Merger Update

British SmallerTechCompaniesVCT2PLC
04 October 2005



BRITISH SMALLER TECHNOLOGY COMPANIES VCT PLC
BRITISH SMALLER TECHNOLOGY COMPANIES VCT 2 PLC
4 October 2005

The boards of British Smaller Technology Companies VCT Plc and British Smaller
Technology Companies VCT 2 Plc (the 'Boards') announce that they are in
discussion regarding the possible merger of their respective Companies, whose
investment advisers are YFM Private Equity Limited.

This follows the introduction of the Venture Capital Trust (Winding Up and
Mergers) (Tax) Regulations in September 2004 permitting VCT mergers without loss
of tax relief to either set of shareholders.

The Boards believe that a merger would achieve a number of benefits including
reduced management and administration costs for the combined entity and an
increase in the range and diversity of the investment portfolio and hence an
improved spread of risk.

The respective Net Asset Values will be used as the basis for the merger.

At this stage, there can be no certainty that a merger of the two VCTs will be
effected nor as to the terms on which any such merger might be effected. A
further announcement will be made when appropriate.

END

For further information please contact
British Smaller Technology Companies VCT plc
British Smaller Technology Companies VCT 2 plc
Phillip Cammerman Director 0113 294 5050

YFM Private Equity Limited

David Hall Managing Director 0161 8327603
David Gee Investment Director 0113 2945050



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