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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Quester Vct 5 | LSE:QUV | London | Ordinary Share | GB0031102071 | 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% | 41.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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QUESTER VCT 5 plc
Summary of results for the year ended 31 December 2005
Per ordinary share (pence) 2005 2004 2003
Capital values
Net asset value 88.6 91.6 92.7
Share price 78.0 85.5 96.0
Return and dividends
Dividend - - 1.0
Cumulative dividend 1.5 1.5 1.5
Total return* 90.1 93.1 94.2
*Net asset value plus cumulative dividend
DIVIDENDS
No dividend is proposed in respect of the year ended 31 December 2005.
The directors have resolved to pay an interim dividend of 1p per share in
respect of the year ending 31 December 2006.
Payment date 15 May 2006
Ex-dividend date 12 April 2006
Associated record date 18 April 2006
Chairman's statement
Overview
There is now a more widespread view in the market that the prospects for the
technology sector overall are improving. This more positive climate should feed
through to the companies in which the Fund invests. Pricing of investments has
remained more realistic and M&A activity is at a higher level than we have seen
for a number of years.
We are therefore in a more favourable environment for venture capital
investment and the Fund should be well placed to benefit from this.
Net assets
The changes underlying the movement in net assets and net assets per share are
shown below. As a result of the net movement of realised and unrealised gains
and losses and the effect of expenses, net assets per share have reduced by
3.6% during the period. Net assets have reduced by £792,000 as a result of
these movements, offset by £648,000, the net impact of raising additional
capital, less share buy-backs. Recognising that shareholders may regard this
reduction in net assets as disappointing against a background of generally
rising quoted markets, we note that it is not unusual for net assets to fall in
the early years of a fund of this type.
£'000 Pence per
share
Net asset value at 31 December 2004 21,904 91.6
Income 408 1.7
Operating expenses (897) (3.6)
Realised net gain on investments 546 2.2
Unrealised loss on revaluation of (849) (3.5)
investments
Net proceeds from issue of shares 985 0.1
Share buy-backs (337) 0.1
Net asset value at 31 December 2005 21,760 88.6
Progress of the portfolio
There has been some good, positive underlying progress made by a number of
companies in the venture capital portfolio during an active year. The majority
of these companies, which have significant potential, have entered an important
phase in their development in terms of proving their science or getting their
products into the market. Future investment returns of Quester VCT 5 will be
determined by their success in implementing these plans.
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 during the period for
over £35million, which generated cash proceeds for the Fund of £1,208,000 and a
profit of £808,000.
It has also been an active period on the investment side; £2.2million has been
invested in seven new companies with good potential and an additional £
1.6million has been invested in nine existing companies.
We are holding reserves for further investment in existing portfolio companies
and we continue to have the capacity to make a limited number of further
venture capital investments. New investments will therefore continue to be
added to the existing portfolio during the current year.
Dividends and dividend reinvestment scheme
The sale of Footfall Limited has generated a gain of £808,000 for the Company
and the Board proposes to return £245,000 of this gain to shareholders. The
Board, in reaching this level of proposed distribution has taken into account
other valuation movements in the portfolio and the Company's future investment
plans.
In order to allow dividends to be paid from capital profits, the Company will
need to revoke its investment company status. This change of status, which is
quite normal, is required as investment companies are prohibited from paying
dividends from capital profits. It is intended that this change in status
should be effected shortly and that an interim dividend of 1p per share in
respect of the year ending 31 December 2006 be declared and be payable on 15
May 2006. For these technical reasons, the directors do not recommend a final
dividend in respect of the year ended 31 December 2005.
Following a recent change in the Prospectus Rules, the original dividend
reinvestment scheme operated by the Company has been withdrawn. It has been
replaced with a new scheme designed to be compliant with the latest rules.
Details of this new scheme are being sent to shareholders so that they may
elect to join this new scheme, if they so wish.
Change of auditor
During the year RSM Robson Rhodes LLP was appointed as auditor of the Company.
New UK accounting standards
During the year under review, the Company was required to adopt a number of new
UK accounting standards (most notably FRS 25 and FRS 26). Accordingly, these
accounting standards have been applied in the preparation of these financial
statements. In adopting the new standards, the Company is required to restate
certain brought forward balances. However, the adjustments are not judged to be
material and as such the brought forward balances have not been restated.
Outlook
The prospects for the technology sector and the environment for venture capital
investment has improved and, together with the increased level of M&A activity
that we are seeing, bodes well for the existing portfolio. We are optimistic
that during the next three to four years we will see a step up in the level of
realisations and, over the medium term, 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.
Bill Passmore
Chairman
15 March 2006
INVESTMENT MANAGER'S REPORT
Introduction
We believe that the prospects for the technology sector are improving. The M&A
market has been increasingly active and this looks set to continue through the
current year. We are therefore in a more favourable climate for early stage
venture capital investment than in the Fund's earlier years.
The year has been a very busy period, during which the majority of companies in
the portfolio have performed much as expected. We have seen the trade sale of
Footfall Limited, which has realised a significant gain for the Company.
However the poor performance of a number of other companies has caused the
value of the venture capital portfolio to fall in the short term.
Developments in the venture capital portfolio
The year to 31 December 2005 was an active period; seven new investments were
made and additional funding was provided to nine existing portfolio companies.
This high level of activity has continued after the year end with the Company
having made three new investments and five further investments in existing
portfolio companies. 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 and some others are actively involved
in M&A discussions.
* Cyclacel plc has 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 a franchise in one of the
most exciting fields of biology, a development-stage portfolio of targeted
oncology drug candidates affecting the cancer cell cycle and holding
approximately $20million in cash.
* In October, Lorantis Holdings 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.
* 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 2005, the company is well positioned to meet the demand of the
global handset and laptop antenna market.
* Footfall Limited, the leading provider of customer counting technology and
statistics to both the retail and retail property sectors was sold for over £
35million to Experian, the information solutions company, in the period. This
was the first significant exit for Quester VCT 5, giving rise to cash proceeds
of £1,202,000 and a profit of £808,000.
Valuation of the venture capital portfolio
The unquoted venture capital portfolio, taking account of both realised and
unrealised gains and losses, has reduced in value by £0.6million during the
period.
During the year, three companies benefited from valuation uplifts, as follows:
* The valuation of the original holding in Oxford Immunotec Limited rose by 35%
(£88,000) reflecting the pricing of a £7million later stage funding round,
which completed in August 2005. The company, which has developed a new blood
test for tuberculosis with fewer false positives and false negatives than the
existing 100 year old skin test, 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 internationally.
* 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 10% (£40,000) to reflect the price of the last
investment transaction.
* The valuation of the investment in Xention Discovery Limited, a drug
discovery company focusing on the development of ion channel-acting drugs to
address underserved indications, rose by 15% (£38,000) reflecting the pricing
of an £11million Series B financing round in July. The funds will be used to
progress various programmes in areas such as pain and type II diabetes and also
to develop further its unique approach to ion channel drug discovery.
Two investments have finally been written off during the year. The failure of
Digital Union UK Limited gave rise to a loss of £200,000. The Quester team had
been closely involved with this business and a modest amount of additional
capital had been advanced to give management time to achieve certain
objectives. In the event, these were not achieved and the decision was taken
not to provide further funding. The final write off of Anadigm Limited resulted
in a loss of £199,000. This investment had been written down over the last two
years. 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. However, it did not achieve
fast enough growth in sales to justify further funding support.
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 further
funding will take the company through to the next stage of its development and
demonstrates the progress made with its science, although the fair value of the
investment has been reduced by £310,000 to reflect the pricing of this third
party investment.
The fair value of Cyclacel has been reduced by £375,000 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.
Further reductions to fair value totalling £441,000 have been made against
Advanced Valve Technologies Limited, HTC Healthcare Group plc and Oxxon
Therapeutics Holdings, Inc. reflecting current uncertainties, although the
possibility of future upside remains.
The quoted venture capital portfolio has fallen in value by £485,000.
Approximately 80% of the fall was due to the fall in share price of three
companies; Allergy Therapeutics plc, Portrait Software plc and Public
Recruitment Group plc, on the release of trading statements. We continue to
support each company's management team and their longer term plans.
Venture capital investments made during the period
We continued to seek new venture capital opportunities on behalf of the
Company, resulting in the following seven new investments being made at a total
cost of £2.2million.
Name Industry sector £'000
Cluster Seven Limited Software 316
Genosis plc Diagnostics & devices 600
Global Silicon Limited Semiconductors 333
Lectus Therapeutics Limited Biotechnology 106
Level Four Software Limited Software 414
Nanotecture Group Limited Industrial products & 88
services
Pelikon Limited Hardware 373
2,230
These initial investments will be supplemented by anticipated further
investments from reserves. Cluster Seven, Genosis, Global Silicon, Level Four,
Nanotecture and Pelikon are revenue generating, albeit at modest levels.
Cluster Seven develops and sells spreadsheet management software. The company's
products address the operational risk, control and compliance impact of
financial institutions' continuing reliance on spreadsheets. In the current
regulatory environment, the control of spreadsheets is paramount and there is a
substantial global market for Cluster Seven's products. The company has built
an impressive client base, principally in the UK, and the £2.4million first
round funding will be invested in product development and expansion in the US.
Henry Sallitt, a Quester director, has joined the board.
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 available
exclusively over-the-counter at Boots. Quester VCT 5'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.
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 the board. The company's
lead product, Xin, is currently incorporated in audio systems such as boom
boxes and CD players in the UK and Europe. The company's new products will play
in other rapidly growing markets. The new funds will enable Global Silicon to
expand its product range and its operations.
Lectus Therapeutics specialises in the discovery and development of novel drugs
(ion channel modulators) for diseases associated with pain management, urinary
incontinence and angina, offering important clinical and economic advantages
over existing therapies in a growing market. The company raised £8.2million in
the Series A funding in which Quester VCT 5 participated alongside other
Quester funds, leading French venture capital firm Sofinova and the top two
Japanese pharmaceutical firms, Taheda and Astellas. The new funds will be used
to advance existing programmes and provide opportunities for commercial
partnerships with pharmaceutical companies.
Level Four Software is an independent software company providing powerful test
and development tools for all types of "automated teller machine" (ATM)
networks, enabling banks and processors to capitalize further on their existing
investments in ATM technology. The ATM industry is expected to experience an
exciting period of growth as financial institutions connect to "chip and pin"
and exploit the revenue generating opportunity presented by increasing customer
use of ATMs. The company is well placed to exploit the market opportunity and
the aggregate £2million investment made by Quester funds will enable the
company to accelerate its development. Henry Sallitt has joined the board.
Nanotecture has created a novel way of making 3D structures with nano-scale
(one billionth of a meter) architectures. The company develops products with
applications in molecular filtration for the pharmaceutical industry, in
designing sensors for the auto sector and in powering mobile phones, PDAs and
digital cameras for the consumer electronics industry.
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 been distributed world wide. The
investment, part of a £5million pre-IPO funding round, will position the
company to accelerate growth.
We also supported the existing portfolio with nine further investments
totalling £1.6million as shown below:
Name Industry sector £'000
Advanced Valve Technologies Industrial products & 193
Limited services
Avidex Limited Biotechnology 131
Azea Networks, Inc. Communications 129
Celona Technologies Limited Software 209
HTC Healthcare Group plc Consumer goods & services 71
Identum Limited Software 359
Oxford Immunotec Limited Diagnostics & devices 286
Workshare Limited Software 56
Xention Discovery Limited Biotechnology 205
1,639
Following the year end, a further £802,000 has been invested in three new and
five existing investments.
Sector spread
A summary of the spread of sectors covered by the portfolio at 31 December 2005
is provided in the table below:
Percentage of venture
Industry sector Percentage of venture Valuation Number of
capital portfolio at investments
valuation £'000
%
Software 26.8 2,286 6
Biotechnology 24.4 2,080 7
Diagnostics & devices 14.3 1,220 2
Communications 10.9 928 2
Industrial products & 7.5 642 4
services
Semiconductors 6.0 516 2
Hardware 4.4 373 1
Electronics 3.7 315 2
Consumer goods & services 2.0 170 1
100.0 8,530 27
Listed equity and bond portfolios
At 31 December 2005, the Company held a portfolio of listed equities valued at
£3.6million (cost: £2.7million). During the year, the opportunity was taken to
realise some of the gains accruing and 14.6% of the portfolio was sold
realising a profit of £123,000. The listed equity portfolio performed well,
generating an IRR of 27.6% over the year. The FTSE All Share index generated an
IRR of 22.0% over the same period.
At the year end, the Company held cash of £6.8million, which together with the
bond portfolio, represents the liquid reserves held to cover follow-on
investments.
The company also still has the capacity to make further new investments and
further activity will be seen during 2006.
Outlook
A number of companies in the portfolio are now at key points in their
development where they are starting to achieve market penetration or prove
their science. Values of those companies, which continue to implement their
business plans successfully, will increase and a number have significant
potential.
We anticipate an increasing rate of realisations from the portfolio as it
matures. As with the very positive Footfall realisation, these future potential
successful realisations, balanced by the possible under-performance of some
companies, should flow through to support net asset growth and dividend
payments over the medium term.
15 March 2006
Fund summary as at 31 December 2005
Industry Sector Original Valuation % % of
Cost equity fund by
£'000 £'000 held value
Quoted venture capital
investments
Allergy Therapeutics plc Biotechnology 500 514 1.1% 2.4%
Genosis plc Diagnostics & 600 596 3.4% 2.7%
devices
Polaron plc Industrial 250 145 1.2% 0.7%
products &
services
Portrait Software plc* Software 565 327 1.5% 1.5%
Public Recruitment Group plc Industrial 250 74 0.7% 0.3%
products &
services
Quadnetics Group plc Electronics 57 47 0.1% 0.2%
Total quoted venture capital 2,222 1,703 7.8%
investments
Unquoted venture capital
investments
Advanced Valve Technologies Industrial 606 335 10.2% 1.5%
Limited products &
services
Antenova Limited Communications 402 402 2.2% 1.9%
Arithmatica Limited Semiconductors 287 183 2.5% 0.8%
Avidex Limited % Biotechnology 571 261 1.3% 1.2%
Azea Networks, Inc. Communications 526 526 2.2% 2.4%
Celona Technologies Limited Software 338 338 5.5% 1.6%
Cluster Seven Limited Software 316 316 4.0% 1.5%
Cyclacel Group plc Biotechnology 500 125 4.0% 0.6%
Global Silicon Limited Semiconductors 333 333 4.2% 1.5%
HTC Healthcare Group plc Consumer goods & 285 170 3.5% 0.8%
services
Identum Limited Software 395 395 8.6% 1.8%
Lectus Therapeutics Limited Biotechnology 106 106 3.0% 0.5%
Level Four Software Limited Software 414 414 18.0% 1.9%
Lorantis Holdings Limited Biotechnology 400 400 0.9% 1.8%
Mesophotonics Limited Electronics 357 268 2.4% 1.2%
Nanotecture Group Limited Industrial 88 88 0.8% 0.4%
products &
services
Oxford Immunotec Limited Diagnostics & 535 624 3.7% 2.9%
devices
Oxxon Therapeutics Holdings, Biotechnology 367 182 1.3% 0.8%
Inc.
Pelikon Limited Hardware 373 373 2.9% 1.7%
Workshare Limited Software 456 496 2.7% 2.3%
Xention Discovery Limited Biotechnology 455 492 3.4% 2.3%
Total unquoted venture 8,110 6,827 31.4%
capital investments
Total venture capital 10,332 8,530 39.2%
investments
Listed fixed interest 2,890 2,893 13.3%
investments
Listed equity investments 2,732 3,603 16.6%
Total investments 15,954 15,026 69.1%
Cash and other net assets 6,734 6,734 30.9%
Net assets 22,688 21,760 100.0%
* formerly AIT Group plc
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2005
2005 2005 2005 2004 2004 2004
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Loss on investments at 1 - (303) (303) - (86) (86)
fair value through
profit or loss
Income 2 408 - 408 618 - 618
Investment management 3 (267) (267) (534) (276) (276) (552)
fee
Other expenses 4 (363) - (363) (277) - (277)
(Loss)/return on
ordinary
activities
before tax (222) (570) (792) 65 (362) (297)
Tax on ordinary 6 - - - 2 - 2
activities
(Loss)/return on
ordinary
activities
after tax (222) (570) (792) 67 (362) (295)
(Loss)/return per 7 (0.9)p (2.3)p (3.2)p 0.3p (1.5)p (1.2)p
share
The total column of this statement is the profit and loss account of the
Company.
In order to reflect the activities of a venture capital trust, the Income
statement has been analysed between items that are part of the capital returns
so as to provide supplementary information.
All revenue and capital items in the above statement 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 this statement.
BALANCE SHEET
AS AT 31 DECEMBER 2005
2005 2004
(restated)
Notes £'000 £'000
Fixed assets
Investments at fair value through 15,026 12,615
profit or loss
Current assets
Debtors 179 56
Cash at bank 6,776 9,373
6,955 9,429
Creditors (amounts falling due within (175) (94)
one year)
Net current assets 6,780 9,335
Creditors (amounts falling due after (46) (46)
more than one year)
Net assets 21,760 21,904
Capital and reserves
Called-up equity share capital 246 239
Capital redemption reserve 6 2
Share premium account 5,966 4,992
Special reserve 15,643 16,542
Capital reserve - realized 973 130
- unrealised (928) (77)
Revenue reserve (146) 76
Equity shareholders' funds 21,760 21,904
Net asset value per share 6 88.6p 91.6p
The financial statements were approved by the directors on 15 March 2006 and
are signed on their behalf by:
Bill Passmore
Chairman
The accompanying notes are an integral part of this statement.
CASHFLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2005
2005 2004
£'000 £'000
Cash (outflow)/inflow from operating activities (450) 557
Corporation tax refund - 2
Financial investment
Purchase of venture capital investments (3,904) (2,348)
Purchase of listed equities and fixed interest (6,781) (6,285)
investments
Sale/redemption of venture capital investments 1,219 776
Sale/redemption of listed equities and fixed 6,671 13,200
interest investments
Total financial investment (2,795) 5,343
Equity dividends paid - (221)
Management of liquid resources
Purchase of Treasury Deposits (280) -
Financing
Issue of ordinary shares pursuant to the offers
for
subscription made during the year 1,042 1,446
Issue of shares in accordance with the terms of
the dividend reinvestment scheme - 34
Share issue expenses (57) (53)
Buy-back of ordinary shares (337) (89)
Total financing 648 1,338
(Decrease)/increase in cash for the period (2,877) 7,019
Reconciliation of net cash flow to movement in net
funds
(Decrease)/increase in cash for the period (2,877) 7,019
Cash used to increase liquid resources 280 -
Net funds at the start of the period 9,373 2,354
Net funds at the end of the period 6,776 9,373
The accompanying notes are an integral part of this statement.
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 31 DECEMBER 2005
Capital Capital Capital
Share redemption Share Special reserve reserve Revenue
Capital Reserve premium reserve realised unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2004 239 - 4,992 16,544 130 (77) 76 21,904
Effect of creating
a capital
redemption reserve - 2 - (2) - - - -
At 1 January 2004 239 2 4,992 16,542 130 (77) 76 21,904
(restated)
Share issues
pursuant to the
offers for 11 - 1,031 - - - - 1,042
subscription
Expenses of share - - (57) - - - - (57)
issues
Share buy-ins (4) 4 - (337) - - - (337)
Total loss for the - - - - - - (792) (792)
period
Gains/(losses) on - - - - 546 (849) 303 -
investments
Net expenses - - - - (267) - 267 -
charged to capital
Transfer from - - - - 2 (2) - -
unrealised reserve
Transfer from - - - (562) 562 - - -
special reserve
At 31 December 246 6 5,966 15,643 973 (928) (146) 21,760
2005
The accompanying notes are an integral part of these statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Loss on investments at fair value through profit or loss
The overall loss on investments for the year shown in the Income statement is
analysed as follows:
2005 2004
£'000 £'000
Realised net gains on disposal 953 399
Write off of investments (407) (250)
Net unrealised loss on revaluation of (849) (235)
investments
(303) (86)
The realised net gains on disposal represents the difference between proceeds
received and the carrying values of those investments sold during the year.
The amounts reported under "write off of investments" represent the proportion
of the carrying value of certain investments that have, in the opinion of the
directors, suffered an impairment which is regarded as permanent. These
write-offs amounted to £407,000 in the year ended 31 December 2005 (2004: £
250,000; 2003: £400,000).
Both realised net gains on disposal and amounts written off are charged to the
realised capital reserve.
2. Income
2005 2004
£'000 £'000
Dividend income
- Listed equity shares 112 78
Interest receivable
- Listed fixed interest 217 446
securities
- Loans to unquoted 8 -
companies
- Bank deposits 71 94
408 618
3. Investment management fee
Quester Capital Management Limited ("QCML") provides investment management
services to the Company under an agreement dated 3 December 2001, as amended by
a supplemental agreement dated 23 December 2004.
A charge of £534,000 (2004: £552,000) in respect of the management fee payable
to QCML was accrued during the year together with irrecoverable VAT of £74,000
(2004: £71,000). The fee, which is calculated quarterly and is payable 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 December 2005. Following the changes
resulting from the supplemental agreement referred to above, this charge is
capped to ensure that the Company's Running Costs do not exceed 3.5% of the
closing net asset value.
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.
The management fee payable to Newton Investment Management Limited, to the
extent that it is not covered by transaction fees payable by the Company, will
be met by QCML out of the above fee.
QCML also provides administrative and secretarial services to the Company for
which it is entitled to a fee of £55,000 per annum (linked to the movement in
the RPI). This fee is included in other expenses (note 4).
4. Other expenses
2005 2004
£'000 £'000
Administration and secretarial 55 53
services
Directors' remuneration (note 5) 39 39
Auditor's remuneration
- Audit services 14 18
- Non audit services 10 8
Insurance 13 12
Legal and professional expenses 25 15
UKLA, LSE and registrar fees 19 14
Interest expense 2 2
Transaction costs 20 -
Other expenses 53 17
Irrecoverable VAT 113 99
363 277
5. Directors' remuneration
2005 2004
£'000 £'000
Fees paid to directors 12 12
Amounts paid to third parties, excluding VAT, in 27 27
consideration of the services of directors
39 39
6. Tax on ordinary activities
2005 2005 2004 2004
Revenue Capital Revenue Capital
£'000 £'000 £'000 £'000
Corporation tax receivable - prior - - 2 -
year adjustment
- - 2 -
Reconciliation of profit on ordinary
activities to taxation
2005 2005 2004 2004
Revenue Capital Revenue Capital
£'000 £'000 £'000 £'000
(Loss)/profit on ordinary activities (222) (570) 65 (362)
before tax
Tax on profit on ordinary activities (67) (171) 19 (109)
at standard UK corporation tax rate
at 30%(2004:30%)
Effects of:
Loss on investments at fair value - 91 - 26
through profit or loss
Non-taxable income (34) - (23) -
Unutilised expenses 101 80 4 83
Prior year adjustment - - 2 -
- - 2 -
7. Loss per share
The total loss per share of 3.2p (2004: 1.2p) is based on the total loss from
ordinary activities after tax of £792,000 (2004: £295,000) and on ordinary
shares of 24,571,235 (2004: 23,610,383), being the weighted average number of
shares in issue during the year.
6. Net asset value
The net asset value per share as at 31 December 2005 of 88.6p (2004: 91.6p) is
based on net assets of £21,760,000 (2004: £21,904,000) divided by the
24,556,227 (2004: 23,905,023) ordinary shares in issue at that date.
This preliminary statement is not the company's statutory accounts. The
statutory accounts for the year ended 31 December 2004 have been delivered to
the Registrar of Companies and received an audit report which was unqualified,
did not include a reference to any matters to which the auditors drew attention
by way of emphasis without qualifying the report, and did not contain
statements under section 237(2) and (3) of the Companies Act 1985. The
statutory accounts for the year ended 31 December 2005 have not yet been
approved, audited or filed.
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 December 2005
are expected to be posted to shareholders on 16 March 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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