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Quester VCT 4 PLC (KAY2)

  Print      Mail a friend       Annual reports

Tuesday 12 July, 2005

Quester VCT 4 PLC

Interim Results

                               Quester VCT 4 plc                               

           Interim statement for the six months ended 30 April 2005            

Financial highlights

Per ordinary share (pence)                  30 April    31 October     30 April
                                                2005                       2004
Capital values                                                                 
Net asset value                                 64.4          67.7         72.4
Share price                                     60.0          62.0         82.5
Return and dividends                                                           
Dividend                                         1.0             -            -
Cumulative dividend                              3.9           2.9          2.9
Total return*                                   68.3          70.6         75.3
*Net asset value plus cumulative                                               
dividend per share                                                             

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

  * Most of the companies in Quester VCT 4's portfolio are still at a
    relatively early stage of development. The underlying scientific and
    business development of those companies involved in technology-related
    opportunities has been generally positive.
  * While the initial investment phase is regarded as essentially complete, the
    total number of venture capital investments will be kept under review and
    further investments will be made if appropriate.
  * Overall, we consider that the portfolio is capable of recovering the loss
    of value so far suffered and then delivering attractive returns to
    shareholders in the longer term.
  * A dividend of 1p per share was paid on 1 April 2005.
                             CHAIRMAN'S STATEMENT                              


Following completion of the Company's initial investment phase, the main focus
of activity has been on the development of long-term value in the venture
capital portfolio.

Members of the Quester investment team have been much engaged during the period
with the key companies in the portfolio, helping in the development of business
strategy and in the building of management teams, considering plans for the
raising of further rounds of finance, where this is justified by business
progress, and in a number of cases looking ahead at the planning of an initial
public offering (IPO) or merger and acquisition (M&A) activity.


Midway through the fifth year of Quester VCT 4, the portfolio still contains a
relatively high proportion of early stage businesses. The portfolio suffered
one business failure during the period, which contributed largely to the amount
recorded for the write-off of investments. Generally, however, for those
companies involved in technology-related opportunities, the underlying
scientific and business development has been positive.

The Board believes that, across the portfolio as a whole, progress is
satisfactory at this stage in Quester VCT 4's development.


                                                     £'000      Pence per
Net asset value at 31 October 2004                  35,240           67.7
Income                                                 211            0.4
Investment management fee and other expenses         (620)          (1.2)
Realised net gains on disposal of investments          125            0.2
Write-off of investments (net of amounts             (580)          (1.1)
in respect of investment previously                                      
Net unrealised loss on revaluation of                (356)          (0.7)
Share buy-backs                                      (463)            0.1
Issue of shares under the dividend reinvestment         67              -
Dividends paid                                       (520)          (1.0)
Net asset value at 30 April 2005                    33,104           64.4

As foreshadowed in the Annual Report for the year ended 31 October 2004, the
Company has revoked its investment company status to enable a dividend to be
paid in respect of the realised gains achieved on venture capital investments
in that year. This has been paid as an interim dividend of 1.0p per share in
respect of the current year ending 31 October 2005.

After payment of the interim dividend the net asset value per share was reduced
from 67.7p at 31 October 2004 to 64.4p per share at 30 April 2005.

In consequence of the revocation of investment company status, Quester VCT 4's
results are now presented in the form of a profit and loss account and
statement of total recognised gains and losses rather than in a three-column
statement of total return.

The profit and loss account for the half-year shows a net loss after tax of £
864,000 (with no tax being payable), equivalent to 1.7p per share. This
includes, in addition to income and expenses, the realised net gains on
disposal of investments and the write-off of investments. The net unrealised
loss on revaluation of investments, amounting to £356,000, is included in the
statement of total recognised gains and losses.


As has previously been stated, Quester VCT 4's venture capital investments are,
in most cases, still at an early stage and will take time to mature.

The Board considers that, given the underlying progress made to date, the
portfolio is capable of recovering the loss of value so far suffered and then
delivering attractive returns to shareholders in the longer term.

Robert Wright


12 July 2005



We indicated in the last Annual Report that Quester VCT 4's initial investment
phase was essentially complete at 31 October 2004. Accordingly, no new venture
capital investments were made during the six months to 30 April 2005, the focus
of attention during this period being on the building of value in the existing
portfolio companies.

An additional £1.6 million was invested in 10 of the existing portfolio
companies, either as further tranches of originally agreed commitment or as
follow-on investment. The follow-on investments included additional commitments
to Advanced Valve Technologies Limited (£146,000), Antenova Limited (£255,000),
Avidex Limited (£211,000), Azea Networks, Inc. (£432,000) and Oxford Immunotec
Limited (£188,000).


During the six months to 30 April 2005, the Company realised proceeds of £
324,000 from the sale of part of the holding in the NASDAQ-quoted company
Loudeye Corp., generating a gain of £145,000 over the comparable valuation at
31 October 2004. Further sales have been made since that date, but given the
timing of release to Quester VCT 4 of certain of its entitlements under the
sale agreement, it will be some time before full realisation is achieved.

It is disappointing to report one company failure during the year. The Quester
team had been closely monitoring the progress of Digital Union UK Limited, with
a modest amount of additional capital being advanced to give management time to
achieve certain business objectives: in the event, these were not achieved and
the decision was taken not to provide further funding (write-off of £679,000).
Two further investments, previously carried at only modest residual valuations,
have also been treated as realised. These transactions have resulted in a net
write-off of £580,000 (after offsetting amounts recovered in respect of certain
previous write-offs): there are now 32 active venture capital investments in
the portfolio.

While most of the companies are still at a relatively early stage of
development, for those involved in technology-related opportunities the
underlying scientific and business development has been generally positive. A
number of companies are progressing towards the raising of new rounds of
finance, with new participants expected to join the syndicate, and in a number
of cases an uplift in valuation may be expected on successful completion of the
new round. It is too soon to predict the achievement of an early exit from any
of the existing investments, but in a number of cases business progress has
resulted in increased focus on exit strategy including consideration of the
opportunities for IPO in due course.


The portfolio of quoted venture capital investments showed a net appreciation
of £12,000 (significant movements within this total being an appreciation in
value of Allergy Therapeutics plc and a decline in Polaron plc).

Among the unquoted venture capital investments, valuations generally have shown
greater stability than in previous periods. As a result of slower than expected
development of the respective businesses, further provisions have been made
against the investments in Advanced Valve Technologies Limited (£365,000) and
HTC Healthcare Group plc (£289,000). On the positive side, encouraging recent
business progress has justified the revaluation of the holdings in Nexagent
Limited (upvaluation of £272,000) and Workshare Limited (upvaluation of £
100,000). Including other minor adjustments, there is a net reduction in
valuation of unquoted investments (excluding Opsys Management Limited) of £

In consequence of the share price performance of the underlying holding in the
NASDAQ-quoted company Cambridge Display Technologies, Inc., a downward
valuation adjustment has been made in respect of Opsys Management Limited (£
216,000) and, for the sake of prudence, a provision of £122,000 has been made
against the valuation of the residual entitlement under the agreement for the
trade sale of CDC Solutions Limited.


At 30 April 2005 the Company held a portfolio of listed equities valued at £6.4
million. The portfolio produced a return over the six months of £309,000
(losses taken £19,000; unrealised portfolio appreciation £327,000).

The remaining holdings in the Company's bond portfolio were realised during the
period: reserves for ongoing investment in the venture capital portfolio are
represented in part by a £3.7 million holding in a global treasury fund. Cash
balances included £3.1 million held in non interest-bearing cash accounts, in
order to comply with the '70% qualifying investment test' under VCT legislation
while enabling the Company to maintain an appropriate level of reserves for
follow-on investment in existing portfolio companies. We expect that the non
interest-bearing cash balance will be significantly reduced by the end of the
current year.


While Quester VCT 4's initial investment phase is regarded as essentially
complete, the total number of venture capital investments will be kept under
review, particularly as realisations are achieved, and further investments will
be made if appropriate.

Although a number of companies in which Quester VCT 4 has invested have not met
their objectives during the period, more generally the progress of the
portfolio has been satisfactory. Overall, we believe that the portfolio offers
attractive upside potential from its current value.

Quester Capital Management Limited


12 July 2005


                             Industry Sector  Original Valuation   Equity % % of  
                                                  Cost              held     fund  
                                                 £'000  £'000               by value
Quoted venture capital                                                          
Allergy Therapeutics plc     Healthcare &          500       771     1.1%    2.3%  
                             life sciences                                      
Loudeye Corp.                Internet              421       493     0.8%    1.5%  
Polaron plc                  Industrial            250       172     1.2%    0.5%  
                             Products &                                         
Portrait Software plc*       Software            1,130       811     5.8%    2.5%  
Public Recruitment Group plc Industrial            250       245     0.8%    0.7%  
                             Products &                                         
Quadnetics Group plc         Electronics           143       135     0.5%    0.4%  
Total quoted venture capital                     2,694     2,627             7.9%  
Unquoted venture capital                                                        
Advanced Valve Technologies  Industrial          1,208       511    26.4%    1.5%  
Limited                      Products &                                         
Anadigm Limited              Semiconductors      1,235       223     2.8%    0.7%  
Antenova Limited             Communications      1,254     1,005     5.4%    3.0%  
Anthropics Technology        Communications      1,070        70     7.0%    0.2%  
Argelcom Limited             Software               89        89     6.2%    0.3%  
Arithmatica Limited          Semiconductors      1,486       429    13.7%    1.3%  
Avidex Limited               Healthcare &        1,013     1,013     2.7%    3.1%  
                             life sciences                                      
Azea Networks, Inc.          Communications      1,764     1,764     7.5%    5.3%  
Celona Technologies Limited  Software              321       321     9.0%    1.0%  
Celoxica Holdings Limited    Software            1,148       648     2.8%    2.0%  
Cyclacel Group plc           Healthcare &        1,000     1,000     1.4%    3.0%  
                             life sciences                                      
De Novo Pharmaceuticals      Healthcare &          803       176     3.0%    0.5%  
Limited                      life sciences                                      
Elateral Holdings Limited    Software            1,155       155    15.5%    0.5%  
Footfall Limited             Industrial          1,000     1,000     7.7%    3.0%  
                             Products &                                         
HTC Healthcare Group plc     Consumer goods &      564       275     8.7%    0.8%  
Lorantis Holdings Limited    Healthcare &        1,400     1,025     2.5%    3.1%  
                             life sciences                                      
Mesophotonics Limited        Electronics           893       670     6.0%    2.0%  
Nexagent Limited             Software              496       417     1.7%    1.3%  
Nomad Software Limited       Software            1,211       651     7.5%    2.0%  
Opsys Management Limited     Electronics         1,038        72        -    0.2%  
Oxford Immunotec Limited     Healthcare &          813       813     9.3%    2.5%  
                             life sciences                                      
Oxxon Therapeutics Holdings, Healthcare &          987       987     3.5%    3.0%  
Inc.                         life sciences                                      
Sift Group Limited           Internet              875       656     4.5%    2.0%  
TeraView Limited             Healthcare &          625       733     4.9%    2.2%  
                             life sciences                                      
Workshare Limited            Software            1,000     1,100     6.6%    3.3%  
Xention Discovery Limited    Healthcare &          500       500     5.8%    1.5%  
                             life sciences                                       
Total unquoted venture                          24,948    16,303             49.3% 
capital investments                                                             
Total venture capital                           27,642    18,930             57.2% 
Listed equity investments                        5,839     6,371             19.2% 
Total investments                               33,481    25,301             76.4% 
Cash and other net assets                        7,803     7,803             23.6% 
Net assets                                      41,284    33,104             100.0%

*formerly AIT Group plc



                                    Notes    6 months     6 months   Year ended
                                             ended 30     ended 30   31 October
                                           April 2005   April 2004         2004
                                                £'000        £'000        £'000
Net losses on investments                       (455)          478          554
Income                                            211          145          267
Investment management fee                       (429)        (508)        (972)
Other expenses                                  (191)        (227)        (358)
Loss on ordinary activities                     (864)        (112)        (509)
before tax                                                                     
Tax on ordinary activities                          -            -            -
Loss on ordinary activities after               (864)        (112)        (509)
Dividends paid and declared             3       (520)            -            -
Transfer from reserves                        (1,384)        (112)        (509)
Loss per share                          6      (1.7)p       (0.2)p       (1.0)p


                                             6 months     6 months   Year ended
                                             ended 30     ended 30   31 October
                                           April 2005   April 2004         2004
                                                £'000        £'000        £'000
Loss for the period                             (864)        (112)        (509)
Unrealised loss on revaluation of               (356)      (2,440)      (4,500)
Total recognised losses                       (1,220)      (2,552)      (5,009)

All items in the above statement are derived from continuing operations.

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


                                           Note   30 April  30 April 31 October
                                                      2005      2004       2004
                                                     £'000     £'000      £'000
Fixed assets                                                                   
Investments                                         25,301    27,664     25,814
Current assets                                                                 
Debtors                                                362       720        578
Cash at bank                                         7,943     9,954      9,185
                                                     8,305    10,674      9,763
Creditors (amounts falling due within one            (402)     (256)      (237)
Net current assets                                   7,903    10,418      9,526
Creditors (amounts falling due in over one           (100)     (100)      (100)
Net assets                                          33,104    37,982     35,240
Capital and reserves                                                           
Called-up equity share capital                         514       525        520
Share premium account                        1         284       218        218
Special reserve                              1      35,820    44,099     41,975
Revaluation reserve                          1     (3,983)   (5,933)    (7,637)
Profit and loss account                      1         469     (927)        164
Total equity shareholders' funds                    33,104    37,982     35,240
Net asset value per share                            64.4p     72.4p      67.7p


                                      6 months ended 6 months        Year ended
                                      30 April 2005  ended 30        31 October
                                                     April 2004            2004
                                      £'000          £'000                £'000
Net cash outflow from operating       (147)          (695)              (1,030)
Net capital expenditure and financial (179)          (2,956)            (3,104)
Equity dividends paid                 (520)          -                        -
Buy-back of ordinary shares           (463)         (204)                 (490)
Issue of shares under the dividend     67             -                        -
reinvest scheme                                                                
Decrease in cash for the period       (1,242)        (3,855)            (4,624)
Reconciliation of net cash flow to movement in net funds                                           
Decrease in cash for the period       (1,242)        (3,855)            (4,624)
Net cash at the start of the period   9,185          13,809              13,809
Net cash at the end of the period     7,943          9,954                9,185


 1. Movement in Reserves
                                         Share    Special Revaluation    Profit
                                       premium    reserve                   and
                                       account                reserve          
                                                    £'000                  loss
                                         £'000                  £'000   account
At 1 November 2004                         218     41,975     (7,637)       164
Share buy-back and cancellation              -      (456)           -         -
Shares issued under the terms of            66          -           -         -
the dividend reinvestment scheme                                               
Net unrealised depreciation of               -          -       (356)         -
Transfer from unrealised reserve             -          -       4,010   (4,010)
Transfer from special reserve                -    (5,699)           -     5,699
Dividends paid                               -          -           -     (520)
Net loss for the period                      -          -           -     (864)
At 30 April 2005                           284     35,820     (3,983)       469

 2. The financial information contained in this report has been prepared on the
    basis of the accounting policies set out in the 2004 Annual Report.
 3. On 21 January 2005 the directors resolved to pay an interim dividend of 1p
    per share payable on 1 April 2005.
As a result of the Directors' decision to enable dividends from capital profits
to be paid to shareholders the Company applied for its investment company
status, as defined under Section 266 of the Companies Act 1985, to be revoked
on 21 January 2005.

Consequently, the financial statements have been prepared to include a
statutory profit and loss account and a statement of total recognised gains and
losses in accordance with Schedule 4 of Companies Act 1985 and Financial
Reporting Standard 3 (Reporting Financial Performance). These statements differ
from the Statement of Total Return presented in prior periods as follows:

 a. Profit/loss on realisation of investments and permanent diminutions in
    value of investments are now included in the profit and loss account.
 b. Unrealised gains and losses on investments are included in the statement of
    total recognised gains and losses.
 c. The full amount of the investment management fee is charged to the profit
    and loss account.
The effect of the restatement has been to decrease the profit on ordinary
activities after taxation, equivalent to the revenue return on ordinary
activities after taxation under the previous presentation, by £670,000 in
respect of the current period and by £2,216,000 in respect of the comparative
period to 30 April 2004 reflecting the impact of the realisation of investments
and investment management fees charged to the profit and loss accounts.

 4. In the balance sheet, the opening revenue reserve, which was showing a loss
    of £455,000, and the opening realised capital reserve of £619,000 have been
    combined into the profit and loss account resulting in an opening balance
    of £164,000. The revaluation reserve records revaluation amounts previously
    included in the unrealised capital reserve, except for any permanent
    diminutions in value which have been passed through the profit and loss
 5. A transfer of £5,699,000 has been made from the Special Reserve to the
    Profit and Loss account. This transfer was made to offset realised losses
    on investments arising during the six months to 30 April 2005.
 6. The calculation of the loss per share for the period is based on the net
    loss after tax of £864,000 divided by the weighted average number of shares
    in issue during the period of 51,851,842.
 7. The net asset value per share as at 30 April 2005 is based on net assets of
    £33,104,000 divided by the 51,385,419 ordinary shares in issue at that
 8. The unaudited financial statements set out above do not constitute
    statutory accounts within the meaning of Section 240 of the Companies Act
9. Copies of the unaudited interim results are expected to be sent to
shareholders on 14 July 2005. Further copies can be obtained from the Company's
registered office.

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

Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS


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