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Chrysalis - still value here ?

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
scotia
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Re: Chrysalis - still value here ?

#146417

Postby scotia » June 18th, 2018, 10:33 am

busybumblebee - thanks for the update.
Looking back, I think the last Chrysalis buyback and re-issue was in April 2013, so this now places those holders beyond the 5 year term. Hence it is possible that there will be interest in the proposed buy back at a reasonable discount.

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Re: Chrysalis - still value here ?

#146423

Postby Kidman » June 18th, 2018, 11:06 am

BusyBumbleBee wrote:II think that is actually quite a good plan - what do others think? Hopefully the buy back policy will narrow the spread.


I am happy with the plan. I like the honesty about future prospects, they have waited until everyone is clear of tax relief considerations, they are now effectively in run-off and we can hope for a succession of capital dividends.

The discount buyback level of 15% is reasonable, it won't encourage shareholders to sell faster than the company's liquidity permits but it does offer a floor for those who need to sell such as deceaseds' estates.

In time when the company becomes too small to be sustainable then they may have to liquidate or merge but lets look forward to some good realisations and dividends in the meantime.

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Re: Chrysalis - still value here ?

#146607

Postby BusyBumbleBee » June 19th, 2018, 9:57 am

I totally agree with your analysis, Kidman : Even after the jump in price, the stock is yielding 7 and a half % tax free - with the special it is about 12%. Frankly it would be daft to sell this at the moment as we can look forward to a few years of that sort of yield, I note that the spread has narrowed a lot this morning (66-67). ? In preparation for a market buy back ?

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Re: Chrysalis - still value here ?

#146874

Postby Blagdon » June 20th, 2018, 12:01 pm

I think you need to be slightly careful using the term yield for dividends being paid out of capital, leading to a reducing NAV.

The sell /hold decision is really about 3 numbers...
* What can you sell for?
* If you hold, what total return do you expect from here forward?
* If you sell, what total return do you expect from the money you have realised?

I am not claiming to know the answers, just not sure that dividend yield means that much for VCTs with also looking at changes in NAV.

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Re: Chrysalis - still value here ?

#147162

Postby BusyBumbleBee » June 21st, 2018, 5:22 pm

There is a a lot in what you say, Blagdon. However, a number of us are hoping/expecting that this is a little different.

Chrysalis has a mature portfolio - the lemons have all gone and over the past several years they have realised an investment or two giving the capital gains back to the shareholders by way of special dividends - big special dividends too in some cases. the NAV has held fairly steady throughout this period. The annual dividend of 5 pence per share has come from a mixture of revenue and capital as is the case with most existing VCTs - and moving forward there will be precious little revenue under the new rules as high priced loans are no longer allowed. All dividends from the mountain of cash just raised will have to come from capital which is much the same way as AIM VCTs have given dividends in the past.

I think we have possibly another three years of similar performance before this VCT has to go into run off. It is buffered by 30% of its assets being in cash or near cash and the fact that it trades at a 15 % discount to NAV which gives a reasonable upside.

Timing the exit is the most difficult thing here, but the board seem to have matters in hand and are working to deliver the best for the shareholders.

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Re: Chrysalis - still value here ?

#148463

Postby BusyBumbleBee » June 27th, 2018, 8:31 pm

So they were serious about a buyback This RNS ceme at 5:53pm today
Chrysalis VCT plc announces that on 27 June 2018 the Company purchased
the following shares for cancellation:

(94,000 at 66.3 pence per share representing 0.32 % of the shares in issue)

Hardly massive but it seems not many want to sell - yet

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Re: Chrysalis - still value here ?

#151708

Postby Kidman » July 11th, 2018, 10:44 am

scotia wrote:That's both Artemis and Chrysalis thinking that current price levels on possible VCT investments are a bit frothy.
Artemis has decided to soldier on, albeit offloading gains into substantial dividends. It should be interesting to see what Chrysalis does when (and if) such gains materialise.

We now have the answer from Chrysalis but today I see the same warning from British Smaller (YFM):-
There is no doubt that the number of potential investments has been limited by recent legislative changes and this has, in turn, led to more competitive pricing and investment terms, notably in competitive fundraising processes. The 2017/18 tax year was a record for VCT fundraising and this, combined with new rules that come into effect in the near future, is likely to increase these pressures further.

(source BSV annual report 2018, page 8)

Higher prices, ergo lower returns, back to the question so many have asked, is it worth buying VCT shares any longer?

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Re: Chrysalis - still value here ?

#151778

Postby BusyBumbleBee » July 11th, 2018, 4:29 pm

Well, Kidman, you say
Higher prices, ergo lower returns, back to the question so many have asked, is it worth buying VCT shares any longer?

and you are right to question this. If you add in the higher risk profile imposed by the recent changes, the draconian penalties for making an HMRC unapproved investment, the prohibition of non-commercial rate loans, the withdrawal of the grandfather rights to invest in asset backed companies and the wall of money 'invested' last year which has to find a home very quickly - the answer is a resounding NO except in special cases.

I am not sure though that so many asked the question last year when all of this was quite apparent.

I am just running the DRIS on the Albion VCTs I own and some of the NVT shares (I moved some into a nominee account last year)

I am not sure that the new rules have affected AIM VCTs so much - but the whole index there is looking very toppy

Will hold my fire until distressed sales appear in a few years time - there are other safer places for my money in the meanwhile.

P.S. Chrysalis are buying in more shares - many more than appear on my feed from ADVFN

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Re: Chrysalis - still value here ?

#151863

Postby scotia » July 11th, 2018, 10:36 pm

there are other safer places for my money in the meanwhile

I fully agree that the really good times are over with VCTs, but I still feel that the tax breaks on purchase and on dividends provide a reasonable protection from loss, whereas I can't see any area of the non-VCT markets that I would deem safe if Trump continues his tariff tirades. So I'll still be purchasing VCTs this tax year, possibly a bit more selectively than in the past. But I may be delaying my conventional ISA investments to see how the market copes with Trump uncertainties.

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Re: Chrysalis - still value here ?

#151875

Postby UncleEbenezer » July 12th, 2018, 2:20 am

The event to look out for is US mid-term elections. After those, Trump might drop some of the posturing. Though just how he'll move on economic matters is anyone's guess.

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Re: Chrysalis - still value here ?

#151899

Postby BusyBumbleBee » July 12th, 2018, 9:29 am

scotia wrote:
there are other safer places for my money in the meanwhile

I fully agree that the really good times are over with VCTs, but I still feel that the tax breaks on purchase and on dividends provide a reasonable protection from loss, whereas I can't see any area of the non-VCT markets that I would deem safe if Trump continues his tariff tirades. So I'll still be purchasing VCTs this tax year, possibly a bit more selectively than in the past. But I may be delaying my conventional ISA investments to see how the market copes with Trump uncertainties.


Money going into an ISA doesn't have to be invested straight away- but it is there and outside the scope of IT & CGT 'forever' - or at least until the gov't changes the rules again.

Many years ago - in similar circumstances - I didn't invest in VCTs - and was able to buy the VCTs later at knock down prices. Agreed that there aren't too many safe havens but you could have a look at BSIF, FSFL, JLEN, NESF, TRIG and UKW - which all have assets which benefit from government subsidies for the next 20 years or so and yield about 6%.

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Re: Chrysalis - still value here ?

#201521

Postby 127tolmers » February 15th, 2019, 10:52 am

Anyone go to the AGM?

https://www.investegate.co.uk/chrysalis ... 0726H8201/

https://www.investegate.co.uk/chrysalis ... 0000H0974/

It will be no surprise to Shareholders who have read my last two Chairman’s Statements to learn that in the last year we made no new investments. The changes to the regulatory environment under which VCTs operate and the economic and business climate facing UK smaller companies has made the last year a challenging one for investors like ourselves. Whilst our existing portfolio of investee companies has performed, on the whole, satisfactorily, there are few signs of real optimism.

So, with realisations totalling £2.2million during the year, your Board has, instead of chasing new investment opportunities, used the Company’s cash resources to achieve two things: to maintain the regular dividend payment of 5.0p per share, with an added special dividend of 3.0p per share at a cash cost of £2.4 million in total; and to buy back 873,000 shares for a total sum of £550,000 at a discount to NAV of around 15%.

As a result of the portfolio performance and this use of the company’s cash resources, net assets declined to £21.3 million from £23.9 million; and per share declined from 80.0p to 73.4p at 31 October 2018. Total Return (NAV plus cumulative dividends) increased by 1.4p per Share during the year and now stands at 156.85p per Share, for those Shareholders that invested at the Company’s launch in 2000, compared to the cost (net of tax relief) of 80p.

Our current strategy is, broadly, to carry on returning funds to Shareholders as realisations occur, although control over realisations is rarely in the hands of the Manager. The Board recognises that as this process continues, the portfolio will decrease both by monetary size and number of investments such that the cost base, relative to net assets, may eventually become inappropriate. The Board will address this matter in a timely manner.

Given this, your Board will continue to consider carefully the various options open to it. Your Board is aware of a number of different views as to the optimal way forward. In this context, your Board will be particularly mindful of the fundamental requirement not to breach the VCT qualifying rules; it will also not take steps which will put at risk the ability of the company to pay in the foreseeable future its regular 5.0p dividend each year, plus appropriate special dividends........

During the year the Company introduced a policy of buying in Shares that become available in the market at a discount of approximately 15% to the latest published NAV, subject to market conditions and any liquidity or regulatory restrictions. The Board feels that this level of discount remains appropriate in view of the characteristics of the Company’s investment portfolio and is pleased to report that the level of buybacks undertaken has been at a manageable level. The Board intends to keep the policy under regular review and will make adjustments if it considers they are required....

Overall, valuation increases on the venture capital portfolio totalled £1.6 million. This total includes an uplift of £550,000 in respect of Coolabi Group Limited, an international media group. The increase is in line with value accruing on the preferred element of the investment.....

As mentioned last year, the new VCT rules have significantly reduced the pool of potential qualifying investee companies and forced VCTs to invest at a much earlier stage in more high-risk situations. However, at the same time the VCT industry has continued to raise substantial amounts of new funds. The inevitable consequence of increased amounts of cash chasing fewer opportunities has been an increase in their price. So generally VCTs are paying higher prices for more risky investments which makes profitable returns much more difficult.

We continue to review new investment opportunities, particularly those involving entrepreneurs we have previously backed successfully, however we are not willing to overpay and it will take a special set of circumstances for us to complete a new investment. In addition, under the new rules Chrysalis is precluded from re-investing in much of our existing portfolio and the companies which would be able to take VCT money have not needed any additional funds this year. Accordingly no investments were made in the year......

Chrysalis VCT Management Limited, a wholly owned subsidiary, provides investment management services to the Company for a fee of 1.65% of net assets per annum. During the year, £389,000 (2017: £408,000) was payable to Chrysalis VCT Management Limited in respect of these fees. At the balance sheet date £nil (2017: £104,000) of prepaid fees were included in debtors.

A performance incentive fee is payable to Chrysalis VCT Management Limited based on realisations from all investments excluding quoted loan notes, redemptions of loan notes in the normal course of business and other treasury functions. The performance incentive fee is the greater of 1% of the cash proceeds of any exit or 5% of the gain to the Company after all exit costs for investments made after 30 April 2004 reduced to 2.5% of investments made prior to 30 April 2004. During the year performance incentive fees of £54,000 (2017: £127,000) were due to Chrysalis VCT Management Limited. At the year-end, £nil (2017: £nil) was outstanding and payable.

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Re: Chrysalis - still value here ?

#212985

Postby BusyBumbleBee » April 5th, 2019, 4:52 pm

There has been a steady drop in the SP over the past few days. A small sell knocks a penny off. Thought they were controlling the discount with a buy back policy - or has the NAV dropped and we haven't been told?

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Re: Chrysalis - still value here ?

#231034

Postby BusyBumbleBee » June 20th, 2019, 6:06 pm

Creditable (considering the number of restaurant chains they are invested in) half year results published today. see https://uk.advfn.com/stock-market/londo ... H/80173845

Intend to continue paying 5 pence per share per year plus special dividends and one was announced today making the half year divi 4 pence payable on 26th July (ex-div on 27th June)

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Re: Chrysalis - still value here ?

#244885

Postby BusyBumbleBee » August 16th, 2019, 7:31 pm

Share Buybacks
The company seems to be buying back shares at little more than bid price and have bought in nearly 1% over the past week. Am hoping they can buy back more as my share of the remaining assets then increases


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