Interim Results

Matrix Income & Growth 2 VCT PLC
05 January 2006




MATRIX INCOME & GROWTH 2 VCT PLC
PRELIMINARY RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2005


CHAIRMAN'S STATEMENT



I have pleasure presenting the interim results of Matrix Income & Growth 2 VCT
plc for the period from 1 May 2005 to 31 October 2005.



This is my first report since Shareholders approved the change of name of the
Company from Matrix Venture Fund VCT plc to reflect its change in investment
remit from primarily technology companies to a generalist investment strategy. I
am pleased to report several areas of good progress.



Overview

Overall the Ordinary Share Fund portfolio has performed well. Capital gains have
been realised which has resulted in the Board proposing to pay to Ordinary Fund
Shareholders a further dividend of 6 pence per share, making a total of 12 pence
per share of interim capital dividends paid to date.



The Net Asset Value (NAV) per Ordinary Share at 31 October 2005 was 87.30 pence.
Although this represents a decrease of 4.43% when compared with 91.35 pence as
at 31 October 2004, this comparison is distorted by the high dividends declared
in this period. A fairer comparison is total return which has increased by 2.07%
from 94.14 to 96.09 pence per share.



The Company is already seeing the benefit of the increased flow of investment
opportunities available to Matrix Private Equity Partners, the Investment
Manager. Your Board was pleased to learn that your Investment Manager has gained
recognition amongst its peers, winning the award for the Venture Capital Trust
Manager of the Year at the recent Investor AllStars 2005 Awards ceremony.



In September your Company launched a new C Share Fund of up to £20 million to
follow the same investment strategy as the Ordinary Share Fund. The new Fund is
being actively marketed and over 1 million new C Shares have already been
allotted after the period end.  I would like to welcome these new Shareholders
to the Company. Your Board is hopeful that significant funds will be raised by
the end of the tax-year that will increase the Company's asset base, improve
share liquidity and reduce running costs as a percentage of the Company's
assets.



Portfolio performance

It is pleasing to note two further full cash exits from the portfolio from
transactions completed after the end of the period. We fully realised our
investment in FootFall which was sold in December to Experian, a subsidiary of
GUS plc.  £2.3 million was returned in cash to the Ordinary Share Fund,
representing just over 3x the original amount invested.  We also sold our
residual investment in AIM-quoted Clearspeed Technology plc for a net
consideration of £300,509. The total return of £515,645 represented just over
2.5x the original amount invested. Details of the current portfolio of the
Ordinary Share Fund are given in the Investment Manager's Report that follows.



New investments

In the period under review, the Ordinary Share Fund made two new investments. It
invested £150,000 in SectorGuard plc, an AIM-quoted company providing a range of
security and manned guarding services.  Since investment this company has
announced a small acquisition and issued an encouraging statement regarding
current trading. In October the Ordinary Share Fund invested £1 million to
support the MBO of Youngman Group Limited, a leading manufacturer of access
equipment with annual revenues of £37 million.  Initial progress has been
encouraging.



After the end of the period, the Ordinary Share Fund committed a further £1
million to support the MBO of Campden Publishing, a publisher of titles in the
healthcare and wealth management sectors.



Return to Shareholders

The results for this period are set out on the following pages and show a
revenue loss (after tax) attributable to Ordinary Fund Shareholders of 0.32
pence per Ordinary Share (31 October 2004: loss of 0.29 pence).  The total
profit (after tax) attributable to Ordinary Fund Shareholders was 1.26 pence per
Ordinary Share (31 October 2004: loss of 2.75 pence).



Dividend

The Board is proposing to pay a second interim capital dividend to Ordinary Fund
Shareholders of 6 pence per share in respect of the year ending 30 April 2006 on
8 February 2006 to shareholders on the Register on 13 January 2006.



I would like to take this opportunity to thank all Shareholders for their
continuing support of the Company.  I intend to circulate a newsletter to
Shareholders in February reporting on the quarter to 31 January 2006 and my next
full statement will be in respect of the year to 30 April 2006.



Lawrence Sullivan, who has been a Director of the Company since its inception,
left the Board following the AGM on 7 September 2005.   Lawrence has been a
valuable source of advice and support and the Board has been particularly
appreciative of his knowledge and experience of the technology sector.  On
behalf of my fellow Directors and myself, I would like to thank him for his
contribution to the Company.



Michael Cumming

Chairman

4 January 2006





INVESTMENT MANAGER'S REPORT



As at 31 October 2005, the Ordinary Share Fund ("the Fund") held 13 venture
capital investments, summarised details of which are set out below. In the six
months to 31 October 2005 the Fund completed two new investments. In August
£150,000 was invested in SectorGuard plc, an AIM-quoted supplier of manned
guarding, mobile patrolling, and alarm response services and in October
£1,000,000 was invested in the MBO of Youngman Group Limited, a manufacturer of
ladders and access towers.   A further £1,000,000 was committed to support the
MBO of Campden Publishing, a publisher of titles in the healthcare and wealth
management sectors, in December. These investments reflect the change in
investment strategy approved by Shareholders in September and the Company is now
beginning to benefit from our strong position in the generalist private equity
market.



The portfolio has performed well overall in the last six months. The sale in May
of the Fund's investment in sit-up Limited, which realised over three times its
cost in cash at completion, has already been reported. As reported below, since
the period end the Fund's investments in Clearspeed Technology plc and FootFall
Limited have been realised in full.



As described below we continue to pay close attention to the current portfolio,
which comprises: -


COMPANY                       BUSINESS                      COST                   VALUATION
                                                                         30-Apr-2005    31-Oct-2005
Award International Holdings  Sales promotion activities    £250,000     £56,250        £0
plc    (AIM quoted)

Award provides its client base with promotional goods and services designed to increase brand
awareness among consumers and to support their marketing campaigns.  The Company floated on AIM in
March 2004 but its share price performance since has been disappointing, reflecting poor trading over
recent months.  In December Administrators were appointed to the Group's trading subsidiaries.

Callserve                     Voice over Internet Protocol  £300,000     £150,000       £0
Communications Limited        ("VoIP")


Callserve provides prepaid internet telephony services from PCs to telephones, worldwide. Revenue
growth has stalled during the current year and the company's cash position is weak.   As such we
believe it is prudent to make a full provision against this investment.


Clarity Commerce Solutions    Customer Relationship         £510,552     £472,055       £486,468
plc                           Management software for
                              hospitality/leisure venues
(AIM quoted)

Clarity, which is quoted on AIM, provides EPOS solutions to hospitality and leisure companies.
Clarity has been highly acquisitive, acquiring other synergistic software companies. In its interim
results to September 2005, Clarity reported operating profit up 24% over 2004 levels and a substantial
contract with Sodexho.


Clearspeed Technology plc     Semi-conductor chips           £124,954    £270,504       £275,706
(AIM quoted)

Clearspeed is an innovative parallel-processing semi-conductor business which floated in AIM in July
2004.  In its interims to June 2005, the company reported encouraging developments both in terms of
the trends in the broader market for parallel processing and in its own achievements. In December the
Fund realised its remaining investment for a net consideration of £300,509, bringing its total
proceeds to £515,645 compared with cost of £201,600.

Flightstore Group plc       Inflight retail services         £254,586    £24,711     £7,920
(AIM quoted)

Flightstore set out to use the existing seat back entertainment system to create an airline
branded, electronic and interactive magazine experience on long haul flights. The business was
floated on AIM in December 2003. Following its failure to achieve its objectives at the time of the
flotation the company has abandoned any new initiatives and is offering itself as being available
for a reverse of a business seeking an AIM listing.

FootFall Limited            People counting services         £750,000    £1,211,250  £2,316,848

FootFall provides business performance information derived from monitoring and analysing pedestrian
traffic in shopping centres and retail outlets. It has significant operations in France, Spain,
Portugal and Italy as well as being the UK market leader. In December FootFall was acquired by
Experian, a subsidiary of GUS plc. The Fund received total proceeds of £2,316,848 in cash at
completion, a return of 3.1 times cost.

Gyro International Limited  Brand communications agency      £750,000    £750,000    £750,000

Gyro is an established brand communications agency providing business-to-business direct marketing
services to technology and financial services companies. Although progress to date has been slower
than anticipated, the company has expanded its geographical coverage and is well placed to deliver
enhanced profitability during 2006.

Magicalia Limited           Community websites               £400,000    £400,000    £424,175

Magicalia has a network of eleven community websites supporting enthusiast-based activities. It
also has a growing online contract publishing business. The company continues to trade well and is
on track to deliver in excess of 50% revenue growth for the year. There are a number of new site
launches planned in the next 6 months.

Miva Inc.                   Performance based internet       £487,833    £681,882    £486,051
                            search engine
(NASDAQ listed)

Miva, formerly FindWhat.com, acquired Espotting Media in July 2004.  Miva is a leading provider of
performance-based marketing services.  The share price has been fairly static over recent months
with relatively low volumes of trade. A number of uncertainties that previously overshadowed the
shares have now been resolved. Third quarter results recently released show net profit of $0.8
million.

Monactive Limited           Software asset management tools  £642,857    £256,000    £110,571
                            & services

Monactive provides a range of software asset management tools. Monactive has failed to achieve
revenue growth at a level which would enable it to begin to generate real value for shareholders
although cash remains well controlled. Opportunities to unlock shareholder value are being
considered.

Recite Limited              Sales support software           £1,000,000  £1,478,322  £1,199,925

Recite provides a managed service combining content, methodology, tools and technology that improve
the effectiveness of large sales forces.  The company has a strong track record of profitability
and has a blue chip customer base and is investing heavily during the current year to accelerate
revenue growth.

SectorGuard plc             Provision of manned guarding,    £150,000    N/A         £115,714
                            mobile patrolling, and alarm
(AIM quoted)                response services

SectorGuard raised £3 million in August to provide it with the flexibility to fund its proposed
acquisition strategy. Since then the company announced the acquisition of a retail security tagging
specialist, Asset Protection (EAS) Ltd., for £1,765,000 in cash.

Youngman Group Limited      Manufacture of ladders and       £1,000,000  N/A         £1,000,000
                            access towers

The MBO of Youngman, a market-leading manufacturer of access equipment to the DIY and industrial
markets, was completed in October. Since then early trading indications have been encouraging.



Further details of each company's activities are included in the Annual Report
and Accounts for the Company published in July 2005 or can be viewed through the
Matrix Private Equity Partners' website at www.matrixgroup.co.uk



Matrix Private Equity Partners Limited

Investment Manager





UNAUDITED PROFIT AND LOSS ACCOUNT


                                    6 months ended 31 October                   Year ended 30 April 2005
                                        2005 (unaudited)                               (restated)

                                 Revenue       Capital      Total        Revenue        Capital         Total
                                    £             £           £              £              £              £
Unrealised gains/(losses) on           -       295,647     295,647               -      2,019,254      2,019,254
investments                      
Realised gains/(losses) on             -         5,838       5,838               -    ( 2,046,104)   ( 2,046,104)
investments     

Income                             139,982           -     139,982          187,898             -        187,898

Management fees                   (33,056)    (99,169)   (132,225)        ( 61,546)     ( 184,639)     ( 246,185)
Other expenses                   (147,459)           -   (147,459)       ( 225,097)             -      ( 225,097)

Profit/(Loss) on ordinary         (40,533)     202,316     161,783        ( 98,745)     ( 211,489)     ( 310,234)
activities before taxation

Tax on ordinary activities              -           -           -                -              -              -
Profit/(loss) on ordinary         (40,533)     202,316     161,783        ( 98,745)     ( 211,489)     ( 310,234)
activities after taxation

Dividends paid                          -    (769,254)   (769,254)               -              -              -

Retained loss                     (40,533)   (566,938)   (607,471)        ( 98,745)     ( 211,489)     ( 310,234)

Dividend per Ordinary Share          0.00p       6.00p       6.00p            0.00p          0.00p          0.00p

Basic earnings and return per      (0.32)p       1.58p       1.26p          (0.76)p        (1.63)p        (2.39)p
Ordinary Share




                                       6 months ended 31 0ctober 2004
                                          (unaudited and restated)


                                     Revenue      Capital        Total
                                        £            £             £
Unrealised gains/(losses) on                -     ( 299,214)    ( 299,214)
investments                       
Realised gains/(losses) on                  -        71,276        71,276
investments                       

Income                                  108,819           -       108,819
                                                  
Management fees                       ( 30,730)    ( 92,191)    ( 122,921)
Other expenses                       ( 116,078)           -     ( 116,078)
                                                  
Profit/(Loss) on ordinary             ( 37,989)   ( 320,129)    ( 358,118)
activities before taxation

Tax on ordinary activities                   -            -             -
Profit/(loss) on ordinary             ( 37,989)   ( 320,129)    ( 358,118)
activities after taxation

Dividends paid                               -            -             -
Retained loss                         ( 37,989)   ( 320,129)    ( 358,118)

Dividend per Ordinary Share               0.00p        0.00p         0.00p

Basic earnings and return               (0.29)p      (2.46)p       (2.75)p
per Ordinary Share






UNAUDITED BALANCE SHEET
                                                         31 October          30 April         31 October
                                                               2005              2005               2004
                                                        (unaudited)         (restated)    (unaudited and
                                                                                               restated)
                                                                  £                 £                  £
Non-current assets
Assets held at fair value through profit and loss         7,173,378         8,531,073          7,789,129
- investments
Monies held pending investment                            3,966,958         1,858,823          2,404,190
                                                         11,140,336        10,389,896         10,193,319

Current Assets
Debtors and prepayments                                     133,793            61,491            449,917
Cash at bank                                                  6,613         1,474,386          1,383,795
                                                            140,406         1,535,877          1,833,712

Creditors: amounts falling due within one year
Other creditors                                              41,644            84,259             85,460
Accruals                                                    164,065            61,302            122,214
                                                          (205,709)         (145,561)          (207,674)

Net current assets/(liabilities)                           (65,303)         1,390,316          1,626,038

Net assets                                               11,075,033        11,780,212         11,819,357

Capital and reserves
Called up share capital                                     126,861           128,209            129,387
Capital redemption reserve                                    4,945             3,597              2,419
Capital reserve                                           1,319,635           898,056        (1,420,412)
Cancelled share premium account - distributable           8,313,114        12,009,435         12,096,464
reserve
Profit and loss account                                   1,310,478       (1,259,085)          1,011,499

                                                         11,075,033        11,780,212         11,819,357

Net asset value per Ordinary Share                            87.30 p           91.88 p            91.35 p



These accounts are unaudited and are not the Company's statutory accounts.




UNAUDITED CASH FLOW STATEMENT
                                                       6 months ended          Year ended          6 months ended
                                                      31 October 2005       30 April 2005         31 October 2004
                                                          (unaudited)                                 (unaudited)
                                                                    £                   £                       £
Operating activities
Net investment interest - non-qualifying                     119,813             259,095                 176,823
Investment management fees paid                             (127,377)           (274,534)               (154,191)
Other cash payments                                         (144,029)           (215,169)               (147,920)
Net cash outflow from operating activities                  (151,593)           (230,608)               (125,288)


Investing activities
Acquisition of investments                                (1,180,365)           (952,574)               (202,362)
Disposal of investments                                     2,846,350             675,341                120,302
Net cash inflow/(outflow) from investing                    1,665,985           (277,233)                (82,060)
activities

Dividends
Dividends paid                                              (776,322)                  -                      -


Net cash inflow/(outflow) before liquid resource             738,070            (507,841)               (207,348)
management                                       

Management of liquid resources
Movement in money market and other deposits               (2,108,135)              2,971                (542,396)
                                                                         

Financing
Purchase of own shares                                             -            (154,283)                      -

Decrease in cash                                          (1,370,065)           (659,153)               (749,744)




NOTES TO THE UNAUDITED FINANCIAL STATEMENTS



1.            These interim accounts have been prepared using new accounting
standards which have been issued to begin the process of converging UK standards
with International Financial Reporting Standards ('IFRS'). The effect on the Net
Asset Value of these changes is quantified in the table in note 4. The first
change, Financial Reporting Standard ('FRS') 21, is to recognise any dividend
payable as a liability only after it has been declared and approved by
Shareholders. The second, FRS 26, is to value the quoted investments in the
investment portfolio at bid prices rather than at mid market prices.



With effect from 1 May 2005, the Company has adopted the following Financial
Reporting Standards:



FRS 21 Events after the balance sheet date

Dividends paid by the Company are accounted for in the period in which the
dividend has been declared. Previously, the Company recognised dividends in the
period in which the net revenue, to which those dividends related, was accounted
for.



FRS 25 Financial Instruments: Disclosure and Presentation and FRS 26 Financial
Instruments: Measurement

All investments held by the Company are classified as 'fair value through profit
and loss'. For investments actively traded in organised financial markets, fair
value is generally determined by reference to Stock Exchange quoted market bid
prices at the close of business on the balance sheet date. Previously all listed
investments were valued using closing mid market prices at the balance sheet
date.



2.            Unquoted investments are stated at fair value, in accordance with
the International Private Equity and Venture Capital Valuation (IPEVCV)
Guidelines) published in 2005, (similar to the British Venture Capital
Association Guidelines previously followed), as follows:



(i)   Investments which have been made in the last 12 months are valued at cost
in absence of overriding factors;



(ii)               Investments in companies at an early stage of their
development are also valued at cost in the absence of overriding factors;



(iii)            Where investments have gone beyond the stage in their
development in (ii) above, the shares may be valued by applying a suitable
price-earnings ratio to that company's historic/current or forecast post-tax
earnings (the ratio used being based on a comparable listed company or sector
but the resulting value being discounted to reflect lack of marketability);



(iv)               Where a value is indicated by a material arm's length
transaction by a third party in the shares of a company, this value will be
used;



(v)   For early stage investments where a company's underperformance against
plan indicates a diminution in the value of the investment, provision against
cost is made, as appropriate.



3.            The Company revoked its status as an investment company on 7
September 2005, so that it can regard realised capital profits as part of the
profits available for distribution.



4.            In accordance with the Company's prospectus dated 10 May 2000, the
Directors have charged 75% of the investment management expenses to the capital
reserve.



5.            Basic revenue return per Ordinary Share is based on the net
revenue on ordinary activities after taxation, and on 12,686,147 Ordinary
Shares, being the weighted average number of Ordinary Shares in issue during the
period (year ended 30 April 2005: 12,820,898 Ordinary Shares; (31 October 2004:
12,938,703 Ordinary Shares).



6.            The cancelled share premium account attributable to the Ordinary
Share Fund provides the Company with a special reserve out of which it can fund
buy-backs of Ordinary Shares as and when it is considered by the Board to be in
the interests of the Shareholders.  At an Extraordinary General Meeting held on
26 March 2004, the Shareholders approved a resolution to authorise the Directors
to apply to the Court to cancel the share premium account attributable to the C
Share Fund following the close of the Offer for Subscription for the C Shares
launched on 20 September 2005.  The cancellation will create a similar special
reserve for the Company to fund buy-backs of C Shares.  Under Resolution 10 of
the Annual General Meeting held on 7 September 2005, the Shareholders authorised
the Company to purchase its own shares pursuant to section 166 of the Companies
Act 1985. The authority is limited to a maximum of 14.99 per cent of the issued
Ordinary Share Capital of the Company or, as the case maybe, 14.99% of the C
Share capital immediately following the issue of C Shares pursuant to the close
of the C Share Offer, and will unless previously revoked or renewed expire on
the conclusion of the Annual General Meeting of the Company to be held in 2006.
The maximum price that may be paid for Ordinary Shares and C Shares will be an
amount equal to 105 per cent of the average of the middle market quotation as
taken from the London Stock Exchange daily official list for the five business
days immediately preceding the day on which that Ordinary Share or, as the case
maybe, C Share, is purchased. The minimum price that may be paid for Ordinary
Shares and C Shares is 1 penny per share. The authority provides that the
Company may make a contract to purchase Ordinary Shares or, as the case maybe, C
Shares under the authority conferred by this resolution prior to the expiry of
such authority which will or may be executed wholly or partly after the
expiration of such authority and may make a purchase of Ordinary Shares or C
Shares pursuant to such contract.



7.            The financial information set out in this report has not been
audited and does not comprise full financial statements within the meaning of
section 240 of the Companies Act 1985. The audited accounts for the Company for
the year ended 30 April 2005, on which the auditors gave an unqualified report,
have been delivered to the Registrar of Companies.



8.            Copies of this statement are being sent to all Shareholders.
Further copies are available free of charge from the Company's registered
office, One Jermyn Street, London, SW1Y 4UH.






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