Interim Management Statement

Baronsmead VCT 2 plc Interim Management Statement For the 3 month period from 1 October 2013 to 31 December 2013. Headlines * £11.9 million realised from the sale of investments * Interim dividend of 8.0p per share payable on 7 March 2014 * £3.8 million invested in 5 new and 4 follow-on investments Performance Summary Capital return As at As at Movement 31 December 30 September 2013 2013 Total net assets £78.80m £75.79m Net asset value per 104.77p 100.63p 4.1% share Share price 98.75p 4.25p 4.8% Discount to NAV (5.7%) (6.3%) 3 months 1 year 5 years 10 years Since launch (%) (%) (%) (%) (%) Net asset value total 4.1 13.2 71.9 119.2 200.1 return(1) Key: (1) NAV total return = NAV + reinvested dividends; Source: ISIS EP LLP 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 constraints of the VCT legislation. The tax reliefs given at the time of subscription have varied between 20% and 40%, so any adjusted performance measure including this relief will vary depending on the date of subscription. There is also the additional ongoing benefit of receiving VCT dividends tax free. Investment Performance In the three months to 31 December 2013, Baronsmead VCT 2's net asset value per share increased by 4.1%. Over the quarter, the unquoted portfolio valuation decreased by 5%, the quoted portfolio increased by 12% and Wood Street Microcap Fund increased by 14%. The Company's net assets as at 31 December 2013 were £78.8 million. This figure takes into account the valuation of the Company's investments as at 31 December 2013. Top Ten Investments Position at Position at Percentage of NAV 31 December 30 September Company as at 31 December 2013 2013 1 2 Nexus Vehicle Holdings Limited 5.9 2 3 Staffline Group plc 3.9 3 8 Netcall plc 3.6 4 7 Crew Clothing Holdings Limited 3.0 5 6 IDOX plc 2.6 6 9 Inspired Thinking Group Limited 2.6 7 11 Valldata Group Limited 2.2 8 13 Vectura Group plc 2.1 9 17 Tasty plc 2.1 10 12 Independent Community Care 2.0 Management Limited Total 30.0 Analysis of Total Assets Percentage of Percentage of total assets at total assets at 31 December 2013 30 September 2013 Unquoted investments 36 48 AIM, listed, ISDX & collective 40 36 investment vehicle Wood Street Microcap Investment Fund 9 8 Listed interest bearing securities 5 4 Net current assets 10 4 Total liquid assets 15 8 Total assets 100 100 Analysis of Investment Portfolio by Sector (excluding cash and interest bearing securities) Percentage of Percentage of total investments at total investments at 31 December 2013 30 September 2013 Business Services 46 40 Consumer Markets 13 15 Financial Services 2 2 Healthcare & Education 15 12 Technology, Media & 24 31 Telecommunications Total 100 100 Investment Activity In the three months to 31 December 2013, Baronsmead VCT 2 invested a total of £3.8 million in 5 new and 4 follow on investments as set out in the table below. Investments made Date Cost (£'000) CableCom II Networking Holdings Limited Oct 2013 1,250 Carousel Logistics Limited Oct 2013 955 Sanderson Group plc* Oct 2013 225 Tasty plc* Oct 2013 125 Crew Clothing Holdings Limited* Nov 2013 110 Daily Internet plc Nov 2013 225 Everyman Media Group plc Nov 2013 391 Plastics Capital plc* Nov 2013 189 MartinCo plc Dec 2013 343 Total investments 3,813 *Follow on investments Realisations In the three months to 31 December 2013, Baronsmead VCT 2 realised total proceeds of £11.9 million from the sale of three unquoted and one quoted investments. Details are set out in the table below. Realisations Company Date Cost Proceeds Multiple* (£'000) (£'000) CableCom Networking Holdings Oct 2013 1,381 5,748 4.8 Limited CSC (World) Limited Nov 2013 1,606 3,115 2.4 PROACTIS Holdings plc Nov 2013 619 621 1.1 Kafevend Holdings Limited Dec 2013 1,252 2,430 2.5 Total realisations 4,858 11,914 *Includes interest/dividends received, loan note redemptions and partial realisations accounted for in prior periods. Dividend Declaration Following recent profitable sales of investments, the Directors have declared an interim dividend of 8.0p per share with respect to the year to 30 September 2014. The dividend will be paid on 7 March 2014 to shareholders on the register as of 21 February 2014. It is the board's current expectation that this interim dividend will be in lieu of the dividend that would normally be declared on the publication of the Company's results for the six months to 31 March 2014. This pays the dividend to the Company's existing shareholders who benefit from the returns realised in 2013 prior to new shares being allotted with respect to subscriptions to the Company's fundraising. Net Asset Value as at 31 January 2014 The net asset value as at 31 January 2014 was 106.27p per share. This is stated before taking into account the 2014 interim dividend of 8.0p per share payable on 7 March 2014. Fundraising Update The Company published an offer for subscription to raise £10.0m, before costs, on 22 January 2014 which became fully subscribed on 11 February 2014. As the new shares with respect to this fundraising are expected to be allotted on or around 14 March 2014, the new shares will not be eligible to receive the dividend payable on 7 March 2014. Investment objective Baronsmead VCT 2 is a tax efficient listed company which aims to achieve long-term investment returns for private investors, including tax free dividends. Events after the period end A new investment of £952,000 was made in Kingsbridge Risk Solutions Ltd on 10 January 2014. Other than the events described above, the Board is not aware of any significant events or transactions which have occurred between 31 December 2013 and the date of publication of this statement which would have a material impact on the financial position of the Company. 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 the Company's Investment Manager, ISIS EP LLP as follows: Email: baronsmeadvcts@isisep.com Telephone: 020 7506 5717 Facsimile: 020 7506 5718 Post: 100 Wood Street, London, EC2V 7AN

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