Preliminary announcment

British SmallerTechCompaniesVCT2PLC
18 March 2005



18 March 2005

                 BRITISH SMALLER TECHNOLOGY COMPANIES VCT 2 PLC
       Unaudited preliminary results for the year ended 31 December 2004

   • Successful flotation and realisation of Amino Technologies plc
   • 14.8% increase in net asset value (before distributions); 8.9% increase
     after dividend distribution
   • Dividend declared of 5p per share
   • Increased liquid resources to £3.8m


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 preliminary results
for the year ended 31 December 2004.

Financial highlights:

                                                     Unaudited          Restated
                                                    Year ended        Year ended
                                                   31 December       31 December
                                                          2004              2003
Income                                                 £77,000          £256,000
Profit (loss) before and after tax                  £1,080,000        £(909,000)
Earnings (loss) per share                               13.79p          (11.64)p
Dividend per share                                       5.00p                -
Total recognised gains (losses)                       £980,000        £(554,000)
Net assets                                          £7,214,000        £6,616,000
Net asset value per share                                92.1p             84.6p

Announcing the results, the Chairman, Sir Andrew Hugh Smith, reported that
stronger market sentiment in the technology sector provided a healthy
environment for the businesses within the Company's portfolio. He said that, as
capital growth begins to be realised, the Board are looking to balance the
financing needs of the developing businesses within the portfolio with the
Company's ongoing operating requirements, whilst implementing an appropriate
dividend policy for the benefit of shareholders.

Investments

A total of £1.88 million was invested in ten businesses over the course of the
year, three of which were new to the portfolio and seven were in support of
existing portfolio businesses.

Of the three new investments, two were made in businesses on their admission to
AIM in furtherance of the Board's stated policy of pursuing some later stage
investment opportunities to complement the earlier stage investments made to
date. Both these quoted investments have consistently traded above their
admission price.

Commenting on the follow-on investments, David Hall, Managing Director of YFM
Private Equity Limited, the Company's Investment Adviser, said that the funding
environment for younger technology-based businesses improved in the year.
Despite the wider availability of finance for these opportunities, and with
investors remaining cautious about the economic outlook, entry valuations
remained at attractive levels.

Sir Andrew reported that, towards the end of the year, the Board decided it was
in the best interests of shareholders to realise its holding in Amino
Technologies plc. The Company had first invested in Amino in September 2001 and
the business floated on AIM in June 2004. The total realised gain on the Amino
investment was a healthy £1.46 million.

Financial Results and Dividend

The Company reported a profit for the year of £1,080,000, with earnings per
share of 13.79p, due to the realised gain on Amino Technologies plc. Net asset
value, before dividend distribution, increased 14.8% over the year as a whole.
Sir Andrew said that this reflected the improved market conditions and business
confidence in the technology sector.

The Company has taken the necessary steps to enable realised capital gains to be
distributed as tax free dividends to eligible shareholders. A dividend of
5 pence per share is being recommended for payment on 3 June 2005 to
shareholders on the Register at 1 April 2005. The net asset value at 31 December
2004 is 92.1 pence per share.

Dividend Reinvestment Scheme and Extraordinary General Meeting

The Board is recommending a dividend reinvestment scheme that will enable
shareholders to increase their total holding in the Company in a cost efficient
way and, subject to individual circumstances, qualify for the VCT tax reliefs
that are applicable to subscriptions for new shares in venture capital trusts.

An Extraordinary General Meeting to authorise the directors to establish such a
scheme will be convened to follow immediately after the Annual General Meeting.
If authorised, this scheme will enable shareholders to reinvest the dividend
just declared to take advantage of the 40% tax relief available on VCT
subscriptions.

Shareholders

The Company appointed Teather and Greenwood to act as its broker in furtherance
of its active policy to continue to refine its overall shareholder 
strategy. As a firm, Teather and Greenwood is widely experienced in the
investment company market and has a particular focus on the VCT sector.
Shareholders have already started to see some benefit through the reduction in
the discount of the Company's quoted share price to its net asset value. Over
the last six months this has reduced from a 55% discount to around 12% at the
current time.

A notice will shortly be sent to Warrantholders alerting them to the dates on
which Warrants can be exercised. This is the last time that Warrants can be
exercised. Unexercised Warrants will then lapse.

Outlook

Looking ahead, Sir Andrew said, "Following continued improvement in business
confidence over the past couple of years, the trend has continued into the early
part of 2005."

Although he commented that the medium term outlook was more fragile than he
would like, he went on to say, "I expect 2005 to continue to present
opportunities for businesses within our portfolio. With over £3.8 million of
liquid funds at the end of the year, the Company has sufficient resources to
support the current portfolio through to maturity and to make selective new
investments as opportunities arise."

For further information, please contact:

David Hall, YFM Private Equity Limited            Tel: [phone]
Michael Bellamy, Teather and Greenwood Limited    Tel: [phone]
Jonathan Becher, Teather and Greenwood Limited    Tel: [phone]


Chairman's Statement

I am pleased to report that the second half of 2004 has shown a continuation of
the progress seen in the first part of the year. Increased confidence in the
technology sector has shown through with an increasing number of trade buyers
and a strong stock market appetite for innovative companies, and has provided a
healthy environment for the growing businesses within your Company's portfolio.

The improved market conditions and business confidence have been reflected in
the performance of your Company over the past year. Net asset value, before
dividend distribution, has risen 14.8% over the year as a whole.

As the portfolio starts to mature and capital growth on some of the earlier
investments begins to be realised, we continue to look for suitable investment
opportunities. In doing so, we need to retain sufficient liquidity to support
the anticipated growth of our existing investments and to meet our ongoing
operating requirements, whilst implementing an appropriate dividend policy for
the benefit of shareholders.

Operations

A total of £1.88 million was invested in ten businesses over the year. Three of
these investments were in new companies to the portfolio. I commented on the
investment in DxS Limited in my interim statement. This business continues to
perform satisfactorily. The other two new investments were in Cozart plc and
Allergy Therapeutics plc on their admission to AIM.

Cozart was well known to your Board, having been an existing investment of the
other two VCTs in the British Smaller Companies stable. The company is a
developer of hand-held drug testing devices. Since flotation the company's share
price has consistently traded above the initial admission price of 30 pence per
share.

Allergy Therapeutics is a speciality pharmaceutical company focused upon the
treatment and prevention of allergies. The investment was made in October 2004
when the company raised a net £15 million through a placing on AIM at 73 pence
per share. The company's share price has continued to rise since our year end.

In addition, the disposal of Sirus Pharmaceuticals Limited, which also received
a small, further investment before the sale, has led to your Company acquiring a
stake in Arakis Limited, the purchaser of Sirus.

Toward the end of the year, the Board decided to realise the gain on your
Company's holding in Amino Technologies plc. The total realised gain since the
first investment in September 2001 was £1.46 million.

Financial Results

I reported in my interim statement that the Board had decided to revoke
investment company status in order to enable realised capital profits to be
distributed in the form of tax free dividends. This formality was completed on
12 November 2004.

Following the revocation of investment company status, we are now required to
present a profit and loss account in Companies Act format.

The financial result for the year under review was a profit of £1.08 million
compared to a loss for the prior year, as restated, of £0.91 million.

The Company is now in a position to distribute realised gains. Your Board is
recommending a dividend payment of 5 pence per share which, if approved, will be
paid on 3 June 2005 to shareholders on the Register at 1 April 2005.

Warrants

A notice will shortly be sent to shareholders and warrantholders alerting them
to the dates on which Warrants can be exercised in the current year. This is the
last year in which Warrants can be exercised, after which time they will lapse.

Dividend Reinvestment Scheme and Extraordinary General Meeting

Following feedback from shareholders, your Board is recommending a dividend
reinvestment scheme that will enable shareholders to elect to receive additional
shares by reinvesting their cash dividends. Dividend reinvestment enables
shareholders to increase their total holding in the Company without incurring
dealing costs, issue costs or stamp duty. Subject to individual circumstances,
these shares should qualify for the VCT tax reliefs that are applicable to
subscriptions for new shares in venture capital trusts.

An Extraordinary General Meeting to authorise the directors to establish such a
scheme will be convened to follow immediately after the Annual General Meeting.
If authorised, this scheme will enable shareholders to reinvest the dividend
just declared to take advantage of the 40% tax relief available on VCT
subscriptions.

Shareholders

Your Board is continually looking at ways to improve shareholder liquidity. In
furtherance of this strategy, I am pleased to tell you that the Board appointed
Teather & Greenwood to act as broker to the Company. The firm is widely
experienced in the investment company market and has a particular focus on the
VCT sector, acting for a number of venture capital trusts. Teather &
Greenwood are assisting the Board and our Investment Adviser, YFM Private Equity
Limited, in refining its overall shareholder strategy. Initial
benefits have already been seen by shareholders through a reduction in the
discount of the Company's quoted share price to its net asset value. Over the
last six months this has reduced from a 55% discount to around 12% at the
current time.

Outlook

Following a gradual improvement in business confidence over the past couple of
years, the trend has continued into the early part of 2005. Overall market
conditions remain favourable, although the economic outlook for the medium term
is more fragile than we would like. Nevertheless, we expect asset prices to
remain attractive and your Company is well placed, with adequate liquid
resources, to take advantage of this environment.

The current portfolio is beginning to mature and show some encouraging signs of
growth potential. Following your Board's strategy of targeting later stage
innovative companies to get a better portfolio balance, I am pleased that the
new investments made during the year are performing well.

I expect 2005 to continue to present opportunities for businesses within our
portfolio. With over £3.8 million of liquid funds at the end of the year, your
Company has sufficient resources to support the current portfolio through to
maturity and to make selective new investments as opportunities arise.


Sir Andrew Hugh Smith
Chairman



Unaudited Profit and Loss Account
for the year ended 31 December 2004

                                                    Unaudited           Restated
                                                         2004               2003
                                            Notes        £000               £000

Income                                                     77                256
Administrative expenses:
  Investment management fee                         (197)             (187)
  Other expenses                                    (178)             (157)
                                                  ------            ------
                                                         (375)              (344)
Profit (loss) on realisation of investments             1,398                (71)
Impairment of investments                                 (20)              (750)
                                                       ------             ------
Profit (loss) on ordinary activities 
before taxation                                         1,080               (909)

Taxation                                        2           -                  -
                                                       ------             ------
Profit (loss) on ordinary activities
after taxation                                          1,080               (909)

Dividends                                                (392)                 -
                                                       ------             ------
Retained profit (deficit) for the year                    688               (909)
                                                       ------             ------
Basic and diluted earnings (loss) per 
Ordinary share                                  5       13.79p            (11.64)p
                                                       ------             ------
Notes
All activity has arisen from continuing operations.


Unaudited Statement of Total Recognised Gains and Losses
                                                      Unaudited         Restated
                                                           2004             2003
                                                           £000             £000

Profit (loss) for the financial year                      1,080             (909)
Unrealised (losses) profits on valuation of investments    (100)             355
                                                         ------           ------
Total recognised gains (losses) for the year                980             (554)
                                                         ======           ======

Unaudited Note of Historical Cost Profits and Losses
                                                       Unaudited        Restated
                                                            2004            2003
                                                            £000            £000

Profit (loss) on ordinary activities before taxation       1,080            (909)
Realisation of investment profits of previous years           31              67
                                                          ------          ------
Historical cost profit (loss) on ordinary activities 
before taxation                                            1,111            (842)
                                                          ------          ------
Historical cost profit (loss) on ordinary activities 
after taxation and dividends                                 719            (842)
                                                          ======          ======



Unaudited Balance Sheet
at 31 December 2004

                                                Notes   Unaudited       Restated
                                                             2004           2003
                                                             £000           £000
Fixed Assets
Investments                                                 3,775          2,535
                                                           ------         ------
Current Assets
Debtors                                                       112             26
Investments                                                 1,280          1,026
Cash                                                        2,544          3,057
                                                           ------         ------

                                                            3,936          4,109
Creditors: amounts payable within one year                   (497)           (28)
                                                           ------         ------
Net Current Assets                                          3,439          4,081
                                                           ------         ------
Total Net Assets                                            7,214          6,616
                                                           ======         ======

Capital and Reserves

Called-up share capital                                       783            782
Share premium account                                           9              -
Capital redemption reserve                                      1              1
Revaluation reserve                                           223            354
Warrant reserve                                                 3              4
Special reserve                                             5,364          6,592
Other reserve                                                   2              1
Profit and Loss account                                       829         (1,118)
                                                           ------         ------

Equity Shareholders' funds                                  7,214          6,616
                                                           ======         ======

Net asset value per Ordinary share                     5     92.1p          84.6p
                                                           ======         ======


Unaudited Cash Flow Statement
for the year ended 31 December 2004


                                                             2004           2003
                                                             £000           £000

Net cash outflow from operating activities                   (307)            (1)
                                                           ------         ------
Investing activities
Purchase of fixed asset investments                        (1,881)        (1,606)
Proceeds from sale of fixed asset investments               1,901              -
                                                           ------         ------
Net cash inflow (outflow) from investing activities            20         (1,606)
                                                           ------         ------
Net cash outflow before management of liquid
resources and financing                                      (287)        (1,607)
                                                           ------         ------
Management of liquid resources
Purchase of fixed interest Government stocks               (1,257)        (1,980)
Proceeds from the sale of fixed interest Government stocks  1,021          6,613
                                                           ------         ------
Net cash (outflow) inflow from management of
liquid resources                                             (236)         4,633
                                                           ------         ------
Financing
Issue of Ordinary shares on exercise of warrants               10              3
Purchase of own shares and associated warrants                  -             (6)
                                                           ------         ------
Net cash inflow (outflow) from financing                       10             (3)
                                                           ------         ------
(Decrease) increase in cash in the year                      (513)         3,023
                                                           ======         ======


Notes to Financial Statements
for the year ended 31 December 2004

1. Basis of reporting

This preliminary announcement, which has been prepared on a basis consistent
with the previous year, does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.

In order to enable the Company to make capital distributions, the Company has
revoked its investment company status. A consequence of the revocation is that
the Company is now required to prepare accounts in accordance with the
requirements of Schedule 4 of the Companies Act 1985 and not in accordance with
the Statement of Recommended Practice 'Financial Statements of Investment Trust
Companies' as was previously the case.

The information for the year ended 31 December 2003 is an extract from the
statutory accounts to that date which have been delivered to the Registrar of
Companies, restated following the revocation of investment company status as
described in the Chairman's Statement. 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 2004, upon which the auditors have still to report, will be delivered
to the Registrar following the Company's annual general meeting.

2. Tax on Ordinary activities
                                                     Unaudited          Restated
                                                          2004              2003
                                                          £000              £000
Corporation tax payable at 19%       
(2003: 19%)                                                  -                 -
                                                        ------            ------

3. Dividends
                                                     Unaudited          Restated
                                                          2004              2003
                                                          £000              £000

Final proposed - 5.0p per share (2003:Nil)                 392                 -
                                                        ------            ------
                                                           392                 -
                                                        ======            ======
4. Earnings (Loss) per Ordinary Share

The earnings (loss) per Ordinary share is based on the profit from ordinary
activities after tax of £1,080,000 (2003: £909,000 loss) and 7,830,000 (2003:
7,812,000) shares being the weighted average number of shares in issue during
the year.

Apart from the unexercised Warrants currently in issue, 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 2004. Consequently, basic
and diluted earnings per share are the same for the year ended 31 December 2004.

Under FRS 14 'Earnings per share' any potentially dilutive shares are deemed
anti-dilutive in the event that a loss has been incurred. Consequently, the
basic and diluted loss per share for the year ended 31 December 2003 are the
same.

5. Net Asset Value per Ordinary Share

The net asset value per Ordinary share is calculated on attributable assets of
£7,214,000 (2003: £6,616,000 and 7,833,466 (2003: 7,823,393) shares in issue at
the year end.

6. Annual General Meeting

The Company's AGM is due to be held at 1.20 p.m. on 27 May 2005 at 23 Berkeley
Square, London, W1J 6HE.Copies of the full financial statements for the period
ended 31 December 2004 will be available to the public at the registered office
of the Company at Saint Martins House, 210-212 Chapeltown Road, Leeds, LS7 4HZ
thereafter.





                      This information is provided by RNS
            The company news service from the London Stock Exchange