Mobeus I&g 2 Regulatory News (MIG)

MOBEUS INCOME & GROWTH 2 VCT PLC

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

Mobeus Income & Growth 2 VCT plc ("the Company") today announces its half-year results for the six months ended 30 September 2019.

As at 30 September 2019:

Net assets: £43.41 million

Net asset value ("NAV"): 89.85 pence

Financial Highlights

For the six months ended 30 September 2019

- Net asset value ("NAV") total return per share was 5.3%*.

- Share price total return per share was 17.5%*.

- Shareholders received an interim dividend of 15.00 pence per share in respect of the year ending 31 March 2020, which was paid on 20 September 2019.

- The Company made two new investments and one follow-on investment totalling £1.82 million.

*NAV total return per share and share price total return are alternative performance measures (APMs). APMs are defined as a financial measure of historical or financial performance, financial position or cashflows, other than a financial measure defined or specified in the accounting framework under which the financial statements are prepared.

Performance Summary

The table below shows the recent past performance of the Company's current share class, first raised in 2005/06 at an original subscription price of 100 pence per share before the benefit of income tax relief. Performance data for all fundraising rounds are shown in the Half-Year Report.

1 Source: Panmure Gordon & Co (mid-market price).

2 Cumulative total return per share comprises either the NAV per share (NAV basis) or the mid-market price per share (share price basis) plus cumulative dividends paid since launch of the current share class.

Chairman's Statement

I am pleased to present the Company's Report for the six months ended 30 September 2019.

Overview

The Company has had a good start to the year with NAV total return per share for the first half of 5.3%. Despite general business and political uncertainty, it has been a busy period of corporate activity for Mobeus. We have participated in three new and follow-on investments and generated healthy proceeds from two successful disposals. On 20 September 2019, the Company paid an interim dividend of 15.00 pence per share, well ahead of its stated target of a minimum of 5.00 pence per share per annum.

Details of our performance and the transactions in the period are provided under the Performance and Investment Portfolio headings below.

As you will be aware, new VCT legislation introduced by the Finance (No. 2) Act 2015 required a change of investment strategy to focus on providing growth capital for earlier stage companies. We are pleased to report that the investments made in this period and since the period end means that the Company has now completed seventeen new growth capital investments to date.

We anticipate continuing this level of investment activity as the Investment Adviser is evaluating a number of other opportunities, both in the existing portfolio and new transactions.

The established portfolio constructed under the previous rules continues to trade well and provides an income for the Company.

As detailed in the Summary of VCT regulation later, which for this Company will apply to its accounting period beginning on 1 April 2020, the percentage in VCT qualifying holdings that the Company is required to hold will increase from 70% to 80%. The Board is confident that its plans for the remainder of the year will enable it to comply with this increased qualifying investments threshold.

Subscription Offer

Your Board regards it as important that the Company maintains adequate levels of liquidity in order to take advantage of new investment opportunities and fund further expansion of the businesses in our investment portfolio. We also aim to deliver attractive Shareholder returns including the payment of dividends and purchase of shares from those Shareholders who may wish to sell their shares. Therefore, in conjunction with other Mobeus-advised VCTs, on 25 October 2019 the Company launched a subscription offer for new shares to raise £15 million with an over-allotment facility of an additional £5 million.

Performance

The Company's NAV total return per share was 5.3% for the six months to 30 September 2019 (2018: 2.7%) while the share price total return was 17.5% (2018: 1.7%). Your Board is pleased with these returns which reflect encouraging performances in both the growth capital and established (pre 2015) companies within the portfolio.

The principal contributions to the increase in Net Asset Value ("NAV") per share are shown below:

After accounting for dividends of 15.00 pence per share paid during the period and a net return of 5.25 pence, the NAV per share was 89.85 pence compared to 99.60 pence at the start at the financial year.

Investment Portfolio

The main portfolio movements for the period are summarised below:

The portfolio continued to perform well during the period, increasing in value by 8.2% (2018: 3.4%) on a like-for-like basis, after adding back disposals and new investments. The portfolio achieved a net increase of £2.45 million over the period made up of £1.49 million in unrealised gains and £0.96 million in realised gains. The portfolio was valued at £29.00 million at the period end

(30 September 2018: £27.92 million).

During the six months under review, the Company invested a total of £1.82 million (2018: £1.70 million). Two investments were into new businesses; we invested £0.91 million into Arkk Consulting, a regulatory and reporting service provider, and £0.55 million into Parsley Box, a supplier of home delivered, ambient ready meals for the elderly. An investment of £0.36 million was also made into an existing portfolio company: MPB Group, an online marketplace for used camera and video equipment. This business has already achieved significant growth and we were therefore pleased to participate in a

£9.00 million funding round to facilitate its continued rapid development.

After the period end, we invested £0.94 million into Active Navigation, a provider of enterprise-level file analysis software.

The net unrealised valuation increase of £1.49 million comprised increases at Auction Technology Group, Proactive Group and MPB Group, while the main decreases were at Wetsuit Outlet, EOTH and Bourn Bioscience. Further details of these movements are explained in the Investment Review.

The Company realised its investments in Plastic Surgeon and ASL Technology during the six months under review. £1.18 million was received from the realisation of Plastic Surgeon, generating a gain in the period of £0.30 million and contributing to a multiple on cost of 5.6x over the life of the investment. £3.68 million was received from the sale of ASL Technology generating a gain in the period of £0.49 million and a multiple on cost of 2.2x over the life of this investment.

The Company also received cash proceeds of £0.45 million during the period, comprising a part disposal of Master Removers Group generating £0.28 million and deferred consideration of £0.17 million arising from the realisation of Entanet holdings, which occurred in 2017.

Details of this investment activity and the performance of the portfolio are contained in the Investment Review and the Investment Portfolio Summary in the Half-Year Report.

Dividends

The Board continues to monitor closely the Company's cash flow and qualifying ratio projections in order to ensure that it is able to maintain compliance with regulatory requirements whilst performing optimally.

After taking into account the successful realisations of two investee companies in the period, the adequacy of distributable reserves, cash flow forecasts and the transition to new VCT regulations, the Company paid an interim dividend of 15.00 pence per share on 20 September 2019.

The Board will consider the payment of further interim dividends later in the financial year depending upon performance, investment activity and the need to meet regulatory ratios.

Share buybacks

During the six months ended 30 September 2019, the Company bought back and cancelled 612,876 of its own shares, representing 1.25% (2018: nil) of the shares in issue at the beginning of the period, at a total cost of £0.53 million (2018: nil) inclusive of expenses.

With effect from 1 August 2019, the Board revised its share buyback policy objective of maintaining the discount to NAV at which the Company's shares may trade in the market from approximately 10% or less, to approximately 5% or less.

In pursuing this policy, the Board's priority will remain to ensure that it is acting prudently and in the interests of the remaining shareholders of the Company. Share buybacks will continue to be entirely at the Board's discretion and will be subject to the Company having sufficient funds and distributable reserves available for such a purpose. They will also continue to be subject to prevailing market conditions, the Listing Rules and any applicable law and regulatory restrictions at the relevant time. Shares bought back in the market will ordinarily be cancelled.

Share Premium Account

At the Annual General Meeting held on 11 September 2019, Shareholders gave their authority for the Company to seek the Court's permission to cancel the share premium account and capital redemption reserve. On 5 November 2019, the High Court of Justice Chancery Division confirmed the cancellations of the amount standing to the credit of the share premium account and capital redemption reserve, increasing the Special Reserve by

£30.60 million. This may be used to facilitate distributions to Shareholders, share buybacks and for other corporate purposes.

Shareholder communications

May I remind you that the Company has its own website which is available at www.mig2vct.co.uk.

The Investment Adviser holds an annual VCT event for Shareholders in central London. Each event includes a presentation on the Mobeus advised VCTs' investment activity and performance. The next event will be held on Tuesday, 4 February 2020 at the National Gallery in Central London. This is a new venue from previous years, though there will continue to be separate daytime and evening sessions. Shareholders have been sent an invitation to this event with further details. If you have not replied to the invitation, but would like to attend, please send an email to vcts@mobeus.co.uk to register. The Board looks forward to meeting all shareholders able to attend.

Outlook

Your Board is pleased with the Company's encouraging performance in the first six months of its financial year. We believe that the existing portfolio provides a good balance between well established investments providing an income return and earlier stage companies typically seeking rapid scale which, whilst recognising their inherently higher risk, also offer potentially higher capital growth.

Whilst the medium-term economic and business environment continues to be challenging, the Investment Adviser reports a strong pipeline of attractive businesses with dynamic entrepreneurial management teams. They have increased their investment and operations management resource to support this continued growth.

Accordingly, we continue to be optimistic about the Company's future investment prospects and, on 25 October 2019, launched a subscription offer for new shares to raise up to £20 million (including the optional over-allotment facility). At 18 November 2019, we have received applications for £5.27 million in respect of the offer which will enable us to capitalise on the investment opportunities outlined above.

Finally, I would like to thank our Investment Adviser Mobeus for their hard work contributing to the successful implementation of your Company's investment strategy and all Shareholders for their continued support.

Ian Blackburn

Chairman

20 November 2019

Investment Policy

The Investment Policy is designed to meet the Company's objective.

Investments

The Company invests primarily in a diverse portfolio of UK unquoted companies. Investments are made selectively across a number of sectors, principally in established companies. Investments are usually structured as part loan stock and part equity in order to produce a regular income stream and to generate capital gains from realisations.

There are a number of conditions within the VCT legislation which need to be met by the Company and which may change from time to time. The Company will seek to make investments in accordance with the requirements of prevailing VCT legislation.

Asset allocation and risk diversification policies, including the size and type of investments the Company makes, are determined in part by the requirements of prevailing VCT legislation. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment.

Liquidity

The Company's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.

Borrowing

The Company's articles of association permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the Board would only consider doing so in exceptional circumstances.

Investment Adviser's Review

There remains a strong demand for growth capital investment and Mobeus is currently reviewing several interesting opportunities. It is expected that a number of new and follow-on investments will be undertaken in the short to medium-term.

In the six months under review we have made two new growth investments of £1.46 million and one existing growth portfolio company has received follow-on funding of £0.36 million. We have also received net cash proceeds of £5.31 million, primarily from the sale of two investments. After the period end, the Company invested a further £0.94 million into a new portfolio company, Active Navigation.

Unrealised movements in the value of the portfolio

The value of the existing portfolio increased by £1.49 million during the first half of the year. This net increase was due to the aggregate increase in individual valuations of £3.15 million exceeding the aggregate reduction in individual valuations of £1.66 million.

Principal increases in value were achieved by Auction Technology Group £1.08 million, Proactive Group £0.72 million and MPB Group £0.68 million. Auction Technology Group, which MIG 2 part realised in 2014, is trading well ahead of budget with growth across all areas of its business. MPB Group has grown revenues substantially and in July, secured a £9.00 million further investment at a higher valuation. £2.00 million was provided by the Mobeus advised VCTs with MIG2 contributing £0.36 million.

A small number of new growth investments (such as Proactive) have shown initial uplifts from cost, due in large part to the structure of the Company's investment, but, in some cases, also due to the underlying investee company performance. Proactive Group has made consistent positive progress in all its markets since investment. The principal driver of the value increase over the period however, is the preference structure of the investment which allocates a greater share of economic value to the VCTs at the current stage of the business' development.

The principal decreases in value were seen at Wetsuit Outlet £(0.31 million), EOTH £(0.23 million) and Bourn Bioscience £(0.22 million). Wetsuit Outlet continues to face challenging markets, although it is anticipated that measures recently implemented will restore margins and begin to improve profitability. EOTH, having achieved record profits over recent years, is still performing well but is currently experiencing some retail headwinds. Bourn has now opened its new facility in Essex but this will take time to reach normal trading levels. Over the medium-term the company has a strong brand and retains a strategic position in the market.

Realised gains from sales of investments

The net realised gains from sale of investments was £0.96 million during the period under review.

The Company realised its investments in ASL Technology and Plastic Surgeon, generating gains of £0.49 million and £0.30 million respectively. Proceeds from these sales contributed to multiples of original cost of 2.2x for ASL Technology and 5.6x for Plastic Surgeon respectively, over the life of the investments. The Company also made a part disposal of Master Removers Group realising £0.28 million of proceeds and a nominal gain. Finally, the Company made a gain of £0.17 million from deferred consideration arising from the disposal of Entanet Holdings in 2017.

Investment portfolio yield and capital repayments

During the period under review, the Company received the following amounts in interest and dividend income:

1 Total portfolio income in the period is generated solely from investee companies within the portfolio. See note 4 of the unaudited condensed financial statements for details of all income receivable by the Company.

2 Total portfolio income in the period and Portfolio Income Yield are alternative performance measures ("APM").

New investments during the period

The Company made two new investments during the period as detailed below:

Statement of the Directors' Responsibilities

Responsibility Statement

In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Ian Blackburn (Chairman), Adam Kingdon (Chairman of the Audit Committee) and Sally Duckworth (Chairman of the Investment Committee), being the Directors of the Company confirm that to the best of their knowledge:

(a) the unaudited condensed set of financial statements, which has been prepared in accordance with Financial Reporting Standard 104 "Interim Financial Reporting" gives a true and fair view of the assets, liabilities, financial position and profit of the Company, as required by DTR 4.2.10;

(b) the Half-Year Management Report which comprises the Chairman's Statement, Investment Policy, Investment Review and the Investment Portfolio Summary includes a fair review of the information required by DTR 4.2.7, being an indication of the important events that have occurred during the first six months of the financial year and their impact on the unaudited condensed set of financial statements;

(c) a description of the principal risks and uncertainties facing the Company for the remaining six months is set out below, in accordance with DTR 4.2.7; and

(d) there were no related party transactions in the first six months of the current financial year that are required to be disclosed, in accordance with DTR 4.2.8.

Principal Risks and Uncertainties

In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed from those identified in the Annual Report and Financial Statements for the year ended 31 March 2019 ("the Annual Report").

The principal risks faced by the Company are:

·; Political and Economic;

·; Investment and strategic;

·; Loss of approval as a VCT;

·; VCT regulatory changes;

·; Regulatory;

·; Financial and operating;

·; Market;

·; Asset liquidity;

·; Market liquidity; and

·; Cyber and Data Security.

A more detailed explanation of these risks can be found in the Strategic Report on pages 24 to 26, and in Note 15 on pages 61 to 68 of the Annual Report and Financial Statements for the year ended 31 March 2019, copies of which are available on the Investment Adviser's website, www.mobeus.co.uk or by going directly to the VCT's website, www.mig2vct.co.uk.

Going Concern

The Board has assessed the Company's operation as a going concern. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Half-Year management report which comprises the Chairman's Statement, Investment Policy, Investment Review and Investment Portfolio Summary. The Directors have satisfied themselves that the Company continues to maintain an adequate cash position. The portfolio taken as a whole remains resilient and well-diversified. The major cash outflows of the Company (namely investments, share buybacks and dividends) are within the Company's control.

The Board's assessment of liquidity risk and details of the Company's policies for managing its capital and financial risks are shown in Note 15 on pages 61 to 68 of the Annual Report and Financial Statements for the year ended 31 March 2019. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the Half-Year report and financial statements.

Cautionary Statement

This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be construed as a profit forecast.

For and on behalf of the Board

Ian Blackburn

Chairman

20 November 2019

Unaudited Condensed Statement of Cash Flows

For the six months ended 30 September 2019