Northern Investors’ NAV rose 6.3% from 685.4p to 728.6p over the six months ended 30 September 2016. The share price rose by 33% to 845p, putting the shares on a premium of 16%.
Including funds distributed through the March 2016 tender offer (GBP15.3 million) and the July 2016 dividend (GBP0.6 million), the total cash returned to shareholders since the change in investment policy in July 2011 has reached GBP77.3 million. A a further GBP18.2 million of assets is still held on the company’s balance sheet. They are aiming for the run-off process to be largely completed by December 2017.
There were no investment additions or disposals during the period under review. The three largest holdings, Optilan Group, Axial Systems Holdings and Cawood Scientific, now represent almost 80% of the total portfolio valuation and in the short term the manager’s efforts will be focussed on realising value from these investments in an orderly manner. Some of the remaining holdings may prove more difficult to exit from, particularly in two cases where the funds managed by NVM Private Equity are not the lead investors and we are to a greater extent dependent on the co-operation of other shareholders.
The directors’ valuation of the portfolio increased by GBP1.8 million over the half year. The return for the period was augmented by the receipt of a GBP0.3 million deferred consideration payment from the sale of Kitwave One in February 2016. A further GBP1.1 million of deferred payments from previous sales will fall due over the next 15 months, though subject to some uncertainty which means that they have not yet been recognised in our financial statements.
The most recent tender offer in March 2016 was only 75% taken up by shareholders, with the result that the company is currently holding more cash than the directors had envisaged. After consulting their legal and financial advisers, they have decided that the next distribution to shareholders will be made by means of a bonus issue to all ordinary shareholders of new B preference shares, which will then be redeemed for cash. They have been advised that for tax purposes this should be treated as a capital, rather than an income, receipt in the hands of the recipients. Further details will be given in a circular to shareholders which is expected to be published in December 2016. Subject to shareholder approval of the necessary resolutions, it is envisaged that
a distribution of not less than GBP6 million will take place before the end of January 2017.
NRI : Northern Investors plans £6m distribution