Northern Investors Company PLC.

29 MAY 2015



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.  The company has subsequently returned a total of £60.6 million to shareholders by way of tender offers and dividend distributions.

Financial highlights (comparative figures as at 31 March 2014):


 2015 2014
Net assets

Number of shares in issue at end of year

Net asset value per share

Cash distributions to shareholders  
(dividends paid plus share buy-backs):  
During year£20.0m£15.2m
Since change in investment policy in July 2011

Total return for the year:  
Pence per share92.2p77.3p
As % of opening net asset value

Proposed dividend per share for the year

Mid-market share price at end of year

Share price discount to net asset value


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




I am very pleased to report on another year of good progress towards fulfilment of the company's orderly realisation strategy approved by shareholders in July 2011.  In March 2015 a further £19 million was returned to shareholders through the latest in our series of tender offers.  The total cash distributed since July 2011 now exceeds £60 million - more than the net asset value of the company at the beginning of the process four years ago - in addition to which the residual net assets at 31 March 2015 amounted to a further £25 million.  We have continued with our declared strategy of striking an acceptable balance between returning cash to shareholders efficiently and timing investment disposals so as to achieve prices which reflect our view of the underlying quality of the investment assets.  As a result the value inherent in the portfolio has been progressively released, and the underlying net asset value (NAV) per share has risen accordingly.

Financial results
The NAV per share at 31 March 2015 was 522.7 pence, up by 20.6% from the corresponding figure of 433.4 pence at 31 March 2014.  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 117.1% compared with 53.3% for the listed private equity sector (excluding funds of funds) as a whole.

The total return per share for the year as shown in the income statement was 92.2 pence, equivalent to 21.3% of the opening NAV.  Investment income was higher than in the preceding year, despite the reduced size of the portfolio.  The revenue return per share, calculated on the weighted average number of shares in issue during the year, rose from 9.3 pence to 11.7 pence.

Since 2013 the annual dividend has been paid in the form of a single final dividend, with no interim dividend being declared.  The proposed dividend for the year ended 31 March 2015 is 17.0 pence per share, a 70% increase from last year's 10.0 pence.  This is the nineteenth consecutive year in which the dividend per share has been increased.  Subject to approval by shareholders at the annual general meeting on 7 July 2015, the final dividend will be paid on 24 July 2015 to shareholders on the register on 3 July 2015.

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.

Investment portfolio
The number of holdings in the portfolio reduced from 20 to 15 over the year, following the successful realisation of the investments in Envirotec, CloserStill Group, Kerridge Commercial Systems, Nasstar and Promatic Group.  The sale of Kerridge was a particular highlight, returning a total of £20.6 million in income and capital proceeds over the five year life of the investment from an original commitment of £4.0 million.  A total of £23.0 million was realised from sales during the year, reflecting a strong enhancement of value by comparison with the £17.2 million carrying value of the relevant investments at the beginning of the year.

The directors' valuation of the 15 remaining holdings at 31 March 2015 was £24.1 million.  Shareholders will understand that as the run-off of investments continues, the remaining holdings will be less diversified than would normally be the case, and as we approach the end of the process it may become more difficult to achieve further significant uplifts of value.  The progress of each company is carefully monitored by our manager, and the board regularly reviews updates on both performance and exit prospects with the manager.  We will continue to pursue an orderly realisation strategy, but where necessary we will take a pragmatic approach to the investments at the lower end of the valuation range in order to keep the overall process on track.

Corporate strategy
Your board has always regarded March 2015 as a significant milestone in the process of returning capital to shareholders.  In 2011 we estimated that cash equivalent to between 60% and 80% of the then £59 million net assets of the company would be returned in cash to shareholders by March 2015; it is pleasing that the actual outcome was 103%.

Looking further ahead, our original projections indicated that by 2017 the cumulative distributions would be in the range from 120% to 160% of the opening net assets, by which time the realisation of the portfolio would be substantially complete.  We still hope to complete the process by the end of 2017 and our current expectation is that the ultimate cash multiple could be between 155% and 170%.  However it should be remembered that there is uncertainty around any estimate of future cash flows, and individual company outcomes may have a disproportionate effect as the size of the portfolio continues to reduce.

To date cash has been distributed by means of a series of tender offers priced at NAV, a mechanism which has provided shareholders with the flexibility to tender their proportionate entitlement or a greater or lesser number of shares according to preference.  The directors will keep other possible methods of distribution under review with the company's professional advisers.

With effect from February 2015 NVM Private Equity transferred its business to a new limited liability partnership, NVM Private Equity LLP, and our contract with NVM was novated to the new entity on the same terms as before.

At the outset of the realisation process, it was agreed that NVM's fixed annual fee would be progressively reduced year by year, with the emphasis moving to an incentive fee payable once cash distributions to shareholders exceeded the equivalent of the March 2011 net assets plus a compounded 7% annual hurdle rate.  No incentive fee has become due as yet, but in the light of the progress made to date the directors consider that the conditions for payment of a fee are likely to be satisfied in the foreseeable future.  As in the two preceding years, a provision has been made in the financial statements equivalent to the fee which would have been payable if the value of the remaining net assets as at the financial year end had been available for distribution in cash to shareholders on that date.  The provision as at 31 March 2015 was £3,892,000 (31 March 2014 £2,778,000), and we are mindful that the eventual payment will need to be set aside from the cash generated from the realisation programme.  Our managers have shown a high level of commitment and skill in implementing the realisation strategy over the past four years and I would like to thank them for the excellent results they have achieved to date.

Shares and share price
Following completion of the March 2015 tender offer, in which 3,828,440 shares were re-purchased at 500 pence per share, the number of shares remaining in issue at the year end was 4,900,000 - representing just under 25% of the original issued capital at the start of the realisation process in 2011.

During the year the mid-market share price rose by 29.6%, from 391.5 pence to 507.5 pence.  The share price discount to NAV at the year end was 2.9% (31 March 2014 9.7%).  Investors who subscribed for shares at a price of 50 pence at the time of the company's flotation on the London Stock Exchange in 1990 have seen a more than ten-fold increase in the market value of their investment, as well as receiving dividends totalling 114 pence per share.

Board of directors
At the annual general meeting on 7 July 2015, both Philip Marsden and I will retire in accordance with the articles of association, having served for three years since we were last re-elected, and John Barnsley and Mark Nicholls will retire in accordance with the board's policy that directors who have served for nine or more years should seek re-election annually.  All of the directors will be seeking re-election for a further term.  I believe that the company has benefitted greatly from the stable composition of the board during the portfolio realisation process, and I would like to thank my fellow directors for the skills and experience which they have brought to bear on the challenges of this phase in the company's life cycle.  I am sure these attributes will prove equally valuable as we move into the later stages of the realisation programme.

Encouraging progress has been made over the past four years, yet much work remains to be done in order to complete the implementation of our corporate strategy.  The result of the recent general election has removed some political uncertainty, but the UK economy and financial markets will continue to face challenges.  However we believe that the residual portfolio has the potential to deliver further gains over the remaining life of the company, and the directors will continue to work closely with NVM to achieve a timely and value-enhancing outcome.

Nigel Guy

The audited financial statements for the year ended 31 March 2015 are set out below.

for the year ended 31 March 2015

 Year ended 31 March 2015Year ended 31 March 2014
Gain on disposal of investments 5,870  5,870  3,170  3,170 
Movements in fair value of investments 2,464  2,464  6,472  6,472 
  ----------  ----------  ----------  ----------  ----------  ---------- 
  8,334  8,334  9,642  9,642 
Income 1,546  1,546  1,764  1,764 
Investment management fee (90) (1,474) (1,564) (120) (1,762) (1,882)
Other expenses (313) (313) (378) (378)
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 1,143  6,860  8,003  1,266  7,880  9,146 
Tax on return on ordinary activities (123) 155 32  (166) 195  29 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 1,020  7,015  8,035  1,100  8,075  9,175 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 11.7p 80.5p 92.2p 9.3p 68.0p 77.3p

for the year ended 31 March 2015

 Year ended 
31 March 2015 
Year ended 
31 March 2014 
Equity shareholders' funds at 1 April 2014 37,831  44,119 
Return on ordinary activities after tax 8,035  9,175 
Dividends recognised in the year (873) (1,152)
Shares re-purchased for cancellation (19,382) (14,311)
  ----------  ---------- 
Equity shareholders' funds at 31 March 2015 25,611  37,831 
  ----------  ---------- 

as at 31 March 2015

 31 March 2015 
31 March 2014 
Fixed assets:    
 Investments 24,068  38,763 
  ----------  ---------- 
Current assets:    
 Investments 56  56 
 Debtors 56  92 
 Cash and deposits 5,477  1,787 
  ----------  ---------- 
  5,589  1,935 
Creditors (amounts falling due within one year) (4,046) (2,867)
  ----------  ---------- 
Net current assets/(liabilities) 1,543  (932)
  ----------  ---------- 
Net assets 25,611  37,831 
  ----------  ---------- 
Capital and reserves:    
Called-up equity share capital 1,225  2,182 
Capital redemption reserve 3,930  2,973 
Capital reserve 4,257  5,475 
Special reserve 12,674  12,674 
Revaluation reserve 1,346  12,495 
Revenue reserve 2,179  2,032 
  ----------  ---------- 
Total equity shareholders' funds 25,611  37,831 
  ----------  ---------- 
Net asset value per share 522.7p 433.4p

for the year ended 31 March 2015

 Year ended 
31 March 2015 
Year ended 
31 March 2014 
 £000 £000 £000 £000 
Cash flow statement    
Net cash inflow from operating activities   916    833 
Corporation tax recovered/(paid)     29 
Financial investment:        
Purchase of investments   (54)  
Sale/repayment of investments 23,029    13,762   
  ----------    ----------   
Net cash inflow from financial investment   23,029    13,708 
Equity dividends paid   (873)   (1,152)
    ----------    ---------- 
Net cash inflow before financing and        
use of liquid resources   23,072    13,418 
Re-purchase of shares for cancellation   (19,382)   (14,311)
    ----------    ---------- 
Net cash inflow/(outflow)        
before use of liquid resources   3,690    (893)
Net cash inflow/(outflow) from use        
of liquid resources     1,395 
    ----------    ---------- 
Increase in cash and deposits   3,690    502 
    ----------    ---------- 
Reconciliation of revenue return before tax    
to net cash flow from operating activities    
Revenue return on ordinary activities before tax   1,143    1,266 
(Increase)/decrease in debtors   36    43 
Increase/(decrease) in creditors   1,211    1,286 
Expenses charged to capital account   (1,474)   (1,762)
    ----------    ---------- 
Net cash inflow from operating activities   916    833 
    ----------    ---------- 
Analysis of movement in net funds   
 1 April 2014 
Cash flows 
31 March 2015 
Cash and deposits 1,787  3,690  5,477 
Short-term investments 56  56 
  ----------  ----------  ---------- 
  1,843  3,690  5,533 
  ----------  ----------  ---------- 

as at 31 March 2015



% of
net assets
by value
Control Risks Group Holdings 3,731 7,669 30.0
Kitwave One 3,633 4,230 16.5
Weldex (International) Offshore Holdings 3,252 2,017 7.9
Optilan Group 1,900 1,678 6.6
Arleigh Group 412 1,587 6.2
Axial Systems Holdings 2,311 1,562 6.1
CGI Group Holdings 1,908 1,365 5.3
Wear Inns 1,304 1,342 5.2
Cawood Scientific 1,196 1,298 5.1
Direct Valeting 97 701 2.7
  ---------- ---------- --------
Ten largest investments 19,744 23,449 91.6
Lanner Group 891 619 2.4
Crantock Bakery 1,061 - -
North East Property and Investments 142 - -
S&P Coil Products 66 - -
Warmseal Windows (Newcastle) 818 - -
  ---------- ---------- --------
Total fixed asset investments 22,722 24,068 94.0
Net current assets   1,543 6.0
    ---------- --------
Net assets   25,611 100.0
    ---------- --------


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 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.  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 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 invests in a diversified portfolio of investments spanning various industry sectors, and 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.


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 LLP (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 2015 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 2015 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, draws attention to the non-going concern basis of preparing the accounts by way of emphasis without qualifying the report 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 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 8,717,951 (2014 11,867,618) 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 2015 divided by the 4,900,000 (2014 8,728,440) ordinary shares in issue at that date.

The proposed final dividend of 17.0p per share for the year ended 31 March 2015 will, if approved by shareholders, be paid on 24 July 2015 to shareholders on the register at the close of business on 3 July 2015.

The full annual report including financial statements for the year ended 31 March 2015 is expected to be posted to shareholders by 8 June 2015 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,

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 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