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  Print      Mail a friend       Annual reports

Wednesday 17 March, 2004


Summary of year end results

QUESTER VCT 5 PLC ('the Company')

Summary of results for the year ended 31 December 2003

Per Ordinary Share        2003        2002
                                (69 weeks)
Capital Values                            
Net asset value           92.7        92.8
Share price               96.0        96.0
Return and Dividends                      
Dividend                   1.0         0.5
Cumulative dividend        1.5         0.5
Total Return*             94.2        93.3
*Net asset value                          
plus cumulative                           

Shareholder information

Annual General Meeting 11.30 a.m. on 12 May 2004



We have continued to make positive progress towards the completion of the
Company's initial venture capital portfolio, in line with the stated investment
objectives. This remains a good time to invest, with the Company continuing to
benefit from current market conditions in which investments are attractively

Net assets and performance

During the year the Company's net assets grew from £18.2million to £
20.9million.This gain primarily resulted from the additional funds raised from
the two top-up issues that were open during the year. These, in total, raised a
further £2.9million for the Company. In terms of net asset value per share,
which stood at 92.7p as at 31 December 2003, shareholders have seen value
largely maintained.

During the year, a revenue profit of £224,000 was achieved, equivalent to 1p
per share, but there was a capital loss of £132,000 or 0.6p per share, giving a
net total return to shareholders of £92,000. Further information is provided in
the statement of total return.

Investment progress

The Company has made satisfactory progress towards building its venture capital
portfolio, with £3.9million being invested in 12 new and three existing
investments. This took the number of venture capital investments held to 18, as
at 31 December 2003. Inclusive of reserves retained for follow-on investment in
existing investments, the Company has now effectively committed 61% of the
funds allocated for venture capital investment.

Further details on the Company's investments and investment performance are
provided in the Investment Manager's report.

Dividends and dividend reinvestment scheme

The directors propose a final dividend of 1p per share. Subject to shareholder
approval at the Company's annual general meeting, this dividend is to be paid
on 1 June 2004. Subscribers for shares under the offers announced on 14
November 2003 are not eligible for this dividend.

On account of the possible changes to the VCT legislation, which will
potentially have an impact on the reliefs available to new subscribers for
shares in VCTs after 5 April 2004, the directors have decided to suspend the
dividend reinvestment scheme operated by the Company until further notice.


The focus for the coming year will be on the continued development of the
venture capital portfolio. Conditions for investment remain good and the
Company continues to benefit from a quality deal flow.We believe that the
existing portfolio holds great promise, although, as is the case for early
stage venture capital investments, it is likely to take several years for the
value to show through.

Bill Passmore


17 March 2004



During the second year of the Company's life, we have continued to build the
venture capital portfolio. We benefit from a strong flow of potential
investment propositions and have been able to take advantage of competitive
pricing. We are generally pleased with the progress achieved to date, both with
the number of new investments completed and with the underlying performance of
the companies in the portfolio.

Progress with venture capital investment

The Company is making positive progress with selection of appropriate venture
capital investments. In the year to 31 December 2003, a further 12 new
investments were made as detailed in the table below.

Company                                 Industry Sector                 £'000
Advanced Valve Technologies Limited     Industrial products &             259
Amino Holdings plc                      Electronics                       143
Anadigm Limited                         Semiconductors                     87
Arithmatica Limited                     Semiconductors                    287
Cyclacel Limited                        Healthcare & life sciences        500
Digital Union Limited                   Software                          214
Lorantis Holdings Limited               Healthcare & life sciences        400
Mesophotonics Limited                   Electronics                       304
Oxford Immunotech Limited               Healthcare & life sciences        250
Oxxon Pharmaccines Limited              Healthcare & life sciences        367
Reqio Limited                           Software                          232
Xention Discovery Limited               Healthcare & life sciences        167

In addition to these, three follow-on investments were made in existing
investments, as


Company                                 Industry Sector                 £'000
AIT Group plc                           Software                          232
Antenova Limited                        Communications                    150
Azea Networks, Inc.                     Communications                    310

Following the year end, a further three new and one follow-on investment have
been made totalling £499,000.

The venture capital portfolio was comprised of 18 investments as at 31 December
2003, including 17 unquoted investments and one in a company whose shares are
traded on the Alternative Investment Market (AIM). It is currently expected
that the portfolio will grow to between 25 and 30 investments.

A well balanced portfolio

The portfolio so far established is balanced by sector and well spread, giving
a current average investment size of £309,000.A summary of the sectors covered
by the portfolio as at 31 December 2003 is provided in the table below:

Industry Sector                   Existing venture        Cost Number of   
                              capital portfolio at             investments 
                                              cost       £'000             
Healthcare & life sciences                    36.8       2,051            6
Software                                      25.4       1,411            4
Industrial products &                         11.9         659            2
Communications                                11.2         623            2
Electronics                                    8.0         447            2
Semiconductors                                 6.7         374            2
                                             100.0       5,565           18

Reserves for follow-on investment

Early stage companies generally require additional funding to allow them to
achieve their goals. Consequently, the Company operates a reserving policy so
that liquid assets are available to meet these potential future requirements.
As at the year end, the notional reserves held for follow-on investment in
existing portfolio companies amounted to £5million.Taking these reserves for
follow-on investment into account, the Company has effectively committed 61% of
the funds allocated for its initial programme of venture capital investment.

Valuation of the venture capital portfolio

Out of the 17 unquoted investments held by the Company at the year end, 16 were
valued at cost (as is usual at this early stage in the development of a venture
capital portfolio) whilst one was valued at an amount below cost. One further
investment of £400,000 in Bowman Power Systems Limited has been written off as
at 31 December 2003 having been written down by 25% at the half year stage.
This disappointing result follows a company performance, during 2003, which was
a long way below the investment plan. This led the company to be unable to
raise further finance from its broadly-based syndicate of investors: a small
recovery is anticipated from the administration process.

As at 31 December 2003, the Company held one quoted venture capital investment,
in AIT Group plc, whose shares are traded on AIM. The accounts show an
unrealised gain of £226,000 on this investment based upon the mid-market price
of its shares at 31 December 2003.

Listed equity and bond portfolio

Approximately 15% of the Company's funds is earmarked for investment in a
portfolio of listed equities or fixed interest investments, managed by Newton
Investment Management Limited. As at 31 December 2003, of the total amount
earmarked, £1.5million had been committed to listed equities and showed an
unrealised gain of £77,000.This portfolio is held as a reserve to cover
possible future funding requirements in the venture capital portfolio as it

Funds awaiting investment in the venture capital portfolio are invested in
short dated, highly rated, sterling denominated corporate and government bonds.
During 2003, the amount of this portfolio has reduced as funds have been
switched into venture capital opportunities. As at 31 December 2003, the
holdings of fixed interest securities amounted to £11.1million.A further £
1.6million allocated to this portfolio was held as uninvested cash. Over the
period, the effective yield from the bond portfolio was 3.9%.


Satisfactory progress has been made in building the venture capital portfolio
and promising investments have been made during the period. The majority of
investments remain valued at cost. Over the next few years we expect the
portfolio to translate its existing potential into increasing investment
values, but we should emphasise that these are very early days in a challenging

Quester Capital Management Limited


17 March 2004


Ten largest venture capital  Industry sector       Cost      Valuation     % of
investments by value                                                       fund
                                                     £'000       £'000         
                                                                       by value
AIT Group plc*               Software                  565         791     3.8%
Cyclacel Limited             Healthcare & life         500         500     2.4%
Workshare Limited            Software                  400         400     1.9%
Lorantis Holdings Limited    Healthcare & life         400         400     1.9%
Footfall Limited             Industrial products &     400         400     1.9%
Azea Networks, Inc.          Communications            398         398     1.9%
Avidex Limited               Healthcare & life         367         367     1.8%
Oxxon Pharmaccines Limited   Healthcare & life         367         367     1.8%
Mesophotonics Limited        Electronics               304         304     1.4%
Arithmatica Limited**        Semiconductors            287         287     1.4%
                                                     3,988       4,214    20.2%
Other venture capital                                1,577       1,448     6.9%
Total venture capital investments                    5,565       5,662    27.1%
Listed fixed interest                               11,080      11,090    53.2%
Listed equity investments                            1,459       1,536     7.4%
Total investments                                   18,104      18,288    87.7%
Cash and other net assets                            2,573       2,573    12.3%
Net assets                                          20,677      20,861   100.0%

* AIT Group plc is traded on the Alternative Investment Market (AIM)

** Formerly know as Automatic Parrallel Designs Limited

STATEMENT OF TOTAL RETURN (incorporating the revenue account)


                      Notes     2003     2003     2003    2002    2002     2002
                             Revenue  Capital    Total                    Total
                                                       Revenue Capital         
                               £'000    £'000    £'000                    £'000
                                                         £'000   £'000         
Profit/ (loss) on                  -       64       64       -   (135)    (135)
Income                  1        647        -      647     507       -      507
Investment management   2      (196)    (196)    (392)    (95)    (95)    (190)
Other expenses          3      (227)        -    (227)   (290)       -    (290)
Return on ordinary               224    (132)       92     122   (230)    (108)
activities before tax                                                          
Tax on ordinary         5          -        -        -    (23)      19      (4)
Return on ordinary               224    (132)       92      99   (211)    (112)
activities after tax                                                           
Dividends proposed      6      (221)        -    (221)    (93)       -     (93)
Transfer to /(from)                3    (132)    (129)       6   (211)    (205)
Return per share        7       1.0p   (0.6)p     0.4p    0.7p  (1.4)p   (0.7)p

The revenue column of this statement is the profit and loss account of the

All revenue and capital items in the above statement derive from continuing

The Company has only one class of business and derives its income from
investments made in shares and securities and from bank deposits.

The prior year comparatives cover the 69-week period ended 31 December 2002.

The accompanying notes are an integral part of this statement.



                                                Note        2003      2002     
                                                            £'000     £'000    
Fixed assets                                                                   
Investments                                                 18,288    15,907   
Current assets                                                                 
Debtors                                                     627       348      
Cash at bank                                                2,354     2,346    
                                                            2,981     2,694    
Creditors (amounts falling due within one year)             (362)     (308)    
Net current assets                                          2,619     2,386    
Creditors (amounts falling due after more than              (46)      (46)     
one year)                                                                      
Net assets                                                  20,861    18,247   
Capital and reserves                                                           
Called-up equity share capital                              225       197      
Share premium account                                       3,580     842      
Special reserve                                             17,390    17,413   
Capital reserve - realised                                  (527)     63       
- unrealised                                                184       (274)    
Revenue reserve                                             9         6        
Equity shareholders' funds                                  20,861    18,247   
Net asset value per share                            8      92.7p     92.8p    

The financial statements were approved by the directors on 17 March 2004 and
are signed on their behalf by:

Bill Passmore


The accompanying notes are an integral part of this statement.



                                                            2003      2002     
                                                            £'000     £'000    
Net cash inflow from operating activities                   92        126      
Corporation tax paid                                        (2)       -        
Financial investment                                                           
Purchase of venture capital investments                     (3,920)   (2,064)  
Purchase of listed equities and fixed interest              (8,951)   (40,300) 
Sale/redemption of venture capital investments              18        -        
Sale/redemption of listed equity and fixed                  10,121    26,086   
interest investments                                                           
Total financial investment                                  (2,732)   (16,278) 
Equity dividends paid                                       (93)      -        
Issue of ordinary shares pursuant to the offers             2,854     19,696   
for subscription made during the year                                          
Issue of shares in accordance with the dividend             13        -        
reinvestment scheme                                                            
Share issue expenses                                        (101)     (1,207)  
Issue of loan stock                                         -         46       
Buy back of ordinary shares                                 (23)      (37)     
Total financing                                             2,743     18,498   
Increase in cash for the period                             8         2,346    
Reconciliation of net cash flow to movement in net                             
Increase in cash for the period                             8         2,346    
Net funds at the start of the period                        2,346     -        
Net funds at the end of the period                          2,354     2,346    

The accompanying notes are an integral part of this statement.


1 Income                                                  2003       2002      
                                                          £'000      £'000     
Dividend income                                                                
Listed equity shares                                      40         8         
Interest receivable                                                            
Listed fixed interest securities                          515        327       
Bank deposits                                             92         172       
                                                          647        507       

2 Investment Management Fee     2003     2003   2003    2002     2002      2002
                             Revenue  Capital  Total Revenue  Capital   Total £
                                               £'000                       '000
                               £'000    £'000          £'000    £'000          
Investment management fee        196      196    392      95       95       190
Irrecoverable VAT                 54        -     54      15        -        15
                                 250      196    446     110       95       205

Quester Capital Management Limited ('QCML') provides investment management
services to the Company under an agreement dated 3 December 2001. QCML is a
wholly owned subsidiary of Querist Limited, a company in which APG Holmes and
JA Spooner are beneficial shareholders. APG Holmes and JA Spooner are executive
directors of QCML.

A charge of £392,000 (2002: £190,000) in respect of the management fee payable
to QCML was accrued during the year. Of this, £nil (2002: £4,000) remained
unpaid as at 31 December 2003.The fee, which is calculated monthly and is
payable in advance, was levied at a rate of 2% on the net assets during the
financial year ended 31 December 2003. This rate will increase to 2.5% with
effect from 1 January 2004.

The management fee payable to Newton Investment Management Limited, to the
extent that it is not covered by transaction fees payable by the Company, will
be met by QCML out of the above fee.

QCML provides administrative and secretarial services to the Company for which
it is entitled to a fee of £51,000 per annum (linked to the movement in the
RPI), which is included in other expenses (note 3).

  * Other expenses                                     2003        2002       
                                                       £'000       £'000      
Administration and secretarial services                51          51         
Directors' remuneration (note 4)                       39          46         
Auditor's remuneration - audit services                19          18         
- non audit services                                   7           10         
Legal and professional expenses                        18          45         
Other expenses                                         28          69         
Irrecoverable VAT                                      65          51         
                                                       227         290        

  * Directors' remuneration
                                                        2003       2002      
                                                        £'000      £'000     
Fees paid to directors                                  12         14        
Amounts paid to third parties, excluding VAT, in        27         32        
consideration of the services of directors                                   
                                                        39         46        

The total fees paid or payable in respect of individual directors for the year
is detailed in the Directors' remuneration section in the Annual Report.

5 Tax on ordinary activities

                                         2003     2003     2002     2002    
                                         Revenue  Capital  Revenue  Capital 
                                         £'000    £'000    £'000    £'000   
Corporation tax payable                                                     
- current year                           -        -        23       (19)    
- prior year adjustment                  -        -        -        -       
                                         -        -        23       (19)    

Reconciliation of profit on ordinary activities to taxation

                                         2003     2003     2002     2002    
                                         Revenue  Capital  Revenue  Capital 
                                         £'000    £'000    £'000    £'000   
Profit on ordinary activities before tax 224      (132)    122      (230)   
Tax on profit on ordinary activities at  67       (40)     37       (69)    
standard UK corporation tax rate of 30%                                     
Effects of:                                                                 
(Profit)/loss on investments             -        (19)     -        40      
Management fee charged to capital        (59)     59       (29)     29      
Non-taxable income                       (12)     -        (2)      -       
Disallowable items                       4        -        17       (19)    
                                         -        -        23       (19)    

6 Dividends proposed

                                                       2003        2002       
                                                       £'000       £'000      
Final dividend: 1p per share (2002: 0.5p per share)    221         93         

Subscribers for shares under the offers announced on 14 November 2003 are not
eligible for the 2003 dividend.

7 Return per share

The revenue return per share of 1.0p (2002: 0.7p) is based on the aggregate of
the net return from ordinary activities after tax of £224,000 (2002: £99,000)
and on ordinary shares of 21,644,753 (2002: 14,645,210), being the weighted
average number of shares in issue during the year.

The capital loss per share of 0.6p (2002: 1.4p) is based on the net realised
and unrealised capital loss for the period after tax of £132,000 (2002: £
211,000) and on ordinary shares of 21,644,753 (2002: 14,645,210), being the
weighted average number of shares in issue during the year.

8 Net asset value per share

The net asset value per share as at 31 December 2003 of 92.7p (2002: 92.8p) is
based on net assets of £20,861,000 (2002: £18,247,000) divided by the
22,498,640 (2002: 19,655,218) ordinary shares in issue at that date.

The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2003. The statutory accounts
for the year ended 31 December 2003 will be finalised on the basis of the
financial information presented by the directors in the preliminary
announcement and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.

A copy of the above document has been submitted to the UK Listing Authority,
and will shortly be available for inspection at the UK Listing Authority's
Document Viewing Facility, which is situated at:

Financial Services Authority

25 The North Colonnade

Canary Wharf


E14 5HS

Copies of the full financial statements for the year ended 31 December 2003 are
expected to be posted to shareholders on 17th March 2004 and will be available
to the public at the registered office of the Company at 29 Queen Anne's Gate,
London, SW1H 9BU.


a d v e r t i s e m e n t