Final Results - Year Ended 31 January 2000

Quester VCT PLC 26 April 2000 QUESTER VCT PLC ('the Company') Summary of results Year ended 31 January 2000 1999 1998 1997 as as as restated restated restated (58 weeks) Annual total return per share (pence) 32 4 13 5 Net asset value plus cumulative dividend per share (pence) 150 118 113 100 Dividend per share (pence) 5.8 2.4 2.8 2.5 Cumulative dividend per share (pence) 13.5 7.7 5.3 2.5 Shareholders' funds (£'000) 42,213 34,181 32,715 13,238 Net asset value per share (pence) 136.5 110.1 107.6 97.2 Mid-market price per share (pence) 150 89 102 95 Net asset value per share as at 29 February was 140.2p SHAREHOLDER INFORMATION Annual General Meeting 25 May 2000 Final dividend for 1999/00 £nil Special interim dividend for 2000/01 10p per share Payment date 1 June 2000 Associated record date 8 May 2000 CHAIRMAN'S STATEMENT Progress of investment Investment has progressed at a steady rate throughout the year and a total of 30 investments, 14 new, 16 follow-on, were completed. The Company has now achieved its objective of investing approximately 80% of its initial funds in a broad spread of venture capital opportunities which meet the criteria for venture capital trusts. It was our original intention to invest 80% of the Company's funds in venture capital opportunities, with the balance of 20% being invested in the FTSE 350. In line with the policies applied by the other Quester VCTs, this has evolved and we are now aiming to invest 85% in venture capital opportunities with the balance of 15% in the FTSE 350. This minor change in policy results from our experience of managing VCTs over the last four years. PERFORMANCE OF THE VENTURE CAPITAL PORTFOLIO The portfolio continued to perform well and is valued at the year end at over £10 million above cost, representing an increase in excess of 40%, which reflects good overall performance. Whilst the majority of the unquoted portfolio remains valued at cost, in line with our accepted valuation policy, we have increased the value of two investments following arm's length transactions in their stocks. The performance of the majority of the AIM traded investments was also good. Whilst it is Quester VCT's objective to invest mainly in unquoted businesses, approximately a fifth, by cost, has been invested in AIM traded investments. Our technology related AIM investments in particular performed extremely well during the year, broadly in line with the rest of that market, and unrealised gains of over £11 million have been generated. During the year three disposals were made, realising capital profits of £1.4 million. In addition, following the year end, the Company made realisations from four of its investments, generating profits of £4.5 million. The Company still retains significant investments in all four of these companies. It is the Directors' intention that these realised gains be distributed to shareholders. As is inevitable with a portfolio of venture capital investments comprising of a substantial number of relatively young businesses, provisions have been made during the year to cover potential losses arising from a small number of investments. In total, provisions of £2 million have been made in respect of five investments. DIVIDEND During the financial year under review, Quester VCT broke new ground for general venture capital trusts when it became the first general VCT to pay a dividend out of capital profits. This dividend, which amounted to 5.75p per share, was paid as a special interim dividend in October 1999. The amount of the capital dividend represents a significant increase over the dividends paid in prior periods that were funded purely from income. No final dividend will be paid. As a result of the post year end disposals referred to above, which generated profits of £4.5 million, the directors have resolved to pay an early interim dividend for the current year of 10p per share absorbing £3.1 million. DIRECTORATE Richard Prest, who retires by rotation at this year's Annual General Meeting, has decided not to seek re-election. My colleagues and I would like to take this opportunity to thank him for his services and significant contribution to both the Board and Audit Committee over the past four years. It is the Company's intention to fill the vacancy caused by Richard's retirement as soon as a suitable candidate has been found. OUTLOOK Shareholders will be aware of the recent volatility in quoted markets, which has resulted in sharp falls in the value of technology related shares, including those in our AIM traded portfolio. There seems little doubt, however, that technology related businesses, identified by reference to sustainable valuation criteria, offer the best growth prospects over the medium and long term. Our managers, Quester Capital Management, who have teams specialising in these areas, should be well placed to identify further good opportunities on sensible terms. We believe that Quester VCT is well placed to build on its excellent progress to date. Tom Scruby Chairman 25 April 2000 INVESTMENT PORTFOLIO SUMMARY AS AT 31 JANUARY 2000 Venture capital investments % of Cost Valuation portfolio Industry Sector £'000 £'000 by value Acedes Gear Tools Limited Manufacturing 995 995 2.8% Advanced Valve Technology Manufacturing 444 444 1.3% Limited Anadyne Microelectronics IT hardware 625 625 1.8% Limited Armagard Limited Manufacturing 1,150 1,150 3.3% Artisan Software Tools Limited Software 1,047 1,047 3.0% Boxman.com plc Internet 750 750 2.1% Cardionetics Limited Healthcare 550 847 2.4% CDC Limited Software 500 500 1.4% Communication & Control IT hardware 375 375 1.1% Electronics Limited Cotswold Outdoor Limited Retail 1,000 400 1.1% Daisy & Tom Limited Retail 1,153 288 0.8% Deep Sea Leisure plc1* Leisure 200 175 0.5% Dragons Health Clubs plc* Leisure 950 2,066 5.9% Dycem Limited Specialist 650 650 1.9% engineering Elateral Holdings Limited Internet 613 613 1.7% First Fibre Limited Telecoms 1,250 1,250 3.6% Harleyco Limited Retail 685 514 1.5% HMV Media Group plc Retail 430 322 0.9% HSL Holdings Limited Software 1,000 1,000 2.8% HTC Healthcare Group plc Other services 325 325 0.9% International Diagnostics Healthcare 990 990 2.8% Group plc International Resources Group Specialist 403 403 1.1% Limited consulting JSB Software Technologies plc* Software 1,000 8,355 23.8% Linguaphone Group plc Publishing 250 250 0.7% Methuen Publishing Limited Publishing 782 782 2.2% Opsys Limited IT hardware 300 300 0.9% Orchestream Limited Software 1,250 2,035 5.8% Pipeline Engineering & Supply Specialist 496 496 1.4% Co Limited engineering Policy Master Group plc* Software 198 624 1.8% Power X Limited IT hardware 600 600 1.7% Purple Technologies Limited Software 200 200 0.6% Shalibane plc* Specialist 1,205 899 2.6% engineering Sibelius Software Limited Software 700 700 2.0% Sift plc Internet 625 625 1.8% Sopheon plc* Software 200 1,108 3.2% XKO Group plc* Software 625 2,391 6.8% Total venture capital 24,516 35,094 100% investments * Shares traded on AIM or main London market PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 JANUARY 2000 2000 1999 Notes as restated £'000 £'000 (Loss)/profit on realisation of (1,395) 2,016 investments Income 1 802 1,316 Investment management fee (852) (820) Other expenses 2 (238) (248) (Loss)/profit on ordinary (1,683) 2,264 activities before taxation Tax on ordinary activities 3 (43) (133) (Loss)/profit on ordinary (1,726) 2,131 activities after taxation Dividend paid 4 (1,778) (580) Retained (loss)/profit (3,504) 1,551 transferred to reserves Basic and diluted 5 (5.6) 7.0 (loss)/earnings per share STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2000 1999 as restated £'000 £'000 (Loss)/profit on ordinary (1,726) 2,131 activities after taxation Unrealised gain/(loss) on 11,664 (793) revaluation of investments Total gains and losses 9,938 1,338 recognised during the period Total recognised gains per 5 32.1p 4.4p share Notes The accompanying notes are an integral part of this statement. All 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 bank deposits. In accordance with Financial Reporting Standard (FRS) 14, the outstanding option gives rise to no dilution to the return per share at this stage. BALANCE SHEET AS AT 31 JANUARY 2000 2000 1999 Notes as restated £'000 £'000 Fixed assets Investments 40,606 23,006 Current assets Debtors 870 1,415 Cash at bank 1,094 10,583 1,964 11,998 Creditors (amounts falling due (357) (823) within one year) Net current assets 1,607 11,175 Net assets 42,213 34,181 Capital and reserves Called-up equity share 1,546 1,553 capital Share premium account 28,833 28,954 Revaluation reserve 12,537 1,682 Profit and loss account (703) 1,992 Total equity shareholders' funds 42,213 34,181 Net asset value per share 6 136.5p 110.1p CASH FLOW STATEMENT FOR THE YEAR ENDING 31 JANUARY 2000 2000 1999 as restated £'000 £'000 Reconciliation of operating profit to net cash inflow from operating activities Net (outflow)/revenue from ordinary (1,683) 2,264 activities before tax Decrease in debtors 347 31 Increase in creditors 25 71 Tax withheld at source on franked (40) (108) investment income Repayment of income tax suffered at 261 - source Income tax suffered at source (67) (211) Amortisation of gilts - 301 Loss/(profit) on realisation of 1,395 (2,016) investments Cash inflow from operating activities 238 332 Taxation Advance corporation tax paid (69) (59) Corporation tax refund (84) 33 85 306 Capital expenditure and financial investment Purchase of investments (17,914 (22,478) Sale/redemption of investments 10,583 30,017 (7,246) 7,845 Equity dividends paid (2,115) (699) Financing Issue of ordinary shares - 812 Share issue expenses - (32) Buy back of shares (128) (73) (Decrease)/increase in cash for the (9,489) 7,853 year Reconciliation of net cash flow to movement in net funds (Decrease)/Increase in cash for the (9,489) 7,853 year Net funds at the start of the year 10,583 2,730 Net funds at the end of the year 1,094 10,583 NOTES TO THE FINANCIAL STATEMENTS 1 Income 2000 1999 £'000 £'000 Franked investment income Unlisted companies 144 302 Listed companies 234 238 Interest receivable Fixed interest securities 232 514 Bank deposits 95 217 Loans to unquoted companies 96 45 Sundry income 1 - 802 1,316 2 Other expenses 2000 1999 as restated £'000 £'000 Administrative and secretarial 38 37 services Directors' remuneration 48 45 Auditors' remuneration - audit 17 16 services - non-audit 19 9 services Legal and professional expenses 20 20 Irrecoverable VAT 59 93 Other expenses 37 28 238 248 3 Tax on ordinary activities 2000 1999 as restated £'000 £'000 Under provision in prior year - 4 Tax attributable to franked 40 108 investment income ACT written off 3 21 43 133 4 Dividends 2000 1999 £'000 £'000 Interim paid net - 5.75p per share 1,778 243 (1999: 0.8p) Second interim proposed net - 0p - 303 per share (1999: 1.0p) Final dividend proposed net - 0p - 34 per share (1999: 0.11p) 1,778 580 5 Loss/earnings per share The 5.6p loss per share (1999: 7.0p earnings per share) is based on the net loss from ordinary activities after tax of £1,725,807 (1999: profit £2,130,287) and on shares of 30,954,344 (1999: 30,498,514), being the weighted average number of shares in issue during the year. The total recognised gains per share is based on the total gains and losses for the year of £9,937,659 (1999: £1,337,999) and on 30,954,344 (1999: 30,498,514) shares being the weighted average number of shares in issue during the year. 6 Net asset value per share The calculation of net asset value per share as at 31 January 2000 is based on net assets of £42,213,724 (1999:£34,181,250) divided by the 30,918,637 (1999: 31,056,383) ordinary shares in issue at that date. The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 January 2000. The statutory accounts for the year ended 31 January 2000 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. Copies of the full financial statements for the year ended 31 January 2000 are expected to be posted to shareholders on 25 April 2000 and will be available to the public at the registered office of the Company at 29 Queen Anne's Gate, London, SW1H 9BU.

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