Interim Results - 6 Months to 30th September 1999

Baronsmead VCT 2 PLC 12 November 1999 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 1999 * £17.5 million of new capital raised in 1999 to make a total of £24.8 million subscribed * NAV increased by 1.9% from 95.7p to 97.4p over the six months providing a total return of 3.4p including interim dividend * Dividend of 1.30p declared (1998 - 1.00p) * Four new VCT qualifying investments, costing £1.8 million, bring total of £4.1 million - over half that required to achieve VCT qualifying status for the amount subscribed in the initial accounting period The Board is pleased to present this second interim statement to shareholders covering the six months to 30 September 1999. We particularly welcome a number of new shareholders who subscribed during last summer in a 'top up' private placing which together with subscriptions earlier last Spring raised £17.5 million of new capital. Having raised over £24 million (net of the expenses associated with the share issues), the Company will be able to build an appropriately diversified portfolio of investments of up to £1 million in our target market of larger companies. Results The Net Asset Value (NAV) per share increased to 97.4p during the six-month period compared to 95.7p at 31 March 1999. In accordance with British Venture Capital Association guidelines, unlisted companies remain at cost until held for more than 12 months. All the unquoted investments are meeting their business plans and there has been a good aggregate advance across the share prices of the AiM qualifying investments. NAV per share would have been higher were it not for the recent fall in the fixed interest securities market, so that the aggregate value of these securities held by the Company fell by 1.9p per share. The Board has declared an interim dividend of 1.3p per share, which compares to 1.0p per share previously, but following the change in legislation in April 1999 no tax credit is repayable to qualifying shareholders. For the first time, shareholders had the opportunity to participate in a dividend reinvestment scheme in July when the final dividend for the year to 31 March 1999 was paid. Combined together, the total return in the six-month period was 3.4%. Almost without exception, subscribing shareholders also benefited from a 20% income tax reclaim and thus achieved a higher return of 4.2% on the net capital investment. This further increases to 8.4% when CGT deferral is taken into account. Building the portfolio Four qualifying equity investments were made at a cost of £1.8 million during the period which increased the number of investments to 13 in total. Their aggregate cost of £4.1 million is now well over half of the level required to achieve VCT qualifying status for the amount subscribed in the initial accounting period. The Board has agreed that the investment managers can widen their approach to seek opportunities to invest in companies developing newer technologies within existing businesses that have established and profitable core activities. This variation in investment policy reflects the need to stay abreast of the fast changing nature of business and the impact of electronic commerce on many existing companies. SDL, PolicyMaster and Aortech are examples of investee companies that have already adopted this approach. Outlook Although we remain in the early stages of establishing our portfolio of qualifying investments, there are some positive signs that these businesses are capable of generating good returns for shareholders. Enquiries: David Thorp 0171 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) of the Company Six months to 30 September 1999 Revenue Capital Total £'000 £'000 £'000 Gains/(losses) on investments - 256 256 Income 649 - 649 Investment management fee (54) (161) (215) Other expenses (93) - (93) Return on ordinary activities before tax 502 95 597 Tax on ordinary activities (107) 35 (72) 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) of the Company Period from 2 April 1998 to 30 September 1998 Revenue Capital Total £'000 £'000 £'000 Gains/(losses) on investments - 33 33 Income 207 - 207 Investment management fee (15) (44) (59) Other expenses (55) - (55) Return on ordinary activities before tax 137 (11) 126 Tax on ordinary activities (29) 9 (20) Return attributable to equity shareholders 108 (2) 106 Dividends in respect of equity shares (66) - (66) Transfer to/(from) reserves 42 (2) 40 Return per ordinary 10p share: Basic 1.75p (0.03p) 1.72p Unaudited Statement of Total Return (incorporating the revenue account) of the Company Period from 2 April 1998 to 31 March 1999 Revenue Capital Total £'000 £'000 £'000 Gains/(losses) on investments - 86 86 Income 453 - 453 Investment management fee (33) (98) (131) Other expenses (143) - (143) Return on ordinary activities 277 (12) 265 before tax Tax on ordinary activities (58) 20 (38) Return attributable to 219 8 227 equity shareholders Dividends in respect of equity shares (211) - (211) Transfer to reserves 8 8 16 Return per ordinary 10p share: 3.17p 0.11p 3.28p Basic Unaudited Balance Sheet As at As at 30 September 31 March 1999 1999 £'000 £'000 Fixed Assets Unquoted 2,727 1,326 Quoted on the Alternative Investment Market 2,173 1,014 Listed on the London Stock Exchange 18,463 4,097 ______ ______ 23,363 6,437 Net current assets 531 3,050 ______ ______ Net assets 23,894 9,487 ______ ______ Financed by Equity shareholders' funds 23,894 9,487 ______ ______ Net asset value per Ordinary share 97.42p 95.65p Notes 1. The revenue column of the total return statement is the revenue account of the Company. 2. There were 24,525,716 ordinary shares in issue at 30 September 1999 (31 March 1999 - 9,918,603). 14,646,113 ordinary shares were issued during the period. 39,000 ordinary shares were bought in by the company for cancellation during the period. 3. Earnings for the period should not be taken as a guide to the results of the full year. 4. The interim dividend of 1.30p per ordinary share will be paid on 17 December 1999 to shareholders on the register on 26 November 1999. 5. These are not statutory accounts in terms of Section 240 of the Companies Act 1985 and are unaudited. Statutory accounts for the period to 31 March 1999, which were unqualified, have been lodged with the Registrar of Companies. No statutory accounts in respect of any period after 31 March 1999 have been reported on by the Company's auditors or delivered to the Registrar of Companies. 6. Copies of the Interim Report 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.

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