Half Yearly Report

Maven Income and Growth VCT 2 PLC

Interim Management Report for the six months ended 31 July 2013 (unaudited)

The Directors announce the unaudited Interim Management Report for the six months ended 31 July 2013.

Overview

The continuing focus for your Company is to achieve long-term capital appreciation and to generate maintainable levels of tax-free income for Shareholders through the ongoing expansion of the private equity asset base.

During the six month period to 31 July 2013 NAV total return increased further to 81.52p and net assets at the period end, including the proceeds of the successful Offer for Subscription which closed on 11 February 2013, were £15.8 million. The portfolio now includes 43 private company investments, the majority of which are trading positively and paying a yield, and continues to generate strong levels of revenue, which is an important component in your Company's ability to sustain an attractive level of tax-free distributions to Shareholders. Consequently, your Board is pleased to declare an increased interim dividend of 1.85p per share.

The Maven team has continued to seek out suitable investment opportunities in profitable UK companies with established revenue streams and during the period several significant new assets were added to the portfolio.

In March 2013 a new company was formed to acquire DPP, an established mechanical and electrical maintenance business and, in June 2013, two new investments completed with the acquisition of HCS Control Systems Group and the buy-out of Lambert Contracts Holdings. Additionally Maven has incorporated three new companies to invest in the retail, engineering and e-commerce sectors.

The trend of successful exits seen during the previous financial year has continued and two significant profitable realisations were achieved during the period, generating capital proceeds of £1.2 million.

We are pleased to note a number of awards in recognition of the quality of the Company's unlisted portfolio and Maven's investment management strategy. In April 2013 our investee company, Torridon, was announced as the Midlands regional winner of the Mid-Market Private Equity-Backed Management Team of the Year award at the BVCA Management Team Awards, and in the following month Maven was announced as winner of Scottish Investor of the Year at the Acquisition International M&A Awards, which recognise consistent achievement in the private equity transactional marketplace.

Most recently, in September 2013, Maven enjoyed a double success at the Scottish Insider Deal and Deal Makers Awards, with the exit from Nessco Group Holdings winning Sale of the Year and Managing Partner Bill Nixon being named as Dealmaker of the Year in a category focused on individuals with a first class track record in completing or enabling transactions.

Highlights

· Total return of 81.52p per share at 31 July 2013, up 0.05p from 31 January 2013;

· NAV at period end of 56.90p per share after payment of the final dividend of 1.75p;

· Six new investments added to the portfolio during the period;

· Partial exit from Homelux Nenplas alongside a secondary buy-out of the Nenplas business;

· Successful IPO of esure; and

· Interim dividend declared of 1.85p per share (2012: 1.75p).

The most important measure of performance for a VCT is the NAV total return, which is the long term record of dividend payments out of income and capital gains combined with the current NAV.

Dividends

The Board has declared an increased interim dividend of 1.85p per share, comprising 0.50p of revenue and 1.35p of capital, to be paid on 1 November 2013 to Shareholders on the register on 11 October 2013. Since the Company's launch, and after receipt of the interim dividend, Shareholders who invested at the outset will have received 26.47p per share in tax-free dividends.

The Board regards the growing level of dividends as an indication of the success of the Company's investment strategy and is committed to improving Shareholder distributions in future years as the portfolio continues to expand and mature.

Investment activity

During the period the Maven team completed six new private equity investments on behalf of your Company, alongside seven follow-on investments in existing portfolio companies. At the period end, the portfolio stood at 58 unlisted and AIM/ISDX investments at a total cost of £15.7 million.

The following investments have been completed during the period:

Your Company has co-invested in some or all of the above transactions with Maven Income and Growth VCT, Maven Income and Growth VCT 3, Maven Income and Growth VCT 4, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6 (formerly Talisman First Venture Capital Trust). The Company is expected to continue to co-invest with all other Maven VCT clients, which offers the advantage that, in aggregate, they are able to underwrite a wider range and larger size of transaction than would be the case on a stand-alone basis.

New investments

Six private company investments were added to the portfolio during the period under review:

· Ensco 969, a new company formed to acquire DPP, a business that provides planned and reactive mechanical and electrical maintenance services to operators of pubs, restaurants and retail chains, predominantly in the South of England. DPP has significant levels of contractual and recurring revenues and a strong track record of attracting new clients and increasing both the breadth of service and geography within which it is delivered;

· Manor Retailing, a new company set up to invest in the retail and leisure sector, where Maven has made a number of successful investments and sees the potential for further opportunities;

· Richfield Engineering Services, a new company established with a buy & build strategy targeting engineering businesses with a proven technical service or product; encompassing manufacturing, maintenance and spares & service capabilities;

· Search Commerce, a new company set up to invest in a business providing e-commerce platforms focused on distribution, service and retail businesses;

· HCS Control Systems Group, a long established business that designs, manufactures, assembles and tests instrumentation control packages for the on-shore and worldwide off-shore oil & gas industry. HCS enjoys a large degree of repeat business from a loyal customer base and will focus on growth through internationalisation into key overseas markets. This acquisition was made by Burray Capital, a new company established by Maven in December 2012 to invest in the oil & gas sector; and

· Lambert Contracts Holdings, a leading specialist contractor in insurance reinstatement, property maintenance and fire protection that benefits from long-term embedded relationships with major insurance companies, loss adjustors and property managers.

In June 2013, a follow-on investment was made into Glacier Energy Services Group, an oil & gas service group headquartered in Aberdeen with two operating divisions, Glacier Engineering and Glacier Offshore. The engineering division is a specialist provider of weld overlay and cladding services through the Wellclad trading company. The off-shore business sells on-site machining services via two trading companies, Roberts Pipeline Machining and Site Machining Services. The group is focused on growth within its core UK market and this investment funded the acquisition of Ross Offshore, a business that provides heat exchanger repair and refurbishment services for the off-shore oil & gas industry.

A commitment has also been made to provide a fully secured mezzanine loan to Maven Capital (Llandudno) to fund the refurbishment of a hotel in North Wales with a long lease in place. The transaction will provide an 8.65% running yield following completion of the development.

Realisations

In March 2013, Maven led the successful partial exit from Homelux Nenplas via the sale of the Homelux Division to US firm QEP Company Inc. The disposal of Homelux was completed alongside a secondary buy-out of Nenplas by Maven and the existing management team. The remaining business, Nenplas Holdings, will focus on continuing to deliver innovative extruded plastic products and solutions and is expected to grow significantly over the next few years through organic opportunities and by making new acquisitions. Additional funding was provided in May 2013 to support the purchase of a plastic extrusion business based in Worcestershire.

Also in March 2013, esure undertook a successful IPO, and a realisation at the carrying value was crystallised in May, with the majority of exit proceeds being received in cash alongside a small element of stock that will be subject to the normal price fluctuations associated with fully listed holdings.

The Manager is currently engaged with investee companies and prospective acquirers at various stages of a potential exit process. This realisation activity reflects the increasing maturity of a number of holdings, but it should be noted that there can be no certainty that these discussions will lead to profitable sales.

The table below gives details of all realisations during the reporting period:

1Proceeds exclude yield and redemption premiums received, which are disclosed as revenue for financial reporting purposes.

One AIM quoted company was struck off the Register during the year, resulting in a realised loss of £104,000 (cost £104,000). This had no effect on the NAV as a full provision had been made in earlier periods.

In respect of AIM holdings the Manager has continued its policy of disposing of quoted holdings for best possible value in cases where the investments were underperforming.

Other material developments

Following a serious fire at the Lawrence Recycling & Waste Management plant in June 2013, which has adversely impacted upon the company's trading prospects, the investment has been written down pending further developments. The reduced value is reflected in the statement of NAV at 31 July 2013.

Principal risks and uncertainties

The Board has reviewed the principal risks and uncertainties facing the Company, which were set out in full in the 2013 Annual Report, and are the risks involved in investment in small and unquoted companies. In order to reduce the exposure to investment risk the Company has invested in a broadly-based portfolio of mature companies in the United Kingdom.

The VCT qualifying status of the Company is reviewed regularly by your Board and monitored on a continuous basis by the Manager in order to ensure that all of the criteria for VCT qualifying status are satisfied. The Board is pleased to confirm that all tests continue to be met.

Valuation process

Investments held by Maven Income and Growth VCT 2 PLC in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange, including AIM, are valued at their bid prices.

VCT regulation

The AIC worked closely with the FSA on Consultation Paper 12-19 (restrictions on the retail distribution of unregulated collective investment schemes and close substitutes) and its applicability to venture capital trusts. The Board supported the AIC in calling on the FSA to exclude VCTs from the proposals in the same way that investment trusts had been and was pleased to note the subsequent announcement by the FCA (which replaced the FSA) that VCTs have been excluded from the marketing restrictions.

The Manager monitors all potential regulatory changes that are under consideration and keeps the Board informed of any implications for the Company.

VCT Offers and fund raising

An Offer for Subscription was made in January 2013, aiming to raise £1.5 million before expenses, in parallel with Maven Income and Growth VCT and Maven Income and Growth VCT 3, each also aiming to raise £1.5 million, and Maven Income and Growth VCT 5, aiming to raise £1 million. The Offer was fully subscribed by 8 February 2013 and consequently closed early, resulting in the issue of 2,510,703 Ordinary Shares at an issue price of 59.74p, raising an additional £1.5 million of share capital, before expenses.

On 25 September 2013, the Company announced that it is planning to raise up to £4 million in a joint Offer for subscription alongside Maven Income and Growth VCT, Maven Income and Growth VCT 3 and Maven Income and Growth VCT 4, each also aiming to raise up to £4 million, with Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6 aiming to raise up to £3 million and £1 million respectively. It is anticipated that the Offer will remain open until 5 April 2014 in respect of the 2013/14 tax year and until late April 2014 in respect of the 2014/15 tax year, unless fully subscribed at an earlier date and subject to the Directors' right to close or extend the Offer at any time. The full terms of the Offer will be set out in a detailed Prospectus which is expected to be issued in October 2013 along with a Circular explaining the necessary authorities required for the Offer to proceed.

The Company may use the money raised under the Offers to pay dividends and general running costs, thereby preserving for investment purposes an equivalent sum of more valuable 'old money' which operates under more advantageous VCT regulations. The proceeds of the Offers will provide additional liquidity for the Company to make further later-stage investments, and enable it to spread its costs over a larger asset base to the benefit of all Shareholders.

Share buy-back policy

Shareholders have given the Board authority to buy back Shares for cancellation when it is in the interests of the Shareholders and the Company as a whole and 375,000 Shares were bought back during the period at a cost of £194,000.

As stated in the 2013 Annual Report, the Board's primary objective is for the Company to retain sufficient liquid assets for making investments in line with its stated policy and for the continued payment of dividends. However, the Directors also acknowledge the need to maintain an orderly market in the Company's Shares and have delegated authority to the Manager to buy back Shares in the market for cancellation, subject always to such transactions being in the best interest of Shareholders. It is intended that, subject to market conditions, available liquidity and the maintenance of the Company's VCT status, Shares will be bought back at prices representing a discount of between 10% and 20% to the prevailing NAV per share.

Outlook

Your Company will continue to focus on investing at prudent entry multiples in later-stage private companies with strong management teams, and which are capable of paying regular income and offer significant potential for capital growth.

We believe this strategy is the optimal approach for delivering future growth in Shareholder value and to support a progressive dividend programme.

Maven Capital Partners UK LLP

Manager

27 September 2013

Notes to the Financial Statements

1. Accounting policies

The financial information for the six months ended 31 July 2013 and the six months ended 31 July 2012 comprises non-statutory accounts within the meaning of the Companies Act 2006. The financial information contained in this report has been prepared on the basis of the accounting policies set out in the Annual Report and Financial Statements for the year ended 31 January 2013, which have been filed at Companies Houses and which contained an Auditor's Report which was not qualified and did not contain a statement under S498(2) or S498(3) of the Companies Act 2006.

2. Movement in reserves

3. Returns per Ordinary Share

The returns per Ordinary Share are based on the following figures:

Directors' responsibility statement

The Directors confirm that, to the best of their knowledge:

· the Financial Statements for the six months ended 31 July 2013 have been prepared in accordance with applicable accounting standards and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" issued in January 2009;

· the Interim Management Report includes a fair review of the information required by DTR 4.2.7 R in relation to the indication of important events during the first six months, and of the principal risks and uncertainties facing the Company during the second six months, of the year ending 31 January 2014; and

· the Interim Management Report includes adequate disclosure of the information required by DTR 4.2.8 R in relation to related party transactions and any changes therein.

Other information

The NAV per Ordinary Share has been calculated using the number of Ordinary Shares in issue at 31 July 2013 of 27,776,366.

A full copy of the Interim Report and Financial Statements will be printed and issued to Shareholders.

Copies of this announcement will be available to the public at the office of Maven Capital Partners UK LLP, 205 West George Street, Glasgow G2 2LW and at the registered office of the Company: Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF.

By order of the Board

Maven Capital Partners UK LLP

Secretary

27 September 2013