Interim Management Statement

RNS Number : 0176G

Bluehone AIM VCT2 PLC

16 October 2008

 

Bluehone AIM VCT2 plc

Interim management statement

For the three month period from 31 May 2008 to 31 August 2008

 

 

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 2008	As at 31 May 2008	Movement
Ordinary shares
Net assets	£31.0m	£27.3m
Net asset value per share	55.92p	71.53p	(21.8)%
Share price	45.50p	46.50p	(2.2)%
Discount to NAV	(18.6)%	(35.0)%
C shares
Net assets	£2.2m	£2.6m
Net asset value per share	73.99p	87.15p	(15.1)%
Share price	65.00p	92.00p	(29.3)%
(Discount)/ premium to NAV	(12.2)%	5.6%
Total return	For the three month period ended 31 August 2008	For the nine month period ended 31 August 2008
Ordinary shares
Net asset value 1	(20.4)%	(19.7)%
Share price2	0.0%	(16.2)%
C shares
Net asset value 1	(15.1)%	(22.7)%
Share price2	(29.3)%	(29.3)%
FTSE AIM3	(21.8)%	(23.0)%

 

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

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

³Source: Datastream

 

Investment Performance

 

There has been little change in market sentiment over the traditionally quieter summer months, with economic indicators failing to give the market any reason for recovery, GDP growth looks set to be significantly below trend going into 2009 and indices are being driven lower on this medium term outlook. The FTSE 100 reached a three year low in mid-July and despite a slight recovery into August, post the quarter-end the market has once again capitulated on fresh news of corporate insolvencies (and rescues) and the collapse of Lehman Brothers, the US’s fourth largest investment bank. Inflation has shown little respite and consumer related industries are reducing earnings forecasts across the board, however oil and commodities prices have come off the highs of the second quarter.

 

The FTSE AiM All-Share index decreased by 21.8 per cent over the quarter and it is worth noting that this index now sits approximately 35 per cent off its most recent highs of July 2007. The FTSE SmallCap index (excluding Investment Trusts) was down by just 9.5 per cent in comparison, once again demonstrating the lack of oil and gas exposure within this index (a positive factor when these sectors are underperforming, but negative when they outperform).

 

The NAV per share of Bluehone AiM VCT2 was 55.9p at the end of August, a fall of 20.7 per cent over the quarter (after taking into account the 1p dividend paid at the interim stage). This compares relatively favourably with the 21.8 per cent drop in the FTSE AiM All-Share index, despite a very poor performance from Portland Gas over the quarter. 

 

Portland contributed the Trust’s biggest loss over the quarter, with a £2.4 million decrease in its valuation caused by a 23.3 per cent decline in the company’s share price. This was despite receiving authorisation from the Department of Business, Enterprise and Regulatory Reform to construct a pipeline to connect its planned underground salt cavern gas storage facility at Portland, Dorset with the National Transmission system. This was the last piece of planning permission required to enable the commencement of the construction of the largest gas storage facility onshore in the UK.

 

The NAV per share of the C share portfolio was 74.0p, a fall of 15.1 per cent over the quarter. This portfolio outperformed the ordinary portfolio due to its much smaller holding in Portland Gas and its higher proportion of cash (including fixed income), which remained stable at 18.2 per cent of the assets.

 

Share Capital Changes

 

On 15 July 2008 shareholders approved proposals to acquire Bluehone AiM VCT plc. Consequently on 23 July 2008 the company acquired investments valued at £10.2 million in return for the issue of 17,148,342 shares.

 

On 29 August 2008 the company issued 38,184 shares as a consequence of the Dividend Reinvestment Scheme.

 

Investment Activity

 

The Trust made one new investment over the quarter in Darwen (now re-named Optare), the UK’s third largest double decker bus manufacturer which floated on AiM at the beginning of the year. The company was brought to AiM to consolidate the fragmented UK bus manufacturing market and create a market leading company in the process. In June, Darwen raised £16 million to facilitate the reverse acquisition of Optare, the market leading producer of single deck 25 to 40 seat buses, of which the Trust invested £330,000. The enlarged group has 12 different bus models covering the entire size spectrum, from mini-community buses to high capacity double deckers, which should prove a competitive advantage when dealing with Tier 1 operators. 

 

The shares acquired during the quarter, excluding those transferred from Bluehone AiM VCT were:

 

Ordinary Portfolio:

 

Company	Date	Cost (£’000)	VCT status
New Investments
UK 4% 070309		298	Non-qualifying
Optare		200	Qualifying
Total new investment		498
Follow-on Investments
IS Pharma		17	Non-qualifying
Cambridge Sensors		100	Qualifying
Infonic		34	Non-qualifying
Formjet		82	Qualifying
Total follow-on investment		233

 

C Portfolio:

 

Company	Date	Cost (£’000)	VCT status
New Investments
Optare		50	Qualifying
Total new investment		50
Follow-on Investments
Infonic		8	Non-qualifying
Formjet		18	Qualifying
Total follow-on investment		26

 

Investment Realisation

 

The Trust’s largest realisation over the quarter was the stake in Hartest Holdings. The Trust’s 6.8 per cent stake was sold to a third party, subsequently named as engineering components company Elektron plc, for 65p a share, realising £378,121 for the Fund. 

 

The final tranche of stock in Vision Media was sold during the quarter. Following several rescue fundraisings in which the Trust did not participate, the holding became severely diluted and the decision was taken to exit the stock completely.

 

Ordinary Portfolio:

 

Company	Date	Proceeds (£’000)	Gain/(loss) (£’000)
Hartest	June	378	(544)
Vision Media	August	4	(239)
UK 4% 070309	August	492	-
Total		874	(783)

  

 

C Portfolio:

 

Company	Date	Proceeds (£’000)	Gain/(loss) (£’000)
UK 4% 070309	July/August	50	-
Total		50	-

 

Top ten investment holdings – combined portfolio

 

Position as at 31 August 2008	Position as at 31 May 2008	Position as at 30 November 2007	Company	Percentage of total investments* as at 31 August 2008
1	(1)	(-)	Portland Gas†	29.0
2	(2)	(3)	Vectura	5.6
3	(4)	(6)	Cambridge Sensors	3.5
4	(6)	(7)	U4EA	3.4
5	(3)	(5)	Bond International Software	3.1
6	(5)	(2)	Jelf	2.6
7	(-)	(9)	Quadnetics	2.2
8	(-)	(-)	BuildStore	2.2
9	(10)	(-)	FDM	2.2
10	(-)	(-)	K3 Business Technology	1.7
Total				55.5

 

Notes:

* Includes cash and interest bearing securities.

† During January 2008 Egdon Resources de-merged and floated its gas storage      business under the name of Portland Gas. As at 30 November 2007 Egdon Resources was 15.1% of total investments.

 

Sector breakdown – combined portfolio

(Including cash and interest bearing securities)

 

	Percentage of total investments at 31 August 2008	Percentage of total investments at 31 May 2008	Percentage of total investments at 31 November 2007
Oil and gas	30.1	28.9	15.1
Industrials	22.8	24.6	28.9
Technology	19.7	16.8	19.4
Health care	13.4	11.5	15.8
Financials	4.7	5.3	6.6
Consumer services	4.5	5.4	9.4
UK Government securities	2.7	3.1	1.1
Consumer goods	1.6	1.3	1.8
Telecommunications	0.8	0.9	1.0
Basic Materials	0.1	-	-
Net current (liabilities)/ assets	(0.4)	2.2	0.9
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 Factsheets, can be found at the Company’s website www.bluehoneaimvct2.com

 

Year end:                      30 November 2008

 

Dividends paid:              Any interim dividend will be paid during August and any final dividend in April.

 

                                    An interim dividend of 1.0 pence per ordinary share was paid on 29 August 2008.   

 

                                    A final dividend of 1.75 pence per ordinary share was paid on 30 April 2008.

 

Issued Share Capital:     55,370,992 ordinary shares of 10p each and 2,950,085 C shares of 50p each

 

For further information please contact:

 

Robert Mitchell, Bluehone Investors LLP:              020 7496 8929

Sally Mills, Bluehone Investors LLP:                    020 7496 8929

Scott Macrae, F&C Asset Management plc:         020 7628 8000

 

 

 

 

END

 

 

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