Final Results

Baronsmead VCT 2 PLC
10 May 2004

Baronsmead VCT 2 plc

To:            RNS

From:          Baronsmead VCT 2 plc

Date:          10• May 2004



Unaudited Preliminary Results - Year Ended 31 March 2004

  • NAV per share increased by 13.6 per cent to 101.9p after payment of
    dividends

  • Dividends totalling 8.5 pence per share were paid during the year
    (equivalent to 12.6p per share for higher rate tax payers)

  • Total return since launch is now 43.6 per cent, which compares with a fall
    of 8.1 per cent in the FTSE All-Share over the comparable period

  • Portfolio increased to 54 companies following 17 new investments and 8
    complete realisations


  • Shareholders agreed on 22 March 2004 to extend the life of Baronsmead VCT
    2 to 2011.



Results


During the year to 31 March 2004 the NAV per share rose by 13.6% from 89.65p to
101.88p after allowing for tax-free dividend payments of 8.5p per share
(equivalent to 12.6p per share for higher rate tax payers). The total return
(assuming all dividends were reinvested) of Baronsmead VCT 2 is now 43.56 per
cent since launch. This compares with a FTSE All-share return on a comparable
basis of minus 8.1 per cent. The total return above has been stated net of all
costs, which have been contained at 2.7 per cent of average net assets which is
one of the lowest cost ratios for generalist VCTs.

The dividends paid during the year comprised 1.2p per share from income and 7.3p
per share from the distribution of the profits realised from the successful sale
of a number of unquoted and Aim investments. Since launch the average annual
tax-free dividend paid to shareholders has been 4.5p a share (equivalent to 6.7p
per share for higher rate tax payers). The Board aims to sustain this level of
average dividend if possible.


INVESTMENT ENVIRONMENT

Corporate buyers have begun to show interest in the acquisition of smaller
growth companies and so the private equity world has seen increased activity
with both new acquisitions and exits. The Managers have benefited from this
renewed market confidence in both the numbers of new investments and
realisations made.




The Aim index has risen substantially in capital terms since March 2003 and this
section of the portfolio has benefited with a 41 per cent uplift. There is
currently a strong flow of Aim flotations, although many of these do not meet
either the VCT qualifying rules or the selection criteria of the Managers. The
majority of Aim investing by Baronsmead VCT 2 has been into new share placings
by existing Aim-traded companies where their market position and the
capabilities of their directors/management are clearer.


OUTLOOK

Our intention is to build on the progress of last year and continue to meet the
objectives of capital growth and pay attractive dividends. Both depend on the
Manager selecting the right investments in the first place and then playing an
active role as portfolio companies grow towards eventual realisation. We wish to
provide appropriate services for shareholders to help them meet their differing
financial priorities in line with the recent changes in VCT tax reliefs.




                                        David Thorp, ISIS Equity Partners plc :
                                        0207 506 1609

                                        Gary Fraser, ISIS Asset Management plc :
                                        0131 465 1016






Unaudited Profit and Loss Account of the Company

For the year ended 31 March 2004
                                                                            2004            2004              2004
                                                                         Revenue         Capital             Total
                                                                           £'000           £'000             £'000

Gains on realisation of Investments                                            -           1,920             1,920
Income                                                                     1,256               -             1,256
Investment management fee                                                  (195)           (583)             (778)
Other expenses                                                             (284)               -             (284)
                                                                      ----------     -----------       -----------

Profit on ordinary activities before taxation                                777           1,337             2,114

Taxation on ordinary activities                                            (131)             132                 1
                                                                      ----------     -----------       -----------

Profit on ordinary activities after taxation                                 646           1,469             2,115

Dividends paid                                                             (492)         (2,984)           (3,476)
                                                                     -----------     -----------       -----------
Retained profit/(loss) transferred from reserves                             154         (1,515)           (1,361)
                                                                      ----------      ----------       -----------

Earnings per ordinary share                                                1.58p           3.58p             5.16p

                                                                          ______           _____             _____







Unaudited Statement of Total Recognised Gains and Losses
                                                                            2004             2004              2004
                                                                         Revenue          Capital             Total
                                                                           £'000            £'000             £'000

Profit on ordinary activities after taxation                                 646            1,469             2,115
Unrealised gain on revaluation of investments                                  -            6,306             6,306
                                                                      ----------      -----------       -----------
Total recognised gain during the year                                        646            7,775             8,421
                                                                      ----------      -----------       -----------
Total recognised gain per ordinary share                                   1.58p           18.96p            20.54p











Audited Profit and Loss Account of the Company

For the year ended 31 March 2003
                                                                            2003            2003              2003
                                                                         Revenue         Capital             Total
                                                                           £'000           £'000             £'000

Losses on realisation of Investments                                           -           (267)             (267)
Income                                                                     1,809               -             1,809
Investment management fee                                                  (193)           (580)             (773)
Other expenses                                                             (295)               -             (295)
                                                                      ----------     -----------       -----------

Profit/(loss) on ordinary activities before taxation                       1,321           (847)               474

Taxation on ordinary activities                                            (349)             187             (162)
                                                                      ----------     -----------       -----------

Profit/(loss) on ordinary activities after taxation                          972           (660)               312

Dividends paid                                                             (858)         (2,004)           (2,862)
                                                                     -----------     -----------       -----------
Retained profit/(loss) transferred from reserves                             114         (2,664)           (2,550)
                                                                      ----------      ----------       -----------

Earnings/(loss) per ordinary share                                         2.37p         (1.61)p             0.76p

                                                                          ______           _____             _____







Audited Statement of Total Recognised Gains and Losses
                                                                            2003             2003              2003
                                                                         Revenue          Capital             Total
                                                                           £'000            £'000             £'000

Profit/(loss) on ordinary activities after taxation                          972            (660)               312
Unrealised loss on revaluation of investments                                  -          (1,926)           (1,926)
                                                                      ----------      -----------       -----------
Total recognised gain/(loss) during the year                                 972          (2,586)           (1,614)
                                                                      ----------      -----------       -----------
Total recognised gain/(loss) per ordinary share                            2.37p          (6.31)p           (3.94)p












Balance Sheet                                                                     31.3.04            31.3.03
                                                                                Unaudited            Audited
                                                                                    £'000              £'000

Assets

Investments
     Listed investments                                                               476                343
     Alternative Investment Market                                                 13,004              6,625
     Quoted on OFEX                                                                    94                310
     Unquoted investments                                                          18,986             12,212
     Listed fixed interest investments                                              4,174              7,155
                                                                                    _____              _____
                                                                                   36,734             26,645

Net current assets                                                                  4,909             10,006

Total assets less current liabilities                                              41,643             36,651


Financed by

Shareholders' funds                                                                41,643             36,651

Net asset value per ordinary share: Basic                                         101.88p             89.65p

Ordinary shares in issue                                                       40,874,019         40,881,722



Summarised Unaudited Statement of Cash Flows


                                                                               Year to              Year to
                                                                              31 March             31 March
                                                                                  2004                 2003

                                                                                 £'000                £'000

Net cash inflow from operating activities                                          377                1,201
Taxation                                                                         (163)                (217)
Capital expenditure and financial investment                                   (1,750)                9,747
Equity dividends paid                                                          (3,476)              (3,477)
                                                                           -----------          -----------
Net cash (outflow)/inflow before financing                                     (5,012)                7,254
Financing                                                                         (21)                (117)
                                                                           -----------          -----------
(Decrease)/increase in cash                                                    (5,033)                7,137
                                                                           -----------          -----------
Reconciliation of net cash flow to movement in net cash

(Decrease)/increase in cash                                                    (5,033)                7,137
Opening net cash                                                                 9,889                2,752
                                                                           -----------          -----------
Net cash at 31 March 2004/2003                                                   4,856                9,889
                                                                           -----------          -----------

Profit on ordinary activities before taxation                                   2,114                   474
(Profit)/loss on realisation of investments                                   (1,920)                   267
Decrease in debtors                                                               134                   494
Increase/(decrease) in other creditors                                             49                  (34)
                                                                          -----------           -----------
Net cash inflow from operating activities                                         377                 1,201
                                                                          -----------           -----------











Notes


 1. The unaudited results which cover the year to 31 March 2004 have been
    prepared under the historical cost convention, modified to include the
    revaluation of fixed asset investments. These accounts have been prepared in
    accordance with applicable accounting standards and on the assumption that
    the Company maintains VCT status.


        2.     Revenue return per Ordinary Share is based on a weighted average
        of 40,996,280 (2003 : 40,961,609) Ordinary Shares in issue during the
        year.


        3.     There were 40,874,019 Ordinary Shares in issue at 31 March 2004
        (2003 : 40,881,722). 837,297 Ordinary Shares were issued through the
        Dividend Reinvestment Scheme. The Company bought back 845,000 Ordinary
        Shares for cancellation during the year.


        4.     These are not statutory accounts in terms of Section 240 of the
        Companies Act 1985. Full statutory accounts for the year to 31 March
        2003, which were unqualified, have been lodged with the Registrar of
        Companies. No statutory accounts in respect of any period after 31 March
        2003 have been reported on by the Company's auditors or delivered to the
        Registrar of Companies. A full annual report will be sent to
        shareholders and will be available for inspection at 100 Wood Street,
        London EC2V 7AN, the registered office of the Company.


        5.     The Annual General Meeting will be held at the offices of ISIS
        Asset Management plc, 100 Wood Street, London on 16 June 2004 at
        11.00am.






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