Final Results

Baronsmead VCT 2 PLC 10 May 2004 Baronsmead VCT 2 plc To: RNS From: Baronsmead VCT 2 plc Date: 10• May 2004 Unaudited Preliminary Results - Year Ended 31 March 2004 • NAV per share increased by 13.6 per cent to 101.9p after payment of dividends • Dividends totalling 8.5 pence per share were paid during the year (equivalent to 12.6p per share for higher rate tax payers) • Total return since launch is now 43.6 per cent, which compares with a fall of 8.1 per cent in the FTSE All-Share over the comparable period • Portfolio increased to 54 companies following 17 new investments and 8 complete realisations • Shareholders agreed on 22 March 2004 to extend the life of Baronsmead VCT 2 to 2011. Results During the year to 31 March 2004 the NAV per share rose by 13.6% from 89.65p to 101.88p after allowing for tax-free dividend payments of 8.5p per share (equivalent to 12.6p per share for higher rate tax payers). The total return (assuming all dividends were reinvested) of Baronsmead VCT 2 is now 43.56 per cent since launch. This compares with a FTSE All-share return on a comparable basis of minus 8.1 per cent. The total return above has been stated net of all costs, which have been contained at 2.7 per cent of average net assets which is one of the lowest cost ratios for generalist VCTs. The dividends paid during the year comprised 1.2p per share from income and 7.3p per share from the distribution of the profits realised from the successful sale of a number of unquoted and Aim investments. Since launch the average annual tax-free dividend paid to shareholders has been 4.5p a share (equivalent to 6.7p per share for higher rate tax payers). The Board aims to sustain this level of average dividend if possible. INVESTMENT ENVIRONMENT Corporate buyers have begun to show interest in the acquisition of smaller growth companies and so the private equity world has seen increased activity with both new acquisitions and exits. The Managers have benefited from this renewed market confidence in both the numbers of new investments and realisations made. The Aim index has risen substantially in capital terms since March 2003 and this section of the portfolio has benefited with a 41 per cent uplift. There is currently a strong flow of Aim flotations, although many of these do not meet either the VCT qualifying rules or the selection criteria of the Managers. The majority of Aim investing by Baronsmead VCT 2 has been into new share placings by existing Aim-traded companies where their market position and the capabilities of their directors/management are clearer. OUTLOOK Our intention is to build on the progress of last year and continue to meet the objectives of capital growth and pay attractive dividends. Both depend on the Manager selecting the right investments in the first place and then playing an active role as portfolio companies grow towards eventual realisation. We wish to provide appropriate services for shareholders to help them meet their differing financial priorities in line with the recent changes in VCT tax reliefs. David Thorp, ISIS Equity Partners plc : 0207 506 1609 Gary Fraser, ISIS Asset Management plc : 0131 465 1016 Unaudited Profit and Loss Account of the Company For the year ended 31 March 2004 2004 2004 2004 Revenue Capital Total £'000 £'000 £'000 Gains on realisation of Investments - 1,920 1,920 Income 1,256 - 1,256 Investment management fee (195) (583) (778) Other expenses (284) - (284) ---------- ----------- ----------- Profit on ordinary activities before taxation 777 1,337 2,114 Taxation on ordinary activities (131) 132 1 ---------- ----------- ----------- Profit on ordinary activities after taxation 646 1,469 2,115 Dividends paid (492) (2,984) (3,476) ----------- ----------- ----------- Retained profit/(loss) transferred from reserves 154 (1,515) (1,361) ---------- ---------- ----------- Earnings per ordinary share 1.58p 3.58p 5.16p ______ _____ _____ Unaudited Statement of Total Recognised Gains and Losses 2004 2004 2004 Revenue Capital Total £'000 £'000 £'000 Profit on ordinary activities after taxation 646 1,469 2,115 Unrealised gain on revaluation of investments - 6,306 6,306 ---------- ----------- ----------- Total recognised gain during the year 646 7,775 8,421 ---------- ----------- ----------- Total recognised gain per ordinary share 1.58p 18.96p 20.54p Audited Profit and Loss Account of the Company For the year ended 31 March 2003 2003 2003 2003 Revenue Capital Total £'000 £'000 £'000 Losses on realisation of Investments - (267) (267) Income 1,809 - 1,809 Investment management fee (193) (580) (773) Other expenses (295) - (295) ---------- ----------- ----------- Profit/(loss) on ordinary activities before taxation 1,321 (847) 474 Taxation on ordinary activities (349) 187 (162) ---------- ----------- ----------- Profit/(loss) on ordinary activities after taxation 972 (660) 312 Dividends paid (858) (2,004) (2,862) ----------- ----------- ----------- Retained profit/(loss) transferred from reserves 114 (2,664) (2,550) ---------- ---------- ----------- Earnings/(loss) per ordinary share 2.37p (1.61)p 0.76p ______ _____ _____ Audited Statement of Total Recognised Gains and Losses 2003 2003 2003 Revenue Capital Total £'000 £'000 £'000 Profit/(loss) on ordinary activities after taxation 972 (660) 312 Unrealised loss on revaluation of investments - (1,926) (1,926) ---------- ----------- ----------- Total recognised gain/(loss) during the year 972 (2,586) (1,614) ---------- ----------- ----------- Total recognised gain/(loss) per ordinary share 2.37p (6.31)p (3.94)p Balance Sheet 31.3.04 31.3.03 Unaudited Audited £'000 £'000 Assets Investments Listed investments 476 343 Alternative Investment Market 13,004 6,625 Quoted on OFEX 94 310 Unquoted investments 18,986 12,212 Listed fixed interest investments 4,174 7,155 _____ _____ 36,734 26,645 Net current assets 4,909 10,006 Total assets less current liabilities 41,643 36,651 Financed by Shareholders' funds 41,643 36,651 Net asset value per ordinary share: Basic 101.88p 89.65p Ordinary shares in issue 40,874,019 40,881,722 Summarised Unaudited Statement of Cash Flows Year to Year to 31 March 31 March 2004 2003 £'000 £'000 Net cash inflow from operating activities 377 1,201 Taxation (163) (217) Capital expenditure and financial investment (1,750) 9,747 Equity dividends paid (3,476) (3,477) ----------- ----------- Net cash (outflow)/inflow before financing (5,012) 7,254 Financing (21) (117) ----------- ----------- (Decrease)/increase in cash (5,033) 7,137 ----------- ----------- Reconciliation of net cash flow to movement in net cash (Decrease)/increase in cash (5,033) 7,137 Opening net cash 9,889 2,752 ----------- ----------- Net cash at 31 March 2004/2003 4,856 9,889 ----------- ----------- Profit on ordinary activities before taxation 2,114 474 (Profit)/loss on realisation of investments (1,920) 267 Decrease in debtors 134 494 Increase/(decrease) in other creditors 49 (34) ----------- ----------- Net cash inflow from operating activities 377 1,201 ----------- ----------- Notes 1. The unaudited results which cover the year to 31 March 2004 have been prepared under the historical cost convention, modified to include the revaluation of fixed asset investments. These accounts have been prepared in accordance with applicable accounting standards and on the assumption that the Company maintains VCT status. 2. Revenue return per Ordinary Share is based on a weighted average of 40,996,280 (2003 : 40,961,609) Ordinary Shares in issue during the year. 3. There were 40,874,019 Ordinary Shares in issue at 31 March 2004 (2003 : 40,881,722). 837,297 Ordinary Shares were issued through the Dividend Reinvestment Scheme. The Company bought back 845,000 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 2003, which were unqualified, have been lodged with the Registrar of Companies. No statutory accounts in respect of any period after 31 March 2003 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 offices of ISIS Asset Management plc, 100 Wood Street, London on 16 June 2004 at 11.00am. This information is provided by RNS The company news service from the London Stock Exchange

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