Worsley Investors Posts 23% NAV Surge in H1 2025 as Cinema Asset Revives

NAV jumps, but underlying progress is the real story

Worsley Investors has posted a headline Net Asset Value (NAV) per share increase of 23.37% to 42.71p for the six months to 30 September 2025. Before we all start high-fiving, the Chairman rightly caveats this. The 23% jump reflects a change in valuer assumptions on the Italian cinema rather than a like-for-like gain.

On a more apples-to-apples basis – using the Directors’ 31 March 2025 valuation of the cinema that was published in June – NAV Total Return for the half was 6.56%. That is the number to focus on.

The share price drifted 2.88% to 27.0p, meaning the discount to NAV widened sharply to 36.8%.

Key metrics	H1 2025	Prev.	Change
NAV per share	42.71p	34.62p (31 Mar)	+23.37%
NAV Total Return	6.56%	8.42%	–
Share price	27.0p	27.8p	-2.88%
Discount to NAV	36.8%	19.7%	Wider
Earnings per share	7.82p	4.11p	Higher
Net assets	£14.411 million	£11.681 million	Higher
Cash	£334,000	£594,000	Lower
Debt	None	None	–

Curno cinema reboot – new lease, fresh valuer, improving trading

The company’s Curno multiplex near Bergamo is now refurbished, reopened and trading under a new tenant, Notorious Cinema. CBRE has taken over as independent valuer (replacing Knight Frank) and has set fair value at €5.46 million, broadly in line with the Directors’ June estimate and well ahead of the prior IFRS figure.

Why the step-up matters: the new valuation recognises turnover rent potential under the Notorious lease – something the previous valuation did not. CBRE assumed an 8% net exit yield and discounted future cash flows at 9.5%.

Lease terms built for upside

• Turnover rent: 23.5% of ticket revenues, 10% of food and drink, 5% of other – with minimums of €500,000, €525,000 and €550,000 in successive years from 1 September 2025.
• Capex recognition: a €108,000 per year rent reduction runs to 31 August 2030 to reflect Notorious investing more than €3 million in the refurbishment.
• Duration: initial term to 31 August 2035, with a tenant break in 2031 and an 8-year renewal option.
• Security: a first-demand bank guarantee of €250,000, index-linked, with potential to be replaced by a €500,000 parent guarantee after six years.

Early trading is encouraging. Revenue per customer has already matched prior levels and market share gains are described as significant. Italian box office was mixed in the half, but improved in late October and November with a strong slate continuing into December. The investment case is that turnover rent should exceed the minimums once the revamped format beds in.

UCI damages claim – a potential catalyst, but not quick

After the previous tenant UCI vacated in January and defaulted on rent, Worsley is preparing a legal claim. The minimum unpaid rent to June 2035 is cited at €11,259,771, plus dilapidations likely to exceed €200,000. The claim is expected to be lodged before year end. This could be a material recovery over time, but the Board warns the process will not be short and will require spend before any return.

Equity portfolio – compounding continues, activism in action

The equities book did a solid job: a £472,000 unrealised gain, £34,000 realised gains and £274,000 of dividends. Total return on invested capital for the half was 8.2%. As at period end, securities accounted for 65.5% of net assets.

Positioning highlights

• Smiths News – now the largest asset at 43.18% of NAV, with a strong FY 2025, net cash and a proposed 3p special dividend. The position size shows conviction – and concentration risk – in equal measure.
• WH Ireland – Worsley’s “quiet activism” paid off post period, with a recommended takeover by Team plc at a multiple of the 30 September price.
• TT Electronics – initiated late 2024, partial profits taken in the half, and post-period a recommended cash offer at a 75% premium to Worsley’s cost.
• Other names include Daniel Thwaites, Northamber, LMS Capital and Shepherd Neame. The portfolio comprised 17 stocks as at 10 December, with total cost of £6.63 million and value of £11.21 million, a 69.2% surplus to cost.

Opinion: the portfolio strategy – smaller UK companies at deep discounts, with activism where needed – continues to work. The outsized Smiths News stake underlines both the upside Worsley is chasing and the importance of getting that thesis right.

Why the discount widened – and why that matters

The share price fell 2.88% in the half while the NAV Total Return was +6.56%, so the discount to NAV widened to 36.8%. At 27.0p, the Chairman notes the price was more than covered by the equity portfolio and net current assets at 28.59p per share – effectively valuing the cinema and legal claim at zero.

That looks overly pessimistic if you buy the CBRE valuation and the turnover rent upside. The gap offers potential for re-rating catalysts such as sustained cinema trading, progress on the UCI claim, or realisations in the equity book.

Profit drivers and costs – what moved the numbers

• Profit for the period was £2.639 million, helped by a £2.322 million uplift in the cinema valuation and £780,000 of net investment gains.
• Property cash income was £221,000, down year-on-year due to the new lease minima and a phased reopening.
• Operating costs were contained: general and admin £327,000, ordinary property expenses £77,800, plus £127,000 of non-ordinary property costs tied to dilapidations and change of tenant.
• Cash at period end was £334,000 with no debt. Liquidity is principally in the equities portfolio.

Note: operating cash flow before equity income and net purchases is expected to remain somewhat negative near term, with legal spend on the UCI claim a swing factor.

Curno valuation – assumptions and sensitivities

CBRE’s €5.46 million valuation uses an 8% net exit yield and a 9.5% discount rate on projected cash flows. That is less conservative than the prior 10% yield and, crucially, it now reflects turnover rent under the Notorious lease. As ever with property, values are sensitive to rental delivery and yields, and realisation is unlikely until the cinema has a full year’s trading with turnover rent above the minimum.

Risks and watchlist for H2

• Market risk – the FTSE All Share returned 11.56% in the half, but smaller companies remain volatile. Worsley’s performance will diverge from indices by design.
• Concentration – Smiths News at 43.18% of NAV is a swing factor. The investment policy limits apply at the time of investment, but positions can grow via performance.
• FX – 33% of total assets are euro denominated, mainly the cinema. Sterling-euro moves can shift reported NAV.
• Legal outcome – the size and timing of any UCI recovery are uncertain. The process may be lengthy.
• Cash – modest cash on hand, though the equities portfolio provides ample secondary liquidity.

My take – cautious optimism with a clear route to value

This is a cleaner, more credible story than six months ago. The cinema is refurbished, trading is building, and a new valuer has anchored a more realistic asset value. The equity portfolio continues to compound, with post-period events at TT Electronics and WH Ireland adding to the case.

The market is giving Worsley little credit for the cinema or the legal claim. That wide discount cuts both ways – it reflects genuine uncertainties, but it also sets up attractive upside if the operational momentum continues. Keep an eye on monthly box office trends, Smiths News updates and any newsflow on UCI recovery proceedings.

For the full Half-Year Report when available, visit the company’s site: worsleyinvestors.com.