Interim Results

Advent 2 VCT PLC
24 October 2000

Advent 2 VCT plc

24 October 2000



Interim Report for the half year ended 31 August 2000

Objective

The objective of Advent 2 VCT is to provide investors with an attractive
return, principally by maximising the stream of dividend distributions from
the income and capital gains generated by a portfolio of investments mainly in
established unquoted companies in the United Kingdom.

Highlights

- Advent 2 VCT has sold its investment in First Fibre to the German company
ADVA AG Optical Networking for a value at completion of £10.3 million. The
consideration was satisfied in shares. This corresponds to an increase of £8.8
million over the £1.5 million cost. Subsequently, £6.4 million of ADVA has
been realised.

- The company has made 12 new investments in Qualifying Companies at a cost,
to the date of this report, of £8 million.
                                       Half year        Year       Half year

                                         ended         ended         ended

                                       31 August    29 February    31 August
                                          2000          2000          1999

                                      (unaudited)                 (unaudited)


                                         pence         pence         pence
Earnings per share                        15.6          1.4           0.7
Dividends per share                       13.9          2.3           1.0
Net asset value per share after          108.8          98.9          94.6
dividend
Net asset value per share before         122.7         101.2          95.6
dividend

- The company revoked its investment company status on 23 October 2000,
enabling the dividends derived from capital profits to be paid to
shareholders. Consequently, an interim dividend of 13.9p per ordinary share
has been declared and will be payable on 1 December 2000 to shareholders on
the register at close of business on 3 November 2000. The dividend is made up
of 1.3p from revenue profits and 12.6p from capital profits.

- The Company has until 28 February 2001 to meet the minimum requirement that
70% of its investments must be in Qualifying holdings. As at 31 August 2000
the company had 54.7% in Qualifying holdings. The Board is confident that the
Inland Revenue target will be exceeded.





Venture Capital Trust status

Advent 2 VCT has been granted provisional approval under section 842AA of the
Income and Corporation Taxes Act 1988 and it is intended that the business of
the company be carried on so as to comply with that section.



Chairman's Statement

This interim report of Advent 2 VCT covers the half year ended 31 August 2000.

Progress in investment

The past six months have been a period of substantial development of the
portfolio, with a further 12 new investments being made at an initial cost of
£8.0 million and a further £1.6 million invested in existing portfolio
companies. Since 31 August, a further £2.7 million has been invested in six
existing and one new company in the portfolio. Among these were £0.5 million
invested in Realcall Ltd as part of a £26.0 million funding round; £1.0
million in Rademacher Group Plc, a new company to the portfolio which is
developing medical therapies for the healthcare market and has been an
investment in Advent VCT Plc since January 1997. This latter investment brings
the total number of companies in the portfolio at the date of this report to
23. Taking into account follow-on commitments to existing portfolio companies
means that the company has almost completed its initial phase of investing
which will bring the portfolio up to its target of 80% Venture Capital
Investment. Comfortably above the minimum 70% target required by the Inland
Revenue.

Disposal

On 13 July 2000, the investment in First Fibre Ltd was sold to ADVA AG Optical
Networking which was satisfied in shares of ADVA. The value of the shares
received in consideration amounted to £10.3 million against the cost of £1.5
million for First Fibre. £6.4 million has been subsequently realised from the
sale of part of the ADVA shares received. At 31 August 2000, the remaining
55,609 ADVA shares held by the company were valued, using BVCA guidelines, at
£4.4 million. In the period to 31 August 2000, quoted shares in this sector
are continuing to show considerable volatility.

Change to trading company status

On 23 October 2000, the company revoked its investment company status enabling
dividends derived from capital profits to be paid to shareholders. As a
result, it has been necessary to change the presentation of the accounts. This
is explained in detail in note 1 to the accounts on page 10. The Board's
decision to adopt trading company status reflects a move in the medium to long
term towards the payment of dividends from successful realisations of
investments in addition to the income derived from the company's fixed income
portfolio. As the portfolio moves towards its target of 80% of investments in
qualifying holdings, dividends derived from income from the fixed income
portfolio will continue to decline.



Dividend

The Board has pleasure in declaring an interim dividend of 13.9p per share for
the period to 31 August 2000 (made up of 1.3p from revenue profits and 12.6p
from capital profits). The interim dividend will be paid on 1 December 2000 to
shareholders on the register at the close of business on 3 November 2000. On
payment of this dividend, gross cumulative total dividends (including the tax
credit) paid since inception of the company will amount to 21.8p. Shareholders
who have completed enduring declarations will benefit from the exemption from
income and capital gains taxes on these dividends.

Balance Sheet

The net asset value per share at 31 August 2000 was 108.8p (net of dividends
declared for the current period), compared with 98.9p at 29 February 2000.

The venture capital investments have been valued in accordance with the
British Venture Capital Association guidelines, under which unquoted
investments are not normally revalued above cost for at least 12 months after
the date of acquisition.

The investment in XKO Group plc, which is listed on the London Stock Exchange,
has declined in market value since 29 February 2000 though it is still valued
at almost three times cost.

Purchase of Own Shares

On 21 June 2000, the company repurchased 34,000 shares. This is explained in
detail in note 5 on page 10 of this report. As previously explained,
occasional market purchases by the company of its own shares could provide an
additional measure of liquidity in the market for the company's shares and
enhance the net asset value per share for the company's remaining
shareholders, therefore it continues to be a policy of the company to
repurchase shares when they become available.

Outlook

The company has until 28 February 2001 to meet the minimum requirement that
70% of its investments must be in Qualifying holdings. As at 31 August 2000
the company had 54.7% in Qualifying holdings. The Board is confident that the
Inland Revenue target will be exceeded. Advent 2 VCT has made significant
progress in the rate of investment since the beginning of the period. The
Board is encouraged by the quality of the portfolio which is spread across a
range of technology and healthcare markets. The manager continues to focus on
investing in companies which have the potential to capitalise on strong
proprietary positions in their respective markets. In the next phase, the
Manager will concentrate on working closely with these investee companies to
build value. Realisations, such as the sale of First Fibre, will be considered
where they clearly provide value to shareholders.


New Investments

Since 29 February 2000 Advent 2 VCT has completed 12 new investments at a cost
of £8 million. Two of the new investments are:

Inca Digital Printers Limited - Industrial Ink-Jet Printing

Advent 2 VCT Plc has invested £546,000 as part of a £2.6 million round. Inca
was a spin-out from Cambridge Consultants Ltd and owns the intellectual
property rights to ink-jet printing technology that provide high-quality
images in an industrial environment, printing packaging as it is needed, on
the production line. The company has two main products, a printing module
which may be built into machinery, and a flat bed printer. The company is
ideally placed to provide a solution to a fast growing marketing in which
manufacturers require increasingly flexible high quality printing.

Optical Micro Devices Limited - Optical Components

Advent 2 VCT Plc has invested £735,000 as part of a £14.9 million round. OMD
is a large scale greenfield start up of an optical foundry, manufacturing
devices in volume for the optical components industry. The majority of
customers for these products will be telecommunications manufacturers,
dominated by large companies including Northern Telecom, Lucent, Siemens,
Alcatel and NEC. Premises and equipment are currently being built in Swindon
and first production will begin in December this year. The company already has
production commitments from Perkin-Elmer and Hewlett Packard.

Profit and Loss Account for the half year ended 31 August 2000
                  Half year to               Year to    Half year to 31 August
                                                            1999 (as restated)
                31 August 2000  29 February 2000 (as               (Unaudited)
                   (Unaudited)   restated) (Audited)
                                                                         £'000
                         £'000                 £'000
Investment                 728                 1,678                       901
income and
deposit
interest                 (445)                 (817)                      (409

Investment
management               (152)                 (232)                     (118)
fees

Other
expenses

Operating                  131                   629                       374
profit

Profit on                5,318                    58                         1
realisation
of
investments

Profit on                5,449                   687                       375
ordinary
activities
before
taxation

Tax on                     (7)                 (180)                     (113)
ordinary
activities

Profit on                5,442                   507                       262
ordinary
activities
after
taxation

Dividends              (4,861)                 (805)                     (350)

Balance                    581                 (298)                      (88)
transferred
to / (from)
reserves

Earnings                 15.6p                  1.4p                      0.7p
per share

Statement of Total Recognised Gains and Losses
                 Half year to                 Year to   Half year to 31 August
                                                            1999 (as restated)
               31 August 2000    29 February 2000 (as              (Unaudited)
                  (Unaudited)     restated) (Audited)
                                                                         £'000
                                                £'000
                        £'000
Profit for              5,442                     507                      262
the period

Unrealised
gain/(loss)
on                      2,866                   1,445                    (267)
revaluation
of
investments

Total                   8,308                   1,952                      (5)
recognised
gains /
(losses)
relating to
the period

All items in the above statement are derived from continuing operations.

Balance Sheet as at 31 August 2000
               31 August 2000 (Unaudited)  29 February 2000 31 August 1999 (as
                                             (as restarted)      restated)
                                                  (Audited)     (Unaudited)
                                    £'000
                                                      £'000        £'000
Fixed assets

Venture
capital
investments
                                    6,085             2,549                   -
Listed
                                        -                 -                 713
Quoted on AIM
                                   17,267             9,104               4,001
Unquoted

Listed fixed                       23,352            11,653               4,714
income
investments                        16,798            17,649              24,419

                                   40,150            29,302              29,133

Current
assets                              1,149             1,452               1,991

Debtors
                                    2,126             5,551               4,712
Cash and
money market
deposits

                                    3,275             7,003               6,703

Creditors

Amounts
falling due
within one
year                                4,861               455                 350

Dividend                              199               581                 502
payable
                                      334               653               1,870
Corporation
tax

Other
creditors

                                    5,394             1,689               2,722

Net current                       (2,119)             5,314               3,981
(liabilities)
/assets

Net assets                         38,031            34,616              33,114

Capital and
reserves                            1,748             1,750               1,750

Called up                          22,750            22,750              22,750
share capital
                                        2                 -                   -
Share premium
account
                                    4,725             1,859                 147
Capital
redemption                          8,806             8,257               8,467
reserve

Revaluation
reserve

Profit and
loss account

Equity                             38,031            34,616              33,114
shareholders'
funds

Net asset                          108.8p             98.9p               94.6p
value per
ordinary
share



Cashflow Statement for the half year ended 31 August
                    Half year to            Year ended       Half year ended 31
                                                                August 1999 (as
                  31 August 2000  29 February 2000 (as    restated) (Unaudited)
                     (Unaudited)   restated) (Audited)
                                                                          £'000
                                                 £'000
                           £'000
Reconciliation
of operating
profit to net
cashflow from
operating
activities

Operating                    117                   629                      374
profit
                           (319)                   416                    1,634
(Decrease)/
increase in
creditors                  (176)                  (64)                    (407)

(Increase)/
decrease in                  100                   258                      113
debtors

Amortisation
of bonds
                           (140)                     -                        -
Income from
First Fibre
rolled into
base cost of
ADVA holding

New cash                   (418)                 1,239                    1,714
(outflow) /
inflow from
operating
activities

Taxation                     105                 (140)                    (245)

Net capital
expenditure
and financial
investment               (2,625)                 4,378                    2,923

Equity                     (455)                 (806)                    (560)
dividends paid
                           3,261               (4,560)                  (2,428)
Management of
liquid
resources                   (32)                     -                        -

Financing

(Decrease)/                (164)                   111                    1,404
increase in
cash for the
period

Reconciliation
of net
cashflow to
movement in
net funds
(Decrease)/                (164)                   111                    1,404
increase in
cash for the
period                       249                   138                      138

Net fund at
start of
period

Net funds at                  86                   249                    1,542
end of period



Reconciliation of movement in shareholders' funds
                   Half year to                 Year to            Half year to

                 31 August 2000    29 February 2000 (as      31 August 1999 (as
                    (Unaudited)     restated) (Audited)   restated) (Unaudited)

                                                  £'000                   £'000
                          £'000
Opening                  34,616                  33,469                  33,469
shareholders'
funds
                          8,308                   1,952                     (5)
Total
recognised
gains/
(losses) for
period                     (32)                       -                       -

Repurchase
and                     (4,861)                   (805)                   (350)
cancellation
of shares

Dividends

Closing                   38,01                  34,616                  33,114
shareholder's
funds







Contacts for information:

Advent Venture Partners          020 7630 9811

Sir David Cooksey





Golin/Harris Ludgate

Julia Burge                    020 7253 2252

Roya Nasser                    020 7216 4548