Announcements

Northern Investors Company PLC.

12 NOVEMBER 2013

NORTHERN INVESTORS COMPANY PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013

Northern Investors Company PLC is a private equity investment trust managed by NVM Private Equity Limited.  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 2012 and 31 March 2013):

Six months to
30 September
                 2013
Six months to
30 September
                 2012
Year to
31 March
         2013
Net assets£45.5m £51.6m £44.1m
Number of shares in issue
at end of period
12,128,440 15,128,440 12,128,440
Net asset value per share375.3p 340.9p 363.8p
Cash distributions to shareholders
(dividends paid plus share buy-backs):
During period
Since change in investment policy (July 2011)


£1.1m
£26.5m


£1.0m
£15.3m


£11.1m
££25.4m
Return for the period:
Pence per share
As % of opening net asset value

21.0p
5.8%

22.2p
6.8%

43.1p
13.2%
Dividend per share declared
in respect of the period

-

-

9.5p
Mid-market share price at end of period311.5p 275.5p 292.5p
Share price discount to net asset value17.0% 19.2% 19.6%

For further information, please contact:

Northern Investors Company PLC
Nigel Guy/Christopher Mellor                   0191 244 6000

Oriel Securities
Neil Winward                                         020 7710 7600

HALF-YEARLY MANAGEMENT REPORT TO SHAREHOLDERS

Your directors have continued to progress the corporate strategy approved by shareholders in July 2011.  Accordingly the company is no longer making new investments and is realising its portfolio of unquoted holdings in an orderly manner in order to distribute capital to shareholders, whilst striking a balance between maximisation of value and an efficient return of cash.  The cumulative total of cash returned to shareholders through tender offers and dividends since the change in strategy is £26.5 million, equivalent to 45% of the company's net assets at 31 March 2011.

The overall performance of the portfolio has been resilient.  In the six months ended 30 September 2013 a total of £2.8 million in cash was realised from the sale of investments.  The principal contribution was made by the sale of IG Doors to Hörmann Group in June, which produced cash proceeds of £1.9 million compared with a March 2013 carrying value of £1.5 million.  The balance of £0.9 million received during the period mainly comprised loan stock and preference share redemptions by various investee companies.  Subsequent to 30 September we have agreed terms for the sale of our investment in Mantis Deposition Holdings for £0.7 million.  Three other companies are currently at various stages in sale processes.  However the timing and ultimate quantum of any cash receipts remains uncertain given the inherent risk associated with any corporate transaction.

Following on from the previous tender offers in December 2011 and December 2012, we intend that a further tender offer will be made to shareholders in the early part of 2014, utilising the cash currently on hand together with any further realisation proceeds received in the next three months.  The tender offer circular will also include an update as to the directors' estimate of the range of possible future cash distributions.  Our latest review shows that the parameters indicated in the chairman's statement in the 31 March 2013 annual report remain valid.

Performance
Over the six month period to 30 September 2013 the company's NAV, after deducting the 2012/13 final dividend of 9.5p per share paid in July, rose from 363.8p to 375.3p.  The return per share for the half year was 21.0p, compared with 22.2p in the corresponding period.  The underlying level of investment income from the portfolio remained healthy despite the continuing reduction in the company's asset base.  The annual management fee payable to NVM Private Equity has again reduced in line with the terms of the management agreement.  A further £363,000 was accrued in the period in respect of the performance fee expected to be payable in due course to NVM once the stipulated cash distributions hurdle has been exceeded.

The mid-market share price rose from 292.5p at 31 March 2013 to 311.5p at 30 September 2013, reducing the discount to NAV from 19.6% to 17.0%.  Adjusting for cash balances, the implied discount to the directors' valuation of the portfolio at 30 September 2013 was 19.0%.

Dividend
As previously announced, the company's annual dividend is now paid in the form of a single final dividend, with no interim dividend being declared.  The net revenue available for distribution in respect of each year is likely to decrease as the sale of income-producing investments continues and cash is returned to shareholders.  The directors intend to declare annual dividends sufficient to maintain the company's authorised investment trust status.

Investment portfolio
No new holdings were acquired during the period, in line with the revised investment policy.  Within the existing portfolio a further investment of £55,000 was made in Mantis Deposition Holdings as part of an interim funding round pending a more substantial recapitalisation, as part of which we have agreed satisfactory terms for an exit from the company rather than commit to holding a relatively immature investment for a further lengthy period.

The residual portfolio at 30 September 2013 comprised 22 unquoted holdings with an aggregate carrying value of £42.6 million.  The agreed strategy for realising each of these investments is reviewed regularly with NVM Private Equity in the light of current performance and prospects.

The four largest holdings, Kerridge Commercial Systems, Control Risks Group Holdings, Alaric Systems and Kitwave One, currently represent approximately two thirds of the total carrying value of the portfolio and are all progressing in line with expectations.  Our other investments are individually less significant but each is closely monitored and we believe that the overall condition of the portfolio is good.  Although the realisation process is advancing there are inevitably some holdings which are still at a relatively early stage in the investment life cycle and which will take time to achieve the best exit outcome.  It must also be remembered that in most cases the investee companies' management teams are significant shareholders, and are therefore central to determining exit timing.

Outlook
The short to medium term prospects for the UK economy appear to be improving and this should be conducive to achieving successful exits from the company's remaining investments within the next three to four years.  It is our clear objective to maximise the cash returns to shareholders within the strategy of an orderly portfolio realisation.

On behalf of the Board

Nigel Guy
Chairman

The unaudited half-yearly financial statements for the six months ended 30 September 2013 are set out below.

INCOME STATEMENT
(unaudited) for the six months ended 30 September 2013

Six months ended
30 September 2013
Six months ended
30 September 2012
Revenue 
£000 
Capital 
£000 
Total 
£000 
Revenue 
£000 
Capital 
£000 
Total 
£000 
Gain on disposal of investments 888  888  509  509 
Movements in fair value of investments 1,676  1,676  2,506  2,506 
----------  ----------  ----------  ----------  ----------  ---------- 
2,564  2,564  3,015  3,015 
Income 868  868  947  947 
Investment management fee (60) (603) (663) (75) (300) (375)
Other expenses (216) (216) (200) (200)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 592  1,961  2,553  672  2,715  3,387 
Tax on return on ordinary activities (64) 58  (6) (102) 75  (27)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 528  2,019  2,547  570  2,790  3,360 
----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 4.4p 16.6p 21.0p 3.8p 18.4p 22.2p

Year ended 31 March 2013
Revenue 
£000 
Capital 
£000 
Total 
£000 
Gain on disposal of investments 2,405  2,405 
Movements in fair value of investments 4,755  4,755 
----------  ----------  ---------- 
7,160  7,160 
Income 1,596  1,596 
Investment management fee (150) (2,096) (2,246)
Other expenses (346) (346)
----------  ----------  ---------- 
Return on ordinary activities before tax 1,100  5,064  6,164 
Tax on return on ordinary activities (172) 144  (28)
----------  ----------  ---------- 
Return on ordinary activities after tax 928  5,208  6,136 
----------  ----------  ---------- 
Return per share 6.5p 36.6p 43.1p

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited) for the six months ended 30 September 2013

Six months ended 
30 September 2013 
£000 
Six months ended 
30 September 2012 
£000 
Year ended 
31 March 2013 
£000 
Equity shareholders' funds at 1 April 2013 44,119  49,241  49,241 
Return on ordinary activities after tax 2,547  3,360  6,136 
Dividends recognised in the period (1,152) (1,029) (1,028)
Shares re-purchased for cancellation (10,230)
----------  ----------  ---------- 
Equity shareholders' funds at 30 Sept 2013 45,514  51,572  44,119 
----------  ----------  ---------- 

BALANCE SHEET
(unaudited) as at 30 September 2013

30 September 2013 
£000 
30 September 2012 
£000 
31 March 2013 
£000 
Fixed asset investments 42,601  43,405  42,799 
----------  ----------  ---------- 
Current assets:
  Investments 1,469  1,948  1,451 
  Debtors 57  51  165 
  Cash and deposits 3,352  6,487  1,285 
----------  ----------  ---------- 
4,878  8,486  2,901 
Creditors (amounts falling due
  within one year) (1,965) (319) (1,581)
----------  ----------  ---------- 
Net current assets 2,913  8,167  1,320 
----------  ----------  ---------- 
Net assets 45,514  51,572  44,119 
----------  ----------  ---------- 
Capital and reserves
Called-up equity share capital 3,032  3,782  3,032 
Capital redemption reserve 2,123  1,373  2,123 
Capital reserve 16,119  27,109  14,381 
Special reserve 12,674  12,674  12,674 
Revaluation reserve 10,106  4,909  9,825 
Revenue reserve 1,460  1,725  2,084 
----------  ----------  ---------- 
Total equity shareholders' funds 45,514  51,572  44,119 
----------  ----------  ---------- 
Net asset value per share 375.3p 340.9p 363.8p

CASH FLOW STATEMENT
(unaudited) for the six months ended 30 September 2013

Six months ended 
30 September 2013 
Six months ended 
30 September 2012 
Year ended 
31 March 2013 
£000 £000 £000 £000 £000 £000 
Cash flow statement
Net cash inflow from operating activities 416  404  451 
Taxation:
Corporation tax recovered/(paid) 29  (36)
Financial investment:
Purchase of investments (55) (74) (185)
Sale/repayment of investments 2,847  4,823  9,453 
----------  ----------  ---------- 
Net cash inflow from financial investment 2,792  4,749  9,268 
Equity dividends paid (1,152) (1,029) (1,028)
----------  ----------  ---------- 
Net cash inflow before use
  of liquid resources and financing 2,085  4,124  8,655 
Financing:
Shares re-purchased for cancellation (10,230)
----------  ----------  ---------- 
Net cash inflow/(outflow) before use
  of liquid resources 2,085  4,124  (1,575)
Net cash outflow from
  use of liquid resources (18) (905) (408)
----------  ----------  ---------- 
Increase/(decrease) in cash and deposits 2,067  3,219  (1,983)
----------  ----------  ---------- 
Reconciliation of revenue return before tax
to net cash flow from operating activities
Revenue return on ordinary activities before tax 592  672  1,100 
(Increase)/decrease in debtors 78  38  (46)
Increase/(decrease) in creditors 349  (6) 1,493 
Management expenses charged to capital (603) (300) (2,096)
----------  ----------  ---------- 
Net cash inflow from operating activities 416  404  451 
----------  ----------  ---------- 
Reconciliation of movement in net funds
1 April 2013 Cash flows 30 September 2013 
£000 £000 £000 
Cash at bank 1,285  2,067  3,352 
Short-term investments 1,451  18  1,469 
----------  ----------  ---------- 
Net funds 2,736  2,085  4,821 
----------  ----------  ---------- 
          

INVESTMENT PORTFOLIO SUMMARY
as at 30 September 2013

CompanyCost
£000
Valuation
£000
% of net assets
by valuation
Kerridge Commercial Systems 3,978 13,625 29.9
Control Risks Group Holdings 3,731 6,817 15.0
Alaric Systems 1,531 4,148 9.1
Kitwave One 3,633 3,927 8.6
Wear Inns 1,304 1,884 4.1
Arleigh Group 767 1,668 3.7
Cawood Scientific 1,196 1,437 3.2
Promatic Group 1,195 1,282 2.8
e-know.net 480 1,144 2.5
CGI Group Holdings 1,908 910 2.0
---------- ---------- -------
Ten largest investments 19,723 36,842 80.9
Optilan Group 1,900 904 2.0
Lanner Group 891 869 1.9
Closerstill Group 866 866 1.9
Axial Systems Holdings 2,311 791 1.8
Weldex (International) Offshore Holdings 3,253 769 1.7
Mantis Deposition Holdings 819 690 1.5
Direct Valeting 258 427 0.9
S&P Coil Products 66 257 0.6
Envirotec 387 186 0.4
Crantock Bakery 1,061 - -
Longhirst Venues 142 - -
Warmseal Windows (Newcastle) 818 - -
---------- ---------- -------
Total fixed asset investments 32,495 42,601 93.6
----------
Net current assets 2,913 6.4
---------- -------
Net assets 45,514 100.0
---------- -------

BUSINESS RISKS

The board carries out a regular review of the risk environment in which the company operates.  The principal risks and uncertainties identified by the board are as follows:

Investment risk:  the majority of the company's investments are 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 investment manager aims to limit the risk attaching to the portfolio as a whole by close monitoring of individual holdings, including appointment of investor directors where appropriate.  The board reviews the portfolio with the investment manager on a regular basis.

Portfolio concentration risk:  following the adoption of the company's revised investment policy in July 2011, the portfolio will become 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.

Financial risk:  as most of the company's investments involve a medium- to long-term commitment and are relatively illiquid, 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.

Liquidity risk:  The company's investments may be difficult to realise.  The fact that a stock is quoted on a recognised stock exchange does not guarantee its liquidity and there may be a large spread between bid and offer prices.  Unquoted investments are not traded on a recognised stock exchange and are inherently illiquid.

Internal control risk:  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 above summary of results for the six months ended 30 September 2013 does not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006, has not been reviewed or audited by the company's independent auditor and has not been delivered to the Registrar of Companies.  The figures for the year ended 31 March 2013 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies;  the independent auditor's report on those financial statements was unqualified and 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 2013.  The financial statements have not been prepared on a 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 2013 and on 12,128,440 (2012 15,128,440) 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 2013 divided by the 12,128,440 (2012 15,128,440) ordinary shares in issue at that date.

A copy of the half-yearly financial report for the six months ended 30 September 2013 is expected to be posted to shareholders by 25 November 2013 and will be available to the public at the registered office of the company at Northumberland House, Princess Square, Newcastle upon Tyne NE1 8ER and on the NVM Private Equity Limited website, www.nvm.co.uk.

Neither the contents of the NVM Private Equity Limited website nor the contents of any website accessible from hyperlinks on the NVM Private Equity Limited website (or any other website) is incorporated into, or forms part of, this announcement.




This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Northern Investors Co PLC via Thomson Reuters ONE

HUG#1742505