Final Results

Elderstreet VCT PLC 29 April 2005 ELDERSTREET VCT PLC (FORMERLY ELDERSTREET DOWNING VCT PLC) PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 FINANCIAL HIGHLIGHTS 2004 pence Net asset value per share 62.9p Cumulative dividends since launch per share 29.5p Total return (Net asset value per share plus cumulative dividends) 92.4p The statement to shareholders by the Chairman, David Brock, includes the following comments: Introduction The year to 31 December 2004 has seen some improvement in the general climate for small businesses, which, together with a focussed approach by the Investment Manager, has contributed to an increase in the Company's Net Asset Value. Net Asset Value At 31 December 2004, the Net Asset Value per share ('NAV') was 62.9p, a rise of 9.4p or 16.6% (before distributions) since the previous year end. Venture capital investments The Company made two new investments and three follow on investments during the year. At the year-end, the venture capital portfolio comprised investments in 26 companies with a cost of £8.1 million and valuation of £8.0 million. The new investments made during the year are summarised as follows: Cost £'000 New investments Careforce Groups plc Domiciliary care provider 190 Baldwin and Francis Flameproof switchgear manufacturer 150 Follow-on investments Berkeley Scott Group plc Recruitment agency 146 Mediasurface plc Software developer 147 Snacktime Ltd Vending machine operator 150 The National Solicitors Network Ltd Services for solicitors 150 933 There were no realisations during the year other than redemptions of loan stock by Berkeley Scott and UM Holdings. The Board have reviewed the valuations of the unquoted investments at the year-end and made a number of adjustments. Wessex Advanced Switching Products Limited has continued to produce strong results, which has given rise to a valuation increase of £215,000. Henry J Beans and The National Solicitors Network have both made progress in recovering from difficulties and provisions made previously of £200,000 and £250,000 have been released. AIM stocks have also shown good increases in valuations over the year. A number of successful acquisitions by Computer Software Group plc have contributed to an improvement in its share price, and the value of the Company's investment has risen by £414,000. Berkeley Scott's successful floatation on AIM in December 2004 helped the valuation of the investment increase by £280,000. Overall the Venture Capital Portfolio showed unrealised gains of £1.298 million over the year. Results and Distribution The profit on ordinary activities after taxation was £1,415,000 (2003 loss: £846,000). An interim distribution of 1p per share was paid on 29 October 2004. Your Board is proposing to pay a final distribution of 2p per share on 21 June 2005 to shareholders on the register at 20 May 2005. 'C' Share issue In February 2005, the Company launched a 'C' Share issue to allow investors to benefit from the 40% income tax relief now available on new investments into VCTs. Supply of new VCT products has exceeded demand by many times for 2004/05 tax year and, as a result, the level of funds raised has been disappointing, with approximately £1.5 million raised to date. Although the 'C' Share funds will be operated as a separate pool, the running costs of the VCT are now shared across the Ordinary and 'C' shareholders, so there are benefits for Shareholders even though the levels of funds raised is lower than hoped. Directorate On 26 January 2005, Barry Dean joined the Board as a non-executive director. Barry is a Chartered Accountant, with over 25 years' experience in the venture capital industry and will be a valuable addition to the Board. VCT qualifying status Qualifying investments now represent 80% of total investments (including cash) thereby continuing to exceed the Venture Capital Trust qualifying criteria of a minimum of 70%. The Board, with the assistance of PricewaterhouseCoopers, continue to monitor the Company's compliance with the VCT legislation. Share repurchase The Board is conscious that the Company's share price is affected by the illiquidity of its shares in the market, resulting from the requirement that shareholders must retain their shares for at least five years in order to retain their tax benefits. In line with accepted practice with VCTs, the Company has a policy of purchasing its own shares. During the year the Directors used this power to acquire 246,100 shares at an average price of 47.0p per share. A Special Resolution to continue with this policy is proposed for the forthcoming AGM. Annual General Meeting The Annual General Meeting of the Company will be held at 32 Bedford Row, London WC1R 4HE at 10:30am on 16 June 2005. Outlook Although there have been no significant exits during 2004, many of the portfolio companies have progressed well, resulting in higher valuations. The Board is encouraging the Investment Manager to continue to work closely with the investee companies to support further progress and, in some cases, work towards possible exits. Exits from existing investments and the proceeds of the 'C' share issue will provide a greater level of funds for new investments. There now appears to be greater deal flow of new investment opportunities than for some time, however the quality of these opportunities varies widely, so careful selection will be the key to success. UNAUDITED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2004 Year ended Year ended 31 December 31 December 2004 2003 £'000 £'000 Investment income 363 291 Investment management fees (143) (131) Other expenses (166) (173) Operating profit/(loss) 54 (13) Net movement on permanent diminution provision 1,361 (621) Loss on realisation of investments - (212) Profit/(loss) on ordinary activities before taxation 1,415 (846) Tax on ordinary activities - - Profit/(loss) on ordinary activities after taxation 1,415 (846) Dividends (439) (297) Retained profit/(loss) for the year 976 (1,143) Basic and diluted earnings/(loss) per share 9.6p (5.6p) Basic and diluted earnings/(loss) per share is based on the profit on ordinary activities after taxation of £1,415,000 (2003: loss: £846,000), but before deduction of distributions of £439,000 (2003: £297,000), in respect of 14,791,121 ordinary shares (2003: 14,977,940), being the weighted average number of ordinary shares in issue during the year. UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 Profit/(loss) on ordinary activities after 1,415 (846) taxation Revaluations - non-permanent diminutions (62) 597 Total recognised gains/(losses) for the 1,353 (249) year Recognised losses brought forward (1,931) (1,682) Recognised losses carried forward (578) (1,931) UNAUDITED NOTE OF HISTORICAL COST PROFITS AND LOSSES for the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 Profit/(loss) on ordinary activities after taxation 1,415 (846) Net movement on permanent diminution (1,361) 621 provision Realisation of revaluation gains from (743) (897) previous years Historical cost loss on ordinary activities after (689) (1,122) taxation Dividends (439) (297) Retained historical cost loss for the year (1,128) (1,419) Historical cost (loss)/profit brought forward (672) 747 Historical cost loss profit carried forward (1,800) (672) UNAUDITED BALANCE SHEET as at 31 December 2004 As at As at 31 Dec 31 Dec 2004 2003 £'000 £'000 £'000 £'000 Fixed Assets Venture capital investments 7,967 6,203 Current Assets Debtors 48 41 Cash at bank and in hand 1,514 2,356 1,562 2,397 Creditors: amounts falling due within one (324) (192) year Net current assets 1,238 2,205 Net assets 9,205 8,408 Capital and reserves Called up share capital 732 744 Capital redemption reserve 25 13 Revaluation reserve 1,908 1,227 Special reserve 6,540 6,424 Equity shareholders' funds 9,205 8,408 Net asset value per share 62.9p 56.5p Net asset value per ordinary share is based on net assets at the year-end, and on 14,639,300 ordinary shares (2003: 14,885,400), being the number of ordinary shares in issue at the year-end. The Special Reserve is a distributable reserve that allows the Company to make market purchases of its own shares and to pay dividends. UNAUDITED CASHFLOW STATEMENT for year ended 31 December 2004 Year ended Year ended 31 Dec 31 Dec 2003 2004 £'000 £'000 £'000 £'000 Net cash inflow from operating 44 113 activities Corporation tax - - Capital expenditure Purchase of venture capital investments (933) (846) Sale of fixed income securities - 800 Sale of venture capital investments 468 1,116 Net cash (outflow)/inflow from capital (465) 1,070 expenditure Equity dividends paid (296) (450) Net cash (outflow)/inflow before financing (717) 733 Financing Purchase of own shares (125) (79) Net cash outflow from financing (125) (79) (Decrease)/increase in cash (842) 654 Reconciliation of net cash flow to movement in net funds 2004 2003 £'000 £'000 (Decrease)/increase in cash during the year (842) 654 Net funds at 1 January 2004 2,356 1,702 Net funds at 31 December 2004 1,514 2,356 Announcement based on draft accounts (unqualified audit report) The financial information set out in the announcement does not constitute the Company's statutory accounts for the year ended 31 December 2004 or 31 December 2003. The statutory accounts for the year ended 31 December 2004 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The financial information for the year ended 31 December 2003 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; this report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The financial information has been prepared on the basis of the accounting policies set out in the Company's financial statements for the year ended 31 December 2003. A copy of the full annual report and financial statements for the year ended 31 December 2004 will be printed and posted to shareholders. Copies will also be available to the public at the registered office of the Company at 69 Eccleston Square, London SW1V 1PJ. This information is provided by RNS The company news service from the London Stock Exchange

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