Interim Results

Baronsmead VCT 2 PLC
16 November 2004


To:                RNS
From:              Baronsmead VCT 2 plc
Date:              16 November 2004


Interim Results - For the six months ended 30 September 2004

     
•    NAV per ordinary share increased by 1.0% from 101.88p to 102.93p before 
     deduction of dividends

•    After dividends of 2.3p per ordinary share,  NAV per ordinary share was 
     100.63p

•    NAV total return since launch in 1998 is 45.1% which compares with a fall 
     of 3.6% in the FTSE All-Share total return over the same period

•    £3.8 million was invested in 10 new qualifying companies taking the total 
     portfolio to 63 companies

•    C share prospectus was issued in September 2004 to raise up to £20 million 
     and, as at 15 November 2004, £9.7 million had been raised.


Performance review

During the six months to 30 September 2004, the Net Asset Value per ordinary
share increased by 1.0% from 101.88p to 102.93p before paying an interim
dividend of 2.3p per share. This will be paid on 16 December 2004 and consists
of 0.8p per share from net revenue and 1.5p distributed from capital profits
realised primarily from the sale of shares in SDL and Inter Link Foods.  The
FTSE All-Share Index (total return) increased 5.1% over the same period.

Baronsmead VCT 2 has now generated a total return of 45.1% for founder
shareholders who invested in 1998 (assuming dividends of 31.2p were reinvested
and added to the change in NAV). Over the same period the FTSE All-Share Index
(total return) has fallen by 3.6%. If the VCT tax reliefs on subscription were
taken into account the total return for shareholders would be significantly
higher.

Good initial progress has been achieved and £9.7 million had been raised by 15
November 2004 under the C share offer to raise up to £20 million, which is set
to close on 28 January 2005 unless fully subscribed beforehand.  This new
capital could expand the capital base of the Company to over £60 million and
allow an increased spread across a larger number of investments and the business
cycle.


Investment portfolio

The overall health of the portfolio remains sound as judged by the trend in the
profitability of these companies.  The percentage of companies experiencing
either increased or steady profits was 83%, which is marginally ahead of the
position at March 2004.

Investment of £3.8 million was made in the period across ten new investee
companies of which four were unquoted and the balance were AIM-traded.
Investment in three existing companies totalled £0.4 million.

Following the active sale of unquoted companies in 2003, the Manager took the
opportunity to sell the shares in SDL and three AIM shareholdings.  The sale of
these investments realised profits of £820,000 and represented a return of 2.6
times original cost.

The portfolio totalled 63 investee companies at 30 September 2004 and qualifying
shareholdings represented some 85% of the capital raised prior to 31 March 2002
comfortably exceeding the 70% required by VCT legislation.


The strongest advances in unquoted valuations came from the investments in
Americana, RLA Media, Brownsword and AssA while provisions increased for Spaform
and Hawksmere.  Job Opportunities was placed into administration in July 2004
and BodyCare was sold after the period end at a loss.


Outlook

Although a significant amount of new capital is being raised by other VCTs, the
family of four Baronsmead VCTs is well placed to compete for attractive unquoted
and AIM propositions.  By co-investing together and also at times with other
institutional clients of ISIS Equity Partners, Baronsmead VCT 2 is able to focus
on larger unquoted transactions.

Similarly Baronsmead VCT 2 can also co-invest into individual AIM investments
thereby making it a more significant institutional shareholder.

Baronsmead VCT 2 is likely to become the largest VCT in the market if the C
share offer is fully subscribed and the Manager has one of the largest private
equity teams in the VCT sector.  This makes us a key source of capital for
companies seeking finance in our specialist sectors and further strengthens the
quality of our deal flow. We are well on the way to creating a portfolio of 80
unquoted and AIM-traded companies.


Enquiries:   David Thorp        0207 506 1100, ISIS Equity Partners plc
             Robert Coulter     0131 465 1000, F&C Asset Management plc



Unaudited Profit and Loss Account of the Company
For the six months to 30 September 2004
                                                                             2004          2004          2004
                                                                          Revenue       Capital         Total
                                                                            £'000         £'000         £'000

Losses on realisation of investments                                            -         (828)         (828)
Income                                                                        679             -           679
Investment management fee                                                   (114)         (344)         (458)
Other expenses                                                              (147)             -         (147)
                                                                       ----------   -----------   -----------

Profit/(loss) on ordinary activities before taxation                          418       (1,172)         (754)

Taxation on ordinary activities                                              (55)            55             -
                                                                       ----------   -----------   -----------

Profit/(loss) on ordinary activities after taxation                           363       (1,117)         (754)

Dividends paid                                                              (337)         (632)         (969)
                                                                      -----------   -----------   -----------
Retained profit/(loss) transferred to/(from) reserves                          26       (1,749)       (1,723)
                                                                       ----------    ----------   -----------

Earnings/(loss) per ordinary share                                          0.86p       (2.65)p       (1.79)p

                                                                           ______         _____         _____



Unaudited Statement of Total Recognised Gains and Losses
                                                                         2004          2004        2004
                                                                      Revenue       Capital       Total
                                                                        £'000         £'000       £'000

Profit/(loss) on ordinary activities after taxation                       363       (1,117)       (754)
Unrealised gain on revaluation of investments                               -         1,086       1,086
                                                                   ----------   ----------- -----------
Total recognised gain/(loss) during the period                            363          (31)         332
                                                                   ----------   ----------- -----------
Total recognised gain/(loss) per ordinary share                         0.86p       (0.07)p       0.79p
                                                                       ______        ______      ______



Unaudited Profit and Loss Account of the Company
For the six months to 30 September 2003
                                                                             2003          2003          2003
                                                                          Revenue       Capital         Total
                                                                            £'000         £'000         £'000

Gains on realisation of investments                                             -           855           855
Income                                                                        566             -           566
Investment management fee                                                    (94)         (281)         (375)
Other expenses                                                              (129)             -         (129)
                                                                       ----------   -----------   -----------

Profit on ordinary activities before taxation                                 343           574           917

Taxation on ordinary activities                                              (64)            64             -
                                                                       ----------   -----------   -----------

Profit on ordinary activities after taxation                                  279           638           917

Dividends paid                                                              (246)       (2,166)       (2,412)
                                                                      -----------   -----------   -----------
Retained profit/(loss) transferred to/(from) reserves                          33       (1,528)       (1,495)
                                                                       ----------    ----------   -----------

Earnings per ordinary share                                                 0.68p         1.55p         2.23p
                                                                           ______         _____         _____



Unaudited Statement of Total Recognised Gains and Losses
                                                                         2003          2003        2003
                                                                      Revenue       Capital       Total
                                                                        £'000         £'000       £'000

Profit on ordinary activities after taxation                              279           638         917
Unrealised gain on revaluation of investments                               -         3,614       3,614
                                                                   ----------   ----------- -----------
Total recognised gain during the period                                   279         4,252       4,531
                                                                   ----------   ----------- -----------
Total recognised gain per ordinary share                                0.68p        10.34p      11.02p
                                                                       ______        ______      ______



Audited 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 to/(from) reserves                       154       (1,515)         (1,361)
                                                                     ----------    ----------     -----------

Earnings per ordinary share                                               1.58p         3.58p           5.16p
                                                                         ______         _____           _____



Audited 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



Unaudited Balance Sheet
                                                                     As at               As at            As at
                                                              30 September        30 September         31 March
                                                                      2004                2003            2004*
                                                                     £'000               £'000            £'000
Fixed Assets
Listed investments                                                       -                 560              476
Unquoted investments                                                21,055              13,200           18,986
Quoted on the Alternative Investment Market                         14,287              10,625           13,004
Quoted on OFEX                                                         105                 299               94
Listed fixed interest investments                                    6,028               5,039            4,174
                                                                    ______              ______           ______
                                                                    41,475              29,723           36,734

Net current assets                                                     926               9,176            4,909
                                                                    ______              ______           ______
Net assets                                                          42,401              38,899           41,643
                                                                    ______              ______           ______

Financed by

Equity shareholders' funds                                          42,401              38,899           41,643
                                                                    ______              ______           ______


Net asset value per ordinary share                                 100.63p              94.90p          101.88p


Ordinary shares in issue                                        42,133,617          40,989,300       40,874,019



*These figures have been audited.


Summarised Unaudited Statement of Cash Flows




                                                       Six months to       Six months to            Year to
                                                        30 September        30 September           31 March
                                                                2004                2003              2004*
                                                               £'000               £'000              £'000

Net cash (outflow)/inflow from operating
activities
                                                               (101)                 137                377
Taxation                                                           -                   -              (163)
Capital expenditure and financial investment                 (4,483)               1,391            (1,750)
Equity dividends paid                                              -             (1,920)            (3,476)

Net cash outflow before financing                            (4,584)               (392)            (5,012)
Financing                                                      1,513                 164               (21)

Decrease in cash                                             (3,071)               (228)            (5,033)

Reconciliation of net cash flow to movement in net cash


Decrease in cash                                             (3,071)               (228)            (5,033)
Net cash at 1 April                                            4,856               9,889              9,889

Net cash at 30 September/31 March                              1,785               9,661              4,856

Reconciliation of operating profit to net cash flow from operating activities


Net return before finance costs and taxation                   (754)                 917              2,114
Profit/(loss) on realisation of investments                      828               (855)            (1,920)
Changes in working capital and other non-cash                  (175)                  75                183
items

Net cash flow from operating activities                        (101)                 137                377



*These figures have been audited.



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 2004.  Unquoted investments have been valued in 
     accordance with BVCA guidelines.  Quoted investments are stated at middle 
     market prices in accordance with Generally Accepted Accounting Practice.

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 42,077,838 
     ordinary shares in issue (31 March 2004 - 40,996,280, 30 September
     2003 - 41,101,147).

4.   During the six months ended 30 September 2004 the Company issued 1,744,598 
     ordinary shares and bought for cancellation 485,000 ordinary shares at a 
     cost of £441,000.  There were 42,133,617 ordinary shares in issue at 30
     September 2004 (31 March 2004 - 40,874,019, 30 September 2003 - 
     40,989,300).

5.   The interim dividend of 2.3p per ordinary share will be paid on 16 December 
     2004 to shareholders on the register on 26 November 2004.

6.   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 2004, which were unqualified, have been lodged with the Registrar
     of Companies.  No statutory accounts in respect of any period after 31 
     March 2004 have been reported on by the Company's auditors or delivered to 
     the Registrar of Companies.

7.   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 Exchange House, Primrose Street, London
     EC2A 2NY.

8.   Since the period end, as at 15 November 2004, £9.7m had been raised under 
     the current offer for subscription of up to 20,000,000 shares, which is
     set to close on 28 January 2005 unless fully subscribed beforehand.


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