TIDMWSE TIDMWSWP
Date: 11th February 2009
On behalf of: Western Selection P.L.C. ("the Company" or "Western")
For immediate release
Western Selection P.L.C.
Interim Results
Western Selection P.L.C. (LSE: WSE), an investment finance company with a mix
of Strategic Investments and a General Portfolio of U.K. stocks, today
announces its unaudited interim results for the six months ended 31st December
2008.
Highlights include:
? Profit before tax up 66% to GBP63,000 (2007: GBP38,000)
? Dividend income up 15%
? Cash balances in excess of GBP316,000 and GBP2.5 million of unused borrowing
facilities
? Proposed move to PLUS Markets
David Marshall, Chairman of Western Selection commented:
"This has been a difficult period for investment companies. The major
turbulence in the financial markets has particularly affected smaller companies
and this is reflected in the valuations of our Strategic Investments, which are
now trading on very low PE multiples.
"However, this challenging environment also provides opportunities for the
Company to invest in Strategic Investments and under-valued equities and has
the cash and borrowing facilities to do so. We are confident the Company will
earn a good yield from the investments and the Board believes that Western is
well placed to weather the volatile markets which may continue for some time."
- Ends -
Enquiries to:
Western Selection P.L.C. Via Redleaf Communications
David Marshall/Edward Beale
Redleaf Communications 020 7566 6700
Emma Kane/Sanna Sumner/Rebecca
Sanders-Hewett
FinnCap 020 7600 1658
Matthew Robinson/Ed Frisby
Loeb Aron & Co. Ltd 020 7628 1128
Peter Freeman
Notes to Editors:
? The Company is an investment finance company and the investment policy is
to hold strategic stakes in a few smaller UK quoted companies and maintain
a diversified portfolio of U.K. listed equities, together with a few
holdings on AIM, PLUS and some unlisted shares. Strategic Investments are
minority positions where the Board seeks to maintain a close working
relationship with the management of the investee. Western is represented
on the boards of two of its three Strategic Investments. The general
portfolio is managed by two non-executive directors, Andrew Hall and
Michael Robotham, and the Board as a whole takes decisions in relation to
both strategic and unlisted investments.
Chairman's Statement
The Directors are pleased to present the unaudited interim results of the
Company for the six months ended 31st December 2008.
Overall performance in the half year to 31st December 2008 has been
disappointing with net assets down 22%. However this is in line with the fall
in the FTSE 100 index. Dividend income has grown 15% on the same period last
year. We are very pleased with the performance of our associated company,
Hartim, which continues to perform well.
The Company made a profit for the half year of GBP63,000 (0.4p per share). This
compares to GBP39,000 for the same period last year (0.3p per share). The main
differences are the contribution of GBP130,000 (2007: nil) from associated
companies; losses of GBP116,000 realised on sale of investments compared to
profits of GBP81,000 last year and net interest received following the successful
capital raising last year. Professional fees have increased as a result of the
increased capital and the listing of the shares and warrants on PLUS, but
administrative expenses have been kept below the 2007 level.
With cash balances in excess of GBP316,000 and GBP2,500,000 of unused borrowing
facilities available, Western is well placed to take advantage of any
investment opportunities that are attractive to the Board.
Investment policy and management
Western's investment policy is to hold strategic stakes in a few special
situations and maintain a diversified portfolio of U.K. listed equities,
together with a few holdings on AIM, PLUS and some unlisted shares. Strategic
investments are minority positions where we seek to maintain a close working
relationship with the management of the investee. Western is represented on the
boards of three of our four strategic investments and is working to achieve
representation on the fourth.
An analysis of assets is shown on the face of the balance sheet. The general
portfolio is managed by two non-executive directors, Andrew Hall and Michael
Robotham, and the Board as a whole takes decisions in relation to both our
strategic and unlisted investments.
General Portfolio
The value of our general portfolio declined by 32% over the period to GBP
2,926,000, compared to a fall in the FTSE100 index of 21% and the FTSE AIM
index of 60%. The bulk of this fall occurred in our investments in smaller
quoted companies. The general portfolio represents 36% of Western's assets, and
a net GBP205,000 has been withdrawn from the general portfolio during the period.
Strategic Investments
Creston plc
Creston is a marketing services group with a strategy to grow within its sector
to become a substantial, diversified international marketing services group.
Creston's results for the half-year to 30th September 2008 show a profit after
tax of GBP2,951,000 (2007: GBP2,280,000).
Western owns 3,000,000 shares in Creston (5.4%) with a market value at 31st
December 2008 of GBP840,000 (30th June 2008: GBP1,425,000), being 10% of Western's
assets.
I am the non-executive chairman of Creston.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire and
sell specialist industrial equipment such as electrical load banks and
generators. Northbridge's first acquisition was Crestchic Limited, one of the
largest specialist load bank equipment manufacturers in the world, located in
Burton-on-Trent, selling and hiring to a national and international customer
base.
Northbridge's latest results, for the half year to 30th June 2008, showed
profit of GBP748,000 (2007: GBP430,000).
Western owns 1,500,000 shares, representing 20.3% of Northbridge's share
capital. The value of this investment at 31st December 2008 was GBP1,950,000
(30th June 2008: GBP2,558,000), representing 24% of Western's assets.
I am a non-executive director of Northbridge.
Swallowfield plc
Swallowfield is a full service provider for global and household brands
operating in the cosmetics and personal care and household goods marketplace.
It offers a flexible and tailored service including: contract filling market
analysis, design, formulation and testing of products, packaging design and
sourcing and distribution of stock.
Swallowfield's latest results, for the year to 30th June 2008, showed profit,
before exceptional items, of GBP1,041,000 (30th June 2007: GBP601,000).
At 31st December 2008, Western owned 1,296,500 shares in Swallowfield (11.5% of
their issued share capital). The market value of the Company's holding in
Swallowfield on 31st December 2008 was GBP921,000 (30th June 2008: GBP971,000)
representing 11% of the Company's assets.
We do not believe that the Board of Swallowfield has the necessary mix of
skills and experience amongst its non-executive directors and we will continue
to work with other shareholders to rectify this.
Hartim Limited
Hartim offers a complete sales, marketing and logistical services to a number
of UK branded fast moving consumer goods companies. This investment was
acquired on 28th March 2008 and is accounted for as an associated company.
Hartim's estimated results for the 9 month period ended on 31st December 2008
are a profit of GBP416,000 after tax.
At 31st December 2008, Western owned 49.5% of Hartim. The carrying value of the
Company's investment in Hartim on 31st December 2008 was GBP935,000 (30th June
2008: GBP797,000) representing 12% of the Company's assets.
Mr. Beale is a non-executive director of Hartim.
Proposed cancellation of admission to trading on AIM
Since 17th September 2007, Western's shares have been traded on both AIM and
PLUS Markets. In the period up to 31 December 2008, 59% of all Western shares
traded have been traded on PLUS Markets and only 41% on AIM, and in the last
six months PLUS Markets accounted for 87% of all shares traded.
The Board has determined that the Company can save over GBP25,000 a year in
adviser's fees if we cancel the admission to trading on AIM to solely trade on
PLUS Markets. We do not believe that this will create problems for shareholders
wishing to deal in Western's shares since all major UK brokers who deal in AIM
shares also deal in PLUS quoted shares, and the majority of the ordinary shares
are, like the quoted warrants, already traded on PLUS. Nor do we believe that
having shares traded solely on PLUS Markets will have an appreciable effect on
the Company's ability to attract new and retain existing investors.
Attached to the interim results is notice of an Extraordinary General Meeting
be held on 12th March 2009 at which shareholders will be asked to approve
cancellation of Western's admission to trading on AIM. This resolution will
require approval by at least 75% of shareholders voting to be effective. If the
resolution is passed by the required majority of shareholders at the EGM, the
admission to trading on AIM is expected to be cancelled on 19th March 2009 and
after that date Western's shares may only be traded after that date on PLUS
Markets.
Conclusion & Outlook
We are earning a good yield on our investments and have cash and borrowing
facilities that will allow us to invest in Strategic Investments and
under-valued equities. We believe that we are well placed to weather the
volatile markets which may continue for some time.
The Board declared an increased dividend of 2.6p per share for the year to 30th
June 2008. It is not the Board's policy to pay interim dividends. Subject to
unforeseen circumstances, we expect to show satisfactory results for the period
to 30th June 2009 and to maintain the dividend for the current year, which the
Board anticipates paying in October 2009.
D.C. MARSHALL
Chairman
Unaudited Income Statement
Half year ended Year
ended
31st December 30th June
2008 2007 2008
GBP000 GBP000 GBP000
Income from investments in:
Listed strategic undertakings 148 99 155
Other listed investments 59 80 180
Surplus on disposal of listed undertakings (116) 81 420
--------- --------- ---------
92 260 755
Administrative expenses - normal (167) (169) (342)
- exceptional - - (3,019)
--------- --------- ---------
Operating (loss)/profit (75) 91 (2,606)
Share of results of associated companies 130 - 69
Net interest receivable/(payable) 8 (52) (35)
--------- --------- ---------
Profit/(Loss) on ordinary activities before 63 38 (2,572)
taxation
Taxation - - -
--------- --------- ---------
Profit/(Loss) on ordinary activities after 63 38 (2,572)
taxation
===== ===== =====
Basic earnings/(loss) per share 0.4p 0.3p (16.4)p
Earnings per share excluding exceptional costs 0.4p 0.3p 2.41p
Dividend per share Nil Nil 2.60p
Statement of Recognised Gains and Losses
Profit/(Loss) attributable to shareholders 63 38 (2,572)
Unrealised losses on listed undertakings (1,892) (3,550) (1,850)
--------- --------- ---------
Total recognised losses (1,829) (3,512) (4,422)
===== ===== =====
Changes in Shareholders' Equity
Total recognised losses (1,829) (3,512) (4,422)
Proceeds of new share issues, net of costs - 2,389 2,385
Dividends paid in respect of the previous year (466) (327) (327)
--------- --------- ---------
(2,275) (1,450) (2,364)
Shareholders' funds at start of period 10,419 12,783 12,783
--------- --------- ---------
Shareholders' funds at end of period 8,124 11,333 10,419
===== ===== =====
Unaudited Balance Sheet
31st December 30th June
2008 2007 2008
GBP000 GBP000 GBP000
Fixed assets
Strategic Investments
Creston plc 840 2,288 1,425
Swallowfield plc 921 740 971
Northbridge Industrial Services PLC 1,950 2,220 2,558
Associates 1,117 221 988
General Portfolio investments - UK 2,828 5,248 3,793
- Unlisted 98 77 98
--------- --------- ---------
7,754 10,764 9,833
--------- --------- ---------
Current assets 76 511 36
Cash at bank and in hand 316 151 579
Current liabilities (22) (93) (29)
--------- --------- ---------
Net current assets 370 569 586
--------- --------- ---------
Total assets less current liabilities 8,124 11,333 10,419
===== ===== =====
Capital and Reserves
Called up share capital 7,182 7,182 7,182
Share premium account 2,654 2,290 2,654
Warrants reserve 148 - 148
Fair Value reserve (1,343) (638) 549
Retained earnings (517) 2,498 (114)
--------- --------- ---------
8,124 11,333 10,419
===== ===== =====
Net Assets at market value per share - pence 45p 63p 58p
Number of shares in issue 17,956,419 17,955,309 17,956,419
Notes:-
1. The results for the half-year are unaudited. The financial information in
this interim announcement does not constitute statutory accounts within
the meaning of Section 240(5) of the Companies Act 1985. The statutory
accounts of Western Selection P.L.C. for the year ended 30th June 2008
have been reported on by the Company's auditors and have been delivered to
the Registrar of Companies. The report of the auditors was unqualified and
did not contain a statement under Section 237(2) or 272(3) of the
Companies Act 1985.
2. The calculation of earnings per share is based on the weighted average
number of shares in issue for the period and the profit on ordinary
activities after tax.
3. Retained earnings include an unrealised impairment provision of GBP3,019,000
on the Company's investment in Creston which is ignored when calculating
distributable profits.
Cash Flow Statement
Half year ended Year ended
31st December 30th June
2008 2007 2008
Notes GBP000 GBP000 GBP000
Net cash outflow from operating (a) (5) (438) (45)
activities
Returns on investments and servicing of
finance
Net interest received/(paid) 9 (52) (35)
Taxation paid - - -
--------- --------- ---------
4 (490) (490)
--------- --------- ---------
Financial investment
Proceeds of disposal of fixed asset 331 822 2,142
investments
Purchase of fixed asset investments (131) (212) (1,513)
--------- --------- ---------
Net cash inflow from financial investment 200 610 629
activities
--------- --------- ---------
Financing activities
Equity dividend paid (467) (327) (327)
Proceeds of new share issues - 2,386 2,385
--------- --------- ---------
Net cash (outflow)/inflow from financing (467) 2,059 2,058
activities
--------- --------- ---------
Movement in cash and cash equivalents (263) 2,179 2,607
Net cash and cash equivalents at start of 579 (2,028) (2,028)
year
--------- --------- ---------
Net cash and cash equivalents at end of (b) 316 151 579
year
===== ===== =====
Notes:
(a) Reconciliation of operating profit to net cash inflow from operating
activities
Profit/(Loss) before taxation 63 38 (2,572)
(Loss)/Profit on sale of investments 116 (81) (420)
Share of results of associates (130) - (69)
Net interest received/(paid) (8) 52 35
Exceptional costs - - (3,019)
(Increase)/Decrease in debtors and accrued (39) (493) (20)
income
(Decrease)/Increase in creditors (7) 46 (18)
--------- --------- ---------
Net cash outflow from operating activities (5) (438) (45)
===== ===== =====
(b) Reconciliation to movements in net debt
At start Cash At end
Period flow Period
Half year ended GBP000 GBP000 GBP000
31stDecember 2008
Cash at bank 579 421 1,000
Bank overdraft - (684) (684)
--------- --------- ---------
579 (263) 316
===== ===== =====
31stDecember 2007
Cash at bank 6 145 151
Bank overdraft (2,034) 2,034 -
--------- --------- ---------
(2,028) 2,179 151
===== ===== =====
Year ended 30thJune 2008
Cash at bank 6 573 579
Bank overdraft (2,034) 2,034 -
--------- --------- ---------
(2,028) 2,607 579
===== ===== =====
Composition of General Portfolio
at 31stDecember 2008
Current Value of
value General
Portfolio
GBP000 %
FTSE 100
Royal Dutch Shell 233 8.2
BP 158 5.6
Diageo 144 5.1
British American Tobacco 126 4.5
Unilever 111 3.9
Royal & Sun Alliance Insurance 110 3.9
Associated British Foods 110 3.9
GlaxoSmithKline 109 3.9
Prudential Corporation 97 3.4
Imperial Tobacco Group 85 3.0
Cobham 72 2.5
Lloyds TSB Group 25 0.9
Land Securities 25 0.9
---------- ---------
1,405 49.7
---------- ----------
FTSE 250
Rotork 55 2.0
Balfour Beatty 53 1.9
Spirax-Sarco Engineering 50 1.8
Renishaw 49 1.7
Forth Ports 46 1.6
William Hill 32 1.1
Marstons 31 1.1
Homeserve 29 1.0
---------- ----------
345 12.2
---------- ----------
FTSE SmallCap
Severfield-Rowen 33 1.2
Castings 27 0.9
Marshalls Group 22 0.8
---------- ----------
82 2.9
---------- ----------
FTSE Fledgling
Treatt 417 14.7
Bioquell 96 3.4
Dawson Holdings 81 2.9
---------- ----------
594 21.0
---------- ----------
FTSE AIM
Wynnstay Group 118 4.2
Best Of The Best 39 1.3
157 5.5
---------- ----------
Quoted Investment Fund
Equisar IIID Fund (A Class) Accumulation Shares 212 7.5
---------- ----------
212 7.5
---------- ----------
Other (less than GBP20,000) 33 1.2
---------- ----------
33 1.2
---------- ----------
2,828 100.0
====== ======
END
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