Half-yearly report

Elderstreet VCT plc
Half-Yearly Report for the six months ended 30 June 2009


Recent performance summary

                                                 30 Jun 31 Dec 30 Jun
                                                   2009   2008   2008
                                                  pence  pence  pence

Net asset value per Ordinary Share                 70.2   72.8   88.5
Cumulative distributions paid per Ordinary Share   44.0   43.0   40.0
Total return per Ordinary Share                   114.2  115.8  128.5



CHAIRMAN'S STATEMENT
I am pleased to present the Half-Yearly Report for Elderstreet VCT
plc for the six-month period ended 30 June 2009.  Despite the
difficult conditions, most companies within the investment portfolio
have held up well.

Net Asset Value
At 30 June 2009, the Company's Net Asset Value ("NAV") per Ordinary
Share stood at 70.2p, a decrease of 1.6p or 2.2% since 31 December
2008 (after adjusting for the dividend of 1p per share paid during
the period).

Ordinary Share issue
The Company undertook a small top-up issue for the Ordinary Share
pool during the period.  1,979,406 Ordinary Shares of 5p were issued
at an average price of 74.7p per share.  The total funds received
under the offer were £1.5 million with issue costs thereon of
£81,000.

Venture capital investments
There was relatively little investment activity during the period.

The Company made one follow-on investment in Access Intelligence plc,
being a £500,000 purchase of loan stock.

Fords Packaging Systems Limited underwent a re-organisation during
the period whereby a new holding company was put in place.  In
addition to a share-for-share exchange in respect of its existing
investment, the Company also took the opportunity to invest a further
£505,000 following the exit of a member of the management team.

The Company undertook a small number of minor disposals, producing a
small realised loss of £26,000 during the period.

Of the investments held throughout the period, the largest movements
in value were from those quoted on AIM. The share price of Access
Intelligence plc doubled over the period producing an uplift in value
of £460,000. Conversely, the share price of Snacktime plc fell by
more than 25% over the period.  However, since the period end the
Snacktime share price has made a sharp recovery.

The Board has reviewed the valuations of the unquoted investments at
the period end and made three adjustments from the previous carrying
values.  Fords Packaging Systems has continued to perform well
justifying an uplift of £105,000.  Unfortunately Wecomm has struggled
to make satisfactory progress and has required a further provision of
£272,000 and Sift has performed poorly, requiring a further provision
of £150,000.

Total net unrealised losses arising on the investment portfolio for
the period were £208,000.

Listed fixed income securities
The Company continues to hold a small portfolio of fixed interest
investments which are managed by Smith & Williamson Investment
Management Limited.  During the period this portfolio produced
unrealised losses of £53,000 and realised losses of £4,000.

Results
The loss on activities after taxation for the period was £334,000
(2008 return: £1,938,000), comprising a revenue return of £53,000 and
a capital loss of £387,000.

Dividend
The Company will pay an interim dividend to of 2.0p per Ordinary
share (comprising of 0.25p revenue and 1.75p capital). The dividend
will be paid on 9 October 2009 to Shareholders on the register at 18
September 2009.

Share buybacks
Historically the Company has operated an ongoing share buyback policy
to provide liquidity in the market for Shareholders wishing to
dispose of their share. In my statement in the Annual Report, I
reported that the Board had decided to temporarily suspend the share
buyback policy, whilst it reviewed the Company's liquidity
requirements.

The Board always seeks to balance the interests of continuing and
departing Shareholders and has decided to introduce a slightly
modified system for share buybacks.  In future, the Company will
acquire its own shares in the market twice each year; once soon after
the publication of the Half-Yearly Report and once soon after the
publication of the Annual Report.  At these times, the Board will
agree the price at which such buybacks are undertaken. The Board will
also agree a level of funds available for buybacks prior to buying in
shares.

The Board reserves the right to allocate company funds reserved for
buybacks across Shareholders wishing to sell on a pro rata basis
rather than a first order basis. This may result in Shareholders only
being able to sell a proportion of their holding. The Board believes
this to be an equitable policy to those Shareholders who wish to
exit. Any implementation of the buyback policy will be at the Board's
discretion and subject to the Company's liquidity and to stock market
and other applicable regulations.

The Board has agreed to make funds of up to £150,000 available for
share buybacks following the release of these results. The Board will
buy in shares at approximately a 15% discount to the latest published
NAV and expects the next buyback to take place at the end of
October.  Shareholders who wish to sell their Shares should contact
Downing Management Services Limited.

Investment management and administration fees
Shareholders will probably be aware that there was change to VAT
regulations last year such that VCTs no longer suffer from VAT
charged on investment management fees.  This change has had an impact
on the ability of the investment manager to recover input VAT on its
costs.  As a result, the Board has undertaken a review of both
investment management and administration fees.

The Board noted that the level of investment management fees charged
to the Company has, in recent years, been lower than the typical
market rate for "generalist" VCTs.  The Board also recognises that it
is important to have a properly resourced investment manager and
believes it should pay a fair fee for the services the Company
receives.

The Board has agreed to increase the investment management fees to
Elderstreet Investments Limited to 2% of net assets per annum.
Previously these fees had been charged at the rate of 2% plus VAT
less the administration fee charged by Downing Management Services
Limited (£60,000 per annum).

Following the conversion of the C Shares into Ordinary Shares last
year, the Company now has just one class of shares. As a result, the
Board has been able to negotiate a reduction to the administration
fee to a level of £50,000 per annum plus VAT.

Based on the current net asset value, the increase in the investment
management fees is almost exactly offset by the savings in
administration fees and VAT.  This is the first significant change to
the fee structure since the Company's launch in 1998. The Board
considers this change to be a satisfactory development for
Shareholders which ensures that the Company can expect to continue to
receive a high quality level of investment management services.

Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is
required in the Company's half-yearly results, to report on principal
risks and uncertainties facing the Company over the remainder of the
financial year.

The Board has concluded that the key risks facing the Company over
the remainder of the financial period are as follows:

*              investment risk associated with investing in small and
  immature businesses;
*              liquidity risk arising from investing mainly in
  unquoted businesses; and
*              failure to maintain approval as a VCT.

In all cases the Board is satisfied with the Company's approach to
these risks.  As a VCT, the Company is forced to have significant
exposure to relatively immature businesses.  This risk is mitigated
to some extent by holding a well-diversified portfolio.

With a reasonably illiquid venture capital investment portfolio, the
Board ensures that it maintains an appropriate proportion of its
assets in cash and liquid instruments.

The Company's compliance with the VCT regulations is continually
monitored by the Administration Manager, who regularly reports to the
Board on the current position.  The Company also retains
PricewaterhouseCoopers to provide regular reviews and advice in this
area.  The Board considers that this approach reduces the risk of a
breach of the VCT regulations to a minimal level.

Outlook
The Company now has a significant proportion of value within a
reasonably small number of investments, however these investments are
well diversified across industrial sectors. This structure of
portfolio lends itself to the "hands-on" investment management style
typically employed by Elderstreet Investments Limited.

The Board expects general economic conditions to remain difficult for
some time, but is satisfied that the larger portfolio companies have,
where needed, made appropriate adjustments, and should be
well-positioned to take advantage of improving conditions when they
arrive.



David Brock
Chairman

UNAUDITED INCOME STATEMENT
for the six months ended 30 June 2009


                                                Six months ended
                                                  30 June 2009
                                           Revenue   Capital    Total
                                             £'000     £'000    £'000

Income                                         186         -      186

(Losses)/gains on investments          -         -      (26)     (26)
realised
- unrealised                                           (261)    (261)
                                               186     (287)    (101)

Investment management fees                    (33)      (99)    (132)
Recoverable VAT                                  -         -        -
Other expenses                               (100)       (1)    (101)

Return/(loss) on ordinary activities            53     (387)    (334)
before taxation

Taxation                                         -         -        -

Return/(loss) attributable to equity            53     (387)    (334)
shareholders

Basic and diluted return per Ordinary         0.1p    (1.7p)   (1.6p)
Share





                                    Six months ended       Year ended
                                      30 June 2008        31 December
                                                                 2008
                                Revenue   Capital   Total       Total
                                  £'000     £'000   £'000       £'000

Income                              469         -     469         861

(Losses)/gains on investments         -       650     650       1,207
         - realised
- unrealised                          -     1,101   1,101     (2,445)
                                    469     1,751   2,220       (377)

Investment management fees         (45)     (136)   (181)       (362)
Recoverable VAT                       -         -       -         100
Other expenses                     (99)       (2)   (101)       (220)

Return/(loss) on ordinary           325     1,613   1,938       (859)
activities before taxation

Taxation                              -         -       -           -

Return/(loss) attributable to       325     1,613   1,938       (859)
equity shareholders

Basic and diluted return per       1.5p      8.4p    9.9p      (4.2p)
Ordinary Share




RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 June 2009


                                          30 Jun   30 Jun    31 Dec
                                            2009     2008      2008
                                           £'000    £'000     £'000

Opening shareholders' funds               15,698   17,968    17,968
Issue of shares                            1,479      884       885
Share issue costs                           (81)     (48)      (49)
Purchase of own shares                         -    (314)     (509)
Total recognised (losses)/gains in the     (334)    1,938     (859)
period
Distributions                              (234)    (756)   (1,738)

Closing shareholders' funds               16,528   19,672    15,698




UNAUDITED SUMMARISED BALANCE SHEET
as at 30 June 2009


                                        As at   As at   As at
                                       30 Jun  30 Jun  31 Dec
                                         2009    2008    2008
                                        Total   Total   Total
                                        £'000   £'000   £'000
Fixed assets
Investments                            15,302  17,934  15,174

Current assets
Investments                             5,110   5,110   5,110
Debtors                                   108     306     392
Cash at bank and in hand                1,291   1,635     348
                                        6,509   7,051   5,850
Creditors: amounts falling due within (5,283) (5,313) (5,326)
one year

Net current assets                      1,226   1,738     524

Net assets                             16,528  19,672  15,698


Capital and reserves
Called up share capital                 1,178   1,116   1,079
Capital redemption reserve                157     144     157
Merger reserve                          3,475   3,475   3,475
Share premium                           4,341   3,018   3,042
Special reserve                         3,652   4,157   3,461
Unrealised holding (losses)/gains       (558)   2,745     124
Capital reserve - realised              4,011   4,690   4,141
Revenue reserve                           272     327     219

Equity shareholders' funds             16,528  19,672  15,698

Net Asset Value per Ordinary Share:     70.2p   88.5p   72.8p



UNAUDITED CASHFLOW STATEMENT
for the six months ended 30 June 2009


                                                  Six    Six
                                               months months     Year
                                                ended  ended    ended
                                               30 Jun 30 Jun   31 Dec
                                                 2009   2008     2008
                                         Note   £'000   £'000   £'000
Net cash inflow from operating
activities and                            1       187     153     211
returns on investments

Capital expenditure
Purchase of investments                       (2,266) (2,610) (3,827)
Sale of investments                             1,851   3,837   4,877
Net cash (outflow)/inflow from capital          (415)   1,227   1,050
expenditure

Acquisitions
Cash acquired from subsidiary                       -     162     162
undertaking
Net cash flow from acquisitions                     -     162     162

Equity dividends paid                           (257)   (756) (1,738)

Net cash (outflow)/inflow before                (485)     786   (315)
financing

Financing
Proceeds from share issue                       1,479     884     885
Share issue costs                                (51)   (103)    (94)
Purchase of own shares                              -   (313)   (509)
Net cash inflow from financing                  1,428     468     282

Increase/(decrease) in cash               2       943   1,254    (33)

Notes to the cash flow statement:

1. Net cash inflow from operating
activities
and returns on investments
Return on ordinary activities before            (334)   1,938   (859)
taxation
Losses/(gains) on investments                     287 (1,751)   1,238
Decrease/(increase) in other debtors              253    (30)   (178)
(Decrease)/increase in other creditors           (19)     (4)      10
Net cash inflow from operating
activities and                                    187     153     211
returns on investments

2. Analysis of net funds
Beginning of period                               348     381     381
Net cash inflow/(outflow)                         943   1,254    (33)
End of period                                   1,291   1,635     348


SUMMARY OF INVESTMENT PORTFOLIO
as at 30 June 2009


                                                Unrealised
                                               gain/(loss)       % of
                                Cost Valuation   in period  portfolio
                               £'000     £'000       £'000   by value

Top ten venture capital
investments
Wessex Advanced Switching         60     2,673           -      16.1%
Products Limited
Snacktime plc *                1,725     1,551       (420)       9.3%
Access Intelligence plc *      1,133     1,420         460       8.6%
Fords Packaging Systems        1,047     1,152         105       6.9%
Limited
Lyalvale Express Limited         915     1,027           -       6.2%
Baldwin & Francis Holdings       690     1,020           -       6.2%
Limited
Smart Education Limited        1,403       985           -       5.9%
The Engine Group plc             600       726           -       4.4%
Wecomm Limited                   850       472       (273)       2.8%
AngloINFO Limited                328       328           -       2.0%
                               8,751    11,354       (128)      68.4%

Other venture capital          5,922     1,704        (80)      10.3%
investments

Listed fixed income            2,236     2,244        (53)      13.5%
securities

Subtotal                      16,909    15,302       (261)      92.2%

Cash at bank and in hand                 1,291                   7.8%

Total investments                       16,593                 100.0%



All venture capital investments are unquoted unless otherwise stated.

* Quoted on AIM

SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 June 2009

Additions


                               £'000
Venture capital investments
Access Intelligence plc          500
Ford Packaging Systems Limited 1,047
                               1,547

Listed fixed income securities
Treasury 3¿ % Stock 7/12/2011    719

                               2,266



Disposals

                                    Market            Gain/     Total
                                  value at           (loss) realised
                                 1 January Disposal against     gain/
                            Cost      2009 proceeds    cost    (loss)
                           £'000     £'000    £'000   £'000     £'000

Full disposals
Alterian plc                 125        57       49    (76)       (8)
Ford Packaging Systems
1998 Limited                  83       542      542     459         -

Partial disposals
Mears Group plc               66        73       59     (7)      (14)

Fixed interest securities
Nucleus Cash Trust           246       243      244     (2)         1
Treasury 4% Stock 2009       936       962      957      21       (5)

                           1,456     1,877    1,851     395      (26)


NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

1. The unaudited half yearly financial results cover the six months
to 30 June 2009 and have been prepared in accordance with the
accounting policies set out in the statutory accounts for the year
ended 31 December 2008 which were prepared under UK Generally
Accepted Accounting Practice ("UK GAAP") and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment
Trust Companies and Venture Capital Trusts" revised January 2009
("SORP").

2. All revenue and capital items in the Income Statement derive from
continuing operations.

3. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.

4. The comparative figures are in respect of the six months ended 30
June 2008 and the year ended 31 December 2008 respectively.

5. Basic and diluted NAV per share for the period has been calculated
on 23,549,887 shares, being the number of shares in issue at the
period end.

6. Basic and diluted return per share for the period has been
calculated on 23,037,846 shares, being the weighted average number of
shares in issue during the period.

7. Distributions

                                         30 Jun 2009      31 Dec 2008
                          Per share Revenue Capital Total       Total
                              pence   £'000   £'000 £'000       £'000
Paid in the period
2007 Final Ordinary Share       3.5       -       -     -         734
dividend
2007 Final 'C' Share dividend   1.0       -       -     -          23
2008 Interim Ordinary Share     3.0       -       -     -         624
dividend
2008 Interim 'C' Share         24.0       -       -     -         357
dividend
2008 Final Ordinary Share       1.0       -     234   234           -
dividend
                                          -     234   234       1,738


8. Capital and Reserves

                 Capital                         Investment  Capital
              Redemption  Merger   Share Special    Holding  Reserve Revenue
                 Reserve Reserve Premium Reserve     Gains/        - Reserve
                                                   (Losses) Realised
                   £'000   £'000   £'000   £'000      £'000    £'000   £'000

At 1 January         157   3,475   3,042   3,461        124    4,141     219
2009
Issue of new           -       -   1,380       -          -        -       -
shares
Share issue            -       -    (81)       -          -        -       -
costs
Expenses               -       -       -       -          -    (100)       -
capitalised
Losses on              -       -       -       -      (261)     (26)       -
investments
Transfer               -       -       -     191      (421)      230       -
between
reserves
Retained net
revenue                -       -       -       -          -        -      53
for the
period
Distributions          -       -               -          -    (234)       -
paid in
period
At 30 June           157   3,475   4,341   3,652      (558)    4,011     272
2009



Distributable reserves comprise the Special Reserve, Capital Reserve
- Realised and the Revenue Reserve.  Additionally £987,000 of the
Merger Reserve is considered to be distributable together with net
losses within the Investment Holding Gains Reserve of £4,891,000.
Reserves available for distribution at the period end therefore
amounted to £4,031,000.

9. The Directors confirm that, to the best of their knowledge, the
half-yearly financial statements have been prepared in accordance
with the "Statement: Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board and the half-yearly financial report
includes a fair review of the information required by:

*              DTR 4.2.7R of the Disclosure and Transparency Rules,
  being an indication of important events that have occurred during
  the first six months of the financial year and their impact on the
  condensed set of financial statements, and a description of the
  principal risks and uncertainties for the remaining six months of
  the year; and

*              DTR 4.2.8R of the Disclosure and Transparency Rules,
  being related party transactions that have taken place in the first
  six months of the current financial year and that have materially
  affected the financial position or performance of the entity during
  that period, and any changes in the related party transactions
  described in the last annual report that could do so.

10. The unaudited financial statements set out herein do not
constitute statutory accounts within the meaning of Section 240 of
the Companies Act 1985 and have not been delivered to the Registrar
of Companies. The figures for the year ended 31 December 2008 have
been extracted from the financial statements for that year, which
have been delivered to the Registrar of Companies; the auditors'
report on those financial statements was unqualified.

11. Copies of the unaudited half-yearly results will be sent to
Shareholders shortly. Further copies can be obtained from the
Company's Registered Office.

---END OF MESSAGE---




This announcement was originally distributed by Hugin. The issuer is 
solely responsible for the content of this announcement.