HARGREAVE HALE AIM VCT 2 PLC 
By HARGREAVE HALE AIM VCT 2 PLC
Interim Management Statement
This statement covers the period from 1 March 2012 to the date of the release of the statement on 17 July 2012.
As at close of business on 13 July 2012, the unaudited Net Asset Value (NAV) for
Hargreave Hale AIM VCT 2 plc was as follows:
| NAV per Ordinary share of 1p | 92.46 | pence. |
Trading Statement (Quarter to 31 May 2012)
In the first quarter of this financial year, the NAV fell 5.31% from 96.8p to 91.66p. During the same period, the FTSE 100 Index lost 9.4% whilst FTSE AIM All-Share Index declined 16.3%.
We have made further selective investments in qualifying companies, adding Angel Biotechnology (contract manufacturer for advanced biologics) and Wandisco (infrastructure software). We also added to our qualifying investment in Microsaic through a placing on 29 May 2012. We disposed of Synchronica and ended the quarter with 30 qualifying investments. The VCT remains comfortably through the HMRC defined investment test and ended the period at 92.7% invested according to the HMRC investment test.
The qualifying investments made a net loss of 3.11 pence per share with 7 out of the 30 making gains, 9 marking time and 14 losing ground. Lidco (0.94 pence per share) was the top performer among the qualifying holdings, with a 34% rise in its share price during the quarter following the release of an NHS report supporting much wider spread adoption of intraoperative fluid management technologies and confirmation that the LiDCOrapid monitor and associated disposable products have been approved by the Japanese Ministry of Health. The company believes that Japan is the second largest global market for haemodynamic monitoring. News of the approval was shortly followed by confirmation that their product will qualify for reimbursement in Japan. EKF climbed 20% (0.61 pence per share) as a string of positive updates, culminating in the release of their preliminary results, pushed the shares back up to new highs. A number of investments performed poorly without good reason: Hardide dropped 42% despite reporting record trading; Reneuron fell 39% after raising £5.4m via a placing at 4p and reporting encouraging trial data; Corac lost 27% despite posting a positive business update. Others fallers included: Tristel (-22%, termination of supply agreement), Intercede (-21%, extended sales cycles), Lombard Risk (-21%, extended sales cycles & placing).
Performance has picked up subsequent to the quarter end: Lombard Risk has gained 15% following the conclusion of their placing at 7.5p and the market started to react to their various contract wins; Hardide has gained 10% following the release of its interim results; Intercede added 9% after the release of its preliminary results. The NAV has also benefited from a 31% rise in Omega Diagnostics' share price following the release of the company's final results, and a 22% gain by WanDisco's shares since their admission to AIM on 1st June 2012.
Allocation to non-qualifying equity investments increased from 6.5% to 9.0% (including a 3.3% investment in the Marlborough Special Situations Fund following the share offer in April 2012). Stripping out the impact of the investment into the Marlborough Special Situations Fund and the investment into non-qualifying equities fell from 6.5% to 5.8%. The Cash position increased from 17.6% to 21.3% as a result of the fund-raising. Fixed income allocation as a percentage of the fund declined from 11.8% to 10.7%, although the underlying holding remained largely unchanged at £0.77m.
Purchase of Ordinary Shares
April 2012
1,740,505 ordinary shares were bought back for cancellation during April at a cost of £1,672,010 (Including 1,608,920 shares bought back and re-issued under the terms of the Tender Offer dated 29 February 2012).
Issue of Equity
April 2012
2,806,736 ordinary shares were issued during April (Including 1,558,927 shares issued under the terms of the Tender Offer dated 29 February 2012), resulting in funds being received of £2,691,779.
As at 31 May 2012, there were 7,774,293 ordinary shares of 1p in issue.
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