Final Results

Baronsmead VCT 2 PLC 17 May 2001 Unaudited Preliminary Results - Year Ended 31 March 2001 Investment Objective Baronsmead VCT 2 is a tax efficient listed company which aims to achieve long-term capital growth and generate tax free dividends for private investors. * 15 new investments made during the year taking the total equity portfolio to 29 companies * Dividends totalling 3.90 pence for the year * Net asset value down 6.1 per cent to 112.3 pence per share versus FTSE All-Share Index down 10.7 per cent * Total return since launch 30.7 per cent Results The NAV at 31 March 2001 was 112.3p per share compared to 119.6p at the previous year end. Over the year to 31 March 2001, this represents a decrease of 6.1 per cent. If the effect of dividends paid to shareholders during the year is added back, the NAV per share would have been 117.2p, which represents a fall of 2.0 per cent over the year. This compares to a reduction in the FTSE All-Share index of 10.7 per cent over the same period. The Board recommends a final dividend of 2.2p per share, which together with the interim dividend of 1.7p per share, makes total dividends of 3.9p per share. Investment Environment The main priority of the Investment Managers has been to invest the initial share capital raised from private investors into sound companies during the first three years to 31 March 2001. During the financial year investments were made in ten new unquoted companies, five AiM/OFEX subscriptions and three further investments in existing investee companies. The portfolio grew to 29 equity investments, up from 16 at March 2000. The average aggregate size of the funds raised by each of the ten new unquoted companies at over £5 million is much higher than most VCTs and is possible because of the co-investment policy between the three Baronsmead VCTs (Baronsmead VCT 3 was launched in January 2001) and other institutional clients of the Investment Managers. The Board believes that the increased size of the investee companies and their managerial competency can lead to greater resilience during difficult trading conditions. Outlook The next year is likely to be a period of economic uncertainty. The greater diversity of the portfolio built up so far and its relative strength will help to counter this. The tax free environment for VCTs for qualifying investors also adds some protection and the payment of tax free dividends provides a tangible cash return. The Investment Managers are experiencing a sustained level of deal-flow and it will be the quality of new investments at lower prices than last year that, together with the existing portfolio, can generate shareholder value. Enquiries: David Thorp 0207 506 1100 Friends Ivory & Sime Private Equity plc Keith Hannay 0131 465 1000, Friends Ivory & Sime plc Unaudited Statement of Total Return (incorporating the revenue account) of the Company Year to 31 March 2001 Revenue Capital Total £'000 £'000 £'000 Gains/(losses) on investments - (3,090) (3,090) Income 2,680 - 2,680 Investment management fee (235) (705) (940) Other expenses (243) - (243) Return on ordinary activities 2,202 (3,795) (1,593) before tax Tax on ordinary activities (626) 211 (415) Return attributable to 1,576 (3,584) (2,008) equity shareholders Dividends in respect of equity shares (1,563) - (1,563) Transfer to/(from) reserves 13 (3,584) (3,571) Return per ordinary 10p share: 3.94p (8.97p) (5.03p) Basic Unaudited Statement of Total Return (incorporating the revenue account) of the Company Year to 31 March 2000 Revenue Capital Total £'000 £'000 £'000 Gains/(losses) on investments - 5,782 5,782 Income 1,397 - 1,397 Investment management fee (126) (378) (504) Other expenses (195) - (195) Return on ordinary activities 1,076 5,404 6,480 before tax Tax on ordinary activities (285) 102 (183) Return attributable to 791 5,506 6,297 equity shareholders Dividends in respect of equity shares (783) - (783) Transfer to reserves 8 5,506 5,514 Return per ordinary 10p share: 3.36p 23.37p 26.73p Basic Unaudited Balance Sheet 31.3.01 31.3.00 £'000 £'000 Assets Investments Listed investments 1,515 2,515 Alternative Investment Market 5,349 5,106 Quoted on OFEX 494 - Unquoted investments 9,703 4,776 Listed fixed interest investments 28,330 15,372 _____ _____ 45,391 27,769 Net current (liabilities)/assets (374) 3,276 Total assets less current liabilities 45,017 31,045 Financed by Shareholders' funds 45,017 31,045 Net asset value per ordinary share 112.30p 119.59p Unaudited Cash Flow Statement Year ended 31 March Year ended 31 March 2001 2000 £'000 £'000 Operating activities Investment income received 1,790 697 Deposit interest received 290 168 Underwriting commission received 1 - Investment management fees charged to revenue (216) (99) Other cash payments (234) (194) --------- --------- Net cash inflow from operating activities 1,631 572 --------- --------- Taxation Advance corporation tax paid - (15) Income tax received 192 - --------- --------- Tax recovered/(paid) 192 (15) --------- --------- Capital expenditure and financial investment Purchase of investments (32,631) (27,228) Disposals of investments 12,116 11,647 Investment management fee charged to capital (651) (294) --------- --------- Net cash outflow from capital expenditure and financial investment (21,166) (15,875) --------- --------- Ordinary dividends paid (1,145) (463) --------- --------- Net cash outflow before financing (20,488) (15,781) --------- --------- Financing Issue of ordinary shares 18,411 17,058 Expenses of issue (921) (728) Buy-back of ordinary shares (47) (163) --------- --------- Net cash inflow from financing 17,443 16,167 --------- --------- (Decrease)/increase in cash (3,045) 386 --------- --------- Reconciliation of net cash flow to movement in net cash (Decrease)/increase in cash in the year (3,045) 386 Net cash at 1 April 2000 3,484 3,098 -------- --------- Net cash at 31 March 2001 439 3,484 --------- --------- Notes 1. Revenue return per Ordinary Share is based on a weighted average of 39,957,070 (2000 : 23,557,284) Ordinary Shares in issue during the year. 2. The final dividend of 2.20p per share, if approved, will be paid on 6 July 2001 to shareholders on the Register on 8 June 2001. 3. There were 40,086,980 Ordinary Shares in issue at 31 March 2001 (2000 : 25,960,360). 14,054,373 Ordinary Shares were issued through the Offer for Subscription and 116,850 Ordinary Shares were issued through the Dividend Reinvestment Scheme. The Company bought back 44,603 Ordinary Shares for cancellation during the year. 4. These are not statutory accounts in terms of Section 240 of the Companies Act 1985. Full statutory accounts for the year to 31 March 2000, which were unqualified, have been lodged with the Registrar of Companies. No statutory accounts in respect of any period after 31 March 2000 have been reported on by the Company's auditors or delivered to the Registrar of Companies. A full annual report will be sent to shareholders and will be available for inspection at 100 Wood Street, London EC2V 7AN, the registered office of the Company. 5. The Annual General Meeting will be held at The Brewery, Chiswell Street, London on 25 June 2001 at 10.30am.

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