Octopus Second AIM VCT plc : Interim Management...

Octopus Second AIM VCT plc ("the Company")

21 March 2012

Interim Management Statement
For the period from 4 October 2011 to 19 March 2012

In accordance with Rule 4.3 of the UK Listing Authority's Disclosure and Transparency rules, Octopus Second AIM VCT plc presents an Interim Management Statement for the period 4 October 2011 to 19 March 2012. The statement also includes relevant financial information between the end of the period and the date of this statement.

Financial Summary

	As at 19 March 2012	As at 3 October 2011
Total net assets (£'000s)	28,742	27,084
Net asset value per share ("NAV")	68.3p	63.3p
Cumulative dividend - paid since launch	13.15p	13.15p

Investment performance
The unaudited NAV has risen by approximately 7.9%, from 63.3p in the period to 19 March 2012, reflecting better conditions and the return of some appetite for risk in the stock market. We would also argue that the progress many smaller companies have made in the last year and the consequent de-rating, has finally begun to be recognised and from their low valuations, share prices have begun to appreciate. However, in the same period, the AIM index has risen by 18.6% and the smaller companies index (ex investment companies) by 15.2%.

The market for smaller companies' shares has at least temporarily chosen to focus on low ratings and commercial prospects, rather than the serious macro-economic worries, which have beset markets for more than a year. In addition with some tentative economic data suggesting that both the US economy may be growing and that the UK economy will avoid a double dip recession, there has been a greater interest in the consistent progress of the last year or more. We are therefore hopeful that the NAV will continue to progress upwards in the coming months.

A number of new investments were made in the second half of last year and in aggregate they have contributed positively to performance, particularly Escher, which has seen a strong share price rise on the back of a major contract win.

Investment Activity
The company has announced a Top-Up Offer to raise up to £3m in new ordinary shares, having invested or expended the majority of the £6.8m raised in the last public offer.  New investment activity has been limited in the last few months - a seasonal feature -  but we suspect that the pace is quickening now.  We have invested recently in Corero Network Security, but the majority of activity in the last few months has been disposals.  Hamworthy was taken over and some profit was also taken from Chime Communications and Advanced Computer Software. A number of smaller holdings were also sold, such as Optare and Colliers, where the future of both companies is now in the control of their major shareholders.  Atlantic Global has also recently been taken over. 

We continue to see smaller company shares as cheaply rated and, in very many cases, capable of growth that is not reflected in their prices. We would expect the anticipated changes to VCT regulations to stimulate capital raising by smaller companies and potentially aided by a market confidence, we would expect to be able to make a number of new investments in the next few months, although the need to do so does not exist.
  
Ten largest equity holdings as at 19 March 2011:

Investee Company	Sector	Carrying value £'000	Carrying value as a % of total net assets
Animalcare Group plc	Food Producers	1,626	5.7
Advanced Computer Software plc	Software & Computer Services	1,514	5.3
Escher Group Holdings plc	Software & Computer Services	1,194	4.2
IDOX plc	Software & Computer Services	1,187	4.1
EKF Diagnostics plc	Healthcare	1,039	3.6
Brooks Macdonald plc	Financial Consultants	955	3.3
Breedon Aggregates ltd	Construction	852	3.0
Sinclair IS Pharma plc	Pharmaceuticals & Biotechnology	767	2.7
Enteq Upstream plc	Oil Services	756	2.6
Brady plc	Software & Computer Services	716	2.5

Buybacks
During the period the Company purchased 752,934 shares at a weighted average price of 57.4p per share for cancellation.

Material events and transactions
The Fund's Board is not aware of any other significant event or transaction which has occurred between 19 March 2012 and the date of publication of this statement which would have a material impact on the financial position of the Fund.

For further information please contact:
Kate Tidbury / Andrew Buchanan - Fund Managers
Octopus Investments Limited - 0800 316 2347

ENDS

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Source: Octopus Second AIM VCT plc via Thomson Reuters ONE

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