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 71.9 119.2 200.1return(1) Key: (1) NAV total return = NAV + reinvested dividends; Source: ISIS EP LLP These total returns are stated before the inclusion of VCT taxreliefs which are designed to mitigate the higher risks and costs associatedwith investing in smaller companies and the constraints of the VCT legislation.The tax reliefs given at the time of subscription have varied between 20% and40%, so any adjusted performance measure including this relief will varydepending on the date of subscription. There is also the additional ongoingbenefit of receiving VCT dividends tax free. Investment Performance In the three months to 31 December 2013, Baronsmead VCT 2's net asset value pershare increased by 4.1%. Over the quarter, the unquoted portfolio valuationdecreased by 5%, the quoted portfolio increased by 12% and Wood Street MicrocapFund increased by 14%. The Company's net assets as at 31 December 2013 were £78.8 million. This figuretakes into account the valuation of the Company's investments as at 31 December2013. Top Ten Investments Position at Position at Percentage of NAV31 December 30 September Company as at 31 December2013 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 48AIM, listed, ISDX & collective 40 36investment vehicleWood Street Microcap Investment Fund 9 8 Listed interest bearing securities 5 4Net current assets 10 4 Total liquid assets 15 8Total 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 31Telecommunications 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 totalproceeds of £11.9 million from the sale of three unquoted and one quotedinvestments. 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 4.8Limited 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 partialrealisations accounted for in prior periods. Dividend Declaration Following recent profitable sales of investments, the Directors have declaredan interim dividend of 8.0p per share with respect to the year to 30 September2014. The dividend will be paid on 7 March 2014 to shareholders on the registeras of 21 February 2014. It is the board's current expectation that this interimdividend will be in lieu of the dividend that would normally be declared on thepublication of the Company's results for the six months to 31 March 2014. Thispays the dividend to the Company's existing shareholders who benefit from thereturns realised in 2013 prior to new shares being allotted with respect tosubscriptions 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 statedbefore taking into account the 2014 interim dividend of 8.0p per share payableon 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 thenew shares with respect to this fundraising are expected to be allotted on oraround 14 March 2014, the new shares will not be eligible to receive thedividend payable on 7 March 2014. Investment objective Baronsmead VCT 2 is a tax efficient listed company which aims to achievelong-term investment returns for private investors, including tax freedividends. Events after the period end A new investment of £952,000 was made in Kingsbridge Risk Solutions Ltd on 10January 2014. Other than the events described above, the Board is not aware of anysignificant events or transactions which have occurred between 31 December 2013and the date of publication of this statement which would have a materialimpact on the financial position of the Company. Further information Further information regarding the Company, including net asset values publishedsince the end of the period and quarterly factsheets, can be found at theCompany's website www.baronsmeadvct2.co.uk Contact For further information please contact the Company's Investment Manager, ISISEP LLP as follows: Email: [email protected] Telephone: 020 7506 5717 Facsimile: 020 7506 5718

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