Interim Management Statement

Baronsmead VCT 2 PLC
13 February 2008

Baronsmead VCT 2 plc

Interim Management Statement

For the three month period from 1 October 2007 to 31 December 2007



Financial Highlights

•        -2.4% change in Net Asset Value (NAV) per ordinary share to 109.47p

•        +77% NAV Total Return to ordinary shareholders over five years

•        £1.79 million subscribed by 230 shareholders after top up offer closed
         over-subscribed.

•        £1.96 million profits realised from the sale of two unquoted
investments



Performance Summary for the quarter to 31 December 2007
                                                  As at                As at

Capital return                                 31/12/07             30/09/07              Movement
Ordinary shares
Total net assets                                 £68.2m               £68.7m                (0.7)%
Net asset value per share                       109.47p              112.19p                (2.4)%
Share price                                      99.50p              101.00p                (1.5)%
Discount to NAV                                    9.1%                10.0%                     -



Performance Summary to 31 December 2007
                                   3              1            3            5       Since launch %*

Total return                    months %        year %      years %      years %
Ordinary shares
Net asset value 1                (2.42)         +2.34        +31.2        +76.98         +104.5
Share price2                     (1.49)         +4.42        +42.8        +93.85         +94.7
FTSE All-share3                  (0.35)         +5.32        +50.1       +104.65         +54.4

* 2 April 1998;

1NAV Total return = NAV + reinvested dividends; Source: ISIS

2Share price Total return = Mid to mid share price + reinvested dividends;
Source: Datastream

3Source: Datastream



Investment Performance

Steady gains across the unquoted portion of the portfolio were more than offset
by lower share prices for the AiM investees in the quarter to 31 December 2007.
This latter trend has continued since the period end so that by 31 January 2008,
the NAV per share had decreased by a further 1.96p to 107.51p.



The UK stock market is currently anticipating recessionary economic conditions
and further downgrades in the ratings of smaller quoted companies are possible.
 The values of unquoted companies are likely to be less affected by market
sentiment and more related to ongoing performance.



It is important to note that the relative health of the portfolio as measured by
the 'direction of travel' has remained firm. Debt levels within investee
companies are also lower than for some time and so the companies should be more
resilient to lower trading levels if these occur.



The sale of Boldon James and RLA at 3.1 times and 3.7 times (respectively) of
their original cost demonstrates that focussed well-managed companies can
generate good value for their shareholders. The sale of Hawksmere after the
period end at 2.5 times cost is a further example, especially as a full
provision had been provided against this investment only 18 months ago.





Investment Activity

Investments

During the quarter a total of £1.86 million was invested as follows:
Company                                                  Cost (£'000)         VCT Status
New Investment
  Optimisa                                                        298         Qualifying
  Cohort                                                          178    Part qualifying
  Plastics Capital                                                473         Qualifying
  Research Now                                                    262    Part qualifying
  Mission Marketing Group                                         247         Qualifying
Total new investment                                            1,458

Follow-on Investments
  Concateno                                                        72     Non qualifying
  Tasty                                                           175         Qualifying
  Fishworks                                                        47         Qualifying
  Appian Technology                                                52         Qualifying
  Brulines Holdings                                                58     Non qualifying
Total follow on investment                                        404

Total New and Follow-on Investment                              1,862



Since the quarter end, two further unquoted investments were completed at a cost
of £2.64 million.



Realisations

Boldon James and RLA Group were sold during the quarter, realising proceeds of
£1,668,000 and £2,293,000 respectively.  The respective investments were made in
June 2005 and December 2002 and including income received, yielded 3.1 and 3.7
times their original cost.  In addition, deferred proceeds of £174,000 were
received in respect of Domantis (sold in January 2007) taking its final multiple
of proceeds over cost to 4.1 times.  After the quarter end, the sale of
Hawksmere on 11 January 2008 realised a further profit of £1.10 million.



Top Ten Investments
Position as at 31/                                            Percentage of total assets
 12/07 (30/09/07)                                                   as at 31/12/07


                    Company
       1 (5)        Reed & Mackay                                        3.3
       2 (3)        Independent Living Services                          3.2
       3 (4)        Kafevend                                             3.2
       4 (2)        Fisher Outdoor Leisure                               3.2
       5 (6)        Empire World Trade                                   3.1
      6 (10)        Hawksmere                                            3.0
      7 (13)        kidsunlimited                                        2.7
       8 (-)        Scriptswitch                                         2.5
       9 (7)        The Crucible Group                                   2.5
      10 (10)       The Art Group                                        2.4
       Total                                                             29.1





Analysis of Total Assets
                                               Percentage of total assets   Percentage of total assets

                                                        31/12/07                     30/09/07
Investment Portfolio
  Unquoted investments                                     41                            45
  AiM listed investments                                   25                            27
  Listed investments                                        1                             2
Total investment portfolio                                 67                            74

Cash Portfolio
  Interest bearing securities                              24                            24
  Cash                                                      9                             2
Total cash portfolio                                       33                            26

Total Assets                                              100                           100



Analysis of Investment Portfolio by Sector*
                                                Percentage of investment     Percentage of investment
                                                       portfolio                     portfolio

                                                        31/12/07                     30/09/07
Business Services                                          49                            43
IT Support Services                                        16                            17
Consumer Markets                                           15                            15
Healthcare                                                 10                            14
Media                                                      10                            11
Total                                                     100                           100

* Excluding interest bearing securities and cash



Investment objective

Baronsmead VCT 2 is a tax efficient listed company which aims to achieve
long-term capital growth and generate tax-free dividends for private investors.



Other than the new investments and realisations set out above, the Board is not
aware of any significant events or transactions which have occurred between 31
December 2007 and the date of publication of this statement which would have a
material impact on the financial position of the Company.



Top up offer

Applications from 230 existing shareholders totalling £2.5 million were received
in December 2007.  As the Offer was over subscribed, these applications were
scaled back to 69.59%, to provide gross proceeds of £1.786 million.  This is the
sterling equivalent of the upper limit of €2.5 million allowed under the EU
Prospectus Directive July 2005.



Monthly and key information

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



Future contact

For further information please contact:

Prem Mohan Raj         0207 506 5640            [e-mail]

Ian Ridge              0131 718 1010            [e-mail]




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