Interim Management Statement

RNS Number : 6926A

Bluehone AIM VCT2 PLC

13 October 2009

Bluehone AIM VCT2 plc

Interim management statement

For the three month period ended 31 August 2009

Investment Objective

The Company's investment objective is to provide shareholders with a tax efficient means of gaining long term capital growth and an attractive dividend stream, primarily through investment in a diversified portfolio of AiM or PLUS Market quoted companies and unquoted companies which anticipate a stock market quotation.

Performance Summary

Capital return	As at 31 August 2009	As at 31 May 2009	Movement

Ordinary shares
Net assets	£22.4m	£21.4m
Net asset value per share	40.4p	38.7p	4.5%
Share price	23.0p	25.0p	(8.0)%
Discount to NAV	43.1%	35.3%

C shares
Net assets	£1.5m	£1.5m
Net asset value per share	52.3p	49.9p	4.7%
Share price	25.0p	25.0p	0.0%
Discount to NAV	52.2%	50.0%

Total return	For the three month period ended 31 August 2009	For the nine month period ended 31 August 2009

Ordinary shares
Net asset value 1	5.8%	26.6%
Share price2	(6.1)%	23.6%

C shares
Net asset value 1	4.7%	(7.4)%
Share price2	0.0%	(44.4)%

FTSE AIM All Share3	14.1%	48.7%

1 NAV total return = NAV + reinvested dividends; Source: F&C Asset Management

2 Share price total return = mid to mid share price + reinvested dividends; Source: Datastream

3 Source: Datastream

Investment Performance

After a difficult June, the AiM market enjoyed a strong summer driven by increasing commodity prices and a partial re-rating amongst some of the smaller companies. Investors became more willing to take on the risk associated with the junior markets and it is encouraging to see that share prices have at last started to respond to good news from companies, where a lack of liquidity is now helping to push up valuations. The AiM market reached its recent nadir on 5 March 2009 having continued to fall during the first quarter, but has since enjoyed a period of recovery off this low base. The FTSE AiM All Share Index increased by 13.8% over the third quarter and as we enter the autumn, there appears to be a definite improvement in sentiment towards the sector. After an extended period during which companies were unable to raise finance from either banks or their shareholders; we are now seeing support given by investors to selective equity fund raisings and Bluehone AiM VCT2 has participated in a number recently. Whilst there has been a rerating in certain individual companies, most noticeably in the resource sector, many still trade at a significant discount to the median price earnings valuation of the FTSE ALL Share index. We would hope that as the recovery becomes more established this gap will narrow.

The total return of the ordinary pool was 5.8% for the period with the NAV at 40.4 pence per share and a dividend being paid to ordinary shareholders of 0.5 pence per share. This quarter performance was held back by a modest fall in the Portland share price which resulted in a £480,000 fall in its valuation. As we write this fall has been more than reversed following a very strong showing by the shares. The performance was also impacted by the write off of AT Communications and Alizyme and downgrades at Vindon and Amino.

The 'C' share total return was 4.7% over the quarter with increases in: Servoca (+50%), IS Pharma (+18%), Tangent (+50%), Ffastfill (+33%) and Fulcrum Pharma (+25%) and falls in: Vindon (-23%), CBG (-27%) and Mount Engineering (-17%).

Share Capital Changes

On 29 August 2008 the company issued 23,008 ordinary shares as a consequence of the Dividend Reinvestment Scheme.

Investment Activity

The shares acquired during the quarter were:

Ordinary Portfolio:

Company	Date	Cost (£'000)	VCT status

New Investments
Island Gas Resources	July	180	Qualifying
Total new investment		180

Follow-on Investments
Datum International	August	42	Qualifying
Formjet	July	30	Qualifying
Kiotech International	August	120	Qualifying
Supporta	July	113	Qualifying
Total follow-on investment		305

C Portfolio:

Company	Date	Cost (£'000)	VCT status

New Investments
Island Gas Resources	July	20	Qualifying
Total new investment		20

Follow-on Investments
Kiotech International	August	30	Qualifying
Total follow-on investment		30

Investment Realisation

The stocks disposed of during the quarter were:

Ordinary Portfolio:

Company	Date	Proceeds (£'000)	Loss (£'000)

ALL IPO	June	8	(182)
Clearspeed Technology	June	33	(181)
Image Scan Holdings	July/August	11	(184)
The Kellan Group	June	16	(126)
Managed Support Services	June	73	(210)
UK 5.75% 071209	July/August	585	(14)
Total		726	(897)

C Portfolio:

Company	Date	Proceeds (£'000)	Loss (£'000)

Managed Support Services	June	5	(22)
Total		5	(22)

Top ten investment holdings - combined portfolio

Position as at 31 August 2009	Position as at 31 May 2009	Position as at 30 November 2008	Company	Percentage of total investments* as at 31 August 2009
1	(1)	(2)	Portland Gas	12.3
2	(2)	(1)	Vectura	12.0
3	(3)	(4)	UK Gilt 5.75% 07/12/09	5.3
4	(4)	(3)	Cambridge Sensors	4.9
5	(5)	(8)	FDM Group	3.9
6	(11)	(24)	Clarity Commerce Solutions	3.5
7	(9)	(13)	Healthcare Locum	3.4
8	(7)	(9)	Quadnetics	3.3
9	(6)	(11)	Bond International Software	3.3
10	(8)	(5)	IS Pharma	3.2
Total				55.1

Notes:

* Includes cash and interest bearing securities.

Sector breakdown - combined portfolio

(Including cash and interest bearing securities)

	Percentage of total investments at 31 August 2009	Percentage of total investments at 31 May 2009	Percentage of total investments at 30 November 2008
Oil and gas	13.8	16.4	8.8
Industrials	26.5	24.5	25.5
Technology	19.6	18.4	19.0
Health care	24.4	22.5	24.0
Financials	2.9	3.1	3.7
Consumer services	4.6	4.2	5.7
UK Government securities	5.3	7.9	7.0
Consumer goods	1.5	1.7	0.7
Telecommunications	0.7	0.5	0.9
Basic Materials	0.0	0.0	0.1
Utilities	0.7	0.0	0.0
Net current (liabilities)/ assets	0.0	0.8	4.6
Total	100.0	100.0	100.0

Daily and key information

Further information regarding the Company, including daily net asset values published since the end of the period and quarterly Fact sheets, can be found at the Company's website www.bluehoneaimvct2.com