Seneca Growth Capital Vct Share Discussion Threads

[stupidboypike] 07/10/2012 07:41

Hi timbo003,

without the performance incentive I had 1.8125p per penny in SCLP:-

" and at 28 August the bid price was 32p .. representing over 58p per Hygea share."

58/32 = 1.8125 (although I don't know how much the word "over" means.

But I thought the performance fee was 20%, so I was expecting 0.8 * 1.8125 = 1.45p per penny in SCLP.

so for SCLP at 50p that would give 94 + (1.45 * (50-32)) = £1.20
(using the same method as you, NAV including fee was 94p with SCLP at 32)

One important point (at least to me) is that that performance fee does not kick in until they have actually distributed 80p to shareholders.

Please anyone correct me if I am wrong.

Best regards SBP

[timbo003] 07/10/2012 06:01

rivaldo

By my calculations, if SCLP share price is 49p, then NAV for Hygea (using Hygea's own methodology of taking the performance incentive into account) would be 120p (not 128p).

The reasoning goes like this:

Without correcting for the performance incentive, every 1p increase in SCLP increases Hygea NAV by 1.82p

With correction for the performance incentive (which kicks now NAV total return >80p), every 1p increase in SCLP increases Hygea NAV by 1.51p (i.e 1.82 *5/6)

Taking Hygea's own figures at the last update: i.e. SPLC at 32p gives a Hygea NAV of 94p, then it follows that by applying a 1.51X muliplier, that a SPLC share price of 49p, corresponds to a Hygea NAV of 120p (approx).

Could someone else carefully check over the maths and performance incentive detail please, as this is an important point now SPLC is charging ahead, I'll be delighted to be corrected if I've made an error.

[jonwig] 06/10/2012 13:30

sbp - yesss... except that SCLP is pure speed, whilst HYG are carrying a load of coal on their backs.

The more SCLP increases, the less the load, but a complete loss for SCLP (unthinkable? - no) would still see HYG with the bag of coal.

And coal, of course, might still make some money.

[stupidboypike] 06/10/2012 08:29

comparing HYG and SCLP you could believe that HYG is underpriced! I would be buying if I had funds.



Best regards SBP

[rivaldo] 05/10/2012 13:41

SCLP at 49p now, so HYG's NAV up to 128p.

[stupidboypike] 02/10/2012 10:58

rivaldo, jonwig, many thanks. After holding these for around 10 years who knows they could even come good!!! Best regards SBP

[jonwig] 02/10/2012 10:42

LoL ... I thought I'd seen my quote somewhere before!

The curse of BBs - never say things only once.

[rivaldo] 02/10/2012 09:59

Stupidboypike, it's all outlined in simple terms in post 46 and 47 so is easy to remember :o))

SCLP is certainly moving nicely, and HYG remains at a healthy discount to around 118p NAV. Let's hope it continues - I suspect SCLP is going to be a volatile and exciting ride :o))

[jonwig] 02/10/2012 09:05

sbp - 2011 AR p24 has:

The Directors are also entitled to participate in a
performance bonus calculated as 20% of sums
returned to shareholders by way of dividends and
capital distributions of whatever nature, which in
aggregate exceeds the sum of 80p per share (including
dividends paid to date, i.e. 21.25p, but excluding any
sums returned to shareholders from HMRC in the year
of subscription). At 31 December 2011, no performance
fee was payable (2010: nil). The Board is also entitled to
be repaid all reasonable travelling, subsistence and
other expenses incurred by them respectively whilst
conducting their duties as Directors.

To date, they've paid out 21.25p in dividends and nothing in the form of capital distribution.
Unless I've misunderstood, the performance fee kicks in only when cash is returned to shareholders, and has to reach 80p aggregate ahead of that.

[stupidboypike] 02/10/2012 08:39

rivaldo, don't forget the management have a high incentive (20%?) which effectively cuts into the NAV at these levels. Can't remember the details, anyone else?

Best regards SBP

[rivaldo] 02/10/2012 08:35

SCLP at 44p now, so HYG's NAV would be up to 118p.

[macmoss] 01/10/2012 17:43

Surprised to see no rise in share price in view of Scancell holding, and the almost 21% rise at the close. I have shares in Scancell, and added to holding yesterday. Naturally I wish I had bought more than I did!

[rivaldo] 01/10/2012 09:10

SCLP now 36p, so HYG's NAV probably around 102p.

[rivaldo] 10/9/2012 14:08

SCLP up to 34p. Given that HYG's results noted that at 32p HYG's NAV would be 94p, the NAV must now be around 98p.

[rivaldo] 03/9/2012 13:02

Wow - I was certainly right about Immunobiology being overvalued! I can't see the quoted holding EKG going very far either at the current valuation - I'd rather they sold it and reinvested in unquoteds at more reasonable valuations.

I came across this recent summary of HYG by Michael Walters - quite useful:

[jonwig] 30/8/2012 06:25

H1 results this morning.

Apart from SCLP they seem to be optimistic about OR Productivity and Hallmarq Veterinary.

They also seem quite keen to get back to paying 5p dividends at some point. But they can't afford them - I hope they don't sacrifice promising investments just to pay out some cash.

I may have missed something subtle, but there don't seem to be any corporate actions in prospect.

[rivaldo] 24/8/2012 12:48

Usefiul post here which confirms that HYG will release their resuults next week and that they still hold 14.8m Scancell shares (i.e they haven't top-sliced, I'm glad to say):

[rivaldo] 20/8/2012 07:59

One would expect a large discount to HYG's now around 140p NAV considering SCLP's likely volatility.

However, given the relative illiquidity of HYG it's possible that any discount will narrow to a much smaller level if there's reasonable demand for HYG's shares.

Anyway, it's going to be an interesting ride :o))

[jonwig] 20/8/2012 07:34

Timbo - yes, I read your highlighting of that, but didn't comment as I've no idea how 'normal' such things are in the VCT universe.

In any event, the majority of holders of VCT shares might be only too pleased if their BoD were in a position to claim a big bonus!

[timbo003] 20/8/2012 07:25

Jonwig, I guess they do, I think 50% is now about right given that they do not have a buy back policy and the BOD are now getting 20% of any increase in NAV due their generous management incentives

[jonwig] 20/8/2012 07:21

Absent much trading in HYG, I guess market-makers have a 50% discount rule of thumb on this.

[rivaldo] 20/8/2012 07:19

SCLP has rocketed above 40p - HYG's NAV is now around 135p methinks.

[timbo003] 17/8/2012 15:18

Rivaldo, Thanks for hat, I had forgotten about DXS, perhaps they will not now need to raise more funds if that money is now banked.

Given the recent events with Scancell, I have just been revisiting the incentive scheme for the directors, which looks exceedingly generous:

www.sharemark.com/files/reports/report_435.pdf

The Directors are also entitled to participate in a performance bonus calculated as 20% of sums returned to shareholders by way of dividends and capital distributions of whatever nature, which in aggregate exceeds the sum of 80p per share (including dividends paid to date, i.e. 21.25p, but excluding any sums returned to shareholders from HMRC in the year of subscription). At 31 December 2011, no performance fee was payable (2010: nil).

So, if Scancell were sold for say £1/share (i.e. around £200M), Hygea would receive around £15M. If they decided to then distribute £12M of that proceeds and retain £3M in the VCT for further investments, then the shareholders would get 100% of the first 59p/share distributed (i.e. £4.8M), they would then only get 80% of the remaining £7.2M, ie £5.8M (72p/share) and the BOD would pocket £1.4M between them (equivalent to about 17p/share). Thereafter (presumably for evermore), the BOD get 20% of all future dividends. This does seem like an exceptionally good deal for the directors.

What seems to set it apart from most other VCT incentive schemes (for VCT managers), is that it does not reset each year. which means shareholders pay a very heavy price once 80p has been distributed