Natural Duvet & Pillow Company Ltd, Re

Natural Duvet & Pillow Company Ltd, Re

The fair value of Mr Ng’s 50% shareholding is to be determined by calculating maintainable earnings based on the 2003, 2004, and 2005 accounts (with appropriate normalising adjustments and re-allocation of costs to D&P based on turnover ratios for each year), applying a P/E multiple of 7, and rounding down the result to reflect uncertainties. No interest on the ZLF Debt is to be deducted, as there was no obligation to pay interest and the free credit was an established feature of NDP’s business.

Parties
Petitioner: Ivan Ng; First Respondent: Steven Crabtree; Second Respondent: The Natural Duvet & Pillow Company Limited; Third Party: Zhejiang Liuqiao Feather Company Limited
Jurisdiction
England and Wales
Judgment Date
18 July 2011
Procedural Posture
Unfair Prejudice Petition Under Companies Act 2006 / Judgment After Trial on Valuation of Shares
Outcome
Petition allowed in part; fair value of Mr Ng’s 50% shareholding determined.
Legal Topics
Unfair Prejudice, Share Valuation, Quasi Partnership, Maintainable Earnings, P/e Multiple, Allocation of Company Expenses
Company Law Unfair Prejudice Share Valuation Quasi Partnership Maintainable Earnings P/e Multiple Allocation of Company Expenses

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Parties

Ivan Ng

Petitioner

Steven Crabtree

First Respondent

The Natural Duvet & Pillow Company Limited

Second Respondent

Zhejiang Liuqiao Feather Company Limited

Third Party

Procedural Posture

Unfair Prejudice Petition Under Companies Act 2006 / Judgment After Trial on Valuation of Shares

Legal Issues

  1. 1 What is the fair value of Mr Ng’s 50% shareholding in The Natural Duvet & Pillow Company Limited as at 10 March 2005?
  2. 2 Should maintainable earnings be calculated including adjustments for costs attributable to D&P and normalising items?
  3. 3 Should interest on the ZLF Debt be factored into the valuation?

Ratio Decidendi

The fair value of Mr Ng’s 50% shareholding is to be determined by calculating maintainable earnings based on the 2003, 2004, and 2005 accounts (with appropriate normalising adjustments and re-allocation of costs to D&P based on turnover ratios for each year), applying a P/E multiple of 7, and rounding down the result to reflect uncertainties. No interest on the ZLF Debt is to be deducted, as there was no obligation to pay interest and the free credit was an established feature of NDP’s business.

Court Disposition

Petition allowed in part; fair value of Mr Ng’s 50% shareholding determined.

Orders

  • Mr Crabtree to pay Mr Ng £500,000 for his 50% shareholding in The Natural Duvet & Pillow Company Limited.