Half-year Report

MOBEUS INCOME & GROWTH 2 VCT PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

Mobeus Income & Growth 2 VCT plc ("the Company") today announces its interim results for the six months ended 30 September 2021.

As at 30 September 2021:

Net assets: £76.98 million

Net asset value ("NAV") per share: 105.87 pence

Financial Highlights

Results for the six months ended 30 September 2021

· Net asset value ("NAV") total return1 per share was 10.9%.

· Share price total return1 per share was 21.6%.

· The Company made two new investments totalling £1.17 million and five follow-on investments totalling £1.52 million.

· £8.32 million of unrealised gains were achieved from strong portfolio performance.

· £2.58 million of cash proceeds from realisations generating net realised gains of £0.27 million.

· An interim dividend of 12.00 pence per share has been declared for the year ending 31 March 2022 and will be paid on 7 January 2022, to Shareholders on the Register on 10 December 2021.

1  Definitions of key terms and alternative performance measures ("APMs") / Key Performance Indicators ("KIPs") shown above and throughout this Report are shown in the Glossary of terms within the Company's Interim Report.

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 tables within the Interim 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.

Dividends payable after the period-end in respect of year ending 31 March 2022

3 An interim dividend of 12.00 pence per share has been declared and will be paid on 7 January 2022 to Shareholders on the Register on 10 December 2021.

Chairman's Statement

Change in Management Arrangements

Further to the communication sent to all Shareholders by the Chairmen of the four Mobeus advised VCTs on 10 September 2021, I am pleased to report that the sale of the Mobeus Equity Partners LLP VCT fund and investment management business to a subsidiary of Gresham House plc ("Gresham House") completed with effect from 30 September 2021. Accordingly, the Mobeus VCTs' investment advisory arrangements have been novated from Mobeus to Gresham House Asset Management Limited.

The Board believes that the novation of the investment advisory arrangements is in the best interests of the Company because it is expected to benefit from the continuity of Mobeus personnel whilst utilising the enhanced resource of Gresham House.

The Board is pleased that Trevor Hope and Clive Austin, the two leading partners involved with managing the Mobeus VCTs' investment portfolios, are joining Bevan Duncan and Ken Wotton (who lead the investment management of the Baronsmead VCTs), as the senior management team of the Strategic Equity division within Gresham House. Trevor and Clive, alongside their investment and operations teams, will remain responsible for the investment, portfolio, and fund management of the Mobeus VCTs. Mobeus founder partners Mark Wignall and Rob Brittain will act as consultants to Gresham House to advise and support the VCTs through the transition period.

I am pleased to present the Company's Interim Report for the six months ended 30 September 2021.

Overview

In the Company's Annual Report for the year ended 31 March 2021, I reported on the record performance and unprecedented value growth of the portfolio as it recovered from the initial impact of COVID-19. I am pleased to say that momentum has been sustained into the new financial year with a strong performance in the first six months ended 30 September 2021, delivering a NAV total return per share of 10.9%.

Despite continuing Brexit concerns and COVID-19 related restrictions, M&A activity has remained buoyant and the Investment Adviser continues to see a healthy deal flow. The Company deployed £2.69 million of capital and generated £2.58 million of proceeds from investment activity during the first half of its financial year. Within these figures, the Company has added two new investments to its portfolio, deployed follow-on funding into five existing portfolio companies and realised one of its investments.

The market volatility and uncertainty that characterised the previous financial year appears to have now stabilised to some extent, though challenges do remain. There have been global supply issues that have put a strain on logistics, materials and labour, though the portfolio has largely been able to avoid their direct impacts. A sizeable proportion of the portfolio is made up of service and software-based businesses and, therefore, are less exposed to these forces.

A significant proportion of the portfolio's value is now concentrated in two AIM-listed assets, and will be subject to a higher level of inherent volatility. During the second quarter of the six-month period to 30 September 2021, the share price of these quoted assets declined but the value impact on the portfolio has been mitigated by the strong performance of the unquoted investments over the same period. This exemplifies the diversity and robustness of the portfolio, particularly as a number of the more recent growth investments start to achieve significant scale and value. This has been recognised across the industry as third-party investment in the period in portfolio businesses such as Preservica, MyTutor and MPB has led to a significant rating increases.

Performance

The share price total return for the six-month period ended 30 September 2021 was 21.6% (2020: 7.1%), compared to the NAV return of 10.9%. This difference arises principally from the retrospective timing of NAV announcements.

This positive NAV return was comprised primarily from unrealised gains in the unquoted portfolio, the realisation of Proactive Group and the partial realisation of MyTutor. These gains were partially offset by a decline in the Company's two AIM-listed assets. For further details on these portfolio movements, see the Investment Adviser's Review within the Interim Report.

At the period-end, the Company was ranked 7th out of 39 Generalist VCTs over five years and 2nd out of 30 over ten years, in the Association of Investment Companies' analysis of NAV Cumulative Total Return. Shareholders should note that these figures do not reflect the increased NAV disclosed in this Report.

Dividends

The Board continues to be committed to providing an attractive dividend stream to Shareholders and is pleased to have announced an interim dividend of 12.00 pence per share, in respect of the year ending 31 March 2022, to be paid on 7 January 2022 to Shareholders on the register on 10 December 2021.

This dividend, in addition to a 6.00 pence dividend paid in July 2021 in respect of the year ended 31 March 2021, will bring cumulative dividends paid since inception to 134.00 pence per share.

As a result of the 12.00 pence per share dividend due to be paid on 7 January 2022, the Company will have met or exceeded the Board's target of paying regular dividends of at least 5.00 pence per share in respect of each financial year for the last eleven years.

It should be noted that as the Company pays dividends, its NAV per share will reduce by a corresponding amount.

Investment portfolio

During the six months under review, the Company invested a total of £1.17 million into two new investments: Legatics (a SaaS LegalTech software business) and Vet's Klinic (a veterinary clinic roll out).

In addition, follow-on investments totalling £1.52 million were made into five existing portfolio companies: Caledonian Leisure (a provider of UK leisure and experience breaks), Bella & Duke (a premium frozen raw dog food provider), Tapas Revolution (a Spanish restaurant chain), MyTutor (an online tuition marketplace) and Andersen EV (a provider of premium EV chargers). We expect follow-on investments to continue to be a feature of the growth capital investments as they seek to achieve scale.

Since the period-end, the Company has also made follow-on investments totalling £0.89 million into Preservica, a seller of proprietary digital archiving software.

The portfolio was valued at £50.53 million at the period-end (31 March 2021: £41.83 million).The portfolio has performed well in the first six months of the Company's financial year. The overall value increased by £8.59 million (2020: £9.44 million), or 20.5% (2020: 42.9%) on a like-for-like basis, compared to the start of the year. This increase comprised a net unrealised uplift in portfolio valuations of £8.32 million, and £0.27 million in net realised gains over the period.

The valuations at the period-end reflect the continued beneficial impact of changes in UK consumer and business behaviour brought on by the pandemic and lockdown restrictions, particularly for those businesses operating direct-to-consumer models. They also underscore the success of portfolio companies in adapting to a rapidly changing environment, diversifying their product offering in order to take advantage of opportunities that have arisen.

Within the net realised gains, the principal contributor was the partial exit of the original 2017 shares held in MyTutor which generated proceeds of £0.52 million and a realised gain in the period of £0.26 million. The full exit of Proactive realised £1.59 million proceeds and has contributed to a multiple of original cost over the life of the investment of 2.6x. Proceeds received in the period from these transactions, combined with loan repayments and other capital receipts, totalled £2.58 million.

Since the period-end, the Company's investment in Vian Marketing Limited (trading as Red Paddle) was sold generating proceeds received to date over the life of this investment of £3.54 million, which is a multiple on cost of 4.9x. To date, and in isolation, the impact of this sale is a 0.54 pence uplift in NAV per share compared to the 30 September 2021 NAV per share contained within this Interim Report. Further proceeds of up to £0.29 million may be receivable in due course.

Details of this investment activity and the performance of the portfolio are contained in the Investment Adviser's Review and the Investment Portfolio Summary within the Interim Report.

Liquidity

Cash and near cash resources held by the Company as at 30 September 2021 amounted to £25.10 million, or 32.6% of net assets. Following payment of the interim dividend declared in this Report, and other transactions since the period-end, cash and near cash resources, as a percentage of proforma net assets will reduce to 28.9%.

Intention to launch an Offer for Subscription

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. Following a review of the Company's future cash requirements, in conjunction with other Mobeus VCTs, on 8 November 2021 the Company announced its intention to launch a joint subscription offer for new shares in the 2021/2022 tax year. Further details will be contained within a prospectus expected to be published in early 2022.

Share buy-backs

During the six months ended 30 September 2021, the Company bought back and cancelled 512,370 of its own shares, representing 0.7% (2020: 0.3%) of the shares in issue at the beginning of the period, at a total cost of £0.48 million (2020: £0.10 million), inclusive of expenses.

It is the Company's policy to cancel all shares bought back in this way. The Board regularly reviews its buyback policy, where its priority is to act prudently and in the interest of remaining Shareholders, whilst considering other factors, such as levels of liquidity and reserves, market conditions and applicable law and regulations. Under this policy, the Company seeks to maintain the discount at which the Company's shares trade at approximately 5% below the latest published NAV.

Shareholder communications

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

The Investment Adviser plans to hold its next Shareholder Event on behalf of all four Mobeus VCTs virtually on 25 February 2022 and an invite to register for the Event is included with this Interim Report.

Fraud Warning

We have been made aware that a number of Shareholders being contacted in connection with sophisticated but fraudulent financial scams which purport to come from the Company or to be authorised by it. This is often by a phone call or an email usually originating from outside of the UK, claiming or appearing to be from a corporate finance firm offering to buy your shares at an inflated price.

The Board strongly recommends Shareholders take time to read the Company's Fraud warning section, including details of who to contact, contained within the Information for Shareholders section at the end of the Company's Interim Report, available on the Company's website.

Environmental, Social and Governance ("ESG")

The Board and the Investment Adviser believe that the consideration of environmental, social and corporate governance ("ESG") factors throughout the investment cycle will contribute towards enhanced Shareholder value.

Following the novation of the investment advisory agreement to Gresham House Asset Management Limited, the Company is now advised by a market leader in sustainability. The Board views this as an opportunity to enhance the Company's existing protocols and procedures through the adoption of the

highest industry standards set out by Gresham House going forward.

Succession

As explained in the Annual Report last year, the Board remain cognisant of the tenure of the Board members. The Board's succession plans had been temporarily suspended upon the outbreak of COVID-19. Both Adam and Sally agreed to remain as directors of the Company through this unprecedented period of disruption.

Outlook

Both the direct and indirect impacts of COVID-19 have and will continue to be wide reaching and a degree of economic uncertainty still remains. Nevertheless, your Board considers that your Company remains well positioned to continue to respond and adapt in most likely scenarios that can presently be foreseen. The strong overall trading performance in the period is testament to the healthy position of the portfolio and further profitable realisations are anticipated.

The Board has been satisfied with the Company's ability to maintain a high rate of investment in quality opportunities over the year. I believe that the additional fundraising, referred to earlier in my Statement, will provide the resource required to continue creating value growth for Shareholders in what has proven to be a successful investment strategy.

I would like to take this opportunity once again to thank all Shareholders for your continued support.

Ian Blackburn

Chairman

2 December 2021

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 Review

Portfolio review

Having recovered from the COVID-19 related decline by the start of 2021, and with the economic uncertainty now dissipating to some extent, the portfolio continues on a positive trajectory. It should be noted that, whilst markets helped deliver a buoyant recovery in 2020, the main driver of value growth in 2021 has been a continuation of strong underlying trading performance across the portfolio.

Whilst a few portfolio companies have experienced disruption as a result of the UK lockdowns, it is pleasing to report that a significant proportion have actually benefited from a structural change in consumer purchasing habits and are now trading above their pre COVID-19 levels.

Overall, the majority of the portfolio has demonstrated a high degree of resilience, with the vast majority of companies by number showing revenue and/or earnings progression over the previous two years. Investments classified as Retailers now comprise c.48% of the portfolio by value, all of which are demonstrating the success of the direct-to-consumer business model, with only one retaining any physical presence at all.

Significant up-ratings in the unquoted portfolio have been a consistent feature across the period, with third-party investment driving value uplifts most notably in Preservica, MyTutor and MPB. Whilst the portfolio has limited exposure to more challenging sectors such as hospitality and travel, software and other technology-enabled businesses have performed strongly. A small number of companies have struggled, though they are in the minority and their impact on overall shareholder return is minimal.

Whilst the exposure to Retailers is very well diversified across the most attractive business models, it is noted that 13.2% of the invested portfolio value is now concentrated in the two recently AIM-listed investments. The AIM market has witnessed some volatility recently, with market sentiment flattening out the initial value uplifts for both these assets and, in the case of Parsley Box, reacting to a dampened period of trading. Nevertheless, the Company's investments retain a strong position and the Investment Adviser remains confident in their medium-term prospects. In line with market practice, in both cases the Company's shareholdings are subject to lock-up arrangements for a period post-flotation which is normal for a transaction of this type.

Strong trading activity levels have created investment opportunities for the Company as portfolio companies sought to enhance their positions by building capability in light of demand. A number of further investments were therefore made into the portfolio during the period. M&A sentiment also remained buoyant with the realisation of Proactive in the period. The outlook for both follow-on investment and realisations continues to be positive.

The Company made investments totalling £2.69 million (2020: £2.45 million), comprising £1.17 million (2020: £0.22 million) into two new investments and £1.52 million (2020: £2.23 million) into five existing investments.

Overall, it is reassuring to see that the traditional investments, as well as the new growth investments, are continuing to make good progress. A strong track record for the growth investments is now emerging which validates the strategic change arising from the alteration to the VCT rules in 2015.

The portfolio's valuation changes in the period are summarised as follows:

The portfolio movements in the period are summarised as follows:

New investments during the period

The Company made two new investments totalling £1.17 million during the period, as detailed below:

Further investments during the period

The Company made further investments into five existing portfolio companies in the period, totalling £1.52 million, as detailed below:

Portfolio valuation movements

The portfolio generated significant net unrealised gains of £8.32 million in the first half of its financial year. The scale of the valuation increases was underpinned by the Company's growth portfolio, many of which have direct-to-consumer business models which, as mentioned previously, have thrived in the remote working conditions necessitated by COVID-19. The AIM-listed assets have been subject to a notable decline over the second quarter of the period to 30 September 2021, though these have been outweighed by strong uplifts in the unquoted portfolio in the same period.

Total valuation increases were £10.79 million. The main valuation increases were:

· MyTutor - £2.45 million

· Bella & Duke - £1.99 million

· Preservica - £1.98 million

· Red Paddle - £1.51 million

· Media Business Insight (MBI) - £1.02 million

MyTutor, Bella & Duke, Preservica, and Red paddle have experienced strong trading and have been the subject of re-ratings following third-party investment interest. They have all significantly increased their customer base and each have strong growth prospects. MBI has recovered very strongly and has benefited its ability in providing both virtual and physical events.

Total valuation decreases were £(2.47) million. The main valuation decreases were:

● Parsley Box - £(1.29) million

● Virgin Wines - £(0.86) million

The two AIM-listed assets, Parsley Box and Virgin Wines have, as expected, been subject to increased volatility since their flotations in March 2021. Following initial uplifts in value, depressed market sentiment has impacted the share prices of both businesses and, in the case of Parsley Box, a period of dampened trading results has compounded this effect. Nevertheless, the Investment Adviser remains confident in both businesses future prospects.

The majority of the increase in portfolio value lies in the top 10 companies which represent over 70% of the portfolio by value. Year-on-year growth by either revenues or earnings has been seen in each of these companies and it is pleasing to note that eight of them are from the younger, growth portfolio since the VCT rule changes in 2015.

Portfolio Realisations during the period

The Company realised its investment in Proactive Group during the period, as detailed below:

Loan stock repayments and other gains/(losses) during the period

During the period, the Company received £0.52 million from the partial realisation of MyTutor, generating a realised gain in the period of £0.26 million. This partial sale of the original 2017 shares generated a multiple of 3.7x compared to the cost of the equity sold. Additionally, proceeds of £0.46 million were received via loan repayments from Vian Marketing (trading as Red Paddle) and MPB Group. Finally, deferred consideration and realised gains totalling £0.01 million was received in respect of disposals in a previous year.

Portfolio income and yield

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

1 Total portfolio income in the period is generated solely from investee companies within the portfolio.

Further investments after the period-end

The Company made further investments into one existing portfolio company, totaling £0.89 million after the period-end, as detailed below:

Portfolio Realisations after the period-end

Environmental, Social, Governance considerations ("ESG")

When seeking new investment opportunities, the Investment Adviser under Mobeus Equity Partners LLP operated with a list of exclusions which precluded it from investing in any businesses operating in areas perceived to be unsustainable or detrimental to wider society, or any businesses that have committed purposeful breaches of regulation or have engaged in unlawful activity. Each potential new investment was subject to a comprehensive due diligence process encompassing commercial, financial and ESG principles. This process helped in the formulation and agreement of strategic objectives at the stage of business planning and investment. The Investment Adviser has continued to work closely with each portfolio company board to support them in addressing their particular ESG challenges and opportunities, which are diverse across the entire portfolio.

Following the novation of the advisory agreement to Gresham House Asset Management Limited on 30 September 2021, a market leader that is well-resourced with knowledge and expertise in sustainability, the Investment Adviser hereby states its intention to align its current ESG procedures and protocols to the highest standards as set out and informed by Gresham House plc. In a changing world, the Investment Adviser believes that this approach will contribute towards the enhancement of Shareholder value going forward.

Outlook

The growth strategy implemented in 2015 is clearly showing signs of bearing fruit with many companies beginning to achieve significant scale and attract the interest of public markets and larger secondary investors. The portfolio generally is in a healthy position with many companies trading well throughout the lockdowns, and several at record levels. It continues to evolve, offering a balance of fast-growing and more stable investments at various stages of maturity and scale across a range of diverse market sectors. There is a significant exposure to businesses operating a direct-to-consumer business model which has contributed to strong trading performance during the period.

Concerns remain over value concentration in quoted assets which have proven to be more vulnerable to market forces and a source of additional volatility during the period.

Nevertheless, the Investment Adviser is confident about the future strength of the portfolio and its ability to cope with the challenges and opportunities associated with Brexit, the macro-economic outlook and any potential ongoing impact of COVID-19. The new investment pipeline is recovering to levels seen pre-COVID-19 and the prospects for profitable capital deployment are encouraging.

There remains much uncertainty around the wider impact of the pandemic on the economy going forward. However, the portfolio is in a robust shape and the investment activity levels are promising. Gresham is therefore cautiously optimistic for the future.

Gresham House Asset Management Limited

Investment Adviser

2 December 2021

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 Nomination and Remuneration Committee), 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 Interim Management Report which comprises the Chairman's Statement, Investment Policy, Investment Review and 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 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 2021 ("the Annual Report") and are not expected to change ahead of the year-end.

The principal risks faced by the Company are:

· Political and economic risk;

· Investment and strategic risk;

· Loss of approval as a Venture Capital Trust;

· Regulatory risk;

· Financial and operating risk;

· Market risk;

· Asset liquidity risk;

· Market liquidity risk; and

· Cyber and data security risk.

A detailed explanation of the principal risks can be found in the Annual Report on pages 32 and 33 and in Note 15 on pages 69 to 76 of the Annual Report and Financial Statements for the year ended 31 March 2021, copies of which are available on the VCT's website at 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 Interim Management Report. The Directors have satisfied themselves that the Company continues to maintain an adequate cash position. The majority of companies in the portfolio in the portfolio are well funded and the portfolio taken as a whole remains resilient and well diversified, although the impact of COVID-19 and Brexit may still impose demand upon the liquidity and trading prospects of some of these companies in the near-term. The major cash outflows of the Company (namely investments, buybacks and dividends) are within the Company's control. Finally, the Company intends to seek to raise new funds from investors in 2022 which will bolster its cash position.

The Board's assessment of liquidity risk and details of the Company's policies for managing its financial risks and capital are shown in Note 15 on pages 69 to 76 of the Annual Report and Financial Statements for the year ended 31 March 2021. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the Interim report and annual 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

2 December 2021