Juridica Share Discussion Threads

[valhamos] 24/9/2014 11:39

asmodeus

Thanks, but I have benefitted from other threads where this has been discussed e.g. RECP (post 182 etc).

[asmodeus] 23/9/2014 17:59

Congratulations Valhamos. You are one of the very few investors who have grasped this. Certainly virtually no financial commentator or reporter ever mentions it. I am fed up with writing to those who say there is no income-tax benefit for shares in an ISA without mentioning offshore funds.

[valhamos] 23/9/2014 15:31

Woozle1

I'm sorry to hear about your unfortunate experience. There are loads of high yield stocks domiciled in Guernsey - I currently have GLIF, RECI, DPA, DNA3 in addition to JIL. Apart from the dividend / retained profits issue which has recently been discussed, I personally would think it remiss of a financial investment company not to take advantage of the favourable tax system in the interests of shareholders. Additionally I benefit as the dividends receive the notional UK tax credit (in effect in broad terms they are paid without any tax to pay for UK basic rate taxpayers)

[edited to remove "gross" as applied to dividend payments which is confusing]

[woozle1] 23/9/2014 14:58

A note of caution: be wary of companies domiciled elsewhere doing stuff over there. It's a recipe for being fleeced. I've been on the wrong end of these before!

[woozle1] 23/9/2014 14:54

That this share is not up 20p on the announcement of the dividend has me a bit a worried. Truth be told there is a lot going on here that I don't understand. I took the 10% yield and a few points of capital appreciation in less than a year and that to me is a good IRR.

[valhamos] 23/9/2014 13:33

eeza

I don't wish it, but serious allegations have been made; even more serious when you consider the legal propriety expected of those in charge. Unless of course you happen to think that LaValmy has been rather unfortunate in his choice of words, and really only meant to say that he hadn't got a clue about what was going on.

[eeza] 23/9/2014 13:18

I would be careful what you wish for, Valhamos.

[valhamos] 23/9/2014 11:34

LaValmy

"Nobody seems to mind that 'Gross proceeds from these settlements totalled approximately US$84.6 million....So $31mn has gone missing. Who has it and why?"

"Well, I have never heard people being fleeced so contentedly."

If your theory is correct the irony is that it is being carried out by a company whose chairman is a top legal barrister and judge and peer. Difficult to think these funds could have possibly gone missing without Lord Daniel Brennan QC noticing that something was amiss, surely?

Also I notice he is also chairman of Global Financial Integrity - "a non-profit, research and advocacy organization located in Washington, D.C.. GFI advocates and conducts research on national and multilateral policies, safeguards, and agreements aimed at curtailing illicit financial flows..."



You seem to be suggesting a certain lack "Financial Integrity" here, possibly some "illicit financial flows"?

This sounds like a good story perhaps you could work on this and get in touch with Gotham City Research for instance?

[guernseymoney] 23/9/2014 10:51

Guernsey has no concept of distributable reserves seen under UK GAAP/UK law - thankfully.

There is a simple solvency test governed by Guernsey Co Law whereby assets must exceed liabilities at the time of dividend and after payment of dividend and also the company be able to meet outflow/liabilities following dividend.

[jonwig] 23/9/2014 10:22

Yes, VCTs - because they are allowed to return both capital and income and call it a "dividend". And it's usually possible to create a revenue reserve from the share premium account, though I think it has to go to court.

La V - Crystal Amber took their first significant stake in June this year. And came back for more. Activist investors do tend to spend a lot of time and money on due diligence.

[gco1133a] 23/9/2014 09:56

I believe that even certain companies registered in England and Wales can and do pay dividends when they have negative revenues reserves, for instance VCTs.

[lavalmy] 23/9/2014 09:45

Well, I have never heard people being fleeced so contentedly. It is your money after all, at least it was.

Your only hope is that Crystal Amber don't take this lying down.

[jonwig] 23/9/2014 07:35

gco - yes, I'm comfortable with that $31m.

The confusion in my mind was that there's another $31m which was referred to - the revenue reserve shown on the balance sheet.
For UK companies, dividends are paid out of this and ordinarily they can't exceed it.
For Guernsey companies that's not the case.

No stones being cast here ... but hopefully no stones left unturned, either!

[gco1133a] 22/9/2014 21:16

The accounts are tricky to understand but before too many stones are cast....

The $31m difference relates to incentive fees paid to the law firm that manages to produce a return in excess of a previously agreed milestone. The tax is not on the proceeds but income earned on the proceeds of successful cases.

[djderry] 22/9/2014 17:33

From my reading they're reserving cash for future tax liabilities which has been raised as an issue here,we're getting more info on additional investments,they've continued to distribute cash which,in part,is shareholders money but also a chunk of the winning awards and,overall,it is performing well.

[tom111] 22/9/2014 15:44

Took another profit here,market not impressed,the share price always drops sharply xd anyway.gl

[jonwig] 22/9/2014 15:14

That's right, they haven't made really new investments, just additional inputs. What the IPCreate investments involve, I don't know, but they don't look too big.

Investors here who expect an ongoing yield will be disappointed, I agree, as the existing cases run down.

By the way, Guernsey law doesn't demand that revenue reserves cover the dividend. The company merely needs to determine that it's "affordable". I had this discussion with regard to another company and checked it with the FD.

[lavalmy] 22/9/2014 14:52

Jonwig

The difference between the gross and the net is not legal fees. As I quoted above it is 'supplemental investment capital' whatever that is (and it should show up as an asset in that case, 'reserves for future funding' ditto, and taxes on the 'proceeds'. What on earth is a tax on proceeds? Profits yes, gains yes, proceeds unbelievable. What is the likely impact on the rest of the NAV, and why is the amount dependent on the performance for the rest of the year? This is not a matter where Fields can plausibly say client confidentiality means he cannot disclose what is going on here.

Revenue reserves are $31mn. Settlement is a bit of a red herring. It is just cashflow. They still need the reserves to at least equal the proposed dividend.

Overall, it is impossible to tell what is going on. I get a feeling of obfuscation and shareholders being taken for a hell of a ride. The only thing that holds this up is the dividend, and that IMHO is fictitious and unsustainable. Where are the new 'profits' going to come from? They have made precious few investments apart from the initial ones.

[jonwig] 22/9/2014 14:23

LaValmy.

I share some of your concerns, but is the $31m you state just the difference between gross and net proceeds? In that case, it will surely be legal costs, which won't appear in the income statement anyway.

The dividend costs $36m - why is that a shortfall on reserves (post settlement)?

[lavalmy] 22/9/2014 13:49

Certainly keeping the red flags flying - Crystal Amber will have plenty to be active about.

Nobody seems to mind that 'Gross proceeds from these settlements totalled approximately US$84.6 million. As part of our investment agreement, we are obligated to return a portion of these proceeds to specific cases in the antitrust portfolio in the form of supplemental investment capital. Additionally, we are obliged to set aside reserves for future funding of the antitrust portfolio. Finally, the Company is also required to pay certain taxes on these proceeds. The level of tax owed on the proceeds has been estimated for our reporting at 30 June 2014. The final determined amount is highly dependent on the performance of the antitrust portfolio during the remainder of 2014.'

So $31mn has gone missing. Who has it and why?

Note too that the mooted dividend exceeds reserves.

This does not pass the smell test. I would be furious about paying UK income tax on these amounts called dividends, and wouldn't be at all surprised if it all ends up in disaster. Well happy to have sold.

[tokyo sexwhale] 22/9/2014 11:27

Added fairly aggressively today 3% rise on today's news too low will be all over IC etc again shortlyTrading at a premium to NAV now but still a good deal imo

[wirralowl] 22/9/2014 10:12

Agreed speedsgh, this one definitely does seem to fly under the radar. Either that or investors are waiting for confirmation of the actual dividend and dates etc before committing. Either way, I'd have expected a bigger uplift than this on what is set to be a bigger than expected pay-out for me. The plus side is it offers me the chance to top up some more before the ex-divi date, as I don't have many other options offering me c.15% divi.

My first stake in JIL was taken at 82p, so its been a cracking investment for me, with a large proportion already returned to me in dividends alone. If only I'd known at the time... :-)

Thanks for sharing the Investec update, DB.

[davebowler] 22/9/2014 09:50

Investec;
Juridica Investments (JIL) Half Year Results for the six months ended 30 June 2014

¢ Returns: NAV +4.45% in USD terms to $2.11 per share.

¢ Dividend: Anticipated year-end dividend declaration of 20pps to be paid following 31/12/14. Post this distribution, the Company will have returned approximately US$101.3m to shareholders via dividends; totalling 58.6pps.

¢ Valuation: Fair value of the Company's investments at the period end was US$157.2m not including the cash receivable of US$53.5m, payable at 31 December 2014

¢ Portfolio: There a number of cases in the portfolio coverage that have the potential to deliver significant returns which are detailed below:

¢ Case 5009-S: involves alleged theft of trade secrets and other contractual claims. Claimed damages are in excess of US$500m. Any settlement is expected to be for less than claimed damages. The case has not been set for trial but trial is expected to occur during 2014 or early 2015.

¢ Antitrust: Two cases that comprise part of the security for the loan facility made to Fields Law may complete or reach an advanced stage during the next 6 to 18 months. Each of these cases has significant damages claimed by their plaintiffs that, if awarded by a jury, will be automatically trebled by the court.

Investec Insight

¢ At the current share price the indicated dividend represents a c.15% yield. This is following the pattern of dividends of c.10% for the last three years. Given compressed yields across the many sectors this is a significant yield and presents the opportunity to gain a degree of income diversification.

¢ Over the last seven years JIL has delivered an annualised return with dividends reinvested of c.11% over a period of significant general market volatility.

¢ Post 30/6/14 Sterling’s fall against the Dollar will have helped boost the NAV by c.4.7%, which puts JIL at a modest premium of c.6%. Given the high level of dividend, excellent track record, and positive outlook, we would expect to see further gains.

[speedsgh] 22/9/2014 09:42

"The Company's dividend policy dictates that the Company distributes net cash profit from its investments after making appropriate reserves and paying expenses of the Company. As such, and based on the following: (i) the Company's results for the six-month period ended 30 June 2014; and (ii) our expectations for the remainder of 2014, we anticipate declaring a dividend to shareholders in the amount of US$37 million (approximately 20 pence per share at today's exchange rate). The actual dividend declaration amount will be determined by the end of 2014. Following this distribution, the Company will have returned to shareholders approximately US$101.3 million (58.6 pence per share)."

I know that these could be classed as an alternative investment but they still appear to fly very much off the radar of most investors. Absolutely cracking income paid out annually. If 20p div is confirmed in due course, that will equate to an 18%+ return on my investment cost. Nice start to a Monday morning.

[jonwig] 22/9/2014 07:20

Here are your H1 results:



and a dividend of about 20p to come in the new year.

I'd have liked more detail about the way these IPCreate patent investments work and the expected returns from them.