Final Results

British SmallerTechCompaniesVCT2PLC
03 April 2007


                 BRITISH SMALLER TECHNOLOGY COMPANIES VCT 2 PLC

                         UNAUDITED PRELIMINARY RESULTS

                               FOR THE YEAR ENDED

                                31 DECEMBER 2006


British Smaller Technology Companies VCT 2 plc ("the Company") today announces
its unaudited preliminary results for the year ended 31 December 2006.


Chairman's Statement


The year under review has seen your Company take positive steps forward
following the successful acquisition of British Smaller Technology Companies VCT
plc at the end of 2005. In this, the first full financial year of the enlarged
Company, net asset value per share has grown by 12.8% due to successful
realisations and the stabilisation of the remaining portfolio, which has shown
encouraging signs of recovery and growth potential.


The benefits of an enlarged Company, envisaged at the time of the acquisition,
are already in evidence and your board is hopeful that these will continue to
add further value for shareholders.


Operations


2006 has seen the portfolio stabilise and mature. Progress has been made by a
number of companies within the portfolio as these businesses gain critical
volume of sales and move into profitability. This progress is reflected in the
net unrealised valuation gain of £473,000.


Your board and its Investment Adviser have seen a good flow of propositions
during the year. However, entry valuations sought for these businesses have, in
general, been overly optimistic and we took the decision to be very selective in
the deals we progressed. In the event, a total of £276,000 was invested in the
year.


In addition to the new investment in AIM quoted Brulines plc and follow-on
investments in DxS Limited and Silistix Limited to support their continuing
growth, we took the opportunity to invest the residual investment in the
secondary management buyout at Tekton Group Limited that followed the successful
realisation of our original holding in that company. This new investment is part
of a restructuring to allow new institutional investors to take the business
through its rapid growth plans.


The second half of the year saw a significant realisation from your Company's
portfolio with the sale, on 28 September 2006, of Vibration Technology Limited
to Sercel Inc, a multinational company head quartered in Nantes, France. The
disposal realised cash proceeds of £2.3 million for your Company, compared to a
carrying value at the last reporting date of £1.14 million and an original cost
of £1.06 million.


Following the flotations of Oxonica plc and Optos plc, Vibration Technology is
another example of the initial investments made by your Company that focused on
earlier stage innovative companies, which, typically, can take four to six years
to mature to a position that is attractive to potential acquirers or for listing
on a quoted market.


For some time, your board has operated an investment strategy of moving toward
companies that were at a later stage in their development to give the portfolio
a better balance and a more immediate revenue stream, either through ongoing
dividends or an earlier realisation profile. This strategy is bearing fruit with
your Company's investment in Tekton Group, made in December 2005, being realised
in December 2006.


Your board continues to review its investment strategy to ensure it is best
positioned to provide growth in shareholder value, with particular reference to
the developing portfolio and market conditions. I can report that your board has
recently agreed to reserve a proportion of available cash for investing in
mature companies of a more generalist nature that are expected to become revenue
positive at an early stage. Initially, it is intended that these companies will
comprise no more than forty per cent of the portfolio. Your directors feel that
this broadening of the investment strategy will further enhance shareholder
returns over the short to medium term.


Financial Results and Dividend


The result for the financial year ended 31 December 2006 was a profit of £1.52
million equivalent to 9.1 pence per share. The prior year result was a loss of
£421,000 (loss per share of 5.14 pence per share). The prior year comparison is
for the original single entity prior to the acquisition of British Smaller
Technology Companies VCT plc. The year under review is for a full year of the
combined entity; hence the significant increase in income and administrative
expenses.


The cost economies forecast at the time of the acquisition are in evidence from
a comparison of the costs of the two independent companies over the prior year
compared to the cost base of the combined entity in the current year. The total
cost of the two companies in 2005 was £790,000. The cost base of the combined
entity in 2006 was £599,000, representing a saving of 24% (ignoring inflationary
effects).


As shareholders, you will see the benefits of these cost economies through an
improving performance of your Company and improving dividend distributions as
realisations from the portfolio are achieved.


The total return, taking account of net asset value plus dividends distributed
to date, is now 90.7 pence per share. For the year to 31 December 2006, your
directors are recommending distributing some of this value as a tax free
dividend of 2.0 pence per share. This will bring total distributions to 9.0
pence per share. This dividend will be paid on 25 May 2007 to shareholders on
the register at 13 April 2007.


Shareholder Matters


In the first half of 2006, a total of 665,867 shares were purchased by your
Company under its stated share buy-back policy. Following that transaction, your
board became aware that further substantial shareholdings were about to be
offered for buy-back. This would have significantly reduced the available cash
for investing in, and growing, the current portfolio, which, the board believes,
is not in the interests of shareholders as a whole. Your directors believe that
the investment strategy for bringing later stage growing businesses into the
portfolio, and in the active support of the successful companies already in the
portfolio, will bring stability and recovery to shareholder value. Therefore,
your board took the decision to withdraw the Company's share buy-back policy for
an indefinite period.


An inevitable consequence of this decision has been to increase the discount
between the share price and the reported net asset value. This is unfortunate
but does reflect the long term nature of VCT shares and the effect of the
legislation that only offers tax relief on a subscription to new shares. We
continue to work with the Company's brokers to improve secondary market
liquidity and the level of the discount, with some progress being made in the
last quarter of the year.


With the revised investment strategy already showing evidence of success and the
earlier stage portfolio companies showing signs of maturity with the
requirement, in some cases, for follow-on funding to support their growth plans,
your board is focused on reserving cash for these purposes. We will consider the
reinstatement of a similar buy-back policy to that operated previously at the
appropriate time, but this is unlikely to be in the foreseeable future.


I can confirm that your Company continues to meet all the investment ratios
required by legislation to maintain its status as a qualifying VCT.


The Annual General Meeting of the Company will be held at 11.30am on 22 May 2007
at 23 Berkeley Square, Mayfair, London, W1J 6HE. Full details of the agenda for
this meeting will be included in the Annual Report which will be circulated to
shareholders.


Outlook


Early stage companies at the leading edge of technological innovation are
inevitably fragile when market conditions change and failure rates can be
relatively high. However, those companies that do gain market acceptance can
provide their investors with significant returns. Your Company has seen some
improvement from these earlier investments as they begin reaching maturity and
become attractive to secondary purchasers through either a trade sale or
flotation.


With an investment strategy, firstly, to target innovative companies that
already have a proven market acceptance and, latterly, to include a proportion
of more generalist mainstream businesses, your Company intends to have a
balanced portfolio well positioned to provide a more constant rate of growth and
tax free dividend income to shareholders.


Sir Andrew Hugh Smith
Chairman
3 April 2007



Unaudited Income Statement

for the year ended 31 December 2006

                                                        Notes         2006        2005
                                                                      £000        £000
        
Income                                                                 220          82
Administrative expenses:        
                                                                    ------      ------
Investment advisory fee                                               (371)       (172)
Other expenses                                                        (228)       (186)
                                                                    ------      ------
                                                                      (599)       (358)
Excess of acquirer's interest in the fair
value of the acquiree's identifiable assets, 
liabilities and contingent liabilities over cost                         -         975
Gain on realisation of investments                                   1,421         251
Gains (losses) on investments held at fair value                       473      (1,371)
                                                                    ------      ------
Profit (loss) on ordinary activities before taxation                 1,515        (421)
Taxation                                                    2            -           -
                                                                    ------      ------
Profit (loss) for the year from continuing operations                1,515        (421)
                                                                    ------      ------
Earnings (loss) per Ordinary share basic and diluted        3         9.10p      (5.14)p
                                                                    ======      ======


Unaudited Balance Sheet

at 31 December 2006

                                                          Notes       2006        2005
                                                                      £000        £000
Assets

Non-current assets
Investments at fair value through profit or loss                     9,008       9,503
                                                                    ------      ------
Current assets        
Trade and other receivables                                            335         150
Cash and cash equivalents                                            4,984       3,834
                                                                    ------      ------
                                                                     5,319       3,984
Liabilities

Current liabilities
Trade and other payables                                              (391)       (647)
                                                                    ------      ------
Net current assets                                                   4,928       3,337
                                                                    ------      ------
Net assets                                                          13,936      12,840
                                                                    ======      ======

Shareholders' equity
Share capital                                                        1,664       1,731
Share premium                                                           69          69
Capital redemption reserve                                              88          21
Merger reserve                                                       5,525       5,525
Other reserve                                                            2           2
Retained earnings                                                    6,588       5,492
                                                                    ------      ------
Total shareholders' equity                                          13,936      12,840
                                                                    ======      ======
Net asset value per Ordinary share                          4         83.7p       74.2p
                                                                    ======      ======


Unaudited Statement of Changes in Equity

                                                  Share
                                        Share   premium  Revaluation    Merger   Special     *Other  Retained    Total 
                                      capital   account      reserve   reserve   reserve   reserves  earnings   equity
    
                                         £000      £000         £000      £000      £000       £000      £000     £000

Balance at 31 December 2004               783         9          223         -     5,364          6     1,221    7,606
Loss for the year                           -         -            -         -         -          -      (421)    (421)
Transfer of the revaluation reserve 
onadoption of IAS39                         -         -         (223)        -         -          -       223        -
Dividends                                   -         -            -         -         -          -      (738)    (738)
Purchase of own shares                    (20)        -            -         -      (159)        20         -     (159)
Exercise of warrants                        1         8            -         -         -         (1)        -        8
Issue of share capital on acquisition     959         -            -     5,561         -          -         -    6,520
Issue costs                                 -         -            -       (36)        -          -         -      (36)
Issue of share capital on DRIS**            8        52            -         -         -          -         -       60
Transfer of the special reserve             -         -            -         -     (5,205)        -     5,205        -
Transfer of the warrant reserve             -         -            -         -          -        (2)        2        -
                                       ------    ------       ------    ------     ------    ------    ------   ------
Balance at 31 December 2005             1,731        69            -     5,525          -        23     5,492   12,840
Profit for the year                         -         -            -         -          -         -     1,515    1,515
Purchase of own shares                    (67)        -            -         -          -        67      (419)    (419)
                                       ------    ------       ------    ------     ------    ------    ------   ------  
Balance at 31 December 2006             1,664        69            -     5,525          -        90     6,588   13,936
                                       ======    ======       ======    ======     ======    ======    ======   ======


*Other reserves include the capital redemption reserve and other reserve, which
are non-distributable.

** DRIS being the Dividend Re-investment Scheme.

The Merger reserve was created to account for the difference between the nominal
and fair value of shares issued as consideration for the acquisition of the
assets and liabilities of British Smaller Technology Companies VCT plc. The
reserve was created after meeting the criteria under section 131 of the
Companies Act 1985 for merger relief. The merger reserve is a non-distributable
reserve.

The special distributable reserve was created following the approval of the
Court and the resolution of the Shareholders to cancel the Company's share
premium account and is available for use for other corporate purposes of the
Company.

Included within retained earnings is £1,211,000 (2005: £632,000) in respect of
unrealised gains in respect of investments held at fair value through profit or
loss. These gains are not distributable under the Companies Act 1985.


Unaudited Cash Flow Statement

for the year ended 31 December 2006

                                                                    2006          2005
                                                                    £000          £000

Net cash flows from operating activities                            (393)         (290)
                                                                  ------        ------
Cash flows from investing activities    
Cash acquired                                                          -         1,386
Costs of acquisition                                                (172)          (39)
                                                                  ------        ------
Acquisition net of cash acquired                                    (172)        1,347
Purchase of fixed asset investments                                 (276)         (867)
Proceeds from sale of fixed asset investments                      2,875           331
                                                                  ------        ------
Net cash from investing activities                                 2,427           811
                                                                  ------        ------
Cash flows from financing activities
Issue of Ordinary shares on exercise of warrants                       -             8
Issue costs in respect of the shares issued in
consideration for the acquisition                                      -           (36)
Purchase of own shares and associated warrants                      (419)         (159)
Dividends paid                                                      (346)         (332)
                                                                  ------        ------
Net cash used in financing activities                               (765)         (519)
                                                                  ------        ------
Net increase in cash and cash equivalents                          1,269             2

Cash and cash equivalents at beginning of the year                 3,834         3,824

Effect of market value changes in cash equivalents                  (119)            8
                                                                  ------        ------
Cash and cash equivalents at the end of the year                   4,984         3,834
                                                                  ======        ======



Notes to Financial Statements

for the year ended 31 December 2006



1.     Accounting Policies

This preliminary announcement does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.

The information for the year ended 31 December 2005 is an extract from the
statutory accounts to that date which have been delivered to the Registrar of
Companies. Those accounts included an audit report which was unqualified and
which did not contain a statement under Section 237(2) or (3) of the Companies
Act 1985. The statutory accounts for the year ended 31 December 2006, upon which
the auditors have still to report, will be delivered to the Registrar following
the Company's annual general meeting.

The financial statements have been prepared in accordance with the International
Financial Reporting Standards (IFRS), which comprise standards and
interpretations approved by the International Accounting Standards Board (IASB)
and International Accounting Standards Committee (IASC) as adopted by the
European Union.



2.     Taxation on Ordinary Activities
                                                                        2006      2005
                                                                        £000      £000

Corporation tax payable at 19% (2005: 19%)                                 -         -
                                                                      ------    ------
Profit (loss) on ordinary activities before taxation                   1,515      (421)
                                                                      ------    ------
Profit (loss) on ordinary activities multiplied by
standard small company rate of corporation tax 
in UK of 19% (2005: 19%)                                                 288       (80)

Effect of:
UK dividends received                                                     (4)        -
Non taxable (profits) losses on investments                             (360)      213
Excess management expenses                                                76      (133)
                                                                      ------    ------
Current tax charge for the year                                            -         -
                                                                      ------    ------


3.     Earnings (loss) per Ordinary Share

The earnings (loss) per Ordinary share is based on net profit from ordinary
activities after tax of £1,515,000 (2005: loss of £421,000) and 16,878,000
(2005: 8,185,000) shares, being the weighted average number of shares in issue
during the year.

The only potentially dilutive shares are those shares which, subject to certain
criteria being achieved in the future, may be issued by the Company to meet its
obligations under the investment management agreement. No such shares have been
issued or are currently expected to be issued. There are, therefore, considered
to be no potentially dilutive shares in issue at 31 December 2006 or 31 December
2005. Consequently, basic and diluted earnings per share are the same for the
year ended 31 December 2006 and 31 December 2005.



4.     Net Asset Value per Ordinary Share

The net asset value per Ordinary share is calculated on attributable assets of
£13,936,000 (2005: £12,840,000) and 16,641,257 (2005: 17,307,124) shares in
issue at the year end. The Company has no securities that would have a dilutive
effect in either period and hence the basic and diluted net asset value per
share are the same.



5.     Annual Report

Copies of the full financial statements for the year ended 31 December 2006 will
be available to the public at the registered office of the Company at Saint
Martins House, 210-212 Chapeltown Road, Leeds, LS7 4HZ .



For further information, please contact:

David Hall YFM Private Equity Limited                    Tel: [phone]

Alan Davies YFM Private Equity Limited                   Tel: [phone]

Jonathan Becher Teather & Greenwood Limited              Tel: [phone]

Michael Bellamy Teather & Greenwood Limited              Tel: [phone]


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