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Wednesday 19 January, 2011


Proposed change of Company's investment policy,...

Not for release, publication or distribution (in whole or in part) in, into or
from any jurisdiction where to do so would constitute a violation of the
relevant laws of such jurisdiction.

For immediate release

19(th) January 2011

                                 SPARK VCT plc

                           ("SPARK" or the "Company")

Proposed change of Company's investment policy and change of name

SPARK  is today posting a circular (the "Circular") which convenes the necessary
General Meeting to implement proposals for a change in SPARK's investment policy
and  a change of SPARK'S company name and to seek Shareholder approval for these


As described in the announcement on 9(th) December 2010, the Board believes that
it is in Shareholders' interests to adopt a new investment policy with a view to
building  a portfolio that comprises a  greater proportion of lower risk, income
producing  investments with a lesser proportion  of higher risk investments with
greater  growth prospects. Further details of the proposed new investment policy
are set out below.

The  proposed amendment of the investment  policy will be subject to Shareholder
approval through an Ordinary Resolution to be put to Shareholders at the General
Meeting on 10(th) February 2011.

Existing Investment Policy

The  Company's investment  policy as  stated in  the latest  Annual Report as at
31(st) December 2009 was as follows:

"To  invest principally  in a  diversified venture  capital portfolio, including
unquoted  companies with  good growth  prospects and  companies whose shares are
traded  on AIM  and also  in a  portfolio of  listed equities and fixed-interest

The  intended  asset  allocation  was  for  85 per  cent.   of  net assets to be
allocated  to a  venture capital  portfolio designed  to achieve capital growth,
with  the balance to be  held in capital-secure liquid  markets as a reserve for
follow-on financing of companies in the existing venture capital portfolio or to
meet the net operating expenses of the Company.

The  percentages may be varied from time to time so that, for example, the asset
allocation  could involve a higher percentage  of venture capital investments if
the  reserve is fully  utilised for follow-on  investment in the venture capital

Risk  diversification within the venture capital portfolio will be achieved by a
spread  of investments across different industry  sectors (mainly in the TMT and
healthcare sectors) and investment stages.

The target size for venture capital investments at date of first investment will
be  between £500,000  and £1.0  million (which  may be increased with subsequent
follow-on  investment) and no single investment  at cost will normally exceed 5
per cent of the Company's net asset value.

From  time to  time, the  venture capital  portfolio may include listed, NASDAQ-
traded  or AIM-traded  companies in  which investment  was originally made on an
unquoted basis.

Gearing will not normally be employed.

The  directors intend  that the  Company will  continue to  qualify as a Venture
Capital  Trust under  the provisions  of sections  258-332 of the Income Tax Act
2007. Under these provisions, it is a requirement that not more than 15 per cent
of  the Company's gross assets be invested  in the securities of any one company
or  group  (aggregating  for  this  purpose  any existing holding in the company
concerned).  From time to time, however,  within the portfolio of fixed-interest
securities,  more than 15 per cent of the Company's gross assets may be invested
in a single government stock (e.g. a short-dated gilt)."

Track Record under the existing investment policy

The  Company has  not delivered  satisfactory returns  to Shareholders under the
existing investment policy set out above.  For every £1 invested:

·  in Quester VCT PLC in April  1996, Shareholders have received a total return,
excluding  tax  reliefs  of  76.5 pence  per Ordinary share comprising dividends
combined  with net  asset value  per Ordinary  Share of  18.8 pence per Ordinary
Share as at 30(th) June 2010;

· in Quester VCT 2 PLC in March 1998, Shareholders have received a total return,
excluding  tax reliefs,  of 62.3 pence  per Ordinary  share comprising dividends
combined with net asset value per Ordinary Share as at 30(th) June 2010; and

·  in Quester  VCT 3 PLC  in February  2000, Shareholders have  received a total
return,  excluding  tax  reliefs  of  36.3 pence  per  Ordinary Share comprising
dividends  combined with  net asset  value per  Ordinary Share as at 30(th) June

The  Board announced on 5(th) March 2010 that  75 per cent of cash proceeds from
realisations  would be paid out to Shareholders and that new investment would be
focused on more mature companies. Subsequent to this, and as explained above, it
was  decided to appoint  a new investment  manager, accompanied by  a new yield-
driven  investment focus. Given this change, it  is the Board's view that a more
sustainable  result should now be achieved over  the longer term by pursuing the
New  Investment Policy  set out  below which  has the  objective of  producing a
predictable and sustainable dividend stream for Shareholders.

Proposed New Investment Policy

The  Board proposes, therefore, an amended investment policy, in line with other
VCTs  managed by Albion, intended to  produce a regular and predictable dividend
stream with an appreciation in capital value as set out below.

The  Company intends to  achieve its strategy  by adopting an amended investment
policy  for new  investments which  over time  will rebalance the portfolio such
that  approximately  50 per  cent  %  of  the portfolio comprises an asset-based
portfolio  of  lower  risk,  ungeared  businesses,  principally operating in the
healthcare, environmental and leisure sectors (the "Asset-Based Portfolio"). The
balance of the portfolio, other than funds retained for liquidity purposes, will
be  invested in  a portfolio  of higher  growth businesses  across a  variety of
sectors  of the UK economy.  These will range from  lower risk, income producing
businesses  to a limited number of higher risk technology companies (the "Growth

In  neither  category  would  portfolio  companies  normally  have  any external
borrowing with a charge ranking ahead of the VCT. Up to two thirds of qualifying
investments  by cost will comprise loan stock secured with a first charge on the
portfolio company's assets.

The  Company's investment portfolio will thus be structured to provide a balance
between income and capital growth for the longer term. The Asset-Based Portfolio
is  designed  to  provide  stability  and  income  whilst  still maintaining the
potential for capital growth. The Growth Portfolio is intended to provide highly
diversified  exposure  through  its  portfolio  of  investments  in  unquoted UK

Funds  held pending investment or for liquidity purposes will be held as cash on
deposit  or in floating  rate notes or  similar instruments with  banks or other
financial institutions with a Moody's rating of 'A' or above.

The  Company's  investment  allocation  and  risk  diversification  policies are
substantially  driven by the relevant HMRC rules  and it is the intention of the
Company to apply the following policies in this respect:

(1)          The Company's income  will be derived wholly  or mainly from shares
and securities;

(2)          At  least  70 per  cent.  of  the  value of its investments will be
represented  throughout the  year by  shares or  securities that  are classified
as'qualifying holdings';

(3)         At least 30 per cent. by value of its total qualifying holdings will
be represented throughout the year by holdings of 'eligible shares';

(4)          At  no time  in the  year will  the Company's  holdings in  any one
company exceed 15 per cent. by value of its investments;

(5)          The Company  will not retain  more than 15 per  cent. of its income
earned in the year from shares and securities; and

(6)          Eligible shares will comprise at least 10 per cent. by value of the
total  of the shares and securities that  the Company holds in any one portfolio

These  tests drive a  spread of investment  risk through disallowing holdings of
more than 15 per cent. in one portfolio company.

'Qualifying  holdings', for the Company  include shares or securities (including
loans  with a five year or greater maturity period) in companies which operate a
'qualifying trade' wholly or mainly in the United Kingdom.

'Qualifying  trade'  excludes,  amongst  other  sectors,  dealing in property or
shares  and securities, insurance, banking and  agriculture. The Company may not
control a portfolio company.

There is an annual investment limit of £1 million in each portfolio company.

Gearing  will  not  normally  be  employed.   As  defined  by  the  Articles  of
Association, the Company's maximum exposure in relation to gearing is restricted
to the amount equal to the Adjusted Capital and Reserves.

From  1(st) January  2011, the  Company  will  co-invest  with  the other 8 VCTs
managed by Albion and allocation to new investments between the Albion VCTs will
be in accordance with the ratio of funds available for investment subject to the
investment  policy of  each Albion  VCT and  a limited  number of  provisions to
protect each participating company.

As  this is a  material amendment to  the existing investment  policy, under the
UKLA  Listing  Rules,  Shareholder  approval  is  required.   If  so approved by
Shareholders,  the elements  of the  proposed amended  investment policy set out
above will replace the Company's existing investment policy.


The  Board's existing dividend policy is to return 75 per cent. of sale proceeds
realised from current portfolio investments to Shareholders by way of dividends.
In  view  of  Albion's  track  record  of  generating  deal  flow of the sort of
opportunities  the Company is now targeting,  and given the Board's intention to
build  up  a  portfolio  of  income  yielding  securities, it is intended that a
greater  proportion of  cash available  from disposals  should be devoted to new
investment rather than to dividends.

The  Board's intention  is to  establish a  sustainable and progressive dividend
stream  to  Shareholders,  with  the  prospect  of a gradual recovery in capital
value.  The Board intends that it will  recommend a final dividend of 0.67 pence
per  Ordinary share, subject to the audit, in respect of the year ending 31(st)
December 2010 which reflects the previous policy.

Thereafter,  the initial annual dividend target  will be 0.67 pence per Ordinary
share  per  annum,  but  it  is  hoped  it  will increase over time as exits are
achieved and the new investment policy is implemented.


The Company's existing buy-back policy is as follows:

                 "There is a very limited secondary market for shares in Venture
Capital Trusts generally. The Company may be able to buy-back limited volumes of
its  Shares from  time to  time. However,  its ability  to do  so is, or may be,
constrained  by the level of its  own liquid resources, VCT specific legislation
and the regulations of the UKLA.

                 The Board considers  that funding tax-free  cash dividends is a
better  use of  Company funds  than share  buy-backs. Accordingly  it intends to
limit  any share purchases to  the most extreme circumstances,  and, in no case,
will  the cost of buy-backs be allowed to exceed 0.5% of opening Net Asset Value
in any year."

In  general, the other Albion managed VCTs  have a share buy-back policy to make
purchases  in the market in  the region of a  10 to 15 per cent. discount to net
asset  value, so far  as market conditions,  liquidity and reserves permit. Such
buy  backs, are subject to the overall constraint that such purchases are in the
company's  interest,  including  the  maintenance  of  sufficient  resources for
investment  in existing and new investee  companies and the continued payment of

In  order to maintain resources for dividends  and the implementation of the new
investment  policy, the  Board does  not intend  to buy  back any  shares in the
financial  year to  31(st) December 2011. However,  it intends  to implement the
share  buy-back policy practiced by the other Albion VCTs once the fruits of the
new investment policy have begun to show.


In  order to reflect the change of Manager,  the Board proposes that the name of
the  Company should  be changed  to "Kings  Arms Yard  VCT PLC", Kings Arms Yard
being the address of Albion.


There  will be a  General Meeting of  the Company held  at The City Club, 19 Old
Broad Street, EC2N 1DS on 10(th) February 2011 at 3:00 p.m.

At the General Meeting, the following resolutions will be proposed:

1.                     an ordinary resolution to change the Company's investment
policy; and

2.                     a special resolution to change the name of the Company.


Posting of Circular.................................19(th) January 2011

Last time and date of receipt of proxies

(including electronic proxies and CREST voting).............3 p.m. on 8(th)
February 2011

General Meeting to be held at the City Club,

19 Old Broad Street, EC2N 1DS....................3 p.m. on 10(th) February 2011

Further Information

A Circular is being posted to Shareholders today.

Copies of the Circular are available on the SPARK website www.albion- and may be obtained from the Company
Secretary, Albion Ventures LLP by contacting Albion Ventures on 020 7601 1850.

A copy of the Circular has been submitted to the National Storage Mechanism and
is available for inspection at

Enquiries to:

Patrick Reeve/Robert Whitby-Smith

Managing Partner/Partner

Tel: 020 7601 1850


Capitalised terms have the meaning set out in the definitions section of the
Circular unless the sense or context determines otherwise.

Circular 19.01.2011:

This announcement is distributed by Thomson Reuters on behalf of 
Thomson Reuters clients. The owner of this announcement warrants that: 
(i) the releases contained herein are protected by copyright and 
    other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
Source: Spark VCT PLC via Thomson Reuters ONE



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