The Lemon Fool

Initial Return of Capital has been announced.
Details here:
https://www.hl.co.uk/shares/shares-sear ... share-news

Y

yieldhog wrote:Initial Return of Capital has been announced.
Details here:
https://www.hl.co.uk/shares/shares-sear ... share-news

And here.

Hasn't moved the dial at all, perhaps because of the opaque methodology, even though it implies an NAV of c80p relative to today's 52p. Or perhaps a healthy distrust of valuations.

I hope the stupid liquidation works out, the more so as I put OH in here, back when it seemed a good idea.

V8

It does leave a few anaddressed questions, at least in my mind.
This distribution is described as a bonus, even though it's titled a Return of Capital. Do I log it as a dividend or return of capital, or is it a bit of both?
Another quarterly dividend is due in June. Should we expect another normal dividend or a reduced one?
As expectations of interest rate cuts have led to improved prices for fixed income assets, shouldn't we be seeing some improvement in actual NAV?

Y

88V8 wrote:Hasn't moved the dial at all, perhaps because of the opaque methodology, even though it implies an NAV of c80p relative to today's 52p. Or perhaps a healthy distrust of valuations.

yieldhog wrote:It does leave a few anaddressed questions, at least in my mind.
This distribution is described as a bonus, even though it's titled a Return of Capital. Do I log it as a dividend or return of capital, or is it a bit of both?
Another quarterly dividend is due in June. Should we expect another normal dividend or a reduced one?
As expectations of interest rate cuts have led to improved prices for fixed income assets, shouldn't we be seeing some improvement in actual NAV?

Return of capital, I think. That's how I will treat it for tax purposes, at any rate.

The dividend is backwards looking, and the ex date for the RoC and the divi are the same, so I would assume the May divi will be much as before.

One would hope for an uplift in NAV, but I wonder how many of the valuations are back of an envelope guesstimates of illiquid assets.

V8

88V8 wrote:Return of capital, I think. That's how I will treat it for tax purposes, at any rate.

I think the treatment is supposed to be that the proceeds of the distribution are deducted from the original purchase price, rebasing it and thus deferring CGT issues until the ultimate disposal.

Alaric wrote:

88V8 wrote:Return of capital, I think. That's how I will treat it for tax purposes, at any rate.

I think the treatment is supposed to be that the proceeds of the distribution are deducted from the original purchase price, rebasing it and thus deferring CGT issues until the ultimate disposal.

The rule is that if the distribution is less than 5% of the total holding or is less than £3,000 then it is treated as a "small capital distribution" and the distribution is deducted from the purchase price, deferring the CGT. If more than 5% & more than £3k then it should be treated as an immediate CGT disposal.

See https://www.gov.uk/hmrc-internal-manual ... al/cg57835