Interim Results

Baronsmead VCT 2 PLC
8 November 2001


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.

Interim Results - For the six months ended 30 September 2001

* NAV fell by 8.9 per cent to 102.30p

* Dividend of 1.30p declared (2000 - 1.70p)

* Investments in period increased to 32 companies

* Total return since launch 20.5 per cent.

The increasing level of portfolio diversity to 32 equity investments gives
greater strength to the Company at a time of greater economic uncertainty and
decline in the UK Stock Markets.

Results

At the end of the six months to 30 September 2001 the net asset value (NAV)
per share decreased from 112.3p to 102.3p, a fall of 8.9 per cent.  After
providing for the interim dividend of 1.3p per share this represents a
negative total return of 7.8 per cent and compares to a fall in the total
return of the FTSE All-Share Index of 12.5 per cent over the same period. 
Contained within these figures is the sharp reduction in the value of the
listed investments in SDL and AorTech.  The value of AiM/OFEX shareholdings
were also down by an amount comparable to the FTSE AIM Index.  A notable
exception was Inter Link Foods, whose share price rose over the period and it
recently became the AiM Company of the year.

The total return since launch in April 1998 is 20.5 per cent, which compares
to a 9.9 per cent reduction in the total return of the FTSE All-Share Index
over the same period.

Investment Environment

The sector focused approach of the Investment Managers has helped them to
address the impact of the uncertain UK economy on their investee companies. 
While part provisions have been made in three IT portfolio companies at 30
September 2001, there has been sustained progress in the consumer and business
service sectors, which currently represents 65% of the equity portfolio.

With approximately £26 million available to invest, Baronsmead VCT 2 is in a
position to subscribe into new investments where prices are now generally
lower than they have been over the last few years and this should deliver
benefits from improving market prospects when confidence returns.   The policy
of co-investment alongside the other Baronsmead VCTs and non-VCT clients of
Friends Ivory & Sime enables investment into larger transactions and larger
companies than most other VCTs.

Portfolio

The diversity of the portfolio has increased with the number of equity
investments growing from 29 to 32 over the six months to 30 September 2001. 
Six new investments were made with a combined commitment of £1.9 million.

* Kidsunlimited, Wilmslow - Nursery day care centres (Business services)
* Searchspace, London - Intelligent enterprise system software (IT Support
  services)
* Vectura, Bath - Drug discovery (Healthcare)
* Capcon Holdings, London - Surveillance services (Business services)
* Fitzhardinge, London - Property consultants (Business services)
* Blooms of Bressingham, Bournemouth - Owns and operates garden centres
  (Consumer)

Further investments were made in 4:2:2 (£87,000), Job Opportunities
(£143,000), James Gilbert (£155,000), Demica (£252,000) and Conclusive Logic
(£123,000).

There were three realisations in the period.  The sale of the shareholding in
AiM-traded Maclellan Group generated a gain of £137,000.  Cambridge Drug
Discovery was sold on a share for share exchange to BioFocus, a company in
which Baronsmead VCT 2 has held shares since its flotation on AiM in August
2000.  In addition a sale was agreed for Marcrist at a loss of £662,000 and
this investment is currently held at the value of the deferred consideration. 
Marcrist had not been able to meet its business plan by the introduction of
new products that could have maintained its market lead.

Outlook

The next year is likely to be a time of economic uncertainty.  The greater
diversity of the portfolio and its relative strength will help to counter
this.  The tax-free environment of VCTs for qualifying investors also adds
some protection and the payment of tax-free dividends provides a tangible cash
return.

The Investment Managers are experiencing a sustained level of deal-flow and
expect their to be opportunities for an element of counter-cyclical investment
based on their sector knowledge of the stronger parts of the UK economy.


Enquiries:  David Thorp 0207 506 1100, Friends Ivory & Sime Private Equity plc
            Gary Fraser 0131 465 1000, Friends Ivory & Sime plc
 
Unaudited Statement of Total Return (Incorporating the Revenue Account)

                            
                                                       Six months to
                                                     30 September 2001
                            
                                            Revenue       Capital       Total
                                              £'000         £'000       £'000
                            
Gains/(losses) on investments                     -       (3,937)     (3,937)
Income                                        1,147             -       1,147
Investment management fee                     (118)         (354)       (472)
Other expenses                                (180)             -       (180)


Return on ordinary activities                            
before tax                                     849        (4,291)     (3,442)
                            
Tax on ordinary activities                   (190)             85       (105)
                            
Return attributable to                            
equity shareholders                            659        (4,206)     (3,547)
                            
Dividends in respect of equity shares        (529)              -       (529)
                            
Transfer to/(from) reserves                    130        (4,206)     (4,076)
                            
                            
Return per ordinary 10p share:                            
Basic                                        1.63p       (10.41p)     (8.78p)

 
Unaudited Statement of Total Return (Incorporating the Revenue Account)
                            
                                                       Six months to
                                                     30 September 2000
                            
                                            Revenue       Capital       Total
                                              £'000         £'000       £'000
                            
Gains/(losses) on investments                     -            32          32
Income                                        1,450             -       1,450
Investment management fee                     (116)         (349)       (465)
Other expenses                                (125)             -       (125)
                            
                            
Return on ordinary activities                            
before tax                                    1,209         (317)         892
                            
Tax on ordinary activities                    (313)            97       (216)
                            
Return attributable to                            
equity shareholders                             896         (220)         676
                            
Dividends in respect of equity shares         (681)             -       (681)
                            
Transfer to/(from) reserves                     215         (220)         (5)
                            
                            
Return per ordinary 10p share:                            
Basic                                         2.25p       (0.55p)       1.70p



 
Unaudited Statement of Total Return (Incorporating the Revenue Account) 

                            
                                                 Year to 31 March 2001
                            
                                            Revenue       Capital       Total
                                              £'000         £'000       £'000
                            
                            
Gains/(losses) on investments                     -       (3,090)     (3,090)
Income                                        2,680             -       2,680
Investment management fee                     (235)         (705)       (940)
Other expenses                                (243)             -       (243)
                            
                            
Return on ordinary activities                 2,202       (3,795)     (1,593)
before tax                            
                            
Tax on ordinary activities                    (626)           211       (415)
                            
Return attributable to                        1,576       (3,584)     (2,008)
equity shareholders                            
                            
Dividends in respect of equity shares       (1,563)             -     (1,563)
                            
Transfer to reserves                             13       (3,584)     (3,571)
                            
                            
Return per ordinary 10p share:                3.94p       (8.97p)     (5.03p)
Basic                            
                            

 
Unaudited Balance Sheet
                                                         As at          As at
                                                  30 September       31 March
                                                          2001           2001
                                                         £'000          £'000
Fixed Assets              
Listed investments                                          651         1,515
Unquoted investments                                     10,503         9,703
Quoted on the Alternative Investment Market               3,945         5,349
Quoted on OFEX                                              419           494
Listed fixed interest investments                        22,730        28,330
                                                         ______        ______
                                                         38,248        45,391
              
Net current assets/(liabilities)                          3,373         (374)
                                                         ______        ______
Net assets                                               41,621        45,017
                                                         ______        ______
              
Financed by              
              
Equity shareholders' funds                               41,621        45,017
                                                         ______        ______
Net asset value per Ordinary share                      102.30p       112.30p


 Summarised Unaudited Group Statement of Cash Flows

       
                              Six months to       Six months to       Year to
                               30 September        30 September      31 March
                                       2001                2000          2001
                                      £'000               £'000         £'000
                     
Net cash (outflow)/inflow
from operating activities              (97)                 101         1,631
Taxation                                  -                  49           192
Capital expenditure and
financial investment                  3,270            (19,862)      (21,166)
Equity dividends paid                 (882)               (464)       (1,145)
                     
Net cash inflow/(outflow) before
financing                             2,291            (20,176)      (20,488)
Financing                               672              17,369        17,443
                     
Increase/(decrease) in cash           2,963             (2,087)       (3,045)
                     
                     
Reconciliation of net cash flow to movement in net cash              
                     
Increase/(decrease) in cash           2,963             (2,807)       (3,045)
Net cash at 1 April                     439               3,484         3,484
                     
Net cash at 30 September/31 March     3,402                 677           439
                     
Reconciliation of operating profit to net cash flow from operating activities 
                     
Net return before finance
costs and taxation                      849               1,209         2,202
Investment management fee charged
to capital                                4                (63)          (56)
Changes in working capital and other
non-cash items                         (950)            (1,045)         (515)
                     
Net cash flow from operating
activities                              (97)                101         1,631


 
Notes

1.   The unaudited interim results have been prepared on the basis of the
accounting policies set out in the statutory accounts of the Company for the
year ended 31 March 2001.

2.   Earnings for the period should not be taken as a guide to the results of
the full year.

3.   Return per ordinary share is based on a weighted average of 40,410,603
ordinary shares in issue.

4.   During the six months ended 30 September 2001 the Company issued 643,122
ordinary shares and bought for cancellation 46,000 ordinary shares at a cost
of £44,815.  There were 40,684,102 ordinary shares in issue at 30 September
2001 (31 March 2001 - 40,086,980).

5.   The interim dividend of 1.30p per ordinary share will be paid on 14
December 2001 to shareholders on the register on 16 November 2001.

6.   These are not statutory accounts in terms of Section 240 of the Companies
Act 1985 and are unaudited.  The full audited accounts for the year ended 31
March 2001, which were unqualified, have been lodged with the Registrar of
Companies.  No statutory accounts in respect of any period after 31 March 2001
have been reported on by the Company's auditors or delivered to the Registrar
of Companies.

7.   Copies of the Interim Report, which have been reviewed by the Company's
auditors, will be mailed to shareholders and will be available from the
Registered Office of the Company at 100 Wood Street, London EC2V  7AN.