Interim Results

British SmallerTechCompaniesVCT2PLC
14 August 2007




14 August 2007


                  BRITISH SMALLER TECHNOLOGY COMPANIES VCT 2 PLC

           Unaudited interim results for the 6 months to 30 June 2007


British Smaller Technology Companies VCT 2 plc ("the Company"), the venture
capital trust specialising in growing smaller technology companies across a
range of industrial sectors, today announces its unaudited interim results for
the six months to 30 June 2007.


Chairman's Statement


The first six months to 30 June 2007 has been characterised by further
successful fundraisings by the VCT market as a whole, continued interest from
buyers in a number of our investments, further development of out policy of
investing in more mature businesses and maintenance of the recently resumed
dividend policy. The overall result has seen an increase in the net asset value
over that reported at the end of the same period last year but a reduction of 2
pence per share, after taking account of the dividend, from 31 December 2006.


Operations


The first half of this year has seen your Company complete £1.06 million of
investments. These comprised £0.94 million of new investments and £0.12 million
of funding for existing portfolio investments. The new investments were £0.39
million in Harvey Jones Limited (kitchen retailer), £0.25 million in Cater Plus
Services Limited (provider of catering services to the care home sector) and
£0.3 million in Pressure Technologies plc (specialist engineering business).
This level of activity has maintained after the end of the period with a new
investment of £0.35 million in Hull-based shipping and logistics support
business RMS Limited. The further investments in the period saw £0.1 million
invested in Silistix Limited and a small investment into a £1 million funding
package for Tissuemed Limited.


Shortly after the end of the period further investments have been made in
Digital Healthcare Limited and Immunobiology Limited. The investment in Digital
Healthcare supports its US expansion strategy, however as is sometimes the case
this funding round was entered into at a lower valuation than previous rounds.
This has been taken into account in the half year valuation exercise that has
played a large part in the reduction of the overall value of the portfolio.


There were no realisations in the period but there remains significant interest
in some of the investments in the portfolio which may well lead to further
realisations in the second half of the year.


The ability demonstrated by some of the portfolio companies to continue to raise
funds in support of their development provides encouragement in the medium term
outlook. The acquisition interest in the portfolio gives confidence for the
second half of the year and the continuing strategy to invest in later stage
companies is intended to deliver a greater balance between income and growth
over the medium term.


Financial Results


The results for the six months ended 30 June 2007 produced an operating loss of
£166,000 or 1.0 pence per share (30 June 2006: loss of £188,000 or 1.1 pence per
share).


The reduction in the operating loss arises as a result of the continued cost
reductions that have arisen following the acquisition of British Smaller
Technology Companies VCT in December 2005. Income generation, whilst broadly in
line with the same period in 2006, has increased by £80,000 from the latter half
of 2006. There are £149,000 of losses arising from unrealised valuation
movements, which combine with the operating loss and a small loss on realisation
of gilts resulting in a loss for the period of £345,000 (2.07 pence per share).


Cash and cash equivalents at the period end were £3.1 million, representing 23%
of net asset value. Your board considers that this is sufficient to support the
current portfolio and to continue to pursue its investment strategy in selective
new opportunities. Further realisations would enhance this cash reserve as well
as generating the ability to continue to distribute an appropriate proportion to
shareholders as a tax free dividend.


Shareholder Relations

In addition to the required statutory announcements your board continues to run
shareholder workshops where investors are invited to meet members of the board,
representatives from YFM Private Equity Limited, the Investment Adviser and the
CEOs of one or more of the portfolio investments. In the last six months two
workshops were held with a total nearing 150 investors and their advisers
attending. Your board remains committed to this program.


I have previously reported that your board withdrew the Company's share buy back
policy for an indefinite period during 2006. The share price has remained at a
discount of approximately 45% to the announced net asset value. This reflects
the long term nature of VCT shares and the effects of the VCT legislation that
only offers the 30% income tax rebate on the subscription to a new issue of
shares leading to an illiquid after market.


However, your board has been able to resume dividend payments which are received
across the whole shareholder base, and continues to support the existing
portfolio companies and pursue its investment strategy which has a stronger bias
towards later stage businesses.


Outlook


The immediate outlook for the second half of the year should see further
investment activity. The interest in some of the portfolio is encouraging
indicating the possibility of realisations during the latter part of 2007. A
proportion of the portfolio remains at an early stage of development and may
well require further funding which brings its own risks. Nonetheless and
particularly taking into consideration the broadening of the investment
strategy, the board remains optimistic about the growth prospects over the
medium to longer term.


Sir Andrew Hugh Smith

14 August 2007





Income Statement

For 6 months ended 30 June 2007

                                          Unaudited       Unaudited      Audited
                                           6 months        6 months         year
                                              ended           ended        ended
                                            30 June         30 June  31 December
                                               2007            2006         2006
                                               £000            £000         £000
                              Notes
Income                                          152             149          220
                                            -------         -------      -------
Administrative expenses:
Investment advisory fee                        (205)           (190)        (371)
Other expenses                                 (113)           (147)        (228)
                                            -------         -------      -------
                                               (318)           (337)        (599)
                                            -------         -------      -------
Operating loss                                 (166)           (188)        (379)

(Losses) gains on 
realisation of investments                      (30)             28        1,421

(Losses) gains on investments 
held at fair value                             (149)            179          473
                                            -------         -------      -------
(Loss) profit on ordinary
activities before taxation                     (345)             19        1,515
Taxation                        2                 -               -            -
                                            -------         -------      -------
(Loss) profit for the period
from continuing operations                     (345)             19        1,515

                                            =======         =======      =======
Basic and diluted (loss)
earnings per Ordinary share     3             (2.07)p          0.11p        9.00p
                                            =======         =======      =======





Balance Sheet

As at 30 June 2007
                                          Unaudited       Unaudited      Audited
                                            30 June         30 June  31 December
                                               2007            2006         2006
                                               £000            £000         £000
                             Notes
Assets
Non-current assets
Investments at fair value through
profit or loss                                9,964           9,588        9,008
                                            -------         -------      -------
Current assets
Trade and other receivables                     241             193          335
Cash and cash equivalents                     3,108           2,733        4,984
                                            -------         -------      -------
                                              3,349           2,926        5,319
Liabilities
Current liabilities
Trade and other payables                        (55)            (74)        (391)
                                            -------         -------      -------
Net current assets                            3,294           2,852        4,928
                                            -------         -------      -------
Net assets                                   13,258          12,440       13,936
                                            =======         =======      =======

Shareholders' equity
Share capital                                 1,664           1,664        1,664
Share premium                                    69              69           69
Capital redemption reserve                       88              88           88
Merger reserve                                5,525           5,525        5,525
Other reserve                                     2               2            2
Retained earnings                             5,910           5,092        6,588
                                            -------         -------      -------
Total Shareholders' equity                   13,258          12,440       13,936
                                            =======         =======      =======
Net asset value per 
Ordinary share                4                79.7p           74.8p        83.7p
                                            =======         =======      =======






Unaudited Statement of Changes in Shareholders' Equity

For the 6 months ended 30 June 2007

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

Balance at 31 December 2006          1,664         69       5,525           90       6,588      13,936
Loss for the period                      -          -           -            -        (345)       (345)
Dividends paid                           -          -           -            -        (333)       (333)
                                   -------    -------     -------      -------     -------     -------
Balance at 30 June 2007              1,664         69       5,525           90       5,910      13,258
                                   =======    =======     =======      =======     =======     =======

* Other reserves include the capital redemption reserve and other reserve.






Summarised Cash Flow Statement

For the 6 months ended 30 June 2007
                                          Unaudited       Unaudited      Audited
                                           6 months        6 months         year
                                              ended           ended        ended
                                            30 June         30 June  31 December
                                               2007            2006         2006
                                               £000            £000         £000
Net cash outflow from operating
activities                                     (273)           (286)        (393)
                                            -------         -------      -------
Net cash (used in) from investing
activities                                   (1,195)             27        2,427
                                            -------         -------      -------
Net cash (used in) financing                   (333)           (765)        (765)
                                            -------         -------      -------
Net (decrease) increase in cash and
cash equivalents                             (1,801)         (1,024)       1,269

Cash and cash equivalents at the
beginning of the period                       4,984           3,834        3,834

Effect of market value changes in
cash equivalents                                (75)            (77)        (119)
                                            -------         -------      -------
Cash and cash equivalents at the
end of the period                             3,108           2,733        4,984
                                            =======         =======      =======






Notes to the Financial Statements


1.       The interim financial statements, which have been approved by the
directors, are unaudited and do not constitute full financial statements as
defined in section 240 of the Companies Act 1985. The comparative figures for
the year ended 31 December 2006 do not constitute full financial statements and
have been extracted from the Company's financial statements for the year ended
31 December 2006. Those accounts were reported upon without qualification by the
auditors and have been delivered to the Registrar of Companies.


The financial statements for the year ended 31 December 2006 were prepared in
accordance with the International Financial Reporting Standards (IFRS), as
adopted by the European Union, and those parts of the Companies Act 1985
applicable to companies reporting under IFRS.


The financial statements are prepared in accordance with the IFRS and
interpretations in force at the reporting date. The Company has not adopted any
standards or interpretations in advance of the required implementation dates. It
is not expected that adoption of standards or interpretations which have been
issued by the International Accounting Standards Board but have not been adopted
will have a material impact on the financial statements.


2. Taxation charge

                                          Unaudited       Unaudited      Audited
                                           6 months        6 months         year
                                              ended           ended        ended
                                            30 June         30 June  31 December
                                               2007            2006         2006
                                               £000            £000         £000
(Loss) profit on ordinary
activities multiplied by standard small
company rate of corporation tax in the UK                                    
of 19% (2006:19%)                               (66)              4          288

Effect of:
UK dividends received                            (3)              -           (4)
Non taxable losses (profits) on investments      34             (39)        (360)
Excess management expenses                       35              35           76
                                            -------         -------      -------
Current tax charge for period                     -               -            -
                                            =======         =======      =======


The Company has no provided, or unprovided, deferred tax liability in either
year.


Deferred tax assets in respect of losses have not been recognised as management
do not currently believe that it is probable that sufficient taxable profits
will be available against which the assets can be recovered.


Due to the Company's status as a venture capital trust, and the continued
intention to meet the conditions required to comply with Chapter 3 of Part 6 of
the Income and Taxes Act 2007, the Company has not provided deferred tax on any
capital gains or losses arising on the revaluation or realisation of
investments.


3. The (loss) earnings per Ordinary share is based on the net loss from ordinary
activities after tax of £345,000 (30 June 2006: net profit of £19,000 and 31
December 2006: net profit of £1,515,000) and on 16,641,000 (30 June 2006:
17,120,000 and 31 December 2006: 16,878,000) shares, being the weighted average
number of shares in issue during the period.


The Company has no securities that would have a dilutive effect and hence basic
and diluted (loss) earnings per Ordinary share are the same.


4. The net asset value per Ordinary share is calculated on attributable assets
of £13,258,000 (30 June 2006: £12,440,000 and 31 December 2006: £13,936,000) and
16,641,257 (30 June 2006 and 31 December 2006: 16,641,257) shares in issue at
the period end.


The Company has no securities that would have a dilutive effect and hence basic
and diluted net asset value per Ordinary share are the same.


5. Copies of the interim report can be obtained from the Company's registered
office: 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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