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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Quester Vct 4 | LSE:QUT | London | Ordinary Share | GB0002098969 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 18.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
QUESTER VCT 4 PLC INTERIM STATEMENT FOR THE SIX MONTHS ENDED 30 APRIL 2007 FINANCIAL HIGHLIGHTS Per ordinary share (pence) 30 April 31 October 30 April 2007 2006 2006 Capital values Net asset value 54.8 65.8 65.2 Share price 54.3 54.0 54.0 Return and dividends Dividend paid in the period 1.0 1.0 1.0 Cumulative dividend (tax free) 5.9 4.9 4.9 Total return* 60.7 70.7 70.1 *Net asset value plus cumulative dividend per share The returns summarised above are applicable only to original shareholders of Quester VCT 4 plc. They do not represent the historic returns to subsequent subscribers. The above table excludes any tax benefits (20% income tax relief and capital gains deferral) received on subscription for shares in the Company. Inclusive of initial income tax relief, the total return to an original investor would be equivalent to 80.7p per share as at 30 April 2007. A final dividend in respect of the year ended 31 October 2006 of 1p per share was paid on 15 March 2007, increasing cumulative dividends to 5.9p per share. CHAIRMAN'S STATEMENT Overview In May 2007 we announced that Quester Capital Management Limited, the company that manages Quester VCT 4 plc, had been acquired by NewMedia SPARK plc (`SPARK'). SPARK is a venture capital investment company traded on the Alternative Investment Market (AIM) of the London Stock Exchange, focused on early stage investment in the ICT and media sectors and is one of the few specialist and successful companies with expertise similar to Quester. SPARK's current market capitalisation is £64 million and it has a portfolio of 21 investments. Its net assets at 31 March 2007 were £72 million. It specialises in digital media, software applications, technology and communications, which complements Quester's own activities in these areas. Quester's strong healthcare business will be developed alongside SPARK's new focus in this area. The combined group will be responsible for managing funds of over £275 million including the three Quester-managed VCTs - the Company, Quester VCT plc and Quester VCT 5 plc - the Quester Venture Partnership, an institutional fund, and University linked funds. The Board believes that the acquisition of Quester by SPARK will provide greater access to some of the UK's best early stage entrepreneurs as well as broadening the range of investment opportunities available to the Quester-managed VCTs, and that the combined management group has the potential to deliver enhanced long-term returns to investors in Quester VCT 4. The Board sees the acquisition of Quester by SPARK as a very positive development. The combined management team has carried out a fresh assessment of the fair values of the investments in the individual portfolio companies at the current stage of their development against their recent progress to business plans. A number of significant valuation changes have arisen from this review, resulting in a reduction in the net asset value by 11p per share at 30 April 2007 to 54.8p per share. Net assets The movement in net assets is summarised in the table below: £'000 Pence per share Net asset value at 31 October 2006 31,924 65.8 Income 125 0.3 Operating expenses (621) (1.3) Net realised gain on investments 185 0.4 Net unrealised loss on investments (4,525) (9.5) Net assets before dividends and share buy-backs 27,088 55.7 Dividend paid net of amounts reinvested (458) (1.0) Share buy-backs (470) 0.1 Net asset value at 30 April 2007 26,160 54.8 No interim dividend is declared in respect of the period. Outlook As noted in the investment manager's report, there are a number of companies where the opportunity may exist for the achievement of a profitable exit in the relatively short term (2007-2008). However, indications are that the flow of cash realisation proceeds from the most significant venture capital investments, provided general market conditions are favourable, looks likely to be concentrated in the years from 2009. The Board is confident that the combined management team will be working closely with these portfolio companies to help them achieve their objectives and to maximise the value of Quester VCT 4's portfolio. It is regretted that it has been necessary to report a significant reduction in the valuation of the portfolio at 30 April 2007. Overall, we believe that the portfolio offers attractive recovery potential. Robert Wright Chairman 27 July 2007 INVESTMENT MANAGER'S REPORT Introduction Following the acquisition of Quester Capital Management Limited by NewMedia SPARK plc on 11 May 2007, the investment team responsible for the management of Quester VCT 4 is led by Andrew Carruthers, CEO of SPARK, along with Jay Patel, Executive Director, and Tom Teichman, Chairman of SPARK, and ongoing members of the Quester team. The combined team presents its first investment manager's report on Quester VCT 4 for the half year to 30 April 2007. Venture capital portfolio: investment activity In line with the indication given in the 2006 Annual Report, one new investment has been added to the portfolio at a cost of £700,000 and the Company is now fully invested. A total of £2.6 million was committed in the period to 17 follow-on investments. New investment The Company invested £700,000 in a £2.4 million first funding round for UniServity Limited, with the balance provided by other Quester managed funds. UniServity is a leading provider of web-based learning platforms to the educational sector, enhancing communication and collaboration between schools, teachers, pupils and the community. UniServity's learning platforms provide schools with a customised online suite of tools to support innovative ways of teaching and learning, thereby extending the classroom to the internet. UniServity is one of only a few learning platform providers approved by the British Education Communications and Technology Agency as an accredited supplier and is well placed to benefit from the Government's commitment to ensure that all schools have a learning platform before the end of 2008. Follow-on investments A feature of the current period is that several portfolio investments have been engaged in raising new rounds of finance to fund their ongoing development. Accordingly, the number of follow-on investments has continued to be substantial. The most significant of these transactions in the half year were as follows: * Workshare: Workshare is an information security company that delivers secure content compliance solutions ensuring safe information exchange without business disruption. We are very pleased with Workshare's development over the four years since Quester VCT 4's original investment in July 2002. In December 2006 the company closed a US$23 million Series B funding round led by Steelpoint Capital Partners and supported by the Company and other Quester funds. The capital raised in this new round positions the company to extend its reach worldwide by investing in acquisitions, distribution in new markets and new service delivery models. * Azea Networks: Azea specialises in developing line terminal equipment for transoceanic submarine optical networks: its technology and expertise exploits the full potential of existing cable assets to deliver substantial capacity gains for the operators. In March 2007, following the commissioning of a successful cable upgrade, Azea secured a US$20 million Series D funding round led by TVM Capital, supported by Quester VCT 4 and other Quester funds and syndicate partners: this provides working capital for further technical and business development and is designed to take the company to break even. * Celona Technologies: Celona is a developer of data migration software for communications service providers (CSPs) enabling them to transform the software platforms which manage their operations without affecting customer service. The company has recently reached an important milestone with the closing of a £7 million Series B funding round with Caledonia Investments plc. This will enable Celona to build out its sales and support activities and will fund further product development, extending the support provided by the Company and other Quester funds (including bridge finance provided during the half year). We continued to provide bridge finance to Oxford Immunotec, the Oxford University spinout company which has developed a new test for the diagnosis of tuberculosis. This company has been investing resources in the opportunity in the United States, where it has submitted an application for FDA approval for the marketing of its product. Discussions are in progress with US venture capital firms on the terms of a new financing round to support the launch of the US marketing effort. In line with an earlier commitment, the Company invested its share of the final tranche of the Series B round of Xention Discovery. This drug discovery company is focused on ion channel targets: it has recently initiated Phase I clinical development of a treatment for atrial fibrillation. The additional investment was made after the company achieved several key milestones which were part of the syndicate's requirements for the release of this remaining tranche of existing funding. Summary of follow-on investments: Name Industry sector £'000 Advanced Valve Technologies Limited Industrial Products & services 14(1) Antenova Limited Communications 129 Anthropics Technology Limited Communications 10 Arithmatica Limited Semiconductors 86 Azea Networks Inc Communications 238 Celona Technologies Limited Software 304 Celoxica Holdings Limited Software 44 Cluster Seven Limited Software 97 HTC Healthcare Limited Consumer services 57 Identum Limited Software 179 Lectus Therapeutics Limited Biotechnology 129 Level Four Software Limited Software 27 Nomad Software Limited Software 152 Oxford Immunotec Limited Diagnostics and devices 255 Oxxon Therapeutics Holdings, Inc Biotechnology 243(2) Workshare Limited Software 378 Xention Discovery Limited Biotechnology 300 2,642 (1) Loan subsequently repaid. (2) Bridging investment realised immediately upon the company's acquisition by Oxford Biomedica plc. Venture capital portfolio: realisations and M&A activity Realisations from the portfolio of quoted venture capital investments generated £1 million in proceeds and a net gain of £185,000 over carrying value at 31 October 2006. These transactions included the sales of the entire holdings in Cyclacel and Polaron; a start was also made on the process of selling the immediately tradable shares in MediGene AG held following its acquisition of Avidex. We are pleased to report the acquisition of Quester VCT 4's unquoted holding in Oxxon Therapeutics by the AIM-traded biotech company, Oxford Biomedica plc, this paper-for-paper transaction being the culmination of an exit strategy initiated over a year ago. As part of the arrangements, the existing syndicate was required to put up some additional cash for Oxxon Therapeutics: a loan of £ 243,000 was made that became represented by tradable shares in the acquirer, which were immediately placed for £268,000 realising a profit of £25,000. The balance of the resulting holding in Oxford Biomedica is subject to marketability restrictions until the end of September 2007. Venture capital portfolio: valuation changes The combined management team has carried out a fresh assessment of the fair values of the investments in the individual portfolio companies at the current stage in their development against their recent progress to business plans: * The valuations of companies that have recently completed third-party funding rounds (Workshare, Azea Networks and Celona Technologies) have been adjusted in line with the terms of those rounds. An adjustment has also been made in the case of Oxford Immunotec to reflect the expected terms of the round currently under negotiation. These revaluations represent an increase of £581,000 in the case of Workshare and reductions totalling £1,954,000 in respect of other companies. * To reflect an improvement in the company's trading position, the valuation of the holding in Elateral has been increased by £324,000. * Advanced Valve Technologies, De Novo Pharmaceuticals and HTC Healthcare have found it difficult to achieve success with their corporate strategies: in these cases provisions for impairment have been increased to 100% and in the case of Mesophotonics to 75% of cost, although we continue to work with the companies to achieve value from these investments (reduction in valuations £2,208,000). * Celldex Therapeutics, Nexagent and Teraview are considered to be all making reasonable progress, but to reflect a more prudent assessment at this stage in their development we have reduced the carrying value of the investments (reduction in valuations £1,470,000). In summary, the changes in the valuations of unquoted investments have resulted in a net reduction in valuations of £4,727,000. Listed equity portfolio The listed equity portfolio has performed well over the half year with the valuation increasing by £408,000. In line with the indication given in the last Annual Report, a total of £3 million has been realised from the portfolio during the half year to provide liquidity for the new investment in UniServity and the follow-on investments that have been made. Conclusion With the completion of one new investment during the half-year, the Company is now fully invested. For the immediate future the focus of activity on the part of the management team will be on the development of value in the portfolio companies. There are a number of companies where the opportunity may exist for the achievement of a profitable exit in the relatively short term (2007-2008). However, the majority of the investments in the venture capital portfolio - dating from Quester VCT 4's main investment phase 2001-2005 - are in companies which are in the course of development from the early stage at which Quester VCT 4 first invested into stronger revenue growth and progress towards profitability. Accordingly it is too soon to expect cash realisations from these investments in the near future. Indications are that the flow of cash realisation proceeds from the most significant venture capital investments, provided general market conditions are favourable, looks likely to be concentrated in the years from 2009. Quester Capital Management Limited Manager 27 July 2007 FUND SUMMARY AS AT 30 APRIL 2007 Industry sector Original Valuation % % of cost equity fund £'000 £'000 held by value Quoted venture capital investments Allergy Therapeutics Biotechnology 700 956 1.1% 3.7% plc Celoxica Holdings plc Software 1,359 153 3.1% 0.6% Genosis plc Diagnostics & devices 111 17 0.6% 0.1% MediGene AG Biotechnology 1,142 744 1.0% 2.8% Oxford Biomedica plc Biotechnology 1,130 684 3.5% 2.6% Portrait Software plc Software 1,130 497 2.7% 1.9% Public Recruitment Industrial products & 250 81 0.6% 0.3% Group plc services Quadnetics Group plc Electronics 143 189 0.3% 0.7% Total quoted venture 5,965 3,321 12.7% capital investments Unquoted venture capital investments Advanced Valve Industrial products & 1,730 - 30.6% 0.0% Technologies Limited services Antenova Limited Communications 1,383 1,039 4.7% 4.0% Anthropics Technology Communications 1,115 45 7.0% 0.2% Limited Arithmatica Limited Semiconductors 1,572 515 13.7% 2.0% Azea Networks Inc Communications 2,687 1,920 8.3% 7.3% Celldex Therapeutics Biotechnology 1,400 585 2.7% 2.2% Inc Celona Technologies Software 1,952 1,200 13.6% 4.6% Limited Cluster Seven Limited Software 255 255 2.4% 1.0% De Novo Diagnostics & devices 803 - 3.0% 0.0% Pharmaceuticals Limited Elateral Holdings Software 1,155 479 13.7% 1.8% Limited Haemostatix Limited Biotechnology 11 11 0.6% 0.0% HTC Healthcare Group Consumer services 771 - 8.7% 0.0% plc Identum Limited Software 1,338 1,338 6.7% 5.1% Lectus Therapeutics Biotechnology 182 182 1.5% 0.7% Limited Level Four Software Software 95 95 0.7% 0.4% Limited Mesophotonics Limited Electronics 893 223 7.4% 0.9% Nexagent Limited Software 1,666 794 5.7% 3.0% Nomad Software Limited Software 1,554 1,554 7.5% 5.9% Opsys Management Electronics 1,038 - 3.5% 0.0% Limited Oxford Immunotec Diagnostics & devices 1,594 1,470 9.3% 5.6% Limited Pelikon Limited Hardware 69 69 0.5% 0.3% Perpetuum Limited Electronics 93 93 1.7% 0.4% Sift Group Limited Internet 917 698 6.2% 2.7% Teraview Limited Diagnostics & devices 947 710 5.4% 2.7% UniServity Limited Software 700 700 11.6% 2.7% Vivacta Limited Diagnostics & devices 195 195 3.0% 0.7% Workshare Limited Software 1,910 2,590 7.3% 9.9% Xention Discovery Biotechnology 1,050 1,125 5.1% 4.3% Limited Total unquoted venture capital investments 29,075 17,885 68.4% Total venture capital 35,040 21,206 81.1% investments Listed equity 2,650 3,733 14.3% investments Total investments 37,690 24,939 95.4% Cash and other net 1,221 1,221 4.6% assets Net assets 38,911 26,160 100.0% PROFIT AND LOSS ACCOUNT Note 6 months 6 months Year ended ended ended 31 October 30 April 2007 30 April 2006 2006 £'000 £'000 £'000 Net (losses)/profits on (4,340) 2,836 3,456 investments at fair value through profit or loss Income 125 194 412 Investment management fee (395) (398) (800) Other expenses (223) (215) (418) (Loss)/profit on operating (4,833) 2,417 2,650 activities Interest payable on loan notes (3) (3) (5) (Loss)/profit on ordinary (4,836) 2,414 2,645 activities before taxation Tax on ordinary activities - - - (Loss)/profit on ordinary (4,836) 2,414 2,645 activities after taxation Basic and diluted (loss)/earnings 4 (10.0)p 4.8p 5.3p per share 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. A statement of total recognised gains and losses has not been presented because all gains and losses are included in the statement above. BALANCE SHEET 30 April 31 October 30 April 2007 2006 2006 £'000 £'000 £'000 Fixed assets Investments at fair value 24,939 30,624 28,299 through profit or loss Current assets Debtors 34 148 183 Cash at bank 1,601 1,715 4,382 1,635 1,863 4,565 Creditors: amounts falling due (314) (463) (330) within one year Other creditors Net current assets 1,321 1,400 4,235 Creditors: amounts falling due (100) (100) (100) in over one year Net assets 26,160 31,924 32,434 Capital and reserves Called-up equity share capital 476 485 497 Capital redemption reserve 56 47 35 Share premium account 338 309 310 Special reserve 32,416 33,730 34,437 Fair value reserve (9,444) (4,781) (5,019) Profit and loss account 2,318 2,134 2,174 Total equity shareholders' funds 26,160 31,924 32,434 Net asset value per share 54.8p 65.8p 65.2p SUMMARISED CASH FLOW STATEMENT 30 April 30 April 31 October 2007 2006 2006 £'000 £'000 £'000 Net cash outflow from operating (531) (260) (783) activities Net capital expenditure and 1,345 (27) (1,767) financial investment Dividends paid net of amounts (458) (476) (477) reinvested Buy-back of ordinary shares (470) (496) (899) Decrease in cash for the period (114) (1,259) (3,926) Reconciliation of net cash flow to movement in net funds Decrease in cash for the period (114) (1,259) (3,926) Net funds at the start of the 1,715 5,641 5,641 period Net funds at the end of the 1,601 4,382 1,715 period RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Share Capital Share Special Fair Profit Total capital redemption premium reserve value and loss reserve account reserve account £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 November 485 47 309 33,730 (4,781) 2,134 31,924 2006 Shares issued - - 29 - - - 29 under the Dividend Reinvestment Scheme Shares bought (9) 9 - (470) - - (470) back Realisation (138) 138 - of prior years' net unrealised profits on investments Transfer from - - - (844) - 844 - special reserve to profit and loss account Transfer of - - - - (4,525) 4,525 - net unrealised loss on revaluation of investments to fair value reserve Loss on - - - - - (4,836) (4,836) ordinary activities after taxation Dividend paid - - - - - (487) (487) At 30 April 476 56 338 32,416 (9,444) 2,318 26,160 2007 Notes 1. The financial information contained in this report has been prepared on the basis of the accounting policies set out in the Annual Report for the year ended 31 October 2006. 2. A final dividend in respect of the prior year totalling £487,000 was paid on 15 March 2007. 3. The number of ordinary shares in issue as at 30 April 2007 was 47,696,728 (30 April 2006: 49,722,899). 4. The calculation of earnings per share for the period is based on the loss after tax of £4,836,000 (2006: profit of £2,414,000) divided by the weighted average number of shares in issue during the period being 48,259,627 (2006: 50,341,560) ordinary shares of 1p each. 5. The unaudited financial statements set out above do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts for the period ended 31 October 2006 have been delivered to the Registrar of Companies and received an audit report which was unqualified and did not contain any statements under S237(2) and (3) of the Companies Act 1985. 6. Copies of the unaudited interim results are expected to be sent to shareholders on 27 July 2007. 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 END
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