TIDMNRI
12 NOVEMBER 2018
NORTHERN INVESTORS COMPANY PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2018
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. Since then
the trust has returned a total of GBP90.7 million to shareholders
through dividends and capital distributions.
Financial highlights (comparative figures as at 30 September 2017 and 31
March 2018):
Six months to Six months to Year to
30 September 30 September 31 March
2018 2017 2018
------------- ------------- ---------
Net assets GBP5.6m GBP5.8m GBP5.8m
Number of shares in issue at
end of period 2,496,767 2,496,767 2,496,767
Net asset value per share 222.7p 233.4p 232.1p
Cash distributions to
shareholders
(dividends paid plus share
buy-backs)
During period -- GBP7.2m GBP7.2m
Since change in investment
policy (July 2011) GBP90.7m GBP90.7m GBP90.7m
Cash balances at end of period GBP3.2m GBP1.5m GBP1.9m
Return/(loss) for the period
Pence per share (9.4)p 16.0p 13.5p
As % of opening net asset value (4.0)% 3.1% 2.7%
Dividend per share declared
in respect of the period -- -- --
Mid-market share price at end
of period 197p 236p 224p
Share price discount/(premium)
to net asset value 11.5% (1.1)% 3.5%
For further information, please contact:
Northern Investors Company PLC
Nigel Guy/James Bryce 0191 244 6000
HALF-YEARLY MANAGEMENT REPORT TO SHAREHOLDERS
Overview
Our company is approaching the final stage of a process which began in
July 2011, when a general meeting of shareholders approved a radical
change in corporate strategy. As a result the company ceased making new
investments and began an orderly realisation of its portfolio, with a
view to returning capital to shareholders through a series of cash
distributions. At the time of the change the company's net assets were
GBP59.0 million, comprising 30 venture capital investments with a
carrying value of GBP47.7 million and net current assets of GBP11.3
million (including cash balances of GBP12.2 million).
It was recognised that the task of realising the underlying value of a
portfolio of minority holdings in small unquoted companies was
challenging and would require patience and careful management, so it is
pleasing to record that over the past seven years the company has been
able to distribute over GBP90 million to shareholders, with now only
three of the original 30 investments still to be sold.
As a result of successful realisations and cash distributions, the
company's remaining net assets have been progressively reduced and stand
at GBP5.6 million at 30 September 2018. Your directors believe that the
point has now been reached where the expense of maintaining the present
corporate form, including a Stock Exchange listing, is disproportionate
in relation to the remaining asset base. Accordingly it is intended
that on 16 November 2018 we will publish a circular convening a general
meeting of shareholders to be held on 11 December 2018, at which a
resolution will be proposed to appoint liquidators to carry out a
members' voluntary liquidation of the company. We believe this will be
the most cost-effective and tax-efficient way of completing the final
stages of the portfolio run-off process and distributing the resulting
funds to shareholders.
This half-yearly management report will therefore be the last report
which your board will be making to shareholders. Following the
appointment of the liquidators, the company's directors will resign and
its Stock Exchange listing will be cancelled.
Results for the six months ended 30 September 2018
During the half year the company's income statement showed a loss before
tax of 9.4 pence per share, comprising a surplus of 1.8 pence per share
on the revenue account and a deficit of 11.2 pence per share on the
capital account. A capital profit of GBP0.1 million was realised on the
sale of CGI Group Holdings, but this was more than offset by an overall
reduction of GBP0.4 million in the directors' valuation of the three
remaining investments. Unfortunately global trade conflicts and rising
US interest rates, whose effects have already been reflected in stock
market weakness, and the continuing uncertainty around Britain's
proposed withdrawal from the European Union, are not particularly
conducive to investee companies' trading or exit prospects.
The net asset value per share at 30 September 2018 was 222.7 pence, a
reduction of 9.4 pence from the audited figure of 232.1 pence as at 31
March 2018. The directors' valuation of the three remaining investments
was GBP3.7 million. Cash balances at 30 September 2018 amounted to
GBP3.2 million (31 March 2018 GBP1.9 million), of which we estimate that
GBP3.0 million will be passed over to the liquidators on their
appointment. The other significant balance sheet item is the provision
of GBP1.3 million for the total incentive fee which will be payable to
NVM if the remaining investments are realised at their current valuation
and when the company's cash balances (net of liquidation expenses) are
distributed to shareholders. The corresponding provision at 31 March
2018 was GBP1.8 million, of which GBP0.5 million became due and was paid
in June 2018.
No dividend has been declared in respect of the period.
Investment portfolio
In September 2018 the company's investment in CGI Group Holdings was
sold for proceeds of GBP1.8 million, compared to an original cost of
GBP1.9 million and a 31 March 2018 carrying value of GBP1.7 million.
This was a satisfactory final outcome to an investment which had already
returned significant amounts of cash through capital reconstructions in
2004 and 2008.
Our manager, NVM Private Equity, has continued to seek appropriate exit
opportunities for the three remaining investments, Axial Systems
Holdings, Lanner Group and Weldex (International) Offshore Holdings. It
is highly unlikely that any of these holdings will be sold prior to the
general meeting, and NVM will be retained to work with the liquidators,
once appointed, on the continuing realisation process. At this stage it
is not possible to give a reliable indication as to the likely timing of
future disposals.
Appointment of liquidators
Shareholders are strongly recommended to read the circular which is
expected to be published by the company on 16 November 2018, which will
contain notice of the general meeting to be held on 11 December 2018 and
will set out the background to, and implications of, the liquidators'
appointment, as well as a description of risk factors and tax
considerations relevant to shareholders. The following paragraphs set
out the directors' understanding of certain key aspects but are not a
substitute for reading the circular itself.
The remit of the liquidators will be to oversee the realisation of the
company's remaining assets and to complete the process of distributing
cash to shareholders. On the appointment of the liquidators, the
directors will cease to have any powers or functions in relation to the
affairs of the company and will therefore resign from the board. NVM's
responsibility to provide administrative and secretarial services to the
company will also cease. However NVM will enter into a new agreement to
provide advisory services in connection with the sale of the remaining
investments. NVM will also retain its existing entitlement to receive
an incentive fee based on cash distributions to shareholders. Details
will be provided in the circular.
It is envisaged that the company's listing on the London Stock Exchange
will be cancelled with effect from 12 December 2018. The share register
will be closed at the close of business on 10 December 2018 and
registration of transfers of shares will no longer be possible after
that date without the prior consent of the liquidators. Shareholders
who hold their shares through ISAs are therefore urged to check that
their ISA provider will permit the shares to be retained once the
company's listing is cancelled. The production of audited annual and
unaudited half-yearly reports in their present form will cease, although
the liquidators are required by statute to report to shareholders
annually for as long as the liquidation continues.
Since the adoption of the revised investment policy in 2011, your
directors have from time to time provided shareholders with updated
estimates of the range of possible outcomes in terms of cash
distributions to shareholders. Our last such estimate, in May 2018, was
that the total cash returned to shareholders would be equivalent to
between 162% and 167% of the starting net assets of GBP59 million. We
believe that this range remains valid, though it must be emphasised that
the timing of further investment sales and the values realised will be
at the discretion of the liquidators and will also depend on the
companies' trading performance and on market conditions at the relevant
time. Nevertheless this points to a highly creditable outcome which
validates the orderly realisation strategy maintained by the board over
the past seven years.
The liquidators have indicated that, based on the information currently
available to them, they expect to make an initial distribution of not
less than GBP1.8 million (equivalent to approximately 72 pence per
share) to shareholders no later than 31 January 2019. The timing and
amount of further distributions will depend on investment realisations,
but it is currently estimated that it may take a further 24 months or
more to complete the realisation process. The liquidators are obliged
to settle all known liabilities and claims and seek tax clearance from
HM Revenue & Customs before making any final distribution to
shareholders and then concluding the liquidation. Based on the
directors' appraisal of the range of possible outcomes mentioned above,
and allowing for the payment of estimated liquidation expenses and the
NVM incentive fee, we believe that cash distributions to shareholders in
the liquidation period, including the initial distribution by the
liquidators, could be in the range from 215 pence to 295 pence per
share. This information is provided for illustration purposes only and
clearly is in no way binding on the company or the liquidators.
Conclusion
Northern Investors was launched in 1984 with an initial capital of GBP5
million and has been listed as an investment trust on the London Stock
Exchange since 1990. The company's impending demise is in some ways to
be regretted, but it is a fact of life that modern investors,
particularly institutions, have become increasingly reluctant to invest
in listed private equity investment trusts which make direct investments
in unquoted companies rather than in managed funds.
I know that shareholders will want to join me in thanking the present
board and their predecessors for their wise oversight of the company's
affairs, as well as our manager NVM whose investment executives have
been consistent, professional and effective in their approach over the
years. We have also been fortunate to have the benefit of long and
productive relationships with our various professional advisers. On
behalf of the board I would also like to thank those shareholders who
have remained with us for their continued support.
On behalf of the Board
Nigel Guy
Chairman
The unaudited half-yearly financial statements for the six months ended
30 September 2018 are set out below.
INCOME STATEMENT
(unaudited) for the six months ended 30 September 2018
Six months ended Six months ended
30 September 2018 30 September 2017
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain on
disposal of
investments - 97 97 - 653 653
Movements in
fair value
of
investments - (357) (357) - 9 9
---------- ---------- ---------- ---------- ---------- ----------
- (260) (260) - 662 662
Income 180 - 180 65 - 65
Investment
management
fee (13) (19) (32) (23) (91) (114)
Other
expenses (123) -- (123) (171) (42) (213)
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
before tax 44 (279) (235) (129) 529 400
Tax on
return on
ordinary
activities - - - - - -
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
after tax 44 (279) (235) (129) 529 400
---------- ---------- ---------- ---------- ---------- ----------
Return per
share 1.8p (11.2)p (9.4)p (5.2)p 21.2p 16.0p
Year ended 31 March 2018
Revenue Capital Total
GBP000 GBP000 GBP000
Gain on disposal of
investments - 776 776
Movements in fair value of
investments - 26 26
---------- ---------- ----------
- 802 802
Income 130 - 130
Investment management fee (39) (194) (233)
Other expenses (319) (42) (361)
---------- ---------- ----------
Return on ordinary activities
before tax (228) 566 338
Tax on return on
ordinary activities - - -
---------- ---------- ----------
Return on ordinary activities
after tax (228) 566 338
---------- ---------- ----------
Return per share (9.1)p 22.6p 13.5p
BALANCE SHEET
(unaudited) as at 30 September 2018
30 September 2018 30 September 2017 31 March 2018
GBP000 GBP000 GBP000
Fixed assets:
Investments 3,663 5,810 5,737
---------- ---------- ----------
Current assets:
Debtors 28 383 19
Cash and cash
equivalents 3,156 1,516 1,867
---------- ---------- ----------
3,184 1,899 1,886
Creditors (amounts
falling due
within one year) (1,286) (1,881) (1,827)
---------- ---------- ----------
Net current assets 1,898 18 59
---------- ---------- ----------
Net assets 5,561 5,828 5,796
---------- ---------- ----------
Capital and
reserves:
Called-up equity
share capital 624 624 624
Capital reserve 6,263 (10,688) 6,437
Special reserve - 17,141 -
Revaluation reserve (2,310) (2,288) (2,205)
Revenue reserve 984 1,039 940
---------- ---------- ----------
Total equity
shareholders'
funds 5,561 5,828 5,796
---------- ---------- ----------
Net asset value per 222.7p 233.4p 232.1p
share
STATEMENT OF CHANGES IN EQUITY
(unaudited) for the six months ended 30 September 2018
------- Non-distributable reserves ------- -------- Distributable reserves -------- Total
Capital
Share redemption Revaluation Capital Special Revenue
capital reserve reserve reserve reserve reserve
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2018 624 - (2,205) 6,437 - 940 5,796
Return on
ordinary
activities
after tax for
the period - - (105) (174) - 44 (235)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 30 September
2018 624 - (2,310) 6,263 - 984 5,561
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CHANGES IN EQUITY
(unaudited) for the six months ended 30 September 2017
------- Non-distributable reserves ------- -------- Distributable reserves -------- Total
Capital
Share redemption Revaluation Capital Special Revenue
capital reserve reserve reserve reserve reserve
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2017 624 6,242 (17) (7,018) 10,941 1,921 12,693
Return on
ordinary
activities
after tax for the
period - - (2,271) 2,842 (42) (129) 400
Bonus issue of B
shares - - - - (6,429) - (6,429)
Redemption of B
shares - 6,429 - (6,429) - - -
B share redemption
expenses - - - (83) - - (83)
Cancellation
of capital
redemption reserve - (12,671) - - 12,671 - -
Dividends paid - - - - - (753) (753)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 30 September
2017 624 - (2,288) (10,688) 17,141 1,039 5,828
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018
------- Non-distributable reserves ------- ------- Distributable reserves ------- Total
Capital
Share redemption Revaluation Capital Special Revenue
capital reserve reserve reserve reserve reserve
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2017 624 6,242 (17) (7,018) 10,941 1,921 12,693
Return on
ordinary
activities
after tax for the
year - - (2,188) 2,796 (42) (228) 338
Cancellation
of capital
redemption reserve - (12,671) - - 12,671 - -
Bonus issue of B
shares - - - - (6,429) - (6,429)
Redemption of B
shares - 6,429 - (6,429) - - -
B share redemption
expenses - - - (53) - - (53)
Transfer to capital
reserve - - - 17,141 (17,141) - -
Dividends paid - - - - - (753) (753)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2018 624 - (2,205) 6,437 - 940 5,796
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CASH FLOWS
(unaudited) for the six months ended 30 September 2018
Six months ended Six months ended Year ended
30 September 30 September
2018 2017 31 March 2018
GBP 000 GBP 000 GBP 000
Cash flows from
operating
activities:
Return on ordinary activities
before tax (235) 400 338
Adjustments for:
Gain on disposal of
investments (97) (653) (776)
Movement in fair value of
investments 357 (9) (26)
(Increase)/decrease in
debtors (9) 783 772
Increase/(decrease) in
creditors (541) (768) (822)
---------- ---------- ----------
Net cash outflow from
operating activities (525) (247) (514)
---------- ---------- ----------
Cash flows from
investing
activities:
Purchase of
investments - - -
Sale/repayment of investments 1,814 4,458 5,046
---------- ---------- ----------
Net cash inflow from
investing activities 1,814 4,458 5,046
---------- ---------- ----------
Cash flows from
financing
activities:
Redemption of B shares - (6,429) (6,429)
B share redemption expenses - (83) (53)
Dividends paid on ordinary
and B shares - (753) (753)
---------- ---------- ----------
Net cash outflow from
financing activities - (7,265) (7,235)
---------- ---------- ----------
Net decrease in cash/cash
equivalents 1,289 (3,054) (2,703)
Cash and cash equivalents at
beginning of period 1,867 4,570 4,570
---------- ---------- ----------
Cash and cash equivalents at
end of period 3,156 1,516 1,867
---------- ---------- ----------
INVESTMENT PORTFOLIO SUMMARY
(unaudited) as at 30 September 2018
Cost Valuation % of net assets
Company GBP000 GBP000 by valuation
Weldex (International) Offshore
Holdings 3,252 1,921 34.6
Axial Systems Holdings 2,311 989 17.8
Lanner Group 410 753 13.5
---------- ---------- -------
Total fixed asset investments 5,973 3,663 65.9
----------
Net current assets 1,898 34.1
---------- -------
Net assets 5,561 100.0
---------- -------
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 performance, and the steps taken with a view to their
mitigation, are as follows:
Investment and liquidity risk: 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. The company's ability to exert
influence over these investments may be limited relative to other
shareholders. 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 has become more
concentrated as investments are realised and cash is returned to
shareholders. This has increased the proportionate impact of changes in
the value of individual investments on the value of the company as a
whole. The directors' valuation of the company's investments represents
their best assessment of the fair value of the investments as at the
valuation date and the amounts eventually realised from such investments
may be more or less than the directors' valuation. 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: the company's investments 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 general
fluctuations in stock markets and interest rates 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 company maintains
sufficient cash reserves to be able to provide additional funding to
investee companies should this be necessary.
Liquidation risk: in order to complete the implementation of the
company's corporate strategy, the directors intend to propose that
liquidators will be appointed to carry out a members' voluntary
liquidation, following which the directors will resign and the company's
shares will cease to be listed on the London Stock Exchange. This will
result in shareholders having a lesser degree of influence over the
affairs of the company than previously and to a loss of liquidity as
regards their shareholdings.
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.
It is expected that a circular to shareholders will be published on 16
November 2018 containing proposals for the appointment of liquidators
and setting out the risk factors relating to such appointment.
OTHER MATTERS
The unaudited half-yearly financial statements for the six months ended
30 September 2018 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 2018 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 2018. 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 and Mr P W F Marsden.
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 2018 and on 2,496,767 (2017 2,496,767) 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 2018 divided by the 2,496,767 (2017 2,496,767)
ordinary shares in issue at that date.
A copy of the half-yearly financial report for the six months ended 30
September 2018 is expected to be posted to shareholders on 16 November
2018 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.
(END) Dow Jones Newswires
November 12, 2018 02:00 ET (07:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Northern Investors (LSE:NRI)
過去 株価チャート
から 12 2024 まで 1 2025
Northern Investors (LSE:NRI)
過去 株価チャート
から 1 2024 まで 1 2025
