|Close Brothers Dev Vct
||EPS - Basic
||Market Cap (m)
Real-Time news about Close BR.Dev (London Stock Exchange): 0 recent articles
|a0002577: Hi Timbo003 - this is from the Motley Fool and may be of interest to you
By Cliff D'Arcy (TMFCliff)
September 30, 2004
So far this year, I've written about Venture Capital Trusts (VCTs) in March, May and August.
Having mentioned this subject four times in six months, you'd think that I'd have put my money where my mouth by actually investing in a VCT. However, investing in VCTs is fraught with danger, and an area where the old investment saying "Do your own research" becomes terrifically important!
If you've never heard of VCTs, you learn more by following the above links. In brief, VCTs are quoted investment companies (similar to investment trusts), which invest in small companies, including those on two stock markets: the Alternative Investment Market and OFEX.
In order to encourage us to invest in these risky sectors, the taxman gives VCT buyers 40% tax relief. In effect, a 60p VCT investment is 'grossed up' to £1, which means a 67% return on day one. Furthermore, neither VCT dividends nor capital gains are taxed. You need to hold VCT shares for three years to qualify for these tax concessions.
VCTs sound pretty interesting, don't they? However, don't be lured into investing in VCTs purely for the tax relief, otherwise you could end up nursing some serious losses. Here's why:
Colossally high charges
As with most collective investment funds, VCTs have initial (upfront) and annual management charges. Then again, these are fantastically high more than any other mainstream investment that springs to mind. Here's how much of your money can disappear in charges:
// Table left out
(The true charges over three years will be slightly less than those I've quoted above, because all three years' annual fees don't get taken on day one, but I trust you get the picture).
One way to reduce the initial charge is to buy a VCT through a discount broker such as Bestinvest, which offers rebates of 1% to 2.5%, or Cavendish Online, which rebates all commissions it receives, usually 3%. Nevertheless, a high-charging VCT can swallow almost half of your tax relief over three years ouch!
As with investment trusts, shares in VCTs trade at a discount to their underlying value. In technical terms, the share price is almost always lower than the 'net asset value'. In some cases, the share price can be less than half the NAV, thanks to a discount of 50%+. This could mean that the NAV could be, say, 50p, but you can only get 25p for your shares. Eek!
Another problem is that shares in many VCTs are highly illiquid, which means that it can be difficult to buy or sell a reasonable number at a time. For example, with some VCTs, several brokers will only trade 500 shares at a time. If the share price is, say, 60p, that means selling in batches of £300. Also VCTs spreads the difference between the (higher) buying price and the (lower) selling price can be huge, which can gobble a serious chunk of your capital.
The small-company sector hasn't done too well since the dotcom bust began in 2000. This means that some VCTs have performed appallingly. Some have lost almost four-fifths of their capital, with this 80% loss wiping out all the investors' 40% tax relief, plus another 40% for good measure. Yikes!
So, when it comes to investing in VCTs, you need to be aware of the risks. I may well decide that the sensible thing to do is not to invest in VCTs at all.
More about VCTs: TrustNet | Tax Shelter Report.|
|a0002577: Don't believe all you hear about these buy backs. Some managers just say this and then do nothing. However this in itself may be a reason to buy - if you believe them - as when the share is trading at more than 10% discount, there may be an opportunity to buy before the company starts its buy back. However the history of buy backs by VCTs is that they buy back as the share price starts to drop, run out of money and then cannot buy any more : one questions whether this is the right policy for continuing investors
For information : the one I am looking at, at the moment, is
BRITISH SMALLER TECHNOLOGY COMPANIES VCT PLC (BSR) where the offer price is 28 pence and the NAV nearly double that
from last annual report:
"Commenting on the prospects for the portfolio, David Hall, Managing Director of Yorkshire Fund Managers, the Investment Adviser to the Company, said, "It is satisfying to see those companies which are more advanced beginning to move towards, or into, profit. Should the level of economic and business sentiment continue to improve we expect to see an increasing level of corporate transactions, which will improve the likelihood of achieving realisations from investments in the short to medium term.|
|timbo003: Pennine VCT (PAV) reported today (I own 4.2K)
Nice (tax free) divi of 2p payable on June 2nd for shareholders on the register on May 21st.
Current share price 58p bid, 63p offer|
|timbo003: Northern 2 (NVT) reported final results today (I own 4K)
total divi for the year is 4p, (final divi will be 3p) which is a pretty good return considering its tax free, current share price 72-92p, horrible spread, not quite as bad as the spread on CBD|
|ukneonboy: I sincerely hope that the latest CBD share "buy-back" does NOT get cancelled tomorrow, but I presume now that the "close-period" has finished, following the recent publication of Final Results, the share price SHOULD remain steady ahead of the "ex-div" date.
|ukneonboy: Looking through today's LSE trade reports, it seems somebody managed to
purchase 10,000 CBD shares at 62p each.
An excellent deal at a great price, I.M.H.O.
Question for TIMBO0003 - were you the lucky buyer ??? coz the share price has
gone up again.
|timbo003: Well I got my Baronsmead 4 share certificate today (£3K) for 2995 shares, plus the all important income tax relief certificate which is worth £600 (to me).
I'm still waiting for the Quester 5 share certificate (£3K).
Next week (when funds are cleared) I think I may very well double up on Quester 5, i.e. buy another £3Ks worth, I like it 'cos as the shares are quoted at around the NAV, rather than a discount and its a relatively tight spead (i.e. more than one MM)
I will probably end up doing the Close Bro Dev C shares (£4K) as there seems to be no way I'm going to be able to buy CBD in the market.
I will also do Northern 3 (£3K) another one where the share price is close to NAV (I already own some Northern 2 from a few years back)
So that will be a total of £16K invested in VCT subscriptions this tax year, so thank you Gordon, you can forget about that £6.4K cheque I was going to have to send to you, instead you are going to have to send me one for £3.2K.
I might not have finished yet!
PS: I like to think my VCT buying is a real show of partiotism, I'm hastening Culpability's demise (in the short term) by depriving him of new labour's life blood (i.e. taxes), yet I will be helping to create jobs in the long term, the majority of which will not appear until new labour are consigned to the history books
What a patriot!|
|ghk: Apparently, the 10,000 CBD "share buy-back" was cancelled because the company is actually now in its "closed period" and the UK Listing Authority regulations prevent companies from dealing in their own shares ahead of its results.
Market-Maker (Winterflood Securities) has therefore "acquired" 10,000 shares which presumably Close Bros Ventures will "buy-back" in late Feb 2004.
Bit of an own goal, it seems|
|ukneonboy: URGENT MESSAGE TO "GHK" AND OTHERS
A small block of 10,000 Close Bros Development VCT "old" (CBD) shares was traded earlier today. Although we won't know the official dealing price for several more days, I'd guess that this is the reason for the 10p fall in the share price.
Bearing in mind, these shares closed on Friday at 60p bid / 80p offer, it definitely seems a bit churlish for the market-maker (sorry R.S.P) to "mark them down" on very little volume.
Anyway, I'm presuming that the VCT investor (seller) only actually received 50p from Winterflood Securities and to test this theory, I've revised my own personal buying LIMIT from 70p to just 60p per share.
(You might wish to do the same !!!!) - IN ANY EVENT, THIS WILL DETERMINE HOW DESPERATE WINS ARE, TO OFFLOAD THESE SHARES.
Close Brothers Dev Vct share price data is direct from the London Stock Exchange