Interim Management Statement

Baronsmead VCT2 plc                              

                         Interim Management Statement                          

For the period from 1 April 2011 to 30 June 2011.

Headlines-

6.9% increase in underlying Net Asset Value                             
                                                                        
Sale of investment in Reed & Mackay at 4.8 times cost                    
                                                                        

 

Performance Summary

Capital return         As at          As at       Movement                    
                       30 June        31 March                                                
                       2011           2011                             
                                                                               
Total net assets        £70.31m       £68.01m                                 
                                                                               
Net asset value per     102.85p        96.23p*     6.9%                        
share                                                                          
                                                                               
Share price              88.50p        86.88p      1.9%                        
                                                                               
Discount to NAV          (14.0%)        (9.7%)                                  
                                                                               
Total return            3 month (%)    3 year (%)   10 year (%) Since launch (%)
                                                                               
Net asset value(1)      6.7            24.7        87.6        138.7           
                                                                               
Share price(2)          4.7            17.3        64.9        128.9           
                                                                               
FTSE All-share(3)       1.9            21.0        59.2        67.8            
                                                                               

* Adjusted for 2.5p interim dividend for comparative purposes. NAV at 31st
March 2011 excluding effect of interim dividend was 98.73p.

Key:

(1) NAV total return = NAV + reinvested dividends; Source: ISIS EP LLP

(2) Share price total return = Mid to mid share price + reinvested dividends;
Source: AIC

(3) FTSE All-share = FTSE All-share Index + reinvested dividends; Source: AIC

These total returns are stated before the inclusion of VCT tax
reliefs which are designed to mitigate the higher risks and costs associated
with investing in smaller companies and the other constraints of the VCT
legislation. The tax reliefs given at the time of subscription have been 20%,
40% and latterly 30%, so any adjusted performance measure including this relief
will vary depending on the date of subscription. Additionally shareholders
benefit from receiving VCT dividends tax free.   

Investment Performance

The unquoted valuations have increased by 6.3% in the quarter to 30 June 2011
as the performance of the portfolio on the whole remains strong despite the
current economic climate. Two unquoted investments, Nexus Vehicle Holdings and
Quantix, increased in value by 18.7% and 21.7% respectively due to strong
profitable growth.

The increase in the valuation of the AIM-traded portfolio was largely driven by
increases in the share prices of Staffline Recruitment Group plc (formerly an
unquoted investment prior to an IPO in 2004) and IDOX plc. These companies had
a combined valuation of £5.1 million at 30 June 2011.

Top Ten Investments 

Position at  Position at                                             Percentage     
30 June      31 March                                                    of NAV         
2011         2011          Company                                as at 30 June               
                                                                           2011         
                                                                               
1            2             Nexus Vehicle Holdings Limited                   7.6
                                                                               
2            5             Quantix Limited                                  3.9
                                                                               
3            3             CableCom Networking Holdings Limited             3.9
                                                                               
4            7             IDOX plc                                         3.7
                                                                               
5            4             Crew Clothing Company Limited                    3.5
                                                                               
6            12            Staffline Group plc                              3.5
                                                                               
7            9             CSC (World) Limited                              3.0
                                                                               
8            6             Kafevend Holdings Limited                        2.9
                                                                               
9            11            Getting Personal Limited                         2.6
                                                                               
10           10            Fisher Outdoor Leisure Holdings                  2.5
                           Limited                                             
                                                                               
Total                                                                      37.1



Analysis of Total Assets          Percentage of total       Percentage of total     
                                               assets                    assets                  
                                         30 June 2011             31 March 2011                 
                                                                               
Unquoted investments                                44                       50
                                                                               
AIM, Listed & Collective                            31                       27
Investments                                                                    
                                                                               
Interest Bearing Securities             24                        19           
                                                                               
Cash                                    1                         4            
                                                                               
Total cash portfolio                                25                       23
                                                                               
Total Assets                                       100                      100

Analysis of Investment Portfolio by Sector

(excluding cash and interest bearing securities)

                                 Percentage of total        Percentage of total       
                                      investments at             investments at   
                                        30 June 2011              31 March 2011                      
                                                                               
Business Services                                 35                         39
                                                                               
Consumer Markets                                  20                         18
                                                                               
Financial Services                                 2                          2
                                                                               
Healthcare & Education                             9                         10
                                                                               
IT & Media                                        34                         31
                                                                               
Total                                            100                        100

Investment Activity

Four AIM traded investments totalling £855,010 were completed in the period.
Two were in existing portfolio companies and two were in new companies, Music
Festivals plc and Ubisense Group plc.

Investments made

Company                                   Date              Cost (£'000)
                                                                        
Active Risk Group plc*                    Jun 2011                   124
                                                                        
Green Compliance plc*                     Jun 2011                   101
                                                                        
Music Festivals plc                       Jun 2011                   500
                                                                        
Ubisense Group plc                        Jun 2011                   130
                                                                        
Total investments                                                    855
                                                                        

*Follow on investments

Realisations

Company                            Date              Cost    Proceeds Multiple
                                                   (£'000)     (£'000) of cost†        
                                                                              
MLS Limited                           Jun 2011         21          21      1.0x
                                                                              
Reed & Mackay Limited                 Apr 2011      1,030       4,826      4.8x
                                                                              
Total realisations                                  1,051       4,847         
                                                                              

† includes interest and dividends received in prior periods.

Events after the period end

Baronsmead VCT 2 is pleased to announce the profitable sale of its investment
in Getting Personal Limited in July 2011.

Getting Personal is a leading online retailer, based in Manchester, which sells
personalised and unique gifts including cards, notebooks, mugs and chocolate on
its website www.gettingpersonal.co.uk. Getting Personal was listed in the
Sunday Times Fast Track 100 Fastest Growing British Companies in both 2009 and
2010.

Other than as discussed in this statement the Board is not aware of any
significant events or transactions which have occurred between 30 June 2011 and
the date of publication of this statement which would have a material impact on
the financial position of the Company.

Fundraising Update

On 1 August 2011 the Government implemented an amendment to the EU Prospectus
Directive giving companies the ability to raise up to €5.0 million over a
twelve month period without the need to publish a prospectus (increased from
the previous limit of €2.5 million). Dependent upon Baronsmead VCT 2's
requirement for additional resources to fund new investments in the current tax
year, the Board is considering a fund raising of the sterling equivalent of up
to €5.0 million in the current tax year. If confirmed, the Chairman will write
to shareholders when the annual report to 30 September 2011 is published in
November 2011 to give further details.

Investment objective

Baronsmead VCT 2 plc is a tax efficient listed company which aims to achieve
long-term investment returns for private investors, including tax-free
dividends.

Further information 

Past performance is not necessarily a guide to future performance. Stockmarkets
and currency movements may cause the value of investments and the income from
them to fall as well as rise and investors may not get back the amount they
originally invested. Where investments are made in unquoted securities and
smaller companies, their potential volatility may increase the risk to the
value of, and the income from, the investment.

Further information regarding the Company, including net asset values published
since the end of the period and quarterly factsheets, can be found at the
Company's website www.baronsmeadvct2.co.uk

Contact

For further information please contact:

Michael Probin     Investor Relations Manager     
020 7506 5600      [e-mail]