Interim Results

Baronsmead VCT 2 PLC
10 November 2000


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.

Interim Results - For the six months ended 30 September 2000


* NAV increased by 1.3 per cent to 121.18p

* Dividend of 1.70p declared (1999 - 1.30p)

* Nine new investments in period

* Total return since launch 38.4 per cent.


Results  
In the six months to 30 September, the net asset value (NAV) per share
increased from 119.6p to 121.2p after deducting the interim dividend of 1.7p
per share.  Although there is no accepted benchmark against which VCTs are
compared, the FTSE All Share Index fell 2.6 per cent during the same period.

The total return in the six months was 2.8 per cent, which compares to 3.2 per
cent in the equivalent period last year.  In accordance with the BVCA
valuation guidelines, under which unquoted investments are held at cost for
the first 12 months of ownership, eight investments are held at their cost
totalling £5.8m, which compares with a figure of £1.7 million last year.  The
total return since launch has been 38.4 per cent.

Building the portfolio
Nine new investments were made in the six month period; six unquoted and three
traded on AiM.  The latter group has shown an increase in share price and
together have increased in value by 52% at the 30 September 2000 since their
flotations NMT (£351k) and Biofocus (£250k) are involved in the healthcare
sector supplying safety syringes and drug discovery services respectively. 
Giardino (£288k) manages a chain of restaurants/cafes under a number of
different brand names.  

The new unquoted investments are spread across four industrial sectors 

* Consumer brands & retail.  
Kondor (£1m) is a leading supplier of mobile telephone accessories.  James
Gilbert (£0.9m) is the supplier of the world leading 'Gilbert' rugby ball.

* IT services.
Demica (£0.7m) supplies banking and financial flow software under the Citadel
name.  Conclusive Logic (£0.3m) has a range of middleware software for
internet security and encryption.

* Media.  
Job Opportunities (£0.5m) supplies free recruitment newspapers in the South of
England.

* Business services.  
Staffline (£0.8m) provides temporary blue collar recruitment services across
the Midlands and North of England.

These investments increase the number of equity investments in the portfolio
to 24.  There was one realisation in the period when Atalink was sold.  

Investment Policy  
The board has continued to review the investment criteria in the light of the
growth opportunities presented by 'new economy' companies and agreed that up
to 25% of the portfolio by value can be invested in early stage/technology
companies.  Following recent investments in NMT, Demica, Conclusive Logic and
Job Opportunities, this percentage of invested funds is approximately 20%. 

Outlook  
The unquoted portfolio is relatively immature as it is all less than two years
old and 77 per cent is valued at cost.  If the unquoted investee companies
progress towards achieving their business plans, then there is potential for
growth in net asset value. 

Enquiries: David Thorp  0207 853 6900, Friends Ivory & Sime Private Equity plc
           Keith Hannay  0131 465 1000, Friends Ivory & Sime plc
 
Unaudited Statement of Total Return (Incorporating the Revenue Account)
                            
                                Six months to 30 September 2000              
                            
                                            Revenue       Capital       Total
                                            £'000         £'000         £'000
                            
Gains/(losses) on investments                 -              32            32
Income                                      1,450             -         1,450
Investment management fee                    (116)         (349)         (465)
Other expenses                               (125)            -          (125)
                            
                            
Return on ordinary activities                            
before tax                                  1,209          (317)         892
                            
Tax on ordinary activities                   (313)           97         (216)
                            
Return attributable to                            
equity shareholders                           896          (220)         676
                            
Dividends in respect of equity shares        (681)            -         (681)
                            
Transfer to/(from) reserves                   215          (220)          (5)
                            
                            
Return per ordinary 10p share:                            
Basic                                        2.25p        (0.55p)       1.70p



 
Unaudited Statement of Total Return (Incorporating the Revenue Account)

                            
                                                  Six months to
                                               30 September 1999              
                            
                                            Revenue       Capital       Total
                                            £'000         £'000         £'000
                            
Gains/(losses) on investments                   -           256          256
Income                                         648            -          648
Investment management fee                      (54)        (161)        (215)
Other expenses                                 (93)           -          (93)
                            
                            
Return on ordinary activities                            
before tax                                     501           95         596
                            
Tax on ordinary activities                    (106)          35         (71)
                            
Return attributable to                            
equity shareholders                            395          130         525
                            
Dividends in respect of equity shares         (319)           -        (319)
                            
Transfer to/(from) reserves                     76          130         206
                            
                            
Return per ordinary 10p share:                            
Basic                                         1.77p        0.58p       2.35p

 
Unaudited Statement of Total Return (Incorporating the Revenue Account) 

                            
                                           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              
                                                     As at          As at
                                                30 September       31 March
                                                   2000              2000
                                                   £'000             £'000
Fixed Assets              
Listed investments                                  2,324            2,515
Unquoted investments                                8,313            4,776
Quoted on the Alternative Investment Market         6,007            5,106
Listed fixed interest investments                  31,400           15,372
                                                   ______           ______
                                                   48,044           27,769
              
Net current assets                                    497            3,276
                                                    ______         ______
Net assets                                          48,541          31,045
                                                    ______         ______
              
Financed by              
              
Equity shareholders' funds              48,541       31,045
                                        ______        ______

Net asset value per Ordinary share      121.18p      119.59p


Summarised Unaudited Group Statement of Cash Flows

       
                              Six months to      Six months to        Year to
                              30 September       30 September         31 March
                              2000               1999                 2000
                              £'000              £'000                £'000
                     
Net cash inflow/(outflow) 
from operating activities         101              (270)               572
Taxation                           49               (15)               (15)
Capital expenditure and 
financial investment          (19,862)          (14,305)           (15,875)
Equity dividends paid            (464)             (144)              (463)
                     
Net cash outflow 
before financing              (20,176)          (14,734)           (15,781)
Financing                      17,369            14,219             16,167
                     
(Decrease)/increase in cash    (2,087)             (515)              386
                     
                     
Reconciliation of net cash flow to movement in net cash              
                     
(Decrease)/increase in cash    (2,807)            (515)              386
Net cash at 1 April             3,484            3,098             3,098
                     
Net cash at 30 September/
31 March                          677            2,583             3,484
                     
Reconciliation of operating profit to net cash flow from operating activities 
                     
Net return before 
finance costs and taxation      1,209              501             1,076
Investment management fee 
charged to capital                (63)             (59)              (83)
Changes in working capital 
and other non-cash items       (1,045)            (712)             (421)
                     
Net cash flow from 
operating activities              101             (270)             572



Notes

1.       The unaudited interim results have been prepared on the basis of the
accounting policies set out in the statutory accounts of the Company for the
year ended 31 March 2000.

2. Earnings for the period should not be taken as a guide to the results of
the full year.

3.       Return per ordinary share is based on a weighted average of
39,830,703 ordinary shares in issue.

2. During the six months ended 30 September 2000 the Company issued 14,103,470
ordinary shares and bought for cancellation 6,931 ordinary shares at a cost of
£7,491.  There were 40,056,899 ordinary shares in issue at 30 September 2000
(31 March 2000 - 25,960,360).

5.       In accordance with FRS16, franked investment income is now shown
excluding any associated tax credit with a subsequent reduction in the amount
of tax charge.  The effect of this change in accounting policy is to decrease
franked investment income and the tax charge by £3,000 (30 September 1999 -
£1,000 and 31 March 2000 - £2,000).  There is no change to the return
attributable to equity shareholders for any of the above accounting periods.

6.       The interim dividend of 1.70p per ordinary share will be paid on 21
December 2000 to shareholders on the register on 24 November 2000.

7.        These are not statutory accounts in terms of Section 240 of the
Companies Act 1985 and are unaudited.  The full audited accounts for the year
ended 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.

8.        Copies of the Interim Report, which have been reviewed by the
Company's auditors, will be mailed to shareholders and will be available from
the Registered Office of the Company at Princes Court, 7 Princes Street,
London EC2R  8AQ.