Worsley Investors Delivers Strong NAV Growth Amid Challenging Markets

Equity portfolio performance also did some heavy lifting

Worsley’s equity portfolio, including net cash available for investment, made up 68.85% of NAV and achieved an internal rate of return of 24.3%. Internal rate of return is just a way of measuring how well the invested capital performed over time.

The standout holding was Smiths News, which remains the largest listed investment at 29.34% of group net assets. Worsley says it took profits after a strong run and also benefited from a substantial special dividend.

At year end, the portfolio had a market value of £10.38 million as at 22 June 2026 versus total cost of £7.49 million, spread across 17 stocks. That is a chunky uplift and shows the activist, value-driven strategy is working on the numbers disclosed.

Worsley Investors share price discount to NAV – why the market is still sceptical

This is the part that will frustrate shareholders. Despite all that NAV progress, the share price total return was -0.36%, while the FTSE All-Share returned 21.54%.

In plain English, the market is saying: nice assets, but we are not willing to pay up for them yet.

The discount widened to 41.31% from 19.70%. A discount to NAV means the shares trade below the underlying asset value. Sometimes that can be a bargain. Sometimes it is the market applying a penalty for illiquidity, complexity or distrust that the stated values will ever be realised in cash.

My view is that both forces are at work here. Worsley is very small, has one quirky Italian cinema asset, and owns a portfolio of smaller quoted companies that are themselves less liquid. That combination does not usually command a premium rating.

The board says it has not bought back shares because, as a very small company, shrinking further would worsen diseconomies of scale. That is fair enough, but it also means there is no obvious short-term fix for the discount.

Curno cinema asset recovery – better tenant, better valuation, but still unfinished business

The Curno cinema story is improving. The property is now let to Notorious Cinema S.r.l., and the lease runs to 31 August 2035, with an option to renew for a further eight years.

The rent structure is partly turnover-based, meaning Worsley gets a slice of revenues rather than just a flat payment. That can be attractive if trading improves, though it adds variability. Minimum rent from 1 September 2025 to 31 August 2026 is €500,000, reduced by €108,000 annually until 31 August 2030 to reflect the tenant’s refurbishment spend.

Notorious invested more than €3 million in the site, and five screens reopened on 27 June 2025, with the remaining four on 22 September 2025. In the nine months the cinema was open during the financial year, ticket attendances reached 158,660.

That all sounds encouraging, and CBRE’s valuation uplift backs it up. But management is clear that a sale is not imminent. They want a longer period of proven trading before actively marketing the asset.

The UCI legal claim could matter, but nothing is banked

The previous tenant, UCI, walked away. Worsley says the minimum unpaid rental on the old lease until 30 June 2035 was €11,341,481, plus more than €230,000 of repair-related costs.

The group says legal action is expected to commence imminently. That could be meaningful upside if successful, but for now it is just a claim, not cash. Sensible investors should treat it as optional upside rather than something to include in today’s valuation.

Costs, cash flow and risks in the Worsley Investors annual report

Not everything here is rosy. Cash rental revenue from Curno fell to €270,800, or £234,500, from €830,700, or £699,000, because the old UCI lease ended and the new lease has lower initial minimum payments.

General and administrative expenses were £690,000, almost unchanged year on year, which is a hefty cost base for a company with net assets of £15.927 million. Audit fees also rose to £71,000 from £54,000, including a £15,000 overrun tied to the prior year audit.

Management also says that operating cash flow before equity income and net purchases is expected to remain negative in the current year. That is important. Even with higher cinema rent and lower direct property expenses, the business still leans on investment income and balance sheet strength.

The good news is the balance sheet looks solid enough. Worsley ended the year with £1.527 million in cash and no debt.

What Worsley Investors results mean for shareholders now

Overall, this was a strong annual report. Profit swung to £4.136 million, NAV rose sharply, the cinema asset looks far healthier, and the quoted portfolio continues to perform well.

But the market’s verdict is harsher than the accounts. A 41.31% discount tells you investors still want proof – proof that the cinema valuation is realisable, proof that the smaller company portfolio can keep compounding, and proof that this tiny structure can create value without costs eating too much of the gains.

If you already own the shares, the bull case is pretty obvious: a robust balance sheet, a valuable equity portfolio, a recovering property asset, and a share price miles below stated NAV. The bear case is just as obvious: small scale, limited liquidity, one unusual property exposure, and no guarantee the discount closes any time soon.

My take? This report is positive, but not uncomplicated. Worsley has clearly made progress. The problem is that the market still wants cash realisations, not just better-looking valuations.