HARGREAVE HALE AIM VCT 2 PLC 
By HARGREAVE HALE AIM VCT 2 PLC
Interim Management Statement
This statement covers the period from 1 September 2011 to the date of the release of the statement on 4 January 2012.
As at close of business on 31 December 2011, the unaudited Net Asset Value (NAV) for
Hargreave Hale AIM VCT 2 plc was as follows:
NAV per Ordinary share of 1p 92.91 pence.
Trading Statement (Qtr to 30 November 2011)
After a disappointing first half, the NAV remained relatively stable throughout the third quarter of this financial year to close at 93.63p. An interim dividend of 2 pence was distributed in November to give a total return of 1.79 pence per share or 1.9% for the quarter. This was a satisfactory result in light of some difficult markets that saw the FTSE SmallCap ex IT fall 11.6% and the FTSE AIM All-Share index fall 9.7%.
Qualifying issuance tailed off in August and remained fairly subdued throughout the Autumn, however, we continued to make a few selective qualifying investments, adding Porta Communications (marketing and communications), TLA Worldwide (US baseball agency) and Sphere Medical (medical monitoring equipment). We ended the quarter with 30 qualifying investments. The VCT is comfortably through the HMRC defined investment test and ended the period at 90% invested according to the HMRC investment test, 64% by market value.
The qualifying portfolio made a net unrealised gain of 2.52 pence per share (+4.4%) over the period with 12 out of the 30 making gains, 5 marking time and 13 losing ground. Lombard Risk (1.94 pence per share) remained the top performer among the qualifying holdings, seeing another 67% increase in its shares following a strong interim report that left them well positioned to beat their full year numbers. Advanced Computer Software's shares gained 21% (0.70 pence per share) after a large seller was cleared out and the company made a string of positive announcements: strong interims, a significantly strengthened Balance Sheet and a 10-year, £17m contract win. Hardide (0.56 pence per share) delivered a better than expected trading update and raised £750k to support growth in its business as it continued along its path to recovery. Fulcrum Utility gained 26% (0.52 pence per share) after announcing that it had successfully re-tendered its outsourced contractor arrangements, an important pre-cursor to future profitability. Unfortunately, delays to the tender process have resulted in a significant downgrade to its current year trading. Electric Word was the biggest disappointment after announcing that trading remained difficult in its professional publishing division.
We further reduced the allocation to non-qualifying equities (now down to 10%), whilst at the same time adopting a more actively managed trading strategy with a greater focus on more liquid equities. The cash position reduced from 18.4% to 15.9% as the qualifying portfolio grew. Fixed income allocation declined from 13.6% to 9.5% as the Nationwide 3.75% 2011 bond was redeemed in November. We have subsequently reinvested the proceeds into Petrobras 6.25% December 2026 to bring fixed income allocation back to 12%. In total, the VCT held 25% of its NAV in cash or fixed income.
Post Period Update
There have been no material events since 30 November 2011 and the NAV remained relatively steady, slipping by 0.8%. We made no further qualifying investments or disposals. The most significant event within the qualifying portfolio was a £3.5m investment into Mexican Grill, the largest investment within the VCT, by Quilvest at a 37% premium to our entry price. Quilvest is a large global private equity firm and owner of the Yo! Sushi chain of restaurants. The additional capital and strengthened management team leaves Mexican Grill well positioned to continue with its expansion plans.
Purchase of Ordinary Shares
September 2011
5,150 ordinary shares were bought back for cancellation during September at a cost of £4,377. As at 30 September 2011, there were 6,713,062 ordinary shares of 1p in issue (excluding shares held as treasury shares).
4 January 2012
For further information please contact:
| Stuart Brookes |
| Company Secretary |
| Hargreave Hale AIM VCT2 plc |
| 01253 754740 |
HUG#1575116
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