest investments                                                      
Amounts recovered from investments previously  159          10            
written off                                                               
Total net financial investment                 2,044        (3,861)       
Equity dividends paid                          (4,911)      (4,669)       
Buy-back of ordinary shares                    (968)        (1,471)       
Issue of shares under the terms of the         113          150           
dividend reinvestment scheme                                              
Total financing                                (855)        (1,321)       
Decrease in cash for the period                (3,597)      (10,679)      
Reconciliation of net cash flow to movement                               
in net funds                                                              
Decrease in cash for the period                (3,597)      (10,679)      
Net funds at the start of the period           5,014        15,693        
Net funds at the end of the period             1,417        5,014         

Net funds comprise cash at bank and on short term deposit.



                   Share   Share    Capital  Special Revaluation  Profit Total £
                 capital premium redemption  reserve   reserve £     and    '000
                   £'000 account               £'000        '000    loss        
                           £'000    reserve                      account        
At 1 March 2007    5,805      51        465   38,820     (1,102)   4,289  48,328
Shares issued         14      99          -        -           -       -     113
under the                                                                       
Shares purchased   (146)       -        146    (968)           -       -   (968)
for cancellation                                                                
Realisation of         -       -          -        -       1,613 (1,613)       -
prior years' net                                                                
losses on                                                                       
Transfer from          -       -          - (10,237)           -  10,237       -
special reserve                                                                 
to profit and                                                                   
loss account                                                                    
Net gain on            -       -          -        -         434   (434)       -
revaluation of                                                                  
Loss on ordinary       -       -          -        -           - (4,886) (4,886)
activities after                                                                
Dividends              -       -          -        -           - (4,911) (4,911)
At 31 December     5,673     150        611   27,615         945   2,682  37,676


 1. (Loss)/profit on investments at fair value through profit or loss
The overall (loss)/profit on investments at fair value through profit or loss
disclosed in the profit and loss account is analysed as follows:

                                                    Ten months to Twelve months
                                                    31.12.07      to 28.02.07  
                                                    £'000         £'000        
Net gain on disposal                                169           1,155        
Write-off of investments                            (5,076)       (600)        
Recoveries made in respect of investments           159           10           
previously written off                                                         
Net gain on revaluation of investments              434           1,147        
                                                    (4,314)       1,712        

2. Income

                                                    Ten months to   Twelve     
                                                    31.12.07        months to  
Dividend income                                                                
Unlisted companies                                  -               67         
Listed companies                                    387             368        
Interest receivable                                                            
Listed fixed interest securities                    108             106        
Loans to venture capital investee                   42              60         
Bank deposits                                       38              90         
Other income                                        61              218        
                                                    636             909        

3. Investment management fee

                                              Ten months to    Twelve months to
                                              31.12.07 £'000   28.02.07 £'000  
Investment management fee                     653              1,011           
Irrecoverable VAT                             123              172             
                                              776              1,183           

SPARK Venture Management Limited ("SVML"), formerly called Quester Capital
Management Limited, provides investment management services to the Company
under an amended and restated agreement dated 20 May 2005.

SVML is a wholly owned subsidiary of SPARK Ventures plc, a company of which AB
Carruthers is an executive director and in which he is a beneficial
shareholder. APG Holmes was an executive director of SVML until his retirement
in April 2008.

SVML is entitled to receive a management fee, determined quarterly in arrears,
at the annual rate of 2.0% on the value of the Company's net assets at the end
of each quarter. This fee is capped to ensure that the Company's running costs
do not exceed 3.25% of closing net asset value. Running costs in respect of the
period are less than 3.25% of closing net asset value and accordingly there was
no reduction in the management fee in respect of the cap (year ended 28
February 2007: nil).

Upon the Company having paid or declared by 31 December 2008 cash dividends
(excluding 1.0p of the special interim dividend paid post the merger of Quester
VCT plc, Quester VCT 2 plc and Quester VCT 3 plc in June 2005) of an aggregate
amount equal to 20% or more of the Company's Formula Asset Value at the date of
the merger (FAV), the Manager will become entitled to an additional performance
incentive fee of 2% (£1,040,000) of the FAV. The performance fee will be
increased by a further 1% should cash dividends paid or declared by the same
date equal 40% or more of the FAV. At 31 December 2007, an aggregate amount
equal to 19% of the FAV had been paid to shareholders as dividend counting
against the target. This fee has not been accrued, because the recommended
final dividend has not yet been approved by the shareholders and as such the
fee is not a liability of the Company as at 31 December 2007.

SVML also provides administrative and secretarial services to the Company for
which it was entitled to a fee of £53,000 for the period (year ended 28
February 2007: £61,000) adjusted annually in line with changes in the Retail
Price Index.

The investment management agreement may be terminated by the Company or the
Manager giving not less than twelve months notice. Such notice may be given at
any time after the date of the agreement. There are no provisions for
compensation payable in the event of termination of the agreement.

 4. Other expenses
Ten months to 31.12.07                            Twelve months                
                                                  to 28.02.07                  
                                                  £'000           £'000        
Administration and secretarial services           53              61           
Directors' remuneration (note 5)                  47              57           
Auditor's remuneration                                                         
Fees payable to the Company's auditor for the     16              14           
audit of the financial statements                                              
Fees payable to the Company's auditor and its     8               16           
associates for other services relating to tax                                  
Legal and professional expenses                   47              48           
Insurance                                         27              35           
UKLA, LSE and registrar's fees                    20              26           
Management fees payable to OLIM Limited           53              64           
Transaction costs                                 8               7            
Irrecoverable VAT                                 40              52           
Other                                             113             75           
                                                  432             455          

 5. Directors' remuneration
Ten months to 31.12.07                             Twelve months               
                                                   to 28.02.07                 
                                                   £'000           £'000       
Amounts paid to Directors or companies controlled  47              57          
by them                                                                        
                                                   47              57          

 6. Tax on ordinary activities
Twelve months to 31.12.07                          Twelve months               
                                                   to 28.02.07                 
Corporation tax                                    -               -           
Reconciliation of profit on ordinary activities to                             
(Loss)/profit on ordinary activities before        (4,886)         983         
Tax on (loss)/profit on ordinary activities at     (1,466)         295         
standard UK corporation tax rate of 30% (28                                    
February 2007: 30%)                                                            
Effects of:                                                                    
Non taxable items - UK dividends and net losses/   1,178           (644)       
(gains) on investments                                                         
Unutilised management expenses                     288             349         
                                                   -               -           

 7. Dividends
Ten months to 31.12.07                             Twelve months               
                                                   to 28.02.07                 
Second interim dividend, year ended 28 February                                
2.8p per share paid 21 March 2007                  3,299           -           
Interim dividend, period ended 31 December 2007:                               
1.4p per share paid 7 December 2007                1,612           -           
Final dividend: 2.5p per share paid 3 July 2006    -               3,006       
Interim dividend: 1.4p per share paid 22 December  -               1,663       
                                                   4,911           4,669       

The Directors recommend a final dividend of 2.8p per share, equivalent to £3.2
million, in respect of the period ended 31 December 2007 which, upon approval
by shareholders at the Annual General Meeting, will be payable on 15 October
2008 and consequently has not been recognised in the accounts.

 8. Earnings per share
The loss per share of 4.3p (year ended 28 February 2007: earnings 0.8p) is
based on the loss on ordinary activities after tax of £4,886,000 (year ended 28
February 2007: earnings £983,000) and on the weighted average number of
ordinary shares in issue during the period of 114,784,742 (year ended 28
February 2007: 118,098,926).

There is no dilution effect in respect of the period ended 31 December 2007 (28
February 2007: nil).

 9. Net asset value per share
The net asset value per share as at 31 December 2007 of 33.2p (28 February
2007: 41.6p) is based on net assets of £37,676,000 (28 February 2007: £
48,328,000) divided by the 113,453,270 ordinary shares in issue at that date
(28 February 2007: 116,108,239). There is no dilution effect as at 31 December
2007 (year ended 28 February 2007: nil).

10. Financial information
As advised in the half yearly financial report, the accounting date has been
changed to 31 December, to simplify the administration of the three Quester
VCTs under SPARK's management, which now all report on the same date. This
statement therefore covers the 10 month period from 28 February to 31 December
2007. Shareholders' approval is being sought at the Annual General Meeting to a
change in the name of your Company to SPARK VCT plc.

This preliminary statement was approved by the Board on 30 April 2008.The
financial information set out above does not constitute the company's statutory
accounts for the period ended 31 December 2007 or the year ended 28 February
2007, but is derived from and has been prepared on the same basis as those
financial statements.

Statutory accounts for 28 February 2007, which were prepared under UK GAAP,
have been delivered to the registrar of companies and those for 31 December
2007, prepared under UK GAAP, will be delivered in due course.

The auditors have reported on the 28 February 2007 and 31 December 2007 year
end accounts and their reports were unqualified and did not include references
to any matters to which the auditors drew attention by way of emphasis without
qualifying their reports and did not contain statements under section 237(2) or
(3) of the Companies Act 1985.

The audited statutory accounts for the financial period ended 31 December 2007
will be available by the close of business on 30 April 2008 at

A copy of the Company's statutory accounts will 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


E14 5HS

Copies of the full financial statements for the period ended 31 December 2007
are expected to be posted to shareholders on 6 May 2008 and will be available
to the public at the registered office of the Company at 133 Glasshouse Street,
London, W1B 5DG.