Northern Investors Company PLC.

2 JUNE 2014



The Annual Financial Report announcement released at 10.45am on 30 May 2014 under reference HUG1789571 incorrectly stated that the proposed final dividend of 10.0p per share for the year ended 31 March 2014 will, if approved by shareholders, be paid on 24 July 2014.  The correct date of payment is 25 July 2014.  The full corrected text of the announcement is as follows:


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 unquoted investments and began an orderly realisation of the portfolio with a view to returning funds to shareholders through a series of tender offers over a period of several years.

Financial highlights (comparative figures as at 31 March 2013):

            2014               2013
Net assets£37.8m£44.1m
Number of shares in issue at end of year8,728,44012,128,440
Net asset value per share433.4p363.8p
Cash distributions to shareholders
(dividends paid plus share buy-backs):
During year£15.2m£11.1m
Since change in investment policy in July 2011£40.6m£25.4m
Total return for the year:
Pence per share77.3p43.1p
As % of opening net asset value21.2%13.2%
Proposed dividend per share for the year10.0p9.5p
Mid-market share price at end of year391.5p292.5p
Share price discount to net asset value9.7%19.6%

For further information, please contact:

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

Oriel Securities                                   Neil Winward/Mark Bloomfield          020 7710 7600



I am pleased to report on another year of good progress in implementing the orderly realisation strategy approved by shareholders in July 2011.  During this process we have consistently aimed to strike a balance between our key objectives of returning cash to shareholders efficiently and timing each investment disposal so as to achieve the best value.  This approach is delivering excellent results and we have been able to distribute a further £15 million to shareholders during the past year, making a total of over £40 million - equivalent to 68% of the July 2011 net assets - since the change in strategy.  The strong cash generation has not been at the expense of growth in value:  since 31 March 2011, when the net asset value (NAV) per share was 304.1p, the NAV has risen to 433.4p, in addition to which dividends totalling 24.3p have been paid.

Investment portfolio
The number of holdings in the portfolio has continued to reduce, reflecting the achievement of successful exits from Alaric Systems, IG Doors and Interlube Systems, and the partial exit from which resulted in us receiving AIM-quoted shares in Nasstar.  Over the year as a whole, investment sale proceeds amounted to £14.1 million compared with a March 2013 carrying value of £11.0 million.  Since the year end the Nasstar paper holding has been sold in the market for £0.6 million.

The directors' valuation of the 20 holdings at 31 March 2014 was £38.8 million, of which £13.9 million related to our largest investment, Kerridge Commercial Systems.  Kerridge has continued to report good trading results and the directors' valuation of the holding has increased by £1.5 million during the year.  A natural consequence of the successful realisation programme is that the portfolio is becoming more concentrated in value around a smaller number of investments, and Kerridge now represents some 37% of the company's net assets.  The investments in Control Risks Group Holdings and Kitwave One together represent a further 28%;  both of these holdings were acquired shortly before the change in investment strategy in 2011 and as such are still developing, but we also believe that a number of the other holdings, whilst smaller in value, have the potential to deliver good returns in the medium term.

Corporate strategy
It is now almost three years since the realisation process commenced and this is an opportune point at which to review progress.  The board estimated in 2011 that between 60% and 80% of the original £59 million net assets of the company would be returned in cash to shareholders by March 2015;  with £40 million already distributed and several potential realisations in view, it now looks likely that this forecast will be exceeded, the current expected range being from 100% to 115%.  We also estimated at the outset that the realisation process would be substantially completed by 2017, at which time cumulative cash returns would be in the range from 120% to 160% of opening net assets; our latest projections show that the ultimate outcome could be between 140% and 165%.  We believe this would represent a highly satisfactory outcome for shareholders.  However it is important to remember that although a large part of the return has already been secured, estimates of future cash flows are inevitably subject to a degree of uncertainty as to market conditions and the performance of individual companies.

Based on the ultimate realisation estimate set out above, there is still potential capital value of between £42 million and £57 million to be unlocked by 2017.  We will continue to work closely with the manager to ensure that the exit plan for each investment remains valid and deliverable and is consistent with our strategic objectives.

Financial results
The NAV per share at 31 March 2014 was 433.4p, up by 19.1% from the corresponding figure of 363.8p at 31 March 2013.  Over the past five financial years the NAV per share has increased in every year, and the NAV total return for the five year period was 103.3% compared with 89.0% for the listed private equity sector as a whole.

The return per share for the year as shown in the income statement was 77.3p, equivalent to 21.2% of the opening NAV.  Net realised and unrealised gains on investments contributed 81.3p per share to the outcome.  Investment income was higher than in the preceding year, despite the reduced size of the portfolio.  The revenue return per share, calculated on the reduced share capital, rose from 6.5p to 9.3p.

The manager is entitled to receive a performance-related incentive fee once cash distributions to shareholders exceed the equivalent of net assets at 31 March 2011 plus a 7% annual hurdle rate.  At 31 March 2013, the directors considered it prudent to make a provision of £1,496,000 in the financial statements, equivalent to the fee which would have been payable if the value of the remaining net assets as at 31 March 2013 had been available for distribution in cash to shareholders on that date.  Following a further review as at 31 March 2014, the directors still consider that a fee is likely to become payable in due course and the provision has been increased to £2,778,000 to reflect the value of cash distributions up to 31 March 2014 and the remaining net assets at that date.

Shares and share price
In March 2014 3,400,000 shares were re-purchased for cancellation through a tender offer at a price of 415p per share.  The number of shares remaining in issue at the year end was 8,728,440.

During the year the mid-market share price rose by 33.8%, from 292.5p to 391.5p.  The share price discount to NAV at the year end was 9.7% (31 March 2013 19.6%).

Two years ago we announced that for the year ended 31 March 2013 and subsequent years the annual dividend would be paid in the form of a single final dividend, with no interim dividend being declared.  The proposed dividend for the year ended 31 March 2014 is 10.0p per share, a 5.3% increase from last year's 9.5p.  This is the eighteenth consecutive year in which the dividend per share has been increased.  Subject to approval by shareholders at the annual general meeting on 21 July 2014, the final dividend will be paid on 25 July 2014 to shareholders on the register on 4 July 2014.

The directors will continue to recommend a dividend each year which takes account of the level of investment income and expenses, subject to observing the minimum amount necessary to maintain the company's authorised investment trust status.

Board of directors
The board's experience and depth of understanding of the dynamics of the underlying portfolio are proving invaluable in delivering the objectives we have set on shareholders' behalf.  We are pleased with the progress to date, but there is much to be done to achieve a satisfactory ultimate outcome and your board in conjunction with the manager remains committed to delivering the strategy.

John Barnsley retires from the board at the forthcoming annual general meeting in accordance with the AIC Code of Corporate Governance, having served as a director for more than nine years.  I am delighted that John has agreed to offer himself for re-election, as his knowledge, skills and experience are invaluable to our company.

Consistent progress has been made over the past three years in implementing the agreed corporate strategy and putting a strong foundation in place for the later stages of the realisation process.  We will continue to focus closely on the remaining portfolio with a view to optimising future cash returns to shareholders.

Nigel Guy

The audited financial statements for the year ended 31 March 2014 are set out below.

for the year ended 31 March 2014

Year ended 31 March 2014Year ended 31 March 2013
Gain on disposal of investments 3,170  3,170  2,405  2,405 
Movements in fair value of investments 6,472  6,472  4,755  4,755 
----------  ----------  ----------  ----------  ----------  ---------- 
9,642  9,642  7,160  7,160 
Income 1,764  1,764  1,596  1,596 
Investment management fee (120) (1,762) (1,882) (150) (2,096) (2,246)
Other expenses (378) (378) (346) (346)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 1,266  7,880  9,146  1,100  5,064  6,164 
Tax on return on ordinary activities (166) 195  29  (172) 144  (28)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 1,100  8,075  9,175  928  5,208  6,136 
----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 9.3p 68.0p 77.3p 6.5p 36.6p 43.1p

for the year ended 31 March 2014

Year ended 
31 March 2014 
Year ended 
31 March 2013 
Equity shareholders' funds at 1 April 2013 44,119  49,241 
Return on ordinary activities after tax 9,175  6,136 
Dividends recognised in the year (1,152) (1,028)
Shares re-purchased for cancellation (14,311) (10,230)
----------  ---------- 
Equity shareholders' funds at 31 March 2014 37,831  44,119 
----------  ---------- 

as at 31 March 2014

31 March 2014 
31 March 2013 
Fixed assets:
  Investments 38,763  42,799 
----------  ---------- 
Current assets:
  Investments 56  1,451 
  Debtors 92  165 
  Cash and deposits 1,787  1,285 
----------  ---------- 
1,935  2,901 
Creditors (amounts falling due within one year) (2,867) (1,581)
----------  ---------- 
Net current assets/(liabilities) (932) 1,320 
----------  ---------- 
Net assets 37,831  44,119 
----------  ---------- 
Capital and reserves:
Called-up equity share capital 2,182  3,032 
Capital redemption reserve 2,973  2,123 
Capital reserve 5,475  14,381 
Special reserve 12,674  12,674 
Revaluation reserve 12,495  9,825 
Revenue reserve 2,032  2,084 
----------  ---------- 
Total equity shareholders' funds 37,831  44,119 
----------  ---------- 
Net asset value per share 433.4p 363.8p

for the year ended 31 March 2014

Year ended 
31 March 2014 
Year ended 
31 March 2013 
£000 £000 £000 £000 
Cash flow statement
Net cash inflow from operating activities 833  451 
Corporation tax recovered/(paid) 29  (36)
Financial investment:
Purchase of investments (54) (185)
Sale/repayment of investments 13,762  9,453 
----------  ---------- 
Net cash inflow from financial investment 13,708  9,268 
Equity dividends paid (1,152) (1,028)
----------  ---------- 
Net cash inflow before financing and
use of liquid resources 13,418  8,655 
Re-purchase of shares for cancellation (14,311) (10,230)
----------  ---------- 
Net cash outflow before use of liquid resources (893) (1,575)
Net cash inflow/(outflow) from use
of liquid resources 1,395  (408)
----------  ---------- 
Increase/(decrease) in cash and deposits 502  (1,983)
----------  ---------- 
Reconciliation of revenue return before tax
to net cash flow from operating activities
Revenue return on ordinary activities before tax 1,266  1,100 
(Increase)/decrease in debtors 43  (46)
Increase in creditors 1,286  1,493 
Expenses charged to capital account (1,762) (2,096)
----------  ---------- 
Net cash inflow from operating activities 833  451 
----------  ---------- 
Analysis of movement in net funds
1 April 2013 
Cash flows 
31 March 2014 
Cash and deposits 1,285  502  1,787 
Short-term investments 1,451  (1,395) 56 
----------  ----------  ---------- 
2,736  (893) 1,843 
----------  ----------  ---------- 

as at 31 March 2014

% of
net assets
by value
Kerridge Commercial Systems 400 13,914 36.8
Control Risks Group Holdings 3,731 6,816 18.0
Kitwave One 3,633 3,756 9.9
Arleigh Group 680 1,720 4.5
Wear Inns 1,304 1,704 4.5
Cawood Scientific 1,196 1,562 4.1
Axial Systems Holdings 2,311 1,502 4.0
CGI Group Holdings 1,908 1,329 3.5
Promatic Group 1,195 1,257 3.3
Weldex (International) Offshore Holdings 3,252 1,152 3.0
---------- ---------- --------
Ten largest investments 19,610 34,712 91.6
Optilan Group 1,900 935 2.5
Closerstill Group 866 866 2.3
Lanner Group 891 823 2.2
Nasstar* 430 666 1.8
Direct Valeting 97 511 1.4
Envirotec 387 186 0.5
S&P Coil Products 66 64 0.2
Crantock Bakery 1,061 - -
North East Property and Investments 142 - -
Warmseal Windows (Newcastle) 818 - -
---------- ---------- --------
Total fixed asset investments 26,268 38,763 102.5
Net current liabilities (932) (2.5)
---------- --------
Net assets 37,831 100.0
---------- --------

*Quoted on AIM


The board carries out a regular review of the risk environment in which the company operates.  The main areas of risk 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 new 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.

Financial risk:  As most of the company's investments involve a medium to long-term commitment and many 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.

Stock market risk:  venture capital investments quoted on the London Stock Exchange or AIM may be subject to market fluctuations upwards and downwards.  External factors such as terrorist activity can negatively impact stock markets worldwide.  In times of adverse sentiment there can be very little, if any, market demand for shares in smaller companies quoted on AIM.

Credit risk:  the company holds a number of financial instruments and cash deposits and is dependent on the counterparties discharging their commitment.  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.

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.


The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for the year.

In preparing the financial statements, the directors are required to (i) select suitable accounting policies and then apply them consistently;  (ii) make judgements and estimates that are reasonable and prudent;  (iii) state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;  and (iv) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that its financial statements comply with the Companies Act 2006.  They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.  Under applicable law and regulations, the directors are also responsible for preparing a directors' report, strategic report, directors' remuneration report and corporate governance statement that comply with that law and those regulations.

The company's financial statements are published on the NVM Private Equity Limited (NVM) website,  The maintenance and integrity of this website is the responsibility of NVM and not of the company.  The work carried out by KPMG LLP as independent auditor of the company does not involve consideration of the maintenance and integrity of the website and accordingly they accept no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website.  Visitors to the website should be aware that legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

In relation to the financial statements for the year ended 31 March 2014 each of the directors has confirmed that, to the best of his knowledge, (i) the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the company;  (ii) the annual report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's performance, business model and strategy;  and (iii) the directors' report and strategic report include a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that the company faces.

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.


The above summary of results for the year ended 31 March 2014 does not constitute statutory financial statements within the meaning of Section 435 of the Companies Act 2006 and has not been delivered to the Registrar of Companies.  Statutory financial statements will be filed with the Registrar of Companies in due course;  the independent auditor's report on those financial statements under Section 495 of the Companies Act 2006 is unqualified and does not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

In July 2011 shareholders approved a change in the investment policy of the company, with the objective of conducting an orderly realisation of the assets of the company in a manner that seeks to achieve a balance between an efficient return of cash to shareholders and maximising the value of the company's investments.  As it is likely that this process, which is expected to have a duration of several years, will ultimately lead to the liquidation of the company, the financial statements have not been prepared on a going concern basis.  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 calculation of the revenue and capital return per share is based on the return on ordinary activities after tax for the year and on 11,867,618 (2013 14,224,330) ordinary shares, being the weighted average number of shares in issue during the year.

The calculation of the net asset value per share is based on the net assets at 31 March 2014 divided by the 8,728,440 (2013 12,128,440) ordinary shares in issue at that date.

The proposed final dividend of 10.0p per share for the year ended 31 March 2014 will, if approved by shareholders, be paid on 25 July 2014 to shareholders on the register at the close of business on 4 July 2014.

The full annual report including financial statements for the year ended 31 March 2014 is expected to be posted to shareholders on 20 June 2014 and will be available to the public at the registered office of the company at St Ann's Wharf, 112 Quayside, Newcastle upon Tyne NE1 3DX and on the NVM Private Equity Limited website,

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 NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX 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