Baronsmead Vt Regulatory News (BVT)

17 Feb 2011 12:21

Baronsmead VCT 2 plc Interim Management Statement

For the period from 1 October 2010 to 31 December 2010.

Headlines4.5% 4.1p per share increase in underlying Net Asset Value (NAV) 3 realisations In Credit Solutions (1.8x cost), Mount Engineering (1.2x cost) and Advanced Computer Software (2.0x cost) Performance SummaryCapital return As at As at Movement 31 Dec 2010 30 Sep 2010 Total net assets £66.41m £63.67m Net asset value per share 95.91p 91.79p* 4.5% Share price 85.75p 81.25p 5.5% Discount to NAV (10.6%) (11.5%) Total return 3 month 3 year 10 year Since launch (%) (%) (%) (%) Net asset value(1) 4.4 6.2 59.6 117.3 Share price(2) 9.2 6.6 74.3 115.6 FTSE All-share(3) 7.4 4.4 43.3 63.0

* Adjusted for 3.0p final dividend for comparative purposes.

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 direction of travel of the 67 investee companies was consistent with 87% (Q3 2010: 91%) of companies now being classified as steady or up as performance stabilises. This is reflected in value increases in both the unquoted and AIM-traded portfolios. The unquoted portfolio increased by 3%, whilst the AIM-traded portfolio increased by 9% in the quarter including a significant increase in the value of Staffline Recruitment Group plc.

Top ten Investments Position at Position at Percentage of NAV 31 Dec 2010 30 Sep 2010 at 31 Dec 2010 Company 1 1 Reed & Mackay Limited 7.2 2 2 Nexus Vehicle Holdings Limited 6.3 3 3 Crew Clothing Company Limited 3.9 4 4 Cablecom Networking Holdings 3.7 Limited 5 10 Staffline Group Plc 3.1 6 6 Kafevend Holdings Limited 3.1 7 5 Quantix Limited 3.0 8 8 Independent Living Services 2.8 Limited 9 7 Fisher Outdoor Leisure Holdings 2.7 Limited 10 9 CSC (World) Limited 2.5 Total 38.3Analysis of Total Assets Percentage of total Percentage of total assets assets at 31 Dec 2010 at 30 Sep 2010 Unquoted investments 46 49 AIM,Listed & Collective 28 25Investments Interest Bearing Securities 20 23 Cash 6 3 Total Cash Portfolio 26 26 Total Assets 100 100

Analysis of Investment Portfolio by Sector

(excluding cash and interest bearing securities)

Percentage of Percentage of total investments total investments at 31 Dec 2010 at 30 Sep 2010 Business Services 39 39 Consumer Markets 17 18 Financial Services 3 5 Healthcare & Education 11 9 IT & Media 30 29 Total 100 100Investment Activity

During the quarter nine AIM traded investments, totalling £1.8m, were completed in five existing portfolio companies and four new companies as shown below. A further investment of £0.3m was made into the existing collective investment vehicle, Wood Street Microcap Investment Fund.

Following the period end an unquoted investment of £6.5m (across the four Baronsmead generalist VCTs) was completed in Valldata Services Limited, a leading provider of outsourced donation processing and fulfilment services for the UK not-for-profit market.

Investments madeCompany Date Cost (£'000) Accumuli plc Nov 2010 333 Brady plc Dec 2010 176 Electric Word plc * Nov 2010 237 Green Compliance plc * Nov 2010 375 Hangar 8 plc Nov 2010 44 IS Pharma plc * Nov 2010 278 Netcall plc * Oct 2010 76 Tangent Communications plc * Dec 2010 88 Tristel plc Nov 2010 217 Total Investments 1,824 * Follow on investmentsRealisations

During the quarter 2 AIM-traded investments, Advanced Computer Software and Mount Engineering, were realised in full. Also 1 unquoted investment, Credit Solutions, was realised in full.

Company Date Cost Proceeds Multiple (£'000) (£'000) of costâ€

Advanced Computer Software plc Nov/Dec 2010 262 525 2.0x

Credit Solutions Nov 2010 1,032 1,294 1.8x Mount Engineering Nov 2010 385 451 1.2x Total realisations 1,679 2,270

†includes interest and dividends received in prior periods.

Fundraising

An Offer for Subscription to raise the sterling equivalent of €2.5m was made available to the Company's existing Shareholders toward the end of November 2010. The Offer was fully subscribed and shares were allotted on 16 December 2010 at a price of 102.50p per share. The directors would like to thank all those who subscribed to the Offer.

Annual General Meeting on 11 January 2011

The AGM was attended by over 40 Shareholders and included a number of presentations and a shareholder workshop. The Chairman gave his view on the current economic situation followed by comments on the investment environment from the Manager. John Smith, Managing Director of Getting Personal presented the growth story of that business.

Net Asset Value

The NAV per share at 31 January 2011 was 97.20p representing an increase of 1.3% since the quarter end driven largely by an increase in the value of the AIM-traded portfolio.

Events after the period end

Other than as discussed in this statement the Board is not aware of any significant events or transactions which have occurred between 31 December 2010 and the date of publication of this statement which would have a material impact on the financial position of the Company.

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

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 michael.probin@isisep.com