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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Nthn.Investors | LSE:NRI | London | Ordinary Share | GB00B08S4K30 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 186.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMNRI
15 NOVEMBER 2016
NORTHERN INVESTORS COMPANY PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
Northern Investors Company PLC is a private equity investment trust
managed by NVM Private Equity LLP. The trust was launched in 1984 and
has been listed on the London Stock Exchange since 1990. In July 2011
shareholders approved a change in investment strategy, whereby the trust
ceased making new investments and began an orderly realisation of its
portfolio with a view to returning capital to shareholders.
Financial highlights (comparative figures as at 30 September 2015 and 31
March 2016):
Six months to Six months to Year to
30 September 30 September 31 March
2016 2015 2016
Net assets GBP18.2m GBP27.1m GBP17.1m
No of shares in issue at end of
period 2,496,767 4,900,000 2,496,767
Net asset value per share 728.6p 553.6p 685.4p
Cash distributions to shareholders
(dividends paid plus share buy-backs)
During period GBP0.6m GBP0.8m GBP16.1m
Since change in investment policy
(July 2011) GBP77.3m GBP61.4m GBP76.7m
Return for the period
Pence per share 67.2p 47.9p 159.5p
As % of opening net asset value 9.8% 9.2% 30.5%
Dividend per share declared
in respect of the period - - 24.0p
Mid-market share price at end of
period 845.0p 590.0p 635.0p
Share price (premium)/discount
to net asset value (16.0)% (6.6)% 7.4%
For further information, please contact:
Northern Investors Company PLC
Nigel Guy/Christopher Mellor 0191 244 6000
Stifel Nicolaus Europe Limited
Neil Winward/Mark Bloomfield/Gaudi le Roux 020 7710 7600
HALF-YEARLY MANAGEMENT REPORT TO SHAREHOLDERS
Overview
The half year to 30 September 2016 has been a period of considerable
economic and political uncertainty in the UK, not least as a result of
the EU membership referendum and its aftermath. This has inevitably led
to the financial markets taking a more cautious approach to corporate
mergers and acquisitions activity, and no further investment exits were
completed during the period. Nevertheless good progress has been made
with positioning our companies for eventual sale and we expect to see
some transactions come to fruition in the second half of our financial
year.
Despite the uncertain background, the overall progress of our investee
companies during the period has been good, and this has resulted in a
further increase in net asset value (NAV) to 728.6 pence as at 30
September 2016 - a 6.3% increase over the half year.
Including funds distributed through the March 2016 tender offer (GBP15.3
million) and the July 2016 dividend (GBP0.6 million), the total cash
returned to shareholders since the change in investment policy in July
2011 has reached GBP77.3 million, with a further GBP18.2 million of
assets still held on the company's balance sheet. It remains our aim
that the run-off process should be largely completed by December 2017.
Investment portfolio
There were no investment additions or disposals during the period under
review. Your directors have continued to review the portfolio with the
manager on a regular basis, placing a strong emphasis on the exit plan
for each investment. The three largest holdings, Optilan Group, Axial
Systems Holdings and Cawood Scientific, now represent almost 80% of the
total portfolio valuation and in the short term the manager's efforts
will be focussed on realising value from these investments in an orderly
manner. Some of the remaining holdings may prove more difficult to exit
from, particularly in two cases where the funds managed by NVM Private
Equity are not the lead investors and we are to a greater extent
dependent on the co-operation of other shareholders.
The directors' valuation of the portfolio increased by GBP1.8 million
over the half year. The return for the period was augmented by the
receipt of a GBP0.3 million deferred consideration payment from the sale
of Kitwave One in February 2016. A further GBP1.1 million of deferred
payments from previous sales will fall due over the next 15 months,
though subject to some uncertainty which means that they have not yet
been recognised in our financial statements.
Financial performance
Over the six month period to 30 September 2016 the company's NAV, after
deducting the 2015/16 final dividend of 24.0 pence per share paid in
July, rose from 685.4 pence to 728.6 pence. The return per share for
the half year was 67.2 pence, compared with 47.9 pence (on a larger
number of shares in issue) in the corresponding period last year.
Investment income from the portfolio has continued to reduce following
the sale of some of our higher-yielding investments last year.
An initial performance fee instalment of GBP2.8 million was paid to NVM
in May 2016, the underlying cash distributions hurdle having been
achieved during the year ended 31 March 2016. The remaining performance
fee provision at 30 September 2016 was GBP2.4 million, although this
will only become payable to the extent that the company's present asset
value is converted into cash distributions to shareholders. Your
directors consider that the incentive scheme continues to achieve an
effective alignment of NVM's interests with those of shareholders, as
demonstrated by the success of the portfolio run-off process to date.
Share price
The mid-market share price increased from 635 pence to 845 pence during
the half year, with the shares trading at a premium to NAV for most of
the period. With only 2.5 million shares remaining in issue, a
relatively low level of trading in the shares can lead to
disproportionate movements in the share price.
Dividend
As in the last four financial years, no interim dividend has been
declared. Given the company's reducing size and unpredictable
investment income, it is not possible at this stage to say whether a
final dividend will be proposed in respect of the current financial
year. However the company will in any case pay a dividend in respect of
each year to the extent, if any, which may be necessary to maintain the
company's authorised investment trust status.
VAT claim against HM Revenue & Customs
We reported previously that the company had brought a claim against HM
Revenue & Customs to recover VAT paid on management fees in the period
from 1990 to 2009, to the extent not already recovered by the company.
The claim has been stayed whilst we await the outcome of the lead
litigation which was heard in the Supreme Court in May 2016. At this
stage it remains impracticable to estimate the possible recovery, if
any.
Corporate strategy
Since July 2011 a total of GBP77.3 million has been returned to
shareholders through five tender offers, priced at net asset value, and
a series of dividends. This is equivalent to 131% of the company's net
assets at the start of the process.
The most recent tender offer in March 2016 was only 75% taken up by
shareholders, with the result that the company is currently holding more
cash than the directors had envisaged. After consulting our legal and
financial advisers, we have decided that the next distribution to
shareholders will be made by means of a bonus issue to all ordinary
shareholders of new B preference shares, which will then be redeemed for
cash. We have been advised that for tax purposes this should be treated
as a capital, rather than an income, receipt in the hands of the
recipients. Further details will be given in a circular to shareholders
which is expected to be published in December 2016. Subject to
shareholder approval of the necessary resolutions, it is envisaged that
a distribution of not less than GBP6 million will take place before the
end of January 2017.
In September 2016 Court consent was given to the cancellation of the
company's GBP4.5 million capital redemption reserve, resulting in the
creation of a new distributable reserve which will give us additional
flexibility in the future distribution of funds to shareholders.
It is still our objective that the realisation of the portfolio should
be substantially completed by the end of 2017, although it is possible
that a small number of assets will remain to be dealt with after that
date. There has been no significant change to the range of possible
outcomes previously announced, ie that the further amount to be returned,
including the proposed January 2017 distribution, could be in the range
from GBP18 million to GBP23 million, making a cumulative total of
between GBP95 million and GBP100 million (equivalent to between 160% and
170% of the net assets at the start of the realisation process). We
currently project future cash distributions of between 720 pence and 920
pence for each of the 2,496,767 shares remaining in issue. It must be
emphasised that the board's estimates are subject to various
uncertainties including timing, market conditions, individual company
performance and the behaviour of other shareholders in investee
companies.
Outlook
We are now in the later stages of the run-off process which began in
2011. The results to date have been good, and your board and manager
are focussed on achieving a timely completion of the exercise so as to
deliver a satisfactory overall outcome for shareholders.
On behalf of the Board
Nigel Guy
Chairman
The unaudited half-yearly financial statements for the six months ended
30 September 2016 are set out below.
INCOME STATEMENT
(unaudited) for the six months ended 30 September 2016
Six months ended Six months ended
30 September 2016 30 September 2015
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain on
disposal of
investments - 277 277 - 240 240
Movements in
fair value
of
investments - 1,758 1,758 - 2,185 2,185
---------- ---------- ---------- ---------- ---------- ----------
- 2,035 2,035 - 2,425 2,425
Income 227 - 227 590 - 590
Investment
management
fee (27) (349) (376) (30) (455) (485)
Other
expenses (185) (22) (207) (194) - (194)
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
before tax 15 1,664 1,679 366 1,970 2,336
Tax on
return on
ordinary
activities (3) 3 - (11) 24 13
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
after tax 12 1,667 1,679 355 1,994 2,349
---------- ---------- ---------- ---------- ---------- ----------
Return per 0.5p 66.7p 67.2p 7.2p 40.7p 47.9p
share
Year ended 31 March 2016
Revenue Capital Total
GBP000 GBP000 GBP000
Gain on disposal of investments - 5,067 5,067
Movements in fair value of investments - 3,413 3,413
---------- ---------- ----------
- 8,480 8,480
Income 1,025 - 1,025
Investment management fee (60) (1,324) (1,384)
Other expenses (316) - (316)
---------- ---------- ----------
Return on ordinary activities before
tax 649 7,156 7,805
Tax on return on ordinary activities (45) 45 -
---------- ---------- ----------
Return on ordinary activities after tax 604 7,201 7,805
---------- ---------- ----------
Return per share 12.3p 147.2p 159.5p
BALANCE SHEET
(unaudited) as at 30 September 2016
30 September 2016 30 September 2015 31 March 2016
GBP000 GBP000 GBP000
Fixed assets:
Investments 13,478 23,979 11,720
---------- ---------- ----------
Current assets:
Investments 56 56 56
Debtors 32 14 25
Cash and deposits 7,126 7,453 10,408
---------- ---------- ----------
7,214 7,523 10,489
Creditors (amounts
falling due
within one year) (2,500) (4,375) (5,097)
---------- ---------- ----------
Net current assets 4,714 3,148 5,392
---------- ---------- ----------
Net assets 18,192 27,127 17,112
---------- ---------- ----------
Capital and reserves:
Called-up equity share
capital 624 1,225 624
Capital redemption
reserve - 3,930 4,531
Capital reserve (2,987) 3,890 (2,918)
Special reserve 17,183 12,674 12,674
Revaluation reserve 2,009 3,707 251
Revenue reserve 1,363 1,701 1,950
---------- ---------- ----------
Total equity
shareholders' funds 18,192 27,127 17,112
---------- ---------- ----------
Net asset value per share 728.6p 553.6p 685.4p
STATEMENT OF CHANGES IN EQUITY
(unaudited) for the six months ended 30 September 2016
--------Non-distributable ---------Distributable
reserves-------- reserves--------- Total
Capital
Share redemption Revaluation Capital Special Revenue
capital reserve reserve reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April
2016 624 4,531 251 (2,918) 12,674 1,950 17,112
Return on
ordinary
activities
after tax for
the period - - 1,758 (69) (22) 12 1,679
Cancellation
of capital
redemption
reserve - (4,531) - - 4,531 - -
Dividends
paid - - - - - (599) (599)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 30
September
2016 624 - 2,009 (2,987) 17,183 1,363 18,192
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CHANGES IN EQUITY
(unaudited) for the six months ended 30 September 2015
--------Non-distributable ---------Distributable
reserves-------- reserves--------- Total
Capital
Share redemption Revaluation Capital Special Revenue
capital reserve reserve reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April
2015 1,225 3,930 1,346 4,257 12,674 2,179 25,611
Return on
ordinary
activities
after tax
for the
period - - 2,361 (367) - 355 2,349
Dividends
paid - - - - - (833) (833)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 30
September
2015 1,225 3,930 3,707 3,890 12,674 1,701 27,127
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CHANGES IN EQUITY
(unaudited) for the year ended 31 March 2016
--------Non-distributable ---------Distributable
reserves-------- reserves--------- Total
Capital
Share redemption Revaluation Capital Special Revenue
capital reserve reserve reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April
2015 1,225 3,930 1,346 4,257 12,674 2,179 25,611
Return on
ordinary
activities
after tax for
the period - - (1,095) 8,296 - 604 7,805
Re-purchase
of shares
for
cancellation (601) 601 - (15,260) - - (15,260)
Share
re-purchase
expenses - - - (211) - - (211)
Dividends
paid - - - - - (833) (833)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March
2016 624 4,531 251 (2,918) 12,674 1,950 17,112
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CASH FLOWS
(unaudited) for the six months ended 30 September 2016
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
GBP000 GBP000 GBP000
Cash flows from operating
activities:
Return on ordinary
activities before tax 1,679 2,336 7,805
Adjustments for:
Gain on disposal of
investments (277) (240) (5,067)
Movement in fair value of
investments (1,758) (2,185) (3,413)
(Increase)/decrease in
debtors (7) 55 31
Increase/(decrease) in
creditors (2,597) 329 1,051
---------- ---------- ----------
Net cash inflow/(outflow)
from operating
activities (2,960) 295 407
---------- ---------- ----------
Cash flows from investing
activities:
Purchase of investments - - -
Sale/repayment of
investments 277 2,514 20,828
---------- ---------- ----------
Net cash inflow from
investing activities 277 2,514 20,828
---------- ---------- ----------
Cash flows from financing
activities:
Repurchase of ordinary
shares for cancellation - - (15,260)
Share re-purchase
expenses - - (211)
Dividends paid on
ordinary shares (599) (833) (833)
---------- ---------- ----------
Net cash outflow from
financing activities (599) (833) (16,304)
---------- ---------- ----------
Net increase/(decrease)
in cash/cash
equivalents (3,282) 1,976 4,931
Cash and cash equivalents
at beginning of period 10,464 5,533 5,533
---------- ---------- ----------
Cash and cash equivalents
at end of period 7,182 7,509 10,464
---------- ---------- ----------
INVESTMENT PORTFOLIO SUMMARY
as at 30 September 2016
Cost Valuation % of net assets
Company GBP000 GBP000 by valuation
Optilan Group 1,900 4,105 22.6
Axial Systems Holdings 2,311 3,520 19.4
Cawood Scientific 1,196 2,951 16.2
Weldex (International) Offshore
Holdings 3,252 1,664 9.1
Lanner Group 621 710 3.9
CGI Group Holdings 1,908 528 2.9
Crantock Bakery 215 - -
S&P Coil Products 66 - -
---------- ---------- -------
Total fixed asset investments 11,469 13,478 74.1
----------
Net current assets 4,714 25.9
---------- -------
Net assets 18,192 100.0
---------- -------
BUSINESS RISKS
The board carries out a regular and robust review of the risk
environment in which the company operates. The principal risks and
uncertainties identified by the board which might affect the company's
business model and future performance, and the steps taken with a view
to their mitigation, are as follows:
Investment and liquidity risk: the majority of the company's
investments comprise minority holdings in small and medium-sized
unquoted companies, which by their nature entail a higher level of risk
and lower liquidity than investments in large quoted companies.
Mitigation: the investment manager aims to limit the risk attaching to
the portfolio as a whole by close monitoring of individual holdings,
including the appointment of investor directors where appropriate. The
board reviews the portfolio, including the schedule of projected exits,
with the investment manager on a regular basis with a view to ensuring
that the orderly realisation process remains on track.
Portfolio concentration risk: following the adoption of the company's
revised investment policy in July 2011, the portfolio is becoming more
concentrated as investments are realised and cash is returned to
shareholders. This will increase the proportionate impact of changes in
the value of individual investments on the value of the company as a
whole. Mitigation: the directors and manager keep the changing
composition of the portfolio under review and focus closely on those
holdings which represent the largest proportions of total value.
Financial risk: most of the company's investments involve a medium- to
long-term commitment and many are relatively illiquid. Mitigation: the
directors consider that it is inappropriate to finance the company's
activities through borrowing except on an occasional short-term basis.
Accordingly they seek to maintain a proportion of the company's assets
in cash or cash equivalents in order to be in a position to meet
expenditure commitments including any investments which may be made
under the company's revised investment policy. The company has very
little exposure to foreign currency risk and does not enter into
derivative transactions.
Economic risk: events such as economic recession or fluctuations in
interest rates, stock markets and the level of demand for corporate
acquisitions in individual industry sectors may affect the valuation of
investee companies and their ability to access adequate financial
resources, as well as affecting the company's own share price and
discount to net asset value. Mitigation: the board and manager monitor
the investment portfolio closely and aim to position each holding for
realisation at the optimum time. The company maintains sufficient cash
reserves to be able to provide additional funding to investee companies
should this be necessary.
Credit risk: the company holds a number of financial instruments and
cash deposits and is dependent on the counterparties discharging their
commitment. Mitigation: the directors review the creditworthiness of
the counterparties to these instruments and cash deposits and seek to
ensure there is no undue concentration of credit risk with any one
party.
Internal control risk: the company's assets could be at risk in the
absence of an appropriate internal control regime. Mitigation: the
board regularly reviews the system of internal controls, both financial
and non-financial, operated by the company and the manager. These
include controls designed to ensure that the company's assets are
safeguarded and that proper accounting records are maintained.
OTHER MATTERS
The unaudited half-yearly financial statements for the six months ended
30 September 2016 do not constitute statutory financial statements
within the meaning of Section 434 of the Companies Act 2006, have not
been reviewed or audited by the company's independent auditor and have
not been delivered to the Registrar of Companies. The comparative
figures for the year ended 31 March 2016 have been extracted from the
audited financial statements for that year, which have been delivered to
the Registrar of Companies; the auditor's report on those financial
statements (i) was unqualified, (ii) drew attention by way of emphasis
of matter to the fact that the financial statements had not been
prepared on the going concern basis and (iii) did not contain a
statement under Section 498(2) or (3) of the Companies Act 2006.
The half-yearly financial statements have been prepared on the basis of
the accounting policies set out in the annual financial statements for
the year ended 31 March 2016. The financial statements have not been
prepared on the going concern basis, since the company's current
objective is to conduct an orderly realisation of the investment
portfolio and return cash to shareholders. No adjustments were
necessary to the investment valuations or other assets and liabilities
included in the financial statements as a consequence of the change in
the basis of preparation.
The directors of the company at the date of this announcement were Mr N
R A Guy (Chairman), Mr J C Barnsley, Mr P W F Marsden and Mr M P
Nicholls.
Each of the directors confirms that to the best of his knowledge the
half-yearly financial statements have been prepared in accordance with
the Statement "Half-yearly financial reports" issued by the UK
Accounting Standards Board and the half-yearly financial report includes
a fair review of the information required by (a) DTR 4.2.7R of the
Disclosure Rules and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties
for the remaining six months of the year, and (b) DTR 4.2.8R of the
Disclosure Rules and Transparency Rules, being related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so. The calculation of the revenue and capital return per share is based on the return on ordinary activities after tax for the six months ended 30 September 2016 and on 2,496,767 (2015 4,900,000) ordinary shares, being the weighted average number of shares in issue during the period. The calculation of the net asset value per share is based on the net assets at 30 September 2016 divided by the 2,496,767 (2015 4,900,000) ordinary shares in issue at that date. A copy of the half-yearly financial report for the six months ended 30 September 2016 is expected to be posted to shareholders by 25 November 2016 and will be available to the public at the registered office of the company at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN and on the NVM Private Equity LLP website, www.nvm.co.uk Neither the contents of the NVM Private Equity LLP website nor the contents of any website accessible from hyperlinks on the NVM Private Equity LLP website (or any other website) is incorporated into, or forms part of, this announcement. This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Northern Investors Co PLC via Globenewswire http://www.nvm.co.uk/investorarea/northern_investors_company_plc.php
(END) Dow Jones Newswires
November 15, 2016 06:00 ET (11:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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