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Spark VCT PLC (KAY)

  Print      Mail a friend       Annual reports

Friday 29 August, 2008

Spark VCT PLC

Half-yearly Report


SPARK VCT PLC

HALF YEARLY FINANCIAL REPORT 2008

Financial highlights


Per ordinary share (pence)       30.06.08      31.12.07         31.08.07           
                                                                
Net asset value                      28.7          33.2             34.2
                                                                
Dividends                                                       
                                                                
Dividend (1)                          2.8           4.2              2.8
                                                                
Cumulative dividend (2)              53.7          50.9             49.5
                                                                
Total return (3)                                                
                                                                
SPARK VCT plc (previously called                                
                                                                
Quester VCT plc)                     82.4          84.1              83.7
                                                                
Return including tax benefits (5)   102.4         104.1             103.7
                                                                
Total return to former shareholders                             
of:                                                             
                                                                
Quester VCT 2 plc (4)               67.7           69.4              68.9
                                                                
Return including tax benefits (5)   87.7           89.4              88.9
                                                                
Quester VCT 3 plc (4)               42.6           44.3              44.0
                                                                
Return including tax benefits (5)   62.6           64.3              64.0

 1. Dividend paid or declared in the financial period ended on the date stated
   
 2. Cumulative dividends paid by SPARK VCT plc
   
 3. Net asset value plus cumulative dividend per share to ordinary shareholders
    since the launch of Quester VCT plc, now renamed SPARK VCT plc.
   
 4. Total return to original shareholders in Quester VCT 2 plc and Quester VCT
    3 plc, which were merged with Quester VCT plc, now renamed SPARK VCT plc,
    in June 2005
   
 5. Return after 20% income tax relief but excluding capital gains deferral
   
Dividend

A final dividend of 2.8p per share equivalent to £3,140,000 was declared at the
Annual General Meeting on 18 June 2008 and is payable on 15 October 2008.

The interim management report comprises the Chairman's Statement, the
Investment Manager's report, Fund Summary and note 10 to the condensed
financial statements.


Chairman's statement


Net assets

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

                                                 £'000 Pence per
                                                                
                                                           Share
                                                                
Net asset value at 31 December 2007             37,676      33.2     
                                                                
Income                                             458       0.4      
                                                                
Operating expenses                               (664)      (0.6)    
                                                                
Movement on venture capital investments                         
                                                                
Unquoted investments                               252       0.2      
                                                                
Quoted venture capital investments               (209)      (0.2)    
                                                                
Bonds and equity investments                                    
                                                                
Net loss on disposal and revaluation             (779)      (0.7)    
                                                                
Net assets before dividend, performance         36,734       32.3     
incentive fee and share buy-backs                               
                                                                
Dividend payable                               (3,140)       (2.8)    
                                                                
Investment management performance incentive    (1,040)       (0.9)    
fee                                                             
                                                                
Share buy-backs                                  (328)        0.1      
                                                                
Net asset value at 30 June 2008                 32,226       28.7     

The return on the Fund's investments dropped by 0.9p per share over the six
months. The good progress made by a number of the portfolio companies has been
offset by the general change in market sentiment, which has held back the
overall performance of the Fund. A few companies are cash positive, growing
satisfactorily and, given the right market conditions, nearing readiness for an
exit. On balance, the earlier stage companies are gaining traction. However,
the change in market sentiment resulted in the withdrawal of a buyer of one
company very late in the day and the climate for follow-on financings has
become more difficult. Your Board cannot identify at this stage an investment
whose performance might transform the overall portfolio, though a number of
companies may show satisfactory returns.

The environment for disposals and funding shows no sign of improving in the
short term.

A fall of £779,000 was suffered in the portfolio of bonds and listed equities.
Given emerging cash requirements over the next two years the listed equity
portfolio was sold in July for a further loss of £291,000.

The main movements in net asset value were driven by the final dividend of 2.8p
per share, approved at the Annual General Meeting. This triggered the payment
of the performance incentive fee, and the dividend will be payable on 15
October 2008.This timing will mean that VAT will not be payable on the
incentive fee: more generally, after

1 October 2008 VAT will not be payable on the management fees and will result
in an ongoing annual benefit at present valuations of around £100,000 per
annum. Shareholders approved the new incentive scheme at the Extraordinary
General Meeting on 1 July 2008.


The Board has not declared an interim dividend. As forewarned in the last
Annual Accounts, shareholders should expect much lower dividends in the future,
as cash will be retained for reinvestment in the venture capital portfolio.
Dividends will depend on the rate of reinvestment and the overall performance
of the portfolio, and will be based to a greater degree than before on net
income and gains on disposal of investments.

As announced at the time of the EGM, the Board confirms that, in circumstances
in which growth in the year-on-year total return results in a payment under the
management performance incentive scheme, the Board would also expect to pay a
dividend.

Jock Birney

Chairman

29 August 2008


Directors' responsibility statement


The Directors confirm to the best of their knowledge that:

  * the condensed set of financial statements contained within the Half-Yearly
    Financial Report has been prepared in accordance with the Accounting
    Standards Board's Statement `Half-Yearly Financial Reports'; and
   
  * the interim management report includes a fair review of the information
    required by Disclosure and Transparency Rule 4.2.7R of important events
    that have occurred during the first six months of the financial year and
    their impact on the condensed set of financial statements, and a
    description of the principal risks and uncertainties for the remainder of
    the financial year; and
   
  * the condensed set of financial statements (notes 4 and 10) includes a fair
    review of the information concerning related parties transactions as
    required by Disclosure and Transparency Rule 4.2.8R.
   
The Half-Yearly Financial Report was approved by the Board on 29 August 2008
and the above responsibility statement was signed on its behalf by the
Chairman.

Investment manager's report


The period covered by this interim management report has seen a change in
market sentiment brought about by the `sub-prime' crisis. A number of key
transactions were completed prior to the change in market sentiment, notably
the sale of Nomad Payments Limited as described in the last Annual Report. More
recently, however, the tendency towards risk aversion in the private equity and
venture capital markets has made financing conditions for a number of portfolio
companies more difficult, delayed opportunities for exits and depressed the
terms on which exits may be achievable. Against this, however, for companies in
the portfolio that are addressing new markets which are growing on the back of
new technologies or services, the general decline in market sentiment will not
stop that growth. As long as they are not approaching the capital markets for
further funding or a sale, then the value in these companies will continue to
develop well, and there are examples of companies in this category within the
portfolio.

Realisation of investments

Details of the successful exit from Nomad Payments Limited by trade sale to
Metavante Technologies, Inc. (NYSE: MV), which closed on 10 January 2008, were
set out in the last Annual Report. This transaction realised £7,263,000 (of
which £5,588,000 has been received in cash and £1,375,000 is held in escrow),
for a multiple of 2.0 times original cost.

New investments

In the first six months of the year, the Company has closed one new investment,
with £1.0 million being committed to Isango! Limited, a growth 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. Isango! has seen monthly
revenues grow by 25% on average month-on-month since the investment was made.

Progress of investments

During the six months to 30 June 2008 both the early stage companies and the
more developed companies within the venture capital portfolio have shown
generally satisfactory business progress.

A total of £1.4 million was committed to follow-on investments during the half
year. Among the Company's early stage investments in the TMT sector, Secerno
Limited, which specialises in the supply of software and appliances to protect
against internal and external threats to databases, was successful in
concluding a US$16 million financing led by Amadeus Capital Partners with
participation by the SPARK-managed funds including £532,000 from the Company.

Also in the TMT sector, an additional £372,000 was advanced as loan finance to
Cluster Seven Limited, the specialist provider of spreadsheet management
software, £129,000 to Level Four Software Limited, the specialist provider of
ATM software solutions, and £69,000 to Arithmatica Limited which is focused on
silicon math solutions for designers of integrated circuits. In the
healthcare sector, a follow-on investment of £255,000 was made in Haemostatix
Limited, the early stage company focused on platelet replacement therapies:
this followed good early scientific results and a decision to accelerate the
rate of development of the company.

Antenova Limited has demonstrated satisfactory progress in winning more
profitable business but in consequence will require additional working capital:
in present conditions, the terms of the new funding round will inevitably be less
attractive than would have been expected earlier. However, by participating in
this round at a level more than pro-rata to its previous holding, the Fund will
be taking advantage of these terms to enhance its position in the investment.

UniServity Limited, which markets a web-based collaborative learning
environment for schools, is achieving considerable success in winning contracts
with Local Education Authorities in the UK and is beginning to make progress
also in international markets.

Among the more developed companies in the portfolio, marketing communications
software company Elateral Holdings Limited has shown encouraging trading
results allowing for an increase in the valuation of the Fund's investment.
However, Elateral was a victim of the sentiment change in markets when an offer 
for the acqisition of the company at substantially above this level was 
withdrawn by a private equity buyer on account of market turmoil.

In the healthcare sector, the merger of Celldex Therapeutics, Inc. with the
NASDAQ- listed AVANT Immunotherapeutics, Inc., which closed in March 2008, has
been well received in the market and the share price has performed well. The
share price of MediGene AG also improved over the half year and the opportunity
was taken to sell one-third of this holding.

The healthcare sector also produced some disappointments over the half year:
the scientific progress of Lectus Therapeutics Limited has not lived up to
expectations and both Genosis plc and Phoqus Pharmaceuticals plc failed in the
implementation of their business plans: all three investments must now be
considered as write-offs.

Valuation changes

Venture capital portfolio

In the venture capital portfolio, the sale of shares in MediGene AG generated
proceeds of £140,000 and contributed to an overall £32,000 gain on disposal.
Revaluation of unquoted investments produced a net surplus of £209,000,
including £774,000 in respect of a revaluation of Elateral Holdings Limited
offset by a write-down of £442,000 in respect of Antenova Limited and other
adjustments.

Valuation changes in the quoted venture capital portfolio produced a surplus of
£29,000 over the figures at 31 December 2007, including increases in the values
of the holdings in AVANT Immunotherapeutics, Inc. and MediGene AG offset by
disappointing performances of Allergy Therapeutics plc and Oxonica plc.

However, amounts totalling £637,000 have been written off as an impairment of
value, including £214,000 in respect of the residual carrying value of the
investment in Lectus Therapeutics Limited, £67,000 in respect of Genosis plc
and £203,000 in respect of Phoqus Pharmaceuticals.

Listed equity and bond portfolio

Approximately £1.0 million was withdrawn from the bond portfolio during the six
months to 30 June 2008 to fund the operations of the Company. The valuation of
the listed equity and bond portfolio fell by £685,000 over the half year.

In mid July the entire portfolio of listed equities was sold (at a loss of £291,000                                    
compared with the valuation at 30 June 2008) in order to protect against the 
possibility of further declines in stock markets and ensure the availability of
liquidity to fund necessary follow-on investments and the operations of the
Company.

Outlook

Following the change in market sentiment, the pace of new investment is being
constrained, pending better visibility on the timing of planned exits and the
consequent availability of resources. The management team continues to adopt a
stringent approach designed to ensure that the Company's follow on investment
resources are most effectively applied.

It remains an objective to refresh the portfolio as soon as possible to take
advantage of new investment opportunities available to SPARK, for example in
the digital media and software applications sectors and in medical devices and
diagnostics. Continued attention will be given to the possibility of early
exits from under-performing investments in order to make this possible,
although present market conditions make the achievement of this objective more
difficult.

SPARK Venture Management Limited Manager

29 August 2008


Fund summary as at 30 June 2008


                                 Industry      Cost Valuation Equity  % of    
                                 sector         (1)           % held  fund by 
                                                        £'000         value   
                                              £'000                           
                                                                              
Fifteen largest venture capital                                               
investments                                                                   
                                                                              
Sift Group Limited               TMT          2,395     2,249 20.2%   7.0%    
                                                                              
Imagesound plc                   TMT          2,848     1,920 11.8%   6.0%    
                                                                              
Elateral Holdings Limited        TMT          1,009     1,783 24.3%   5.5%    
                                                                              
Vivacta Limited                  Healthcare   1,067     1,336 8.5%    4.1%    
                                                                              
Cluster Seven Limited            TMT          1,569     1,197 9.0%    3.7%    
                                                                              
Skinkers Limited                 TMT          1,000     1,000 5.6%    3.1%    
                                                                              
UniServity Limited               TMT          1,000     1,000 16.5%   3.1%    
                                                                              
Isango! Limited                  TMT          1,000     1,000 2.3%    3.1%    
                                                                              
Secerno Limited                  TMT            978       978 4.6%    3.0%    
                                                                              
Level Four Software Limited      TMT            855       855 5.1%    2.7%    
                                                                              
Teraview Limited                 Healthcare   1,172       827 5.4%    2.6%    
                                                                              
Perpetuum Limited                TMT            686       780 7.0%    2.4%    
                                                                              
Workshare Limited                TMT            695       695 1.9%    2.2%    
                                                                              
International Diagnostics Group  Other          690       690 23.9%   2.1%    
Limited                                                                       
                                                                              
We7 Limited                      TMT            674       674 10.0%   2.1%    
                                                                              
                                             17,638    16,984         52.7%   
                                                                              
Other venture capital                                                         
investments                                                                   
                                                                              
Haemostatix Limited              Healthcare     502       502 10.6%   1.6%    
                                                                              
Community Internet Europe        TMT            327       365 40.0%   1.1%    
Limited                                                                       
                                                                              
Arithmatica Limited              TMT            563       337 12.5%   1.0%    
                                                                              
Antenova Limited                 TMT          1,134       322 4.7%    1.0%    
                                                                              
MediGene AG FRANKFURT            Healthcare     411       314 0.2%    1.0%    
                                                                              
Allergy Therapeutics plc AIM     Healthcare     772       239 1.1%    0.7%    
                                                                              
Oxonica plc AIM                  Healthcare     204       204 1.5%    0.6%    
                                                                              
HTC Healthcare Group Limited     Other          189       189 36.7%   0.6%    
                                                                              
AVANT Immunotherapeutics, Inc.   Healthcare     625       182 0.2%    0.6%    
NASDAQ                                                                        
                                                                              
Artisan Software Tools Limited   TMT            120       120 23.4%   0.4%    
                                                                              
Landround plc AIM                TMT            178       115 6.3%    0.4%    
                                                                              
Casella Group Limited            Other          110       110 17.8%   0.3%    
                                                                              
Symetrica Limited                TMT            108       108 2.4%    0.3%    
                                                                              
Other investments:                                                            
                                                                              
valuations less than £100,000                   204       192         0.6%    
(2)                                                                           
                                                                              
                                              5,447     3,299         10.2%   
                                                                              
Total venture capital                        23,085    20,283         62.9%   
investments                                                                   
                                                                              
Total quoted venture capital                  2,281     1,128         3.5%    
investments                                                                   
                                                                              
Total unquoted venture capital               20,804    19,155         59.4%   
investments                                                                   
                                                                              
                                             23,085    20,283         62.9%   
                                                                              
Listed fixed interest                         3,848     3,828         11.9%   
investments                                                                   
                                                                              
Listed equity investments                     5,403     5,294         16.4%   
                                                                              
Total investments                            32,336    29,405         91.2%   
                                                                              
Cash and other net assets                     2,821     2,821         8.8%    
                                                                              
Net assets                                   35,157    32,226         100.0%  

 1. Amounts shown as cost represent the valuation attributed to the investment
    at the date of the merger in 2005 or subsequent acquisition cost as reduced
    in certain cases (2) by amounts written off as representing an impairment
    in value
   
 2. Cost reduced by amounts written off as representing an impairment in value
   

Condensed financial statements


Profit and loss account

                                       Notes  Six months   Six months Ten months
                                                      to          to          to
                                                30.06.08    31.08.07    31.12.07
                                              (unaudited)  (unaudited) (audited)
                                                                       
                                                    £'000     £'000      £'000
                                                                              
Loss on investments at fair value through 3        (736)     (4,936)   (4,314)
profit or loss                                                                
                                                                              
Income                                               458         418       636
                                                                              
Investment management fee: annual fee              (448)       (442)     (776)
                                                                              
                performance incentive fee 4      (1,040)           -         -
                                                                              
Other expenses                                     (216)       (329)     (432)
                                                                              
Loss on ordinary activities before               (1,982)     (5,289)   (4,886)
taxation                                                                      
                                                                              
Tax on loss on ordinary activities                     -           -         -
                                                                              
Loss on ordinary activities after                (1,982)     (5,289)   (4,886)
taxation                                                                      
                                                                              
Basic and fully diluted loss per share    5      (1 .8)p      (4.6)p    (4.3)p

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.

The accompanying notes are an integral part of this statement.



Balance sheet

                                       Notes     30 June         31   31 August
                                                    2008   December        2007
                                             (unaudited)       2007 (unaudited)
                                                   £'000  (audited)       £'000
                                                              £'000            
                                                                               
Fixed assets                                                                   
                                                                               
Investments at fair value through          6      29,405     36,294      37,746
profit or loss                                                                 
                                                                               
Current assets                                                                 
                                                                               
Debtors                                            1,535        177         284
                                                                               
Cash at bank                                       5,767      1,417       1,319
                                                                               
                                                   7,302      1,594       1,603
                                                                               
Creditors: amounts falling due             7     (4,481)      (212)       (219)
within one year                                                                
                                                                               
Net current assets                                 2,821      1,382       1,384
                                                                               
Net assets                                        32,226     37,676      39,130
                                                                               
Capital and reserves                                                           
                                                                               
Called-up equity share capital                     5,608      5,673       5,716
                                                                               
Share premium account                                150        150         150
                                                                               
Capital redemption reserve                           676        611         568
                                                                               
Special reserve                                   25,272     27,615      37,478
                                                                               
Revaluation reserve                              (2,931)        945     (6,517)
                                                                               
Profit and loss account                            3,451      2,682       1,735
                                                                               
Total equity shareholders' funds                  32,226     37,676      39,130
                                                                               
Net asset value per share                  8       28.7p      33.2p       34.2p

The accompanying notes are an integral part of this statement.



Summarised cash flow statement

                                        Note  Six months Ten months  Six months
                                                      to         to          to
                                                30.06.08   31.12.07    31.08.07
                                             (unaudited)  (audited) (unaudited)
                                                   £'000      £'000       £'000
                                                                               
Cash (outflow)/inflow from operating       9       (104)        125         243
activities                                                                     
                                                                               
Financial investment                                                           
                                                                               
Purchase of venture capital investments          (2,429)    (3,764)     (1,337)
                                                                               
Purchase of listed equities and fixed            (1,490)    (7,514)     (2,898)
interest investments                                                           
                                                                               
Sale of venture capital investments                6,038      1,237       1,237
                                                                               
Sale/redemption of listed equity and               2,253     11,926       2,969
fixed interest investments                                                     
                                                                               
Amounts recovered from investments                   410        159           -
previously written off                                                         
                                                                               
Total net financial investment                     4,782      2,044        (29)
                                                                               
Equity dividends paid                                  -    (4,911)     (3,186)
                                                                               
Financing                                                                      
                                                                               
Buy-back of ordinary shares, net of                (328)      (855)       (723)
shares issued under the dividend                                               
reinvestment scheme                                                            
                                                                               
Increase/(decrease) in cash for the                4,350    (3,597)     (3,695)
period                                                                         
                                                                               
Reconciliation of net cash flow to                                             
movement in net funds                                                          
                                                                               
Increase/(decrease) in cash for the                4,350    (3,597)     (3,695)
period                                                                         
                                                                               
Net funds at the start of the period               1,417      5,014       5,014
                                                                               
Net funds at the end of the period                 5,767      1,417       1,319

The accompanying notes are an integral part of this statement. Net funds
comprise cash at bank and on short term deposit.



Reconciliation of movements in shareholders' funds

                      Share     Share      Capital   Special   Revaluation      Profit     Total
                      capital   premium redemption   reserve  reserve         and loss        
                                                                               account         
                                                                    
                                                                                
                        £'000   £'000       £'000      £'000      £'000          £'000     £'000
                                                                              
At 1 January 2008       5,673     150          611    27,615        945           2,682   37,676
                                                                              
Shares purchased for     (65)       -           65      (328)        -              -       (328)
cancellation                                                                  
                                                                              
Realisation of prior        -       -            -         -     (3,429)          3,429       -
years' net gains on                                                           
investments                                                                   
                                                                              
Transfer from special       -       -            -    (2,015)       -             2,015       -
reserve to profit and                                                         
loss account                                                                  
                                                                              
Net loss on                 -       -            -       -        (447)             447       -
revaluation of                                                                
investments                                                                   
                                                                              
Loss on ordinary            -       -            -       -          -            (1,982)  (1,982)
activities after                                                              
taxation                                                                      
                                                                              
Dividend payable            -       -             -       -         -            (3,140)  (3,140)
                                                                              

At 30 June 2008         5,608     150           676   25,272      (2,931)         3,451   32,226

The accompanying notes are an integral part of this statement.


Notes

 1. The financial information contained in this Half-Yearly Financial Report
    has been prepared on the basis of the accounting policies set out in the
    Annual Report for the 10 months ended 31 December 2007.
   
The annual financial statements of the Company are prepared under the
historical cost convention, except for the measurement at fair value of fixed
asset investments, and in accordance with applicable UK accounting standards.

 2. A final dividend in respect of the period ended 31 December 2007 of 2.8p
    per share totalling £3,140,000 was declared at the Annual General Meeting
    on 18 June 2008 and is payable on 15 October 2008.
   
 3. The overall loss on investments at fair value through profit or loss
    disclosed in the profit and loss account is analysed as follows:
 
                                                            
                                                                             
                                        Six months to Ten months to  Six months to
                             
                                              31.08.07     31.12.07       30.06.08
                
                                            (unaudited)    (audited)   (unaudited)                
                                                 £'000        £'000         £'000
                                                                                 
                                                                         
                                                                               
Net (loss)/gain on disposal                      (62)          460          169
                                                                               
Write-off of investments                        (637)            -      (5,076)
                                                                               
Recoveries made in respect of                     410            -          159
investments previously written off                                             
                                                                               
Net (loss)/gain on revaluation of               (447)      (5,396)          434
investments                                                                    
                                                                               
                                                (736)      (4,936)      (4,314)
                                                                               
Unquoted venture capital investments              252      (3,548)      (1,416)
                                                                               
Quoted venture capital investments              (209)      (1,282)      (2,393)
                                                                               
Bonds and equity investments                    (779)        (106)        (505)
                                                                               
                                                (736)      (4,936)      (4,314)

`Net gain on disposal' represents the difference between proceeds received and
the carrying values of those investments sold during the period.

The amounts reported under `write-off of investments' represent the proportion
of the carrying value that have, in the opinion of the Directors, suffered an
impairment in value.

 4. Under the amended and restated agreement dated 20 May 2005 with SPARK
    Venture Management Limited, formerly called Quester Capital Management
    Limited (the Manager), 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 the Company with 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 is entitled to a performance incentive fee of 2% of the FAV (£1
    ,040,000) . Following the declaration at the Annual General Meeting of a
    final dividend of 2.8p per share in respect of the period ended 31 December
    2007, the total of cash dividends (excluding 1.0p of the special interim
    dividend) paid or declared over this period amounts to 11.15p per share or
    25% of the FAV. The performance inventive fee will be payable following
    payment of the final dividend on 15 October 2008.
   

 5. The loss per share of 1 .8p (six months ended 31 August 2007: loss 4.6p) is
    based on the loss on ordinary activities after tax of £1,982,000 (six
    months ended 31 August 2007: loss £5,289,000) and on the weighted average
    number of ordinary shares in issue during the period of 112,759,987 (six
    months ended 31 August 2007: 115,321,504).
   
The loss per share of 4.3p for the ten months ended 31 December 2007 is based
on the loss on ordinary activities after tax of £4,886,000 and on the weighted
average number of ordinary shares in issue during the period of 114,784,742.

 6. Movements in investments during the six months ended 30 June 2008 are as
    follows:
                                                Venture     Bonds &       Total                          
                                              capital        equity                                      
                                          investments   investments       
                                                £'000         £'000       £'000                  
                                                                               
Cost at 1 January 2008                         25,098        10,252      35,350
                                                                               
Net gain at 1 January 2008                        536           408         944
                                                                               
Valuation at 1 January 2008                    25,634        10,660      36,294
                                                                               
Movements in the period:                                                       
                                                                               
Purchases at cost                               2,429         1,490       3,919
                                                                               
Disposals                                                                      
                                                                               
- proceeds                                    (7,413)       (2,253)     (9,666)
                                                                               
- net gains/(losses) on disposal                   32          (94)        (62)
                                                                               
Impairment in value                             (637)             -       (637)
                                                                               
Amortisation of fixed interest                      -             4           4
investments                                                                    
                                                                               
Net gain/(loss) on revaluation of                 238         (685)       (447)
investments                                                                    
                                                                               
Valuation at 30 June 2008                      20,283         9,122      29,405
                                                                               
Book cost at 30 June 2008                      23,085         9,251      32,336
                                                                               
Net loss at 30 June 2008                      (2,802)         (129)     (2,931)
                                                                               
Valuation at 30 June 2008                      20,283         9,122      29,405

Amounts shown as cost represent the valuation attributed to the investment at
the date of the merger in 2005 or subsequent acquisition cost, less any
reduction made on accounts of impairment in value.

Bonds and equity investments at valuation at 30 June 2008 include listed fixed
interest investments of £3,828,000 (31 December 2007: £4,860,000) and listed
equity investments of £5,294,000 (31 December 2007: £5,800,000).

 7. Creditors (amounts falling due within one year) are as follows:
 
                                                         30.06.08     31.12.07           
                                                                            
                                                            £'000        £'000           
                                                                            
Dividend payable                                            3,140           -
                                                                            
Investment management fee: performance incentive fee        1,040           -
                                                                            
Accruals                                                      301         212
                                                                            
                                                            4,481         212



 8. The net asset value per share as at 30 June 2008 of 28.7p (31 December
    2007: 33.2p) is based on net assets of £32,226,000 (31 December 2007: £
    37,676,000) and on the 112,157,948 ordinary shares in issue at that date
    (31 December 2007: 11 3,453,270).There is no dilution effect in respect of
    the period ended 30 June 2008 (year ended 31 December 2007: nil).
   
 9. Reconciliation of operating loss to cash (outflow)/inflow from operating
    activities for the period is as follows:
   

                                      Six months to  Ten months to  Six months to                      
                                           30.06.08       31.12.07       31.08.07             
                                         (unaudited)     (audited)     (unaudited)                  
                                              £'000         £'000         £'000                           
                                                                               
                                                             
                                                                               
Loss on ordinary activities before tax       (1,982)       (4,886)      (5,289)
                                                                               
Loss on investments at fair value                736         4,314        4,936
through profit or loss                                                         
                                                                               
Decrease in debtors                               17           812          705
                                                                               
Increase/(decrease) in creditors               1,129         (122)        (115)
                                                                               
Amortisation of fixed interest                   (4)             7            6
investments                                                                    
                                                                               
Cash (outflow)/inflow from operating           (104)           125          243
activities                                                                     

10.Spark Investors Limited (a fellow subsidiary of the Manager), of which AB
Carruthers is a director, may from time to time be eligible to receive
transaction fees and/or directors' fees from investee companies. During the
period to 30 June 2008, fees of £22,000 attributable to the investments of the
Company were received pursuant to these arrangements (10 months ended 31
December 2007: £39,000 paid to Quester Services Limited of which APG Holmes was
a director until 11 May 2007 and AB Carruthers was a director from that date).

11.This Half-Yearly Financial Report has been neither audited nor reviewed by
the Company's auditors and does not constitute statutory accounts. The
statutory accounts for the period ended 31 December 2007 have been delivered to
the Registrar of Companies and received an audit report which was unqualified,
did not include a reference to any matters to which the auditors drew attention
by way of emphasis without qualifying the report and did not contain any
statements under Section 237 (2) and (3) of the Companies Act 1985.

12.Interim management statements relating to the first and third quarters of
the financial year will be released via the Regulatory News Service on or
shortly before 19 May and 19 November each year.

13.Copies of the Half-Yearly Financial Report are expected to be sent to
shareholders on or about 3 September 2008. 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 North Colonnade
Canary Wharf
London E14 5HS