VEN2.L Regulatory News (VEN2)

Ventus 2 VCT plc

Half-yearly Financial Report

for the six month period ended 31 August 2010

Registered No: 05667210

Chairman's Statement

I am pleased to present the financial report of Ventus 2 VCT plc (the "Company") for the six month period ended 31 August 2010.

Merger with Ventus 3 VCT plc

On 6 May 2010, the Company completed a scheme of reconstruction with Ventus 3 VCT plc (the "Scheme" or "Merger"). The terms of the Scheme were set out in a circular issued by the Company on 8 February 2010. The Scheme was effected by Ventus 3 VCT plc transferring its assets and liabilities to the Company, in consideration for which the Company issued 12,250,311 new ordinary shares to the shareholders of Ventus 3 VCT plc. Under the Scheme, Ventus 3 VCT plc was placed into members' voluntary liquidation. The number of new shares issued by the Company to the shareholders of Ventus 3 VCT plc was determined on the basis of the relevant net assets of Ventus 3 VCT plc and the Company's ordinary share fund on the date prior to the Merger, adjusted in accordance with the terms of the Scheme. The new ordinary shares rank pari passu in all respects and form a single class with the existing ordinary shares.

The creation of a single, larger company is expected to bring significant advantages to shareholders, primarily through a reduction in the annual running costs of the enlarged company when compared to the combined running costs of each separate company. This should increase dividends in the future.

The aggregate cost of the Merger of £277,000 was borne by the Company and Ventus 3 VCT plc.

In acquiring the assets of Ventus 3 VCT plc, the Company now has a shareholding of 60% of the ordinary shares issued by each of Redeven Energy Limited and Spurlens Rig Wind Limited. These shareholdings constitute controlling interests and therefore these companies are subsidiaries of the Company. The consolidated financial statements of the Company and its subsidiaries (the "Group") are presented in this report.

Net Asset Value, Results and Dividend - Ordinary Shares

At 31 August 2010, the net asset value of the ordinary share fund of the Company stood at £21,493,000 or 87.6p per ordinary share. The revenue profit attributable to ordinary shareholders for the six month period was £432,000 or 2.14p per ordinary share. The capital profit attributable to ordinary shareholders for the period was £410,000 or 2.04p per ordinary share, resulting in a net profit to ordinary shareholders for the period of £842,000 or 4.18p per ordinary share.

The value of investments held by the Company's ordinary share fund at 31 August 2010 was £19,890,000 compared to £8,434,000 at 28 February 2010. The Investment Manager's Report gives details of investments made during the period, including those assets acquired from Ventus 3 VCT plc, together with information about the valuation of all investee company holdings within the portfolio.

The income generated in the ordinary share fund during the period comprised interest earned on mezzanine loan stock and cash deposits and dividends earned from investee companies. Total income attributable to the ordinary share fund for the six month period to 31 August 2010 was £635,000 compared to £178,000 for the six month period ended 31 August 2009. The increased income was primarily attributable to the mezzanine loan interest accrued on additional loan investments, including those acquired from Ventus 3 VCT plc, and dividend income received from investee companies.

The Company has declared an interim dividend of 1.50p per ordinary share which will be paid on 12 January 2011 to all ordinary shareholders on the register as at the close of business on 10 December 2010.

Net Asset Value and Results - "C" Shares

On 8 February 2010, the Company launched its second "C" share offer jointly with Ventus VCT plc. The offer closed on 31 May 2010, the Company having allotted 4,404,421 "C" shares, resulting in net proceeds of £4,162,000 after issue costs.

At the period end, the net asset value per "C" share of the Company stood at £10,498,000 or 92.7p per "C" share. The revenue profit attributable to "C" shareholders for the period was £20,000 or 0.19p per "C" share. The capital loss attributable to "C" shareholders for the period was £65,000 or 0.62p per "C" share, resulting in a net loss attributable to "C" shareholders for the period of £45,000 or 0.43p per "C" share.

The value of investments held at 31 August 2010 by the "C" share fund was £1,850,000 compared to £325,000 at 28 February 2010.

The income generated in the "C" share fund during the period comprised interest earned on mezzanine loan stock, cash on deposit and UK treasury bills. Total income attributable to the "C" share fund for the six months to 31 August 2010 was £95,000.

The Company has not declared an interim dividend in respect of the "C" Shares.

The Company's Investment Manager, Climate Change Capital Limited, continues to be actively engaged in managing the portfolio of existing investments and in identifying and negotiating potential investment opportunities to invest the new "C" share capital that has been raised. The Merger with Ventus 3 VCT plc, the investments made and "C" share capital raised constitute the important events of the period.

Key Performance Indicators

For the six month period ended 31 August 2010

1 The "per share" value is determined in respect of the weighted average number of shares in issue during the period.

2 The total expense ratio represents the total operating expenditure during the period (excluding irrecoverable VAT) as a percentage of the net asset value of the Company at period end (pro-rated to provide an annualised ratio).

3 The net asset value per share is determined in respect of the number of shares in issue at the period end.

4 The total shareholder return represents the net asset value of the Company at period end plus the cumulative dividends paid by the Company since incorporation. The total shareholder return per share is the net asset value per share, based on the number of shares in issue at period end, plus the cumulative dividends paid per share, based on the number of shares eligible to receive dividends at the time the dividends were paid.

The performance of the Company is reviewed in the Investment Manager's Report, including the Company's compliance with HM Revenue & Customs VCT regulations. The Company's prospects are considered in the UK Market Outlook section of the Investment Manager's Report.

Investments

As at the date of this report, the ordinary share fund of the Company held investments in 18 companies, with a total value of £19.71 million, which takes into account £72,000 invested in Wind Power Renewables Limited and £250,000 loan repaid by Kettering East Energy Limited since 31 August 2010. The "C" share fund held investments in four companies with a total investment value of £2.85 million, which includes £500,000 invested in each of BEGL 2 Limited and BEGL 3 Limited since the period end.

The Investment Manager's Report provides details of the investments held as at 31 August 2010 and as at the date of this report. All investments are structured so as to be treated as qualifying holdings for the purposes of Venture Capital Trust ("VCT") regulations, unless otherwise stated.

Principal Risks and Uncertainties

Under the Financial Services Authority's Disclosure and Transparency Rules, the Directors are required to identify those material risks to which the Company is exposed and take appropriate steps to mitigate those risks. Other than the inherent risks associated with investment activities, which are discussed in the Investment Manager's Report, the risks described below are those which the Directors consider to be material. The Directors do not expect that the risks and uncertainties presented will change significantly over the current financial year.

·; Failure to meet the investment requirements for compliance with HM Revenue & Customs VCT regulations

The Board mitigates this risk by regularly reviewing investment management activity with appropriately qualified advisers and by obtaining pre-approval from HM Revenue & Customs for each qualifying investment.

·; Inadequate control environment at service providers

The Board mitigates this risk by only appointing service providers of a high standing under agreements that set out their responsibilities and by obtaining assurances from them that all exceptions have been reported to the Board.

·; Non-compliance with the Listing Rules of the Financial Services Authority, Companies Act legislation, HM Revenue & Customs VCT regulations and other applicable regulations

The Board mitigates this risk by employing external advisers fully conversant with applicable statutory and regulatory requirements who report regularly to the Board on the Company's compliance.

VCT Qualifying Status

The Company retains PricewaterhouseCoopers LLP to review its compliance with VCT regulations. The Directors are satisfied that the Company has continued to fulfil the conditions for maintaining VCT status.

Responsibility Statement

The Directors acknowledge responsibility for the interim results and approve this half-yearly report. The half-yearly report has not been audited or reviewed by the Company's auditor. The Directors confirm that to the best of their knowledge:

(a) the condensed financial statements have been prepared in accordance with International Accounting Standard 34 ("IAS 34") Interim Financial Reporting and give a true and fair view of the assets, liabilities, financial position and profit of the Company as required by Disclosure and Transparency Rule ("DTR") 4.2.4R;

(b) the interim management report, included within the Chairman's Statement and Investment Manager's Report, includes a fair review of the information required by DTR 4.2.7R, being the significant events of the first half of the year and the principal risks and uncertainties for the remaining six months of the year; and

(c) the financial statements include a fair review of related party transactions and changes thereto, as required by DTR 4.2.8R.

The responsibility statement has been approved by the Board.

Alan Moore

Chairman

28 October 2010

Investment Manager's Report

Climate Change Capital Limited (the "Investment Manager") is pleased to present a review of the investment activities of the Company since the last annual report.

Summary of Investments

As described in the last annual report, the ordinary share fund of the Company acquired the assets and liabilities of Ventus 3 VCT plc on 6 May 2010. Therefore references to ordinary share fund investment holdings as at the date of this report now include the value of investments that have been acquired from Ventus 3 VCT plc.

As at the date of this report, the ordinary share fund of the Company holds investments in 18 companies with a total investment value of £19.71 million. £13.29 million of this value is held in investee companies which are operational. The Company also holds investments valued at £4.39 million in companies whose assets are in construction and expected to become operational over the course of the next year. The ordinary share fund also holds £2.03 million of investments in investee companies that are seeking planning permissions to develop renewable energy generating assets.

As at the date of this report, the Company also holds investments in the "C" share fund in four companies with a total value of £2.85 million.

Valuation of Investments

It is the accounting policy of the Company to hold its investments at fair value. In this report, investee companies whose assets have been fully constructed and have passed an initial satisfactory operational period are valued using a discounted cash flow methodology to establish their fair value. The key assumptions that have a significant impact on fair value in the discounted cash flow valuations are the discount factor used, the price at which the power and associated benefits can be sold and the level of electricity the investee company's generating assets are expected to produce. The fair values of the investee companies which have not passed an initial satisfactory operational period are not considered to be materially different from the historical cost of investment having been reviewed for impairment, except for Broadview Energy Limited, which has been revalued based on the price per share of a recent capital raising round, and Redimo LFG Limited, which was previously impaired.

Further details on all investments are presented in the investment portfolio review below.

Additional Capital Raised

The Company raised £4.2 million in "C" share capital, net of issue costs, during the six months ended 31 August 2010 through a joint offer with Ventus VCT plc. The offer closed on 31 May 2010.

Investment Portfolio Summary

The following table shows total investments made from the ordinary share fund as at 31 August 2010 and as at the date of this report in terms of cost and value. The additions and unrealised gains made in the six months to 31 August 2010 are also presented. The additions during the period, the cost and values of investments and the commitments made to investments shown as at 31 August 2010 and the date of this report include the investment assets and commitments acquired from Ventus 3 VCT plc.

Q - Investment complies with HM Revenue & Customs VCT regulations on qualifying holdings.

PQ - Part of the investment complies with HM Revenue & Customs VCT regulations on qualifying holdings.

* - A company in which Ventus VCT plc has also invested. The Company and Ventus VCT plc are managed by Climate Change Capital Limited.

The following table shows total investments made from the "C" share fund as at 31 August 2010 and as at the date of this report in terms of cost and value. The total amount invested and contractually committed as at the date of this report is also presented.

Q - Investment complies with HM Revenue & Customs VCT regulations on qualifying holdings.

PQ - Part of the investment complies with HM Revenue & Customs VCT regulation on qualifying holdings.

* - A company in which Ventus VCT plc has also invested.

Investment Portfolio Review

The investments held by the Company as at the date of this report are reviewed in detail below.

The calendar year 2010 has been characterised by low winds across the UK which have affected the amount of energy generation at wind farm sites. The actual levels of wind energy generation across the UK have been substantially below the expected annual average energy yield.

The investment structures used by the Manager are based on long term energy yield projections and any bank loan facilities raised by investee companies are structured using conservative low case assumptions to enable the investee companies to withstand significant downside scenarios and to mitigate the risk of restrictions on the payment of dividends and default. The Manager has conducted testing on each of the Company's wind farm investments and verified that all bank covenants have been met, notwithstanding the low wind volumes that have been experienced so far this year. This is a situation that the Manager and the Board continue to keep under close review.

The valuations of the wind farm investments in this report have not been adversely affected by the recent poor wind volumes. The discounted cash flow valuation models are based on long term yield projections which are reviewed on a periodic basis.

Craig Wind Farm Limited

Craig Wind Farm Limited is a company which operates a ten megawatt wind farm in the Scottish Borders. The site became operational in October 2007.

The Company made a £180,000 equity investment in Craig Wind Farm Limited which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 12.5% of the ordinary shares in Craig Wind Farm Limited and also provides a mezzanine loan facility of £338,000. As at the date of this report, the Company's total investment is valued at £1,019,000.

The operational availability of the wind turbines has been very good over the last contract year as the technical issues that affected the site in the first two years have been resolved but total energy generation over the twelve months to 31 August 2010 was 21% below budget as a result of low wind volumes. Craig Wind Farm Limited has been able to meet its bank debt service payments and is in compliance with the covenants on its bank loan facility.

Mezzanine interest payments are being made in accordance with the loan agreement and £30,000 of mezzanine interest was paid in the six months ended 31 August 2010 against income accrued in the current and prior periods. As a result of the shortfall on energy generation against budget, Craig Wind Farm Limited was not in a position to make further payments of mezzanine interest at the end of September 2010 and therefore the amount due has been accrued. No dividends have been declared by Craig Wind Farm Limited to date.

Craig Wind Farm Limited has applied for planning permission to extend the site by the addition of two more wind turbines. The application is still pending determination by the local planning authority. If the application is successful, it will create the potential to increase the overall installed generating capacity at the site by 50%. The Manager is continuing to work with the other shareholders to progress this extension opportunity.

Firefly Energy Limited

Firefly Energy Limited is the parent company of a group of trading subsidiaries that have entered into long term power purchase agreements with customers for 41.7 megawatts of generating capacity across five wind farm developments. The five wind farm projects are fully operational and generating revenues.

Firefly Energy Limited continues to expand its business of the provision of power purchase agreement administration services and associated management and accounting services. These are core services that are highly in demand from the small to medium sized privately owned generator sector. Firefly Energy Limited has secured a total of thirteen new contracts over the course of the last year. The management team at Firefly Energy Limited considers there is a strong probability that further contracts of this nature will be secured as the business expands, providing an ancillary income stream to the business alongside the income from the five main long term power purchase agreements.

The Company made a £100,000 equity investment in Firefly Energy Limited which was matched by Ventus 3 VCT plc. Following acquisition of the assets of Ventus 3 VCT plc, the Company owns 50% of the ordinary share capital in Firefly Energy Limited and is providing a shareholder loan which has principal outstanding of £200,000. As at the date of this report, the Company's total investment is valued at £400,000. In October 2010, the Company received a mezzanine interest payment of £10,000 from Firefly Energy Limited.

Achairn Energy Limited

Achairn Energy Limited is a company operating a six megawatt wind farm in Caithness, Scotland. The site became operational on schedule in May 2009.

The Company made a £500,000 equity investment in Achairn Energy Limited which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 40.4% of the ordinary share capital in Achairn Energy Limited and also provides a mezzanine loan facility of £1.24 million. Achairn Energy Limited has been operational for a suitable period andin accordance with the Company's investment valuation policy, the total investment has been revalued at £2,889,000.

The operational availability of the wind turbines over the contract year has been very good with high levels of availability being achieved. However, as with other sites, wind volumes have been disappointing and the total energy generation over the twelve months to 31 August 2010 was 19% below budget. Achairn Energy Limited has been able to meet its bank debt service payments and is in compliance with the covenants on its bank loan facility.

The Company received £114,000 of mezzanine interest in April 2010 against income accrued in the half year and prior periods. As a result of the reduced energy generation levels derived from low wind volumes, Achairn Energy Limited was not in a position to make further payments of mezzanine interest at the end of September 2010 and therefore the amount due has been accrued. The Manager expects the next payment of mezzanine interest to be paid in March 2011 subject to improved wind volumes resulting in higher generation levels.

A7 Lochhead Limited

A7 Lochhead Limited is a company that operates a six megawatt wind farm in Lanarkshire, Scotland. Construction was completed on time and on budget in June 2009.

The Company made an equity investment of £273,000 which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc,the Company owns 20% of the ordinary share capital in A7 Lochhead Limited and also provides a mezzanine loan facility of £120,000. A7 Lochhead Limited has been operational for a suitable period andin accordance with the Company's investment valuation policy, the investment has been revalued to £740,000.

The operational availability of the wind turbines over the contract year has been very good with high levels of availability being achieved. As with other sites, wind volumes have been disappointing and the total energy generation over the twelve months to 31 August 2010 was 18% below budget. A7 Lochhead Limited has been able to meet its bank debt service payments and is in compliance with the covenants on its bank loan facility.

During the six months ended 31 August 2010 the Company has received interest payments of £11,000, against income accrued in the current and prior periods, and dividends of £10,000. In October 2010 the Company received interest payments of £7,500 against income accrued in the half year and a further dividend of £8,000.

Broadview Energy Limited

The Company holds an equity investment valued at £500,000 in Broadview Energy Limited, an established wind farm development company and operator of small to medium sized wind sites. The investment represents a holding of approximately 2.2% in the ordinary shares of Broadview Energy, which was originally acquired for £200,000 in December 2008. The current valuation is based on a price of £2.50 per share which was the subscription price for ordinary shares in Broadview Energy Limited's latest capital raising round in June 2010, which included new third party investors. The capital raising placed a value on the ordinary share of Broadview Energy Limited of £22 million.

The Company also provides a shareholder loan with £1.8 million principal outstanding. As at the date of this report, the Company's total investment is valued at £2.3 million.

Broadview Energy Limited has constructed a three turbine wind farm in Aberdeenshire which has been fully operational since the beginning of 2010. It has also secured planning consent for two further sites comprising nine turbines in total. Both projects are in the process of procuring wind turbines and finalising terms with lenders. Planning applications for a further three sites are in the process of being determined.

Broadview Energy Limited has not declared or made any payment of dividends as the strategy of the business is currently to reinvest proceeds back into growing the business.

Redimo LFG Limited

The Company made an equity investment of £1 million in Redimo LFG Limited which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 50% of the ordinary share capital of Redimo LFG Limited. Redimo LFG Limited owns and operates a portfolio of generating stations which use landfill gas to produce electricity for export onto the grid.

In the last annual report, the Manger outlined a number of technical issues which have affected the operation of the generating stations within the Redimo LFG Limited portfolio, largely resulting from rising levels of contamination in the landfill gas. The Manager is continuing to work with its technical consultants to improve the operational performance, however conditions remain challenging and the increased costs of operating the generating equipment as a result of the gas quality means that the portfolio continues to perform below budget. The Manager is investigating and trialling a number of measures in an effort to improve performance, however progress since the date of the last annual report has been limited.

The ability of Redimo LFG Limited to trade out of its current position remains contingent on stabilising the operational performance and on an improvement in the level of future wholesale energy prices. Currently, Redimo LFG Limited is in breach of certain covenants under its banking facilities, however it retains the support of its lenders. The Company determined in December 2009 that it was prudent to fully write down the value of its investment in Redimo LFG Limited. This remains the position even though Redimo LFG Limited is still actively trading.

PBM Power Limited

PBM Power Limited is a company operating a waste wood biomass electricity generating plant in Lincolnshire.

Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 25% of the share capital in PBM Power Limited for which a total consideration of £574,000 has been paid.

The plant became operational in April 2009, which was approximately five months later than scheduled as a result of delays in provision of the grid connection by the network operator. There have been a number of operational issues with the plant since it was first commissioned which have progressively been resolved by the principal contractor under warranty. These have taken significantly longer than first expected and there have been further plant shutdowns over the summer period in order to resolve the operational issues once and for all. The plant has only recently been put back in to full operation therefore as at the date of this report there has only been a limited period of consistent generation.

The intention of PBM Power Limited is to run the plant at design output over the remainder of 2010 to ensure that the technical issues that have arisen in the past have been fully resolved by the latest works.

Together with the delayed start, the additional shutdowns have led to significantly lower than expected generation volumes compared to the original year one and two operating budget.

PBM Power Limited is continuing in negotiations with its lending bank regarding the rescheduling of the repayments of its long term loan facilities.

In view of the need for the generating plant to demonstrate a consistent period of stable operation, the investment has not been revalued using a discounted cash flow methodology. The fair value of this investment is not considered to be materially different to the historic cost of investment. In consideration of the discounted future expected cash flows from this investment, the value at which the investment is held is not considered to be impaired.

Spurlens Rig Wind Limited

Spurlens Rig Wind Limited is a company developing a six turbine wind farm in the Borders region of Scotland. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 60% of the share capital in Spurlens Rig Wind Limited for which a total consideration of £198,000 has been paid.

The planning application is expected to be submitted before the end of October 2010 and a decision is anticipated within twelve months. The Company has secured the rights to provide the equity and mezzanine debt finance required to build the wind farm should planning permission be granted.

Olgrinmore Limited

Olgrinmore Limited is a company developing a two turbine wind farm in Caithness, Scotland. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 17.6% of the share capital in Olgrinmore Limited for which a total consideration of £68,400 has been paid.

A planning application was submitted in January 2009 but was refused by the local planning department under delegated authority in June 2010. The company has now submitted an appeal which is expected to be determined before the end of the calendar year.

The Company has secured the rights to provide the equity and mezzanine debt finance required to build the wind farm should planning permission be granted on appeal.

Redeven Energy Limited

The Company holds an investment in Redeven Energy Limited, made by way of a shareholder loan, to fund the development of three wind farm sites in East Anglia. The Company made a nominal equity investment which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 60% of the share capital in Redeven Energy Limited and is providing total shareholder loans of £534,000, of which £60,000 was advanced in May 2010.

Planning consent has been awarded on the first two sites comprising a total of seven turbines. Procurement work has started and negotiations are taking place with turbine suppliers, lenders and other key contract counterparties. The planning application for the third site, which would add a further two wind turbines to the portfolio, is expected to be submitted later this year once the required planning reports and public consultations have been completed.

The Company has secured the rights to provide the equity and mezzanine debt finance required to build the wind farms for the sites when planning permissions are obtained.

Osspower Limited

Osspower Limited is a company developing a group of four small scale hydro-electric generating assets in Scotland. . The Company made an equity investment of £150,000 which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 50% of the share capital in Osspower Limited and provides shareholder loans of £55,000. The Company has also negotiated the rights to arrange the finance to build the hydro-electric schemes.

The planning applications for the four hydro-electric schemes were submitted to the Scottish Government Consents Unit in July 2009 and full planning permission was granted in April 2010. The Investment Manager is currently working with the other shareholders of Osspower Limited to put in place the finance facilities and contracts required to take the consented sites forward into construction and long term operation.

The Small Hydro Company Limited

The Small Hydro Company Limited is a company developing a number of small scale hydro-electric generating assets in England. The Company made an equity investment of £57,500 which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 22.5% of the share capital in The Small Hydro Company Limited and provides shareholder loans amounting to £384,000.

The Small Hydro Company Limited submitted planning applications for its first five sites in July 2009 and is continuing to work with the relevant authorities to manage the applications through the planning process and to obtain the necessary environmental licences. One of the planning applications was initially refused and a resubmission has been made. Three sites have been consented and the other application is yet to be determined.

Renewable Power Systems (Dargan Road) Limited

Renewable Power Systems (Dargan Road) Limited is a company operating a landfill gas generating scheme on Belfast City Council's North Foreshore waste management site.

The Company made an equity investment of £390,000 which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 50% of the share capital in Renewable Power Systems (Dargan Road) Limited and provides a shareholder loan facility of £1.12 million. Renewable Power Systems (Dargan Road) Limited has been operational for a suitable period andin accordance with the Company's investment valuation policy, the investment has been revalued to £1.97 million.

The project manager and developer is Renewable Power Systems Limited, an experienced UK landfill gas generation specialist. Renewable Power Systems Limited owns 50% of Renewable Power Systems (Dargan Road) Limited and provides long term operational support services.

Construction on the site began in 2008 and the plant became operational on schedule and to budget in August 2009. Operating performance in the first contract year at the project has been in accordance with budget and no significant operational issues have occurred.

The Company received mezzanine loan interest of £36,000 in April 2010 against income accrued in the current and prior periods. In May 2010, the Company received a dividend of £150,000. The Company received mezzanine loan interest of £73,000in September 2010 against income accrued in the half year together with a further dividend of £100,000.

Sandsfield Heat & Power Limited

Sandsfield Heat & Power Limited is a company developing a biomass generating scheme in North Yorkshire. The scheme uses waste wood as a fuel to generate electricity, via a conventional steam turbine, for export to the grid.

The project manager and developer is Bioflame Limited, a company specialising in energy from waste systems. Bioflame Limited own 30% of Sandsfield Heat & Power Limited.

Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 44.9% of the share capital in Sandsfield Heat & Power Limited acquired for total consideration of £1.8 million and provides a mezzanine loan facility of £1.0 million.

Construction on the site commenced in early 2009 and the plant entered operation in July 2010 in line with the construction schedule. The plant is currently undergoing performance optimisation testing in accordance with the post commissioning testing regime and satisfactory full output has been achieved.

Subject to satisfactory performance in line with the business plan, the first payment of mezzanine loan interest is expected to occur in December 2010 and the first dividend distribution is expected in the first half of 2011.

Twinwoods Heat & Power Limited

Twinwoods Heat & Power Limited is a company developing a waste wood biomass generating scheme in Bedfordshire. The plant design is identical to the Sandsfield Heat & Power Limited development and is again being developed in partnership with Bioflame Limited which owns 30% of Twinwoods Heat & Power Limited.

Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 50% of the share capital in Twinwoods Heat & Power Limited acquired for total consideration of £2.0 million and also provides a mezzanine loan facility of £400,000.

Construction on the site commenced in 2009 and the plant is expected to be operational in the first half of 2011. Construction works are proceeding on schedule.

Kettering East Energy Limited

Following the acquisition of the assets of Ventus 3 VCT plc, the Company held a loan facility of £250,000 provided to Kettering East Energy Limited, a company developing a seven turbine wind farm project in Northamptonshire with full planning consent.

As a result of unforeseen difficulties in the site development process the Company elected not to proceed with this scheme and the loan facility was repaid by Kettering East Energy Limited in October 2010.

EcoGen Limited

Following the acquisition of the assets of Ventus 3 VCT plc, the Company owns 12% of the ordinary share capital in EcoGen Limited acquired for total consideration of £400,000 and holds £200,000 of convertible loan notes. EcoGen Limited is an experienced wind farm owner, operator and developer.

EcoGen Limited is actively managing the development of a series of new wind farm sites in the UK. Its most advanced planning application for a five turbine wind farm project in Cambridgeshire was recently refused. EcoGen Limited is considering an appeal of the planning decision.Detailed work has begun on the pre-planning process for a number of additional sites.

Wind Power Renewables Limited

Wind Power Renewables Limited is a developer of wind farm sites in East Anglia. The Company made an equity investment of £90,000 which was matched by Ventus 3 VCT plc. Following the acquisition of the assets of Ventus 3 VCT plc, the Company held 30% of the share capital in Wind Power Renewables Limited and provided shareholder loans amounting to £120,000. In September 2010, the Company invested a further £72,000 for equity and increased its shareholding to 48% of the ordinary shares. The funding was raised to meet the increased costs of preparing planning applications.

Wind Power Renewables Limited has submitted three sites for planning to date. One of the sites was refused planning permission in October 2009 and has now been resubmitted on a revised basis. Two other sites are awaiting determination although one of these is expected to require a revision to its layout to meet certain constraints that have been identified. There are three other sites that have been secured under land options that will be considered for planning applications in due course.

Greenfield Wind Farm Limited / Muirhall Windfarm Limited

During the year ended 28 February 2010, the Company advanced an interim loan facility totalling £325,000 to Muirhall Windfarm Limited, a company owning a fully consented six turbine wind farm site in West Lothian, Scotland. The loan facility was provided as part of an exclusivity arrangement in respect of the long term financing of the project. The loan was extended by £50,000 in March 2010 and was repaid in full when the Company acquired a holding in Muirhall Windfarm Limited's parent company, Greenfield Wind Farm Limited, as part of the long term financial structure for the wind farm scheme.

In March 2010, the Company's ordinary share fund acquired a shareholding of 8.35% in Greenfield Wind Farm Limited for consideration of £334,000. The Company's "C" share fund acquired a shareholding of 12.5% for consideration of £500,000. The ordinary share fund and "C" share fund also advanced mezzanine loans of £668,000 and £1,000,000 respectively.

Ventus 3 VCT plc made an equity investment of £332,000 in Greenfield Wind Farm Limited for a shareholding of 8.3% and advanced a loan of £664,000. Therefore, following the Company's acquisition of the assets of Ventus 3 VCT plc, the ordinary share fund of the Company owns 16.65% of the share capital in Greenfield Wind Farm Limited and provides a mezzanine facility of £1,332,000.

Works on site commenced in early April 2010 and the six wind turbines are scheduled to be fully installed in November 2010 and operational by the end of December 2010. Construction works are currently progressing on schedule.

The investments by the Company's ordinary share fund and "C" share fund in the ordinary shares of Greenfield Wind Farm Limited have been structured so as to meet the qualifying holding tests under HM Revenue & Customs VCT regulations. The mezzanine loans are not structured as qualifying holdings.

Renewable Power Systems Limited

During the six months ended 31 August 2010, the Company's "C" share fund provided a loan facility of £350,000 to Renewable Power Systems Limited, a company which specialises in the development and operation of landfill gas sites and other forms of energy from waste generation. As part of the agreement to provide the loan facility the Company has secured an exclusivity agreement relating to any project that Renewable Power Systems Limited requires external finance to progress. This facility is structured as a short term investment to provide Renewable Power Systems with development capital and is scheduled to be repaid in June 2011. As the Company does not hold equity in Renewable Power Systems Limited, it is not a qualifying investment under HM Revenue & Customs VCT regulations.

BEGL 2 Limited & BEGL 3 Limited

In September 2010 the Company's "C" share fund provided medium term loan facilities of £500,000 to each of BEGL 2 Limited and BEGL 3 Limited. These companies are subsidiaries of Broadview Energy Limited.

BEGL 2 Limited is the development company for a fully consented five turbine wind farm in Leicestershire and BEGL 3 Limited is the development company for a fully consented four turbine wind farm in Teesside.

In each case the loans have been secured against the relevant development company and will be used to meet construction and post consent development costs alongside long term bank loan facilities. The facilities are to be repaid in full no later than June 2012. As the loan facilities are short term in nature they are not qualifying investments under HM Revenue & Customs VCT regulations.

Investment Policy

The Company is focused on investing in companies developing renewable energy projects with installed capacities of two to twelve megawatts, although larger projects may also be considered. Given the target investment size, investments will generally be in companies developing projects initiated by specialist small-scale developers and smaller projects which are not attractive to large development companies and utilities.

Asset Allocation

The Investment Manager seeks, primarily, to allocate the Company's investments in equity securities and loan stock of companies owning renewable energy projects with full planning consent, ready for construction of the project to commence or whose assets are already operational. Up to 10% of net proceeds raised from the initial share offer and the "C" share offer, respectively, may be allocated to development funding for early stage renewable energy projects prior to planning permissions being obtained.

The Company's policy is to maintain cash reserves of at least 5% of net proceeds raised from the initial share offer and the "C" share offer for the purpose of meeting operating expenses and purchasing its shares in the market. Circumstances may arise which would require the Company to hold less than 5% of net proceeds in cash for a limited period of time.

In order to comply with VCT requirements, at least 70% by value of the Company's investments are required to be comprised of qualifying investments.

Since the acquisition of Ventus 3 VCT plc's assets, the Company typically owns 25% to 50% of the equity share capital of each investee company and a portion of its investment in each investee company may be in the form of loan stock.

The Company's uninvested funds are placed on deposit or invested in short-term fixed income securities until suitable investment opportunities are found.

Risk Diversification

The Company invests in companies developing projects that are situated throughout the UK. Funds are also invested with a range of small-scale independent developers so project risk is not concentrated with only a few developers. The portfolio contains investments in companies with projects at different stages of the asset lifecycle, ranging from pre-planning to construction and then into operation. Investments are made via subscriptions for new share capital or via loan stock instruments in order to secure a negotiated level of return from each investment . The majority of investments are made in special purpose companies set up specifically to develop a single project. The bank debt financing is non-recourse to the Company.

The returns from projects are largely dependent on the UK Government's continued support for renewable energy, primarily under the Renewables Obligation and Feed-in Tariff mechanisms. The risk of any negative change to government policy is mitigated by the UK Government's historic practice of grandfathering financial support mechanisms for existing assets. This risk is further mitigated by the Company typically negotiating fixed and/or floor price mechanisms into the power purchase agreements entered into by project companies for the sale of their generated output.

Gearing

The Company does not intend to borrow funds for investment purposes. However the Company is exposed to gearing through its investee companies which typically fund a portion of the construction costs of each project through senior bank debt finance. The Investment Manager is involved in negotiating the terms of this finance to ensure competitive terms are achieved. The interest rate is typically fixed via an interest rate swap for the duration of the bank loan so that investee companies are not exposed to changes in market interest rates.

To the extent that borrowing is required, the Directors shall restrict the borrowings of the Company, and shall so far as possible by the exercise of the Company's voting powers and other rights or powers of control over its subsidiaries secure that they restrict their borrowings. The aggregate principal amount at any time outstanding in respect of money borrowed by the Group shall not without the previous sanction of an ordinary resolution of the Company exceed a sum equal to 10% of the adjusted share capital and reserves of the Company in accordance with its Articles. These provisions only apply to the borrowings of investee companies where those companies are considered to be subsidiaries of the Company. As at the date of this report the aggregate borrowings of the Group do not exceed 10% of the adjusted share capital and reserves of the Company.

Maximum Exposures

In order to gauge the maximum exposure of the funds to various risks, the following can be used as a guide:

i) Investments in qualifying holdings

70-95% of the funds will be invested in qualifying holdings no later than three years after the date that provisional approval by HM Revenue & Customs of the Company's status as a VCT becomes effective. The relevant compliance date for the initial share offer was 1 March 2009 and for the 2009 "C" share offer and 2009 ordinary share "top-up" offer is 1 March 2012. The relevant compliance date for the 2010 "C" share offer is 1 March 2013.

For the purpose of the 70% qualifying holdings requirement, disposals of qualifying investments for cash may be disregarded for a period of six months. Where a VCT breaches one or more of the requirements due to factors outside of its control, it may apply to HM Revenue & Customs for a determination that the breach will be disregarded for a period of 90 days while the breach is remedied.

ii) Concentration limits

Under VCT regulations no more than 15% of the Company's total assets may be in a single investee company at the time the investment is made in that investee company.

iii) Investments in pre-planning projects

A maximum of 10% of the net funds raised from each of the initial ordinary share offer and the 2009 and 2010 "C" share offers respectively may be invested in pre-planning projects.

UK Market Outlook

The Coalition Government has stated its intention to be the greenest government ever and, following the recent Comprehensive Spending Review, details have begun to emerge as to how it intends to achieve its policy objectives.

The Spending Review confirmed the anticipated reductions in the budgets of a number of key areas of public sector provision, including the Department of Energy and Climate Change. However, against this backdrop of budget cuts, the Government highlighted its continued support for "action on renewables" and the commitment to obtain 15% of energy from renewables by 2020 in supporting the roll out of both large and small scale technologies, improving energy efficiency, supporting growth and facilitating a private sector led transition to a green economy.

The Spending Review announced a range of initiatives to support the development of a low carbon economy including facilitating greater deployment of offshore wind and supporting the establishment of manufacturing infrastructure at UK ports, renewable heat incentives, increased expenditure on renewable energy and environmental technologies through existing support mechanisms and the establishment of a "green investment bank" to facilitate increased private sector investment. There was also re-affirmation of the existing support structures such as the Renewables Obligation and Feed-in Tariffs that are already in place for developers and generators of renewable energy.

The debt financing environment for new projects continues to improve after the difficulties in bank funding markets over the last two years. The number of lending banks in the small to medium sized renewable energy project sector remains relatively few but some increased competition is coming back as banks that were active pre-credit crunch start to re-engage with the market.

Wind turbine prices have softened further over the course of 2010, although turbine prices in the UK are still difficult to predict due to the volatility in the Euro/Sterling exchange rate. Whilst factory prices (denominated in Euros) may start to stabilise as spare capacity in the supply chain is taken up, most manufacturers are still able to deliver in relatively short time frames.

The level of opportunity for those investors with capital to deploy appears to remain significant throughout the range of technology sectors. This is in part due to the fact that lending banks remain cautious about high levels of gearing and want to see sponsors providing a suitable degree of equity. The environment for the Company as a key provider of equity and mezzanine debt capital to the small to medium sized UK renewables market therefore remains encouraging.

Climate Change Capital Limited

Investment Manager

28 October 2010

Directors and Advisers

Directors

Alan Moore (Chairman)

Paul Thomas

Colin Wood

D Pinckney (resigned 13 July 2010)

Company Secretary

The City Partnership (UK) Limited

Thistle House

21 Thistle Street

Edinburgh

EH2 1DF

Auditors

PKF (UK) LLPFarringdon Place

20 Farringdon Road

London

EC1M 3AP

Principal Banker

HSBC Bank plc

60 Queen Victoria Street

London

EC4N 4TR

Investment Manager

Climate Change Capital Limited

3 More London Riverside

London

SE1 2AQ

Registrar & Registered Office

Capita Registrars

The Registry

34 Beckenham Road

Beckenham

Kent

BR3 4TU

Broker

Matrix Corporate Capital LLP

1 Vine Street

London

W1J 0AH

VCT Taxation Adviser

PricewaterhouseCoopers LLP

1 Embankment Place

London

WC2N 6RH

Solicitors

Berwin Leighton Paisner LLP

Adelaide House

London Bridge

London

EC4R 9HA

Group Statement of Comprehensive Income

for the six month period ended 31 August 2010 (unaudited)

The profit and total comprehensive income for the period attributable to the equity shareholders of the Group was wholly derived from the parent Company. The Company acquired its subsidiaries during the period; there would have been no additional revenue or profit to report had the Company acquired its subsidiaries at the beginning of the period. The Company has only one class of business and derives its income from investments made in the UK.

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union. The revenue and capital columns shown above constitute supplementary information prepared under the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" 2009 ("SORP") published by the Association of Investment Companies.

The accompanying notes below form an integral part of these financial statements.

Group Statement of Comprehensive Income

for the six month period ended 31 August 2009 (unaudited)

The profit and total comprehensive income for the period attributable to the equity shareholders of the Group was wholly derived from the parent Company. The Company has only one class of business and derives its income from investments made in the UK.

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union. The revenue and capital columns shown above constitute supplementary information prepared under the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" 2009 ("SORP") published by the Association of Investment Companies.

The accompanying notes below form an integral part of these financial statements.

Group Statement of Comprehensive Income

for the year ended 28 February 2010 (audited)

The profit and total comprehensive income for the period attributable to the equity shareholders of the Group was wholly derived from the parent Company. The Company has only one class of business and derives its income from investments made in the UK.

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union. The revenue and capital columns shown above constitute supplementary information prepared under the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" 2009 ("SORP") published by the Association of Investment Companies.

The accompanying notes below form an integral part of these financial statements.

Group Balance Sheet

as at 31 August 2010 (unaudited)

Approved by the Board and authorised for issue on 28 October 2010.

Paul Thomas

Director

Ventus 2 VCT plc. Registered No: 05667210

The accompanying notes below form an integral part of these financial statements.

Company Balance Sheet

as at 31 August 2010 (unaudited)

The accompanying notes below form an integral part of these financial statements.

Group Statement of Changes in Equity

for the six month period ended 31 August 2010 (unaudited)

The Company did not have subsidiary undertakings in the prior periods therefore comparative movements and balances for the Group have not been presented in respect of these periods.

The accompanying notes below form an integral part of these financial statements.

Company Statement of Changes in Equity

for the six month period ended 31 August 2010 (unaudited)

All amounts presented in the Company Statement of Changes in Equity are attributable to equity holders.The revenue reserve is a distributable reserve. The special reserve may be used to fund buy-backs of ordinary shares as and if it is considered by the Board to be in the interests of the shareholders.

The accompanying notes below form an integral part of these financial statements.

Company Statement of Changes in Equity

for the six month period ended 31 August 2009 (unaudited)

The accompanying notes below form an integral part of these financial statements.

Company Statement of Changes in Equity

for the year ended 28 February 2010(audited)