QUESTER VCT 4 PLC
ANNUAL REPORT 2005
Summary of results for the year ended 31 October 2005
Per ordinary share 2005 2004 2003
(pence)
Capital values
Net asset value 61.3 67.7 77.2
Share price 60.0 62.0 82.5
Return and
dividends
Dividend 1.0 - -
Cumulative 3.9 2.9 2.9
dividend
Total return* 65.2 70.6 80.1
*Net asset value plus cumulative dividend
DIVIDENDS
No dividend is proposed in respect of the year ending 31 October 2005.
The directors have resolved to pay an interim dividend of 1p per share in
respect of the year ending 31 October 2006.
Payment date 1 March 2006
Ex-dividend date 1 February 2006
Associated record date 3 February 2006
CHAIRMAN'S STATEMENT
OVERVIEW
Quester, the Manager of Quester VCT 4, is one of a small number of venture
capital houses that specialise in high growth early stage venture capital
opportunities. These opportunities are largely found in two areas - information
and communication technologies and healthcare and life sciences - market
sectors offering investors considerable potential. It is also an area dominated
to a significant degree by institutional investors, who are used to taking a
long term view of up to 10 years.
It would be normal to expect net assets to fall in the early years in a fund of
this type, as losses and running costs are incurred, before rising when the
more successful investments begin to increase in value. This traditional
"curve" has been exaggerated by the difficult market conditions in the
technology area since the start of the fund in January 2001.
The current climate is now somewhat more favourable for early stage technology
investment. Pricing is more realistic and M&A activity is at a higher level
than we have seen for a number of years. At the same time, we are entering the
fund's second phase where we can normally expect some of the companies in the
portfolio to begin to show their worth. The next few years will be most
important, as this is when a maturing portfolio should deliver its potential
returns.
NET ASSETS, REVENUE AND DIVIDENDS
Net assets have reduced by �4.2million and stand at �31.0million at 31 October
2005. The changes underlying the movement in net assets are as follows:
�'000 Pence per
share
Net asset value at 31 October 2004 35,240 67.7
Income 437 0.9
Operating expenses (1,176) (2.3)
Realised loss on investments (404) (0.8)
Unrealised loss on revaluation of investments (1,737) (3.4)
Dividend paid (521) (1.0)
Dividend reinvestment scheme 68 -
Share buy-backs (915) 0.2
Net asset value at 31 October 2005 30,992 61.3
PROGRESS OF THE PORTFOLIO
There has been some good, positive underlying progress made by a number of
companies in the venture capital portfolio in what has been a particularly
active year. Some of these companies, which have significant potential, are at
a critical point in their development in terms of proving their science or
getting their products into the market.
We are seeing an increased level of M&A activity within the portfolio. It is
good to be able to report the sale of Footfall Limited after the year end,
which generated cash proceeds of �3.0million and a profit of �2.0million. This
gain, which is not included in the results for the period to 31 October 2005,
is equivalent to approximately 4p per share or a 6.5% increase in net asset
value.
It has also been a very active period on the investment side; �4.9million has
been invested in 17 existing companies and four new investments have been made
in companies with good potential. We believe that current prices offer the
prospect of attractive returns.
DIVIDENDS AND DIVIDEND REINVESTMENT SCHEME
An interim dividend of 1p per share was paid on 1 April 2005. This was paid
from realised gains that arose from the venture capital portfolio, principally
the sale of Sterix Limited.
The sale of Footfall Limited following the year end has generated a sizeable
gain for the Company. The Board has therefore resolved to distribute part of
this gain through an interim dividend of 1p per share, at a cost of
approximately �500,000, payable on 1 March 2006.
We have withdrawn the Company's dividend reinvestment scheme in which a number
of shareholders had participated. This follows a recent change to the
Prospectus Rules that did not provide for the type of scheme operated by the
Company. The Board is considering the creation of a new scheme to comply with
the latest rules.
BOARD CHANGES
We have been seeking to add fresh skills to the Board and I am pleased to
report the appointment of Rudy Burger as an additional director. He has over 25
years of international business experience and has held senior positions at
Xerox, NEC, Media Lab Europe and Scipher and has wide experience in the
information technology and digital media sectors.
We would like to thank Rob Barrow for his valuable contribution to the Board up
to his retirement in April 2005.
CHANGE OF AUDITOR
During the year RSM Robson Rhodes LLP was appointed as auditor of the Company.
OUTLOOK
The environment for venture capital investment has improved. Pricing of
investments is more realistic and the increased level of M&A activity we are
seeing bodes well for the existing portfolio. As always it is impossible to
predict timing, but we are optimistic that during the next three to four years,
we will see a step up in the level of realisations and an associated increase
in net asset value. We should also start to see an increase in the level of
dividend distributions, as and when gains are realised.
It has been a very tough period and we are grateful to you for your continuing
support.
Robert Wright
Chairman
10 January 2006
INVESTMENT MANAGER'S REPORT
INTRODUCTION
We are currently in a more favourable climate for early stage venture capital
investment than in the Fund's earlier years and the majority of companies in
the portfolio have performed much as expected during what has been a very busy
period. The M&A market has been increasingly active and, following the year
end, we have seen the trade sale of Footfall, which has realised a significant
gain for the Company. We see the possibility of further M&A activity during the
current year.
PERFORMANCE OF THE VENTURE CAPITAL PORTFOLIO
The year to 31 October 2005 has been a particularly active period for the
venture capital portfolio. This high level of activity has continued after the
year end. We have worked very closely with a large number of portfolio
companies, providing further funding to support the development of their
businesses, where appropriate. Progress has been made by a number of companies
towards public market listings, with one AIM flotation, and others actively
involved in M&A discussions.
* Celoxica Holdings plc achieved an AIM flotation in October 2005 as part of a
�6.1million fundraising. Celoxica is a leading provider of electronic system
level design (ESL) and synthesis solutions used for the design and development
of complex electronic products and embedded systems. Typical applications
include use in high performance missile detection systems and motion picture
image analysis. ESL is set to become a major growth area in the electronics
design automation market and, post flotation, Celoxica is well placed to take
advantage of this.
* Cyclacel plc has recently announced plans to combine with Xcyte Therapies,
Inc. to form a larger international biopharmaceutical company. The transaction
is anticipated to close at the end of the first quarter of 2006 creating
Cyclacel Pharmaceuticals, Inc., a publicly-traded company with approximately
$20million in cash, a franchise in one of the most exciting fields of biology
and a development-stage portfolio of targeted oncology drug candidates
affecting the cancer cell cycle.
* In October, Lorantis Limited was acquired by Celldex Therapeutics, Inc., a US
based biotechnology company focused on the discovery and commercialisation of
products for the treatment of cancer, infectious diseases and immune system
disorders. The effective merger of the two companies improves the prospect of
an IPO.
* The majority of the holding in Loudeye Corp, a NASDAQ traded stock, whose
paper was received on the sale of On Demand Distribution Limited, has been
sold. This investment has now returned cash of �0.8million, which, when taken
with the value of the residual holding, is equivalent to a return of 1.4 times
original cost.
Particular progress has been made by the following portfolio companies in the
period:
* Antenova Limited, a leading developer of advanced antenna technology and
innovative radio solutions used in wireless communications, has signed two
significant contracts in the period. Following the completion of a �12million
funding round in January 2005, the company is well positioned to meet the
demand of the global handset and laptop antenna market, which is predicted to
grow significantly over the next two years.
* Identum Limited, specialists in cryptography and information security,
focusing on the control, authentication and protection of emails and other
digital information, continues to make positive progress following the launch
of Private Post in October. Private Post is a user-friendly, military grade
encryption product, targeted at the business community, which enables emails to
be sent securely. This is a growing market, with regulation and compliance
requirements leading to an increased demand for secure email communication.
* Footfall Limited, the leading provider of customer counting technology and
statistics to both the retail and retail property sectors, continued to make
good progress. Following the year end, the company was sold to Experian, the
information solutions company, giving rise to cash proceeds of �3.0million for
Quester VCT 4 and a profit of �2.0million. The resulting profit and associated
uplift in net asset value will be recognised in the current year ending 31
October 2006.
VALUATION OF THE VENTURE CAPITAL PORTFOLIO
Three investments have been written off during the year. The largest was
Digital Union UK Limited giving rise to a loss of �679,000. The Quester team
had been closely involved with the business, which designed software enabling
buyers to optimise auction-based purchasing decisions, and a modest amount of
additional capital had been 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. The final balance of the investment in
Anadigm Limited was also written off, resulting in a loss of �223,000. This
investment had been substantially written down over the last two years from its
original cost. This was a great disappointment following the significant
efforts made to develop and support this business, which a widely spread
investment syndicate saw as having considerable potential. The company
developed a product providing added functionality, potential cost savings and
flexibility in design for electronic system companies building flexible analog
circuits. However, it did not achieve fast enough growth in sales to justify
further funding support. Reqio Limited entered into administration during the
period and the final remaining value of �44,000 has been written off.
The valuations of a number of portfolio companies were increased during the
year. There has been a �271,000 uplift in the carrying value of Nexagent
Limited, the provider of centralised management software and hardware for
interconnecting next-generation telecommunication networks, to restate it to
the price of the last round.
Oxford Immunotec Limited has benefited from an uplift of �217,000 reflecting
the pricing of a �7million later stage funding round, which completed in
August. The company, which has developed a new blood test with fewer false
positives and false negatives than the existing 100 year old skin test for
tuberculosis, is well placed to take advantage of a growing recognition that
the existing skin test is no longer adequate. The company's blood test has
European regulatory approval and is being sold to hospitals and clinics across
the European Union and beyond.
The valuation of Xention Discovery Limited, a drug discovery company focusing
on the development of ion channel-acting drugs to address underserved
indications, rose by �75,000. This reflects the pricing of an �11million series
B financing round in July. The funds will be used to progress various programs
in areas such as pain and type II diabetes and also to develop further its
unique approach to ion channel drug discovery.
Workshare Limited is an established company that develops and markets document
integrity software products widely used by professional services firms and
large enterprises. The company's software provides secure and compliant
production and exchange of business documents, enabling users to assemble and
verify document content and record who has viewed documents. The company has
progressed well in the period, closing key sales in new vertical markets and
accelerating business transacted through its website. The carrying value of
this investment was increased by �100,000 to reflect the price of the last
investment.
A number of provisions have been made in the year against the previous carrying
value of investments. Firstly, a provision of �60,000 has been made against the
carrying value of Anthropics Limited. We continue to work with this company, a
developer of pioneering visual messaging applications for the mobile
communications market, despite the now very low carrying value, to achieve a
recovery of value. To help achieve this, a modest further investment was made
post year end.
Avidex Limited, a biotechnology company focused on the novel development of
therapeutics involving T-cell receptors leading to the treatment of cancer,
inflammation and autoimmune diseases, has secured further funding via a
significant investment from its new trade partner, Syngenta. This is a positive
advancement for the company and will take it through the next stage of its
development. This further funding demonstrates the progress made with its
science, although our investment valuation has been written down by �330,000 to
reflect the pricing of this third party investment.
A 75% provision totalling �750,000 has been made against the carrying value of
Cyclacel to reflect the initial market valuation of Xcyte Therapies, on the
announcement of the news of its merger with Cyclacel. We expect this valuation
to rise as the market becomes aware of the quality of the Cyclacel technology.
These latter two valuation changes reflect current valuation trends across the
biotechnology sector generally, as opposed to specific performance issues with
the individual businesses themselves.
Provisions totalling �1,457,000 were also made against six other investments in
the portfolio to reflect short term valuation uncertainty.
The quoted venture capital portfolio has fallen in value by a net �782,000.
Approximately 50% of this fall is attributable to Portrait Software plc whose
share price fell to a low of 14p on the release of a trading statement. The
company focuses on the provision of solutions to enable businesses to manage
their customer relationships more effectively. We continue to support the
company's management team and their longer term plans for the company. At 4
January 2006, the mid-market price had risen by 89% to 26.5p.
VENTURE CAPITAL INVESTMENTS MADE DURING THE PERIOD
This has been a very active period for new investment. Four new and 17 further
investments were made.
During the year we actively continued to seek new venture capital opportunities
on behalf of the Company, following the investment policy shared with our
institutional fund. The four new investments are Genosis UK plc, Global Silicon
Limited, Level Four Software Limited and Pelikon Limited and were made at a
total cost of �294,000. These small initial investments will be supplemented by
anticipated further investments from reserves, provided agreed performance
milestones are achieved. These are early stage investments with high potential
that have the capability to develop into significant investments. Global
Silicon, Level Four and Pelikon are revenue generating, albeit at modest
levels.
Genosis focuses on developing innovative and unique solutions for the diagnosis
of reproductive disorders. This is a growing market with an estimated 1 in 6
couples globally experiencing fertility issues. Genosis' first product,
Fertell, is a combined male and female home fertility test to be sold by Boots.
Quester VCT 4's initial investment was a pre-AIM investment. The company
subsequently raised �7million on its AIM listing in December, which will enable
manufacturing capabilities to be scaled up and marketing and sales resources to
be enhanced. The share price stands at a modest premium to the flotation price.
Global Silicon, a designer and manufacturer of integrated circuit solutions for
the high growth consumer audio market, raised �6million in a series B funding
round. Jeremy Milne, a Quester director, has joined its board. The company's
lead product, Xin, is currently sold in audio systems such as boom boxes and
MP3 players in the UK and Europe. This is a rapidly growing market, fuelled by
the widespread availability of digital music from download sites. The new funds
will enable Global Silicon to expand its product range and its operations in
Cambridge and China, with high volume production expected to commence in 2006.
Level Four Software is an independent software company, which supplies advanced
software products for the testing and development of "automated teller machine"
(ATM) services to banks and financial institutions. The ATM industry is
expected to experience an exciting period of change over the next five years.
Level Four Software is managed by an experienced management team and is well
placed to meet the changing market with its innovative technology. Henry
Sallitt, a Quester director, has joined its board. The aggregate �2million
investment made by Quester funds will enable the company to accelerate its
development.
Pelikon is an innovative manufacturer of thin, flexible electro luminescent
displays for consumer electronics, home appliances and industrial applications.
The company has progressed the commercialisation of its display technology and
over one million flexible displays have already been distributed world wide.
The investment, part of a �5million funding round, will allow the company to
accelerate growth.
During a very active period, we have also supported the existing portfolio with
17 further investments totalling �4.9million.
Company Industry sector �'000
Advanced Valve Technologies Industrial products & services 409
Limited
Antenova Limited Communications 254
Avidex Limited Healthcare & life sciences 343
Azea Networks, Inc. Communications 432
Celona Technologies Limited Software 345
Celoxica Holdings plc Software 167
De Novo Pharmaceuticals Limited Healthcare & life sciences 53
Digital Union UK Limited Software 143
HTC Healthcare Group plc Consumer goods & services 135
Identum Limited Software 177
Nexagent Limited Software 1,070
Nomad Software Limited Software 125
Oxford Immunotec Limited Healthcare & life sciences 714
Reqio Limited Software 19
Teraview Limited Healthcare & life sciences 125
Workshare Limited Software 139
Xention Discovery Limited Healthcare & life sciences 250
4,900
The largest follow-on investment made during the year was Nexagent, a market
leader in centralised management software and hardware for interconnecting next
generation telecom networks. The company's technology enables customers to
accelerate the management of advanced IP services over disparate networks,
resulting in increased operational efficiencies, improved productivity and
service performance. The company continues to make good progress and has been
recognised with key industry awards in the period.
A WELL BALANCED PORTFOLIO
A summary of the spread of sectors covered by the portfolio at 31 October 2005
is provided in the table below:
Industry sector Percentage of Valuation Number of
venture capital investments
portfolio
at valuation
% �'000
Healthcare & life sciences 34.0 6,718 10
Software 28.3 5,590 10
Communications 14.1 2,778 3
Industrial products & services 10.7 2,111 4
Electronics 4.4 871 3
Internet 3.7 721 2
Semiconductors 2.5 496 2
Consumer goods & services 1.9 382 1
Hardware 0.4 69 1
100.0 19,736 36
LISTED EQUITY AND BOND PORTFOLIOS AND CASH
At 31 October 2005, the Company held a portfolio of listed equities valued at �
5.7million (cost: �4.8million). During the year, the opportunity was taken to realise some of the
gains accruing and 23% of the portfolio was sold realising a profit of �
595,000. The listed equity portfolio performed well, generating an IRR of 27.7%
over the 12 months.
At the year end, the cash holdings of the Company amounted to �5.6million.
These, together with the listed equity portfolio, represent the liquid reserves
held to cover follow-on investments. New investments will continue to be made
should surplus liquid resources be available.
OUTLOOK
Following the end of the technology boom in 2001, the first five years of the
Company's life have been characterised by a difficult environment for young
technology companies. However, conditions generally have improved, as evidenced
by much increased M&A activity and improved sentiment towards AIM.
A number of companies in the portfolio are now at key points in their
development where they are starting to achieve market penetration and prove
their science. Values should increase as these companies achieve important
milestones.
We anticipate that the rate of realisations from the portfolio will increase as
the portfolio matures and, as with the very positive Footfall realisation,
these future potential realisations should flow through to further dividend
payments.
Quester Capital Management Limited
Manager
10 January 2006
FUND SUMMARY AS AT 31 OCTOBER 2005
Industry sector Original Valuation Equity % of
Cost �'000 % held fund by
value
�'000
Quoted venture capital investments
Allergy Therapeutics Healthcare & life 500 630 1.1% 2.0%
plc sciences
Celoxica Holdings plc Software 1,315 668 2.7% 2.2%
Loudeye Corp. Internet 95 64 1.0% 0.2%
Polaron plc Industrial products 250 125 1.2% 0.4%
& services
Portrait Software plc* Software 1,130 418 5.0% 1.3%
Public Recruitment Industrial products 250 213 0.8% 0.7%
Group plc & services
Quadnetics Group plc Electronics 143 129 0.5% 0.4%
Total quoted venture capital investments 3,683 2,247 7.2%
Unquoted venture capital investments
Advanced Valve Industrial products 1,471 773 30.6% 2.5%
Technologies Limited & services
Antenova Limited Communications 1,254 1,005 5.4% 3.2%
Anthropics Technology Communications 1,070 10 7.0% 0.0%
Limited
Arithmatica Limited Semiconductors 1,486 429 13.7% 1.4%
Avidex Limited Healthcare & life 1,144 815 2.7% 2.6%
sciences
Azea Networks, Inc. Communications 1,764 1,764 7.5% 5.7%
Celona Technologies Software 666 666 11.0% 2.2%
Limited
Cyclacel Group plc Healthcare & life 1,000 250 1.4% 0.8%
sciences
De Novo Pharmaceuticals Healthcare & life 803 176 3.0% 0.6%
Limited sciences
Elateral Holdings Software 1,155 155 13.7% 0.5%
Limited
Footfall Limited Industrial products 1,000 1,000 7.7% 3.2%
& services
Genosis UK plc Healthcare & life 90 90 0.9% 0.3%
sciences
Global Silicon Limited Semiconductors 67 67 0.8% 0.2%
HTC Healthcare Group Consumer goods & 671 382 8.7% 1.2%
plc services
Identum Limited Software 266 266 12.8% 0.9%
Level Four Software Software 68 68 1.2% 0.2%
Limited
Lorantis Holdings Healthcare & life 1,400 1,025 2.7% 3.3%
Limited sciences
Mesophotonics Limited Electronics 893 670 7.2% 2.2%
Nexagent Limited Software 1,537 1,458 5.8% 4.7%
Nomad Software Limited Software 1,211 651 7.5% 2.1%
Opsys Management Electronics 1,038 72 3.5% 0.2%
Limited**
Oxford Immunotec Healthcare & life 1,339 1,556 9.3% 5.0%
Limited sciences
Oxxon Therapeutics Healthcare & life 987 494 3.5% 1.6%
Holdings, Inc. sciences
Pelikon Limited Hardware 69 69 0.5% 0.2%
Reqio Limited Software 644 - 12.2% 0.0%
Sift Group Limited Internet 875 656 4.5% 2.1%
Teraview Limited Healthcare & life 750 858 4.9% 2.8%
sciences
Workshare Limited Software 1,139 1,239 6.8% 4.0%
Xention Discovery Healthcare & life 750 825 5.1% 2.7%
Limited sciences
Total unquoted venture capital investments 26,607 17,489 56.4%
Total venture capital 30,290 19,736 63.6%
investments
Listed equity investments 4,767 5,738 18.6%
Total investments 35,057 25,474 82.2%
Cash and other net 5,518 5,518 17.8%
current assets
Net assets 40,575 30,992 100.0%
* Formerly AIT Group plc
**Formerly Opsys Limited
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2005
Notes 2005 2004
�'000 �'000
(Loss)/gain on realisation of 1 (404) 554
investments
Income 2 437 267
Investment management fee 3 (847) (972)
Other expenses 4 (324) (353)
Loss on operating activities (1,138) (504)
Interest payable on loan notes (5) (5)
Loss on ordinary activities before (1,143) (509)
taxation
Tax on ordinary activities 6 - -
Loss on ordinary activities after (1,143) (509)
taxation
Dividends paid 7 (521) -
Transfer from reserves (1,664) (509)
Loss per share 8 (2.2)p (1.0)p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 OCTOBER 2005
Notes 2005 2004
�'000 �'000
Loss on ordinary activities after taxation (1,143) (509)
Net unrealised loss on revaluation of (1,737) (4,500)
investments
Total losses recognised during the period (2,880) (5,009)
Total losses per share 8 (5.6)p (9.5)p
NOTE OF HISTORICAL COST PROFITS AND LOSSES
FOR THE YEAR ENDED 31 OCTOBER 2005
Notes 2005 2004
�'000 �'000
Reported loss on ordinary activities before (1,143) (509)
taxation
Realisation of prior years' net unrealised (3,722) (2,465)
losses on investments
Historical cost loss on ordinary activities (4,865) (2,974)
before taxation
All items in the above statements 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.
The accompanying notes are an integral part of these statements.
BALANCE SHEET
AS AT 31 OCTOBER 2005
2005 2004
Note �'000 �'000
Fixed assets
Investments 25,474 25,814
Current assets
Debtors 337 578
Cash at bank 5,641 9,185
5,978 9,763
Creditors (amounts falling due within (360) (237)
one year)
Net current assets 5,618 9,526
Creditors (amounts falling due in over (100) (100)
one year)
Net assets 30,992 35,240
Capital and reserves
Called-up equity share capital 506 520
Capital redemption reserve 26 11
Share premium account 285 218
Special reserve 34,969 41,964
Revaluation reserve (5,652) (7,637)
Profit and loss account 858 164
Equity shareholders' funds 30,992 35,240
Net asset value per share 9 61.3p 67.7p
The balance sheet as at 31 October 2004 has been restated to reflect the
creation of a capital redemption reserve on the repurchase and cancellation of
shares and also to reflect the revocation of the Company's investment company
status. The impact of this change in status is detailed in the directors'
report.
The financial statements were approved by the directors on 10 January 2006 and
are signed on their behalf by:
Robert Wright
Chairman
The accompanying notes are an integral part of this statement.
CASHFLOW STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2005
2005 2004
�'000 �'000
Cash outflow from operating activities (494) (1,030)
Financial investment
Purchase of venture capital investments (5,194) (6,993)
Purchase of listed equities and fixed interest (1,044) (2,557)
investments
Sale/redemption of venture capital investments 771 3,715
Sale/redemption of listed equity and fixed 3,643 2,731
interest investments
Sale/redemption of venture capital investments 142 -
previously written off
Total financial investment (1,682) (3,104)
Equity dividends paid (521) -
Financing
Issue of shares in accordance with the terms 68 -
of the dividend reinvestment scheme
Share buy-ins (915) (490)
Total financing (847) (490)
Decrease in cash for the period (3,544) (4,624)
Reconciliation of net cash flow to movement
in net funds
Decrease in cash for the period (3,544) (4,624)
Net funds at the start of the period 9,185 13,809
Net funds at the end of the period 5,641 9,185
The accompanying notes are an integral part of this statement.
NOTES TO THE FINANCIAL STATEMENTS
1. Loss on realisation of investments
2005 2004
�'000 �'000
Realised net gains on disposal 521 1,606
Write-off of investments (946) (1,052)
Recoveries made in respect of investments previously 142 -
written off
Write down of debtors (121) -
(404) 554
2. Income
2005 2004
�'000 �'000
Dividend income
Listed companies 210 179
Interest receivable
Fixed interest securities 2 39
Loans to unquoted companies 19 -
Bank deposits 52 40
Other income from shares and 154 -
securities
Sundry income - 9
437 267
3. Investment management fee
Quester Capital Management Limited (QCML) provides investment management
services to the Company under an agreement dated 30 October 2000.
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 �847,000 (2004: �972,000) in respect of the management fee payable
to QCML was accrued during the year together with irrecoverable VAT of �127,000
(2004: �181,000). The fee, which is calculated monthly and is payable quarterly
in advance, was levied at a rate of 2.5% (2004: 2.5%) on the Company's net
assets during the financial year ended 31 October 2005.
The manager's appointment is for a fixed term which shall expire on the seventh
anniversary of the commencement of the fund and shall continue until terminated
by either party subject to a notice period. If such notice is given on or after
the seventh anniversary of the commencement of the fund, the notice period
shall be the longer of (i) twelve months and (ii) the period from the date on
which notice is given to the tenth anniversary of the commencement of the fund.
Thereafter the notice period shall be twelve months.
QCML provides administrative and secretarial services to the Company for which
it is entitled to a fee of �54,000 per annum (linked to the movement in the
RPI). This fee is included in other expenses (note 4).
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.
4. Other expenses
2005 2004
�'000 �'000
Administration and secretarial services 54 53
Directors' remuneration (note 5) 33 39
Auditor's remuneration
Audit services 14 22
Non audit services 6 9
Legal and professional 8 21
Insurance 13 11
FSA, UKLA and registrar's fees 19 19
Irrecoverable VAT 150 191
Other expenses 27 (12)
324 353
5. Directors remuneration
2005 2004
�'000 �'000
Fees paid to directors 9 15
Amounts paid to third parties, excluding VAT, in 24 24
consideration of the services of directors
33 39
The total fees paid or payable in respect of individual directors for the
period is detailed in the Directors' Remuneration Report.
6. Tax on ordinary activities
2005 2004
�'000 �'000
Corporation tax payable - -
Reconciliation of loss on ordinary activities to
taxation
Loss on ordinary activities before tax (1,143) (509)
Tax on profit on ordinary activities at standard (343) (153)
UK corporation tax rate of 30% (2004: 30%)
Effects of:
Loss/(gain) on investments 121 (166)
Loss on operating activities 222 319
Corporation tax payable - -
The company has excess trading losses of �2,612,000 (2004: �1,732,000) that are
available to offset against future profits. A deferred tax asset of �784,000
(2004: �520,000) has not been recognised in respect of these losses and will be
recoverable only to the extent that the Company has sufficient future taxable
profits.
7. Dividends paid
2005 2004
�'000 �'000
Interim dividend: 1p per share paid 1 April 2005 521 -
8. Return per share
The loss per share of 2.2p (2004: 1.0p) is based on the loss on ordinary
activities after tax of �1,143,000 (2004: �509,000) and on ordinary shares of
51,547,440 (2004: 52,471,757), being the weighted average number of ordinary
shares in issue during the year.
The total recognised loss per share of 5.6p (2004: 9.5p) is based on the total
recognised losses for the period of �2,880,000 (2004: �5,009,000) and on the
weighted average number of ordinary shares in issue during the period of
51,547,440 (2004: 52,471,757).
9. Net asset value
The net asset value per share as at 31 October 2005 of 61.3p (2004: 67.7p) is
based on net assets of �30,992,000 (2004: �35,240,000) divided by the
50,596,419 (2004: 52,047,965) ordinary shares in issue at that date.
The financial information set out above does not constitute the Company's
statutory accounts for the period ended 31 October 2005. The statutory accounts
for the period ended 31 October 2005 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 will be submitted to the UK Listing Authority, and
will shortly be available for inspection at the UK Listing Authority's Document
Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Copies of the full financial statements for the period ended 31 October 2005
are expected to be posted to shareholders on 13 January 2006 and will be
available to the public at the registered office of the Company at 29 Queen
Anne's Gate, London, SW1H 9BU.
END
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