Final Results

RNS Number:9975L
Elderstreet Milnm Vent Cap Tst PLC 
05 June 2003

ELDERSTREET MILLENNIUM VENTURE CAPITAL TRUST PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2003

FINANCIAL HIGHLIGHTS

                                                                                               2003           2002
                                                                                              pence          pence

Net asset value per share                                                                     65.8p          69.4p
Cumulative return since launch per share                                                    25.525p        21.525p
Total return (Net asset value per share plus cumulative dividends)                            91.3p          90.9p


The statement to shareholders by the Chairman, Michael Stoddart, includes the following comments:


Introduction

The year ended 28 February 2003 has seen a continuation of the difficult
economic climate which has been further harmed by the military activities in the
Middle East, the continued threat of terrorism and a number of major corporate
scandals and failures.



Results and dividend

Against the background described above, it is pleasing to report that
Elderstreet Millennium Venture Capital Trust plc has performed steadily over the
year.  At the year end the Company's Net Asset Value per share (NAV) stood a
69.8p, an increase of 0.4p since the previous year end (before taking into
account the 4p of dividends paid and proposed for the year).   After taking into
account dividends the NAV stood at 65.8p.



Gross revenue for the year was #530,000 (2002: #596,000) and the revenue after
taxation was #287,000 (2002: #361,000).



In line with the Company's usual dividend policy of paying out all revenue, the
Board is proposing that the Company pay a final revenue dividend of 0.6p.  It is
also proposed to pay a further capital distribution of 1.4p per share from
realised gains.  Therefore, subject to approval at the AGM, Shareholders will
receive a final distribution of 2.0p per share making a total of 4.0p per share
for the year.  The final dividend will be paid on 31 July 2003 to Shareholders
on the register at 27 June 2003.



Following the proposed year end dividend, original Shareholders will have
received tax-free dividends of 25.5p per share from the Company since it was
launched.   The Total Return to Shareholders (Net Assets plus cumulative
dividends) is, therefore, 91.3p per share compared to an initial investment (net
of income tax relief) of 80p per share.



Venture capital investments

The Investment Manager has continued to take a cautious approach to investing
whilst there is so much uncertainty and volatility in equity markets. The
Company has, however, made four new investments in the year and one follow-on
investment totalling #1.3 million.  The new investments are in a broad range of
businesses and have helped to further diversify the venture capital portfolio.



During the year the Company made three significant disposals.  The Company's
holding in Arrowhead Holdings Limited was sold at the start of the period
generating a gain against original cost of #294,000.  The remaining investment
in CRC Group plc was also sold giving a gain of #113,000 and part of the holding
in Connaught plc was sold producing a gain of #60,000.  In total the Company
generated realised gains of #476,000 during the course of the year.  Two
investments, e-Gas & Power and Optima, which had been fully written off in our
books went into liquidation during the year and have now been treated as
realised.



Within the remaining portfolio, a number of investments have made encouraging
progress.  In particular Lyalvale, a shotgun cartridge manufacturer, has bounced
back from a poor previous year.  As part of the review of unquoted investment
valuations, the Directors have valued the holding on a earnings basis, giving
rise to an uplift of #326,000.



In November 2001, the Company made an investment in The QSS Group Limited, a
railway industry consultancy. Since then the business has made excellent
progress and is now valued on an earnings basis giving an uplift of #436,000.



The unquoted venture capital portfolio has also had some disappointments, most
notably Veterinary Practices Initiatives Limited, which has faced a number of
performance and management issues.  New management is now in place and being
closely monitored by the Investment Manager.  The Directors have, however,
decided that it is prudent to make full provision against the equity part of the
Company's investment totalling #655,000.



In line with the trend in the market, the AIM investments have shown a fall in
value over the year.  The Directors continue to take a prudent approach and to
value these investments at 90% of their mid-market quoted price.  In total, the
venture capital portfolio including the AIM investments, fell in value by
#223,000 over the year.



Listed fixed income securities

At the year-end the listed fixed income portfolio was valued at #3.6 million.
During the year this portfolio generated realised losses of #13,000 and
unrealised gains of #85,000.



Future of the Company

I said last year that a resolution to continue as a Venture Capital Trust (VCT)
would once again be proposed at the forthcoming AGM.  At last year's AGM we
received an overwhelming vote to continue as a VCT for at least a further 3
years.  Since then circumstances have not changed significantly and the
regulations for winding up and merging VCTs are still not finalised.  There,
therefore, seems little point in repeating the resolution and, consequently, it
will not be proposed.  I would be happy to discuss views with Shareholders at
the AGM and the Board will review the situation once the regulations are
finalised.



Share repurchase

Shareholders who subscribed at the outset of the Company have now held their
shares for more than the minimum holding period to retain income tax relief on
the investment.  Those Shareholders who
deferred a gain by investing in this VCT will crystallise the gain when they
sell their shares.  Any Shareholders considering selling their holding are
recommended to take advice from their financial adviser prior to making any
investment decision.  Shareholders wishing to sell their shares should contact
their stockbroker or bank to carry out the transaction.



The Board monitors the market in the Company's shares and, in order to maintain
liquidity in the market, makes market purchases when appropriate.  A Special
Resolution to continue the policy of selectively buying in shares is proposed
for the forthcoming AGM.  During the year under review the Company purchased
490,000 shares at an average price of 53.7p per share.



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 Board is pleased with the progress that the Investment Manager has continued
to make in developing and further diversifying the venture capital portfolio.
As is the nature of this type of portfolio, there have been some
disappointments, but, in general, news of the investee companies has been
relatively positive, especially when viewed against the background of the
current economic climate and the recent performance of many other VCTs.  We
believe that overall the portfolio is conservatively valued



Although, as a VCT, the Company must continue to operate within certain
parameters, the Board is keen to maximise tax-free dividends that can be paid to
shareholders. Future distributions will be derived from investment income and
also from realised capital gains.  The current focus for new investments is to
seek high-yielding opportunities to enhance the revenue earnings available for
distribution to Shareholders.    At the current time the Investment Manager is
extremely selective in its choice of investments but the climate is providing
opportunities at more attractive prices than in the past.  The Manager is also
continuing to seek and evaluate profitable exit opportunities from existing
investments.  At this time such opportunities are relatively rare, however when
a general economic recovery arrives the Company hopes to benefit from the
well-diversified portfolio that it now holds.



Annual General Meeting

The Annual General Meeting of the Company will be held at 69 Eccleston Square,
London SW1V 1PJ at 3.00pm on 30 July 2003.



M C Stoddart
Chairman




STATEMENT OF TOTAL RETURN (incorporating the revenue account)
for the year ended 28 February 2003


                                         Year ended 28 February 2003                 Year ended 28 February 2002

                                        Revenue      Capital       Total           Revenue      Capital        Total
                                          #'000        #'000       #'000             #'000        #'000        #'000

Losses on investments                         -         (83)        (83)                 -         (65)         (65)

Income                                      530            -         530               596            -          596

Investment management fees                 (74)        (220)       (294)              (70)        (210)        (280)

Other expenses                            (147)            -       (147)             (137)          (6)        (143)

Return/(loss) on ordinary
activities before tax                       309        (303)           6               389        (281)          108
                                           

Tax on ordinary activities                 (22)           22           -              (28)           28            -

Return/(loss) on ordinary
activities after tax                        287        (281)           6               361        (253)          108
                                            

Dividends                                 (284)        (428)       (712)             (368)        (345)        (713)

Transfer to/(from) reserves                   3        (709)       (706)               (7)        (598)        (605)



Return per ordinary share                  1.6p       (1.5p)        0.1p              1.9p       (1.3p)         0.6p




Revenue return per ordinary share is based on the net revenue after taxation of
#287,000 (2002: #361,000), but before deduction of dividends of #284,000 (2002:
#368,000), in respect of 18,145,265 (2002: 18,886,069) ordinary shares, being
the weighted average number of ordinary shares in issue during the year.



Capital return per ordinary share is based on the net capital loss for the
financial year of #281,000 (2002: loss #253,000), but before deduction of
dividends of #428,000 (2002: #345,000), in respect of 18,145,265 (2002:
18,886,069) ordinary shares, being the weighted average number of ordinary
shares in issue during the year.





BALANCE SHEET
at 28 February 2003



                                                                           2003                          2002

                                                            #'000         #'000           #'000         #'000


Fixed Assets
Venture capital investments                                               7,402                         7,506
Listed fixed income securities                                            3,579                         3,221
                                                                         10,981                        10,727
Current Assets

Debtors                                                       101                           168
Cash at bank and in hand                                    1,137                         2,445
                                                            1,238                         2,613

Creditors: amounts falling due within
one year                                                    (410)                         (559)
                                                            

Net current assets                                                          828                         2,054

Net assets                                                               11,809                        12,781


Capital and reserves

Called up share capital                                                   1,793                         1,843
Capital redemption reserve                                                  171                           121
Special reserve                                                          10,196                        11,370
Capital reserve - unrealised                                              (399)                         (598)
Revenue reserve                                                              48                            45

Equity shareholders' funds                                               11,809                        12,781

Net asset value per share                                                 65.8p                         69.4p



Net asset value per ordinary share is based on net assets at the year end and on
17.93 million ordinary shares being the number of ordinary shares in issue at
the year end.



CASHFLOW STATEMENT
for year ended 28 February 2003

                                                                Year ended                             Year ended
                                                          28 February 2003                       28 February 2002
                                                       #'000         #'000                    #'000         #'000

Net cash inflow from operating
activities                                                             149                                    246
                                                                      

Taxation
Income tax recovered                                                    12                                      9

Investing activities
Purchase of listed fixed income securities           (2,741)                                (2,281)
Purchase of venture capital                          (1,265)                                  (421)
investments
Sale of listed fixed income                            2,455                                  2,171
securities
Sale of venture capital investments                    1,214                                  1,948
Net cash inflow from investing activities                            (337)                                  1,417

Equity dividends paid                                                (883)                                  (531)

Net cash (outflow)/inflow before financing                         (1,059)                                  1,141


Financing
Repurchase of shares                                   (249)                                  (513)
Net cash outflow from financing                                      (249)                                  (513)

(Decrease)/increase in cash                                        (1,308)                                    628


Reconciliation of net cash flow to movement in net funds

(Decrease)/increase in cash
during the year                                                    (1,308)                                    628
                                                                   
Net funds at 1 March                                                 2,445                                  1,817

Net funds at 28 February                                             1,137                                  2,445


Announcement based on draft accounts (unqualified audit report)

The financial information has been prepared on the basis of the accounting
policies set out in the Company's draft financial statements for the year ended
28 February 2003.



The financial information set out in the announcement does not constitute the
Company's statutory accounts for the year ended 28 February 2003 or 2002.  The
statutory accounts for the year ended 28 February 2003 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 28 February 2002 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 28
February 2003 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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