Final Results

Elderstreet Downing VCT PLC
25 March 2002

ELDERSTREET DOWNING VCT PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2001


FINANCIAL HIGHLIGHTS

                                                                       2001
                                                                       pence

Net asset value per share                                               75.7p
Cumulative return since launch per share                                21.0p
Total return (Net asset value per share plus cumulative dividends)      96.7p



The statement to shareholders by the Chairman, David Brock, includes the 
following comments:


Introduction

The year ended 31 December 2001 was characterised by increasingly difficult
economic conditions.  These prolonged conditions have begun to impact on the
investments within the Company's portfolio, in many cases giving rise to
significantly lower valuations than at the Company's previous year end.



Net Asset Value

At 31 December 2001 the Net Asset Value per share (NAV) was 75.7p, a fall of
25.8p since 31 December 2000.  This fall should be assessed against the
background of substantial falls in the major stock market indices over the same
period and significantly lower Net Asset Values being reported by many other
VCTs.



Venture capital investments

The AIM investments within the portfolio have experienced sharp reductions in
values, particularly since 11 September 2001.  Two of the Company's AIM
investments alone have accounted for a reduction of £1.6 million representing
10.6p per share.  Although Software for Sport is continuing to make progress,
its share price fell by 47% over the year reflecting the change in sentiment
towards the technology sector.  Topnotch Healthclubs share price fell
significantly in September 2001 when the company released a profits warning
stating that delays in its expansion programme and the uncertain economic
conditions were impacting on its performance.  Although the company is now
making satisfactory progress the share price has yet to recover.



The valuation of the unquoted portfolio has been reviewed by the Board at the
year end and a number of provisions made and existing provisions adjusted.  The
investment in European and Telecommunications and Technology has been written
down by £527,000 to reflect the price at which a fundraising was carried out in
February 2002.  This investment had previously been revalued upwards by
£1,000,000 based on the previous fundraising round.  Berkeley Scott was badly
affected by the 'foot and mouth' outbreak during 2001 and consequently a
provision of £393,000 has been made to reflect the poor results.  In addition,
the valuation of Shopcreator has been reduced by £383,000 in line with the
latest fundraising round undertaken.  The revaluations noted above total £1.3
million, equivalent to a fall in NAV of 8.6p.



During the year the Investment Manager negotiated a successful exit from the
investment in Food Packaging Limited.  A secondary buyout of the company was
completed in July 2001 giving rise to a gain of £608,000.  The Company also made
some other smaller realisations, giving a net loss of £58,000, and leaving total
net realised gains of £550,000.



At the end of the financial year the Company had a portfolio consisting of
investments in twenty-nine companies with a cost of £9.7 million and valuation
of £8.0 million.



VCT qualifying status

Qualifying investments now represent 74% of total investments (including cash)
thereby exceeding 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.



Format of accounts

During 2000 the Company revoked its investment company status in order to pay a
capital distribution.  As a consequence of this change the Company's financial
statements must now include a Profit and Loss Account, instead of a Statement of
Total Return.



Results and dividend

The loss on ordinary activities after taxation was £1,227,000 (2000 - Loss -
£3,790,000).



An interim dividend of 1.5p per share was paid on 28 September 2001.  Your Board
is proposing to pay a final dividend of 2p per share on 3 May 2002 to
shareholders on the register at 5 April 2002.  This will take the total tax-free
dividends paid to shareholders since launch to 21p per share.



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.  A Special Resolution to continue with this
policy is proposed for the forthcoming AGM.



Annual General Meeting

The fourth Annual General Meeting of the Company will be held at 32 Bedford Row,
London WC1R 4HE at 10:00 am on 2 May 2002.



Publication of share price

The Company's share price continues to be quoted in the Financial Times on a
daily basis in the 'Investment Companies' sector.



Outlook

The current economic conditions have presented new challenges for many of the
companies within the portfolio.  The Investment Manager continues to closely
monitor investee companies and, where appropriate, provides executive support to
assist in their development.  In view of the increasingly difficult climate for
investing, some time ago the Board and Investment Manager took the decision to
significantly reduce the rate of new investment.  As a result the Company still
has £3.5 million of its funds held in cash and fixed interest securities and is
now well poised to take advantage of the lower valuations of potential new
investments which the Board believes will become available.



The cautious economic mood and reduced valuations means that currently
acceptable disposal opportunities are now less likely to occur than in previous
years.  However, the Company has a large and well-diversified portfolio which
has good long term potential to give rise to satisfactory exits when the
economic conditions improve.



PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2001
                                                           Year            Year
                                                          ended           ended
                                                         31 Dec          31 Dec
                                                           2001            2000
                                                          £'000           £'000

Investment income                                           437             711
Investment management fees                                (244)           (288)
Other expenses                                            (230)           (248)

Operating (loss)/ profit                                   (37)             175
Net movement on permanent diminution provision          (1,739)         (2,896)
Profit/ (loss) on realisation of investments                550         (1,038)

(Loss) on ordinary activities before taxation           (1,226)         (3,759)
Tax on ordinary activities                                  (1)            (31)

(Loss) on ordinary activities after taxation            (1,227)         (3,790)

Dividends                                                 (528)         (1,816)

Retained (loss) for the year                            (1,755)         (5,606)


Loss per share                                           (8.1p)         (25.0p)





Loss per share is based on the loss on ordinary activities after taxation of
£1,227,000 (2000: £3,790,000), but before deduction of dividends of £528,000
(2000 - £1,816,000), in respect of 15.10 million ordinary shares (2000 - 15.13
million), being the weighted average number of ordinary shares in issue during
the year.



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 2001
                                                            Year          Year
                                                           ended         ended
                                                          31 Dec        31 Dec
                                                            2001          2000
                                                           £'000         £'000

(Loss) on ordinary activities after taxation             (1,227)       (3,790)
Net movement on permanent diminution provision             1,739         2,896
Total unrealised (losses) on revaluation of              (3,876)         (861)
investments

Total recognised losses for the year                     (3,364)       (1,755)

Recognised gains brought forward                           3,545         5,300

Recognised gains carried forward                             181         3,545



NOTE OF HISTORICAL COST PROFITS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 2001
                                                              Year             Year
                                                             ended            ended
                                                            31 Dec           31 Dec
                                                              2001             2000
                                                             £'000            £'000

(Loss) on ordinary activities after taxation               (1,227)          (3,790)
Net movement on permanent diminution provision               1,739            2,896
Realisation of revaluation gains from previous years           942            3,503
Historical cost profit on ordinary activities after          1,454            2,609
taxation
Dividends                                                    (528)          (1,816)

Retained historical cost profit for the year                   926              793

Historical cost profit brought forward                         823               30

Historical cost profit carried forward                       1,749              823



BALANCE SHEET AT 31 DECEMBER 2001

                                                                2001                    2000
Fixed Assets                                         £'000     £'000         £'000     £'000
Venture capital investments                          7,994                  12,688
Listed fixed income securities                       1,439                   1,450
                                                               9,433                  14,138
Current Assets
Debtors                                                233                     759
Cash at bank and in hand                             2,112                     814
                                                     2,345                   1,573
Creditors: amounts falling due within one year       (342)                   (367)
Net current assets                                             2,003                   1,206
Net assets                                                    11,436                  15,344

Capital and reserves
Called up share capital                                          754                     755
Capital redemption reserve                                         3                       2
Revaluation reserve                                              661                   3,057
Special reserve                                               10,018                  11,530
Equity shareholders' funds                                    11,436                  15,344
Net asset value per share                                      75.7p                  101.5p





Net asset value per ordinary share is based on net assets at the year end, and
on 15.10 million ordinary shares (2000 - 15.12 million), being the number of
ordinary shares in issue at the year end.

CASHFLOW STATEMENT FOR YEAR ENDED 31 DECEMBER 2001
                                                                                   Year                    Year
                                                                                  ended                   ended
                                                                                 31 Dec                  31 Dec
                                                                                   2001                    2000  
                                                                        £'000     £'000         £'000      £'000

Net cash inflow/ (outflow) from operating activities                                223                     (11)

Capital expenditure
Purchase of listed fixed income securities                                  -                   (598)
Purchase of venture capital investments                                 (724)                 (5,904)
                                                                        (724)                 (6,502)
Sale of fixed income securities                                             -                   1,538
Sale of venture capital investments                                     2,347                   6,225
Net cash inflow from capital expenditure                                          1,623                    1,261

Equity dividends paid                                                             (531)                  (1,665)

Net cash inflow/  (outflow) before financing                                      1,315                    (415)

Financing
Purchase of own shares                                                   (17)                    (20)
Net cash (outflow) from financing                                                  (17)                     (20)

Increase/ (decrease) in cash                                                      1,298                    (435)

 
                                                                                  2001                     2000
Reconciliation of net cash flow to movement in net funds                          £'000                    £'000
Increase/ (decrease) in cash during the year                                      1,298                    (435)
Net funds at 1 January 2001                                                         814                    1,249
Net funds at 31 December 2001                                                     2,112                      814

                                                                                   2001                     2000
Cashflow from operating activities and returns on investments                     £'000                    £'000
Operating (loss)/ profit                                                           (37)                      175
Decrease/ (increase) in prepayments and accrued income                               86                    (100)
Decrease/ (increase) in other debtors                                               202                    (118)
(Decrease)/ increase in accruals and other creditors                               (28)                       32
Net cash inflow/ (outflow) from operating activities and returns on                 223                     (11)
investments



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 2001.  The statutory
accounts for the year ended 31 December 2001 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 2000 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.



A copy of the full annual report and financial statements for the year ended 31
December 2001 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.





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