Date: 26th February 2015
On behalf of: Western Selection P.L.C.
Western Selection P.L.C.
Interim Results
Western Selection P.L.C. (ISDX:WESP) today announces its unaudited interim
results for the six months ended 31st December 2014.
The Directors are pleased to present the unaudited interim results of the
Company for the six months ended 31st December 2014.
Our net assets per share decreased 9% to 93p at 31st December 2014 from 102p at
30th June 2014. Our Core Holdings decreased in value by 12%, primarily due to a
fall in Northbridge's share price. The value of our treasury operations
investments increased by 6% over the half year. At the close of business on
25th February 2015, our net asset value was 94.55p per share.
The Company achieved a profit for the half year of £222,000 (1.2p per share)
compared with £336,000 for the same period last year (1.9p per share).
Operating profit before associates was £175,000, compared to £31,000 last year.
Dividend income from Core Holdings has increased from £120,000 to £163,000,
principally due to the earlier timing of Creston's interim dividend of £40,500
from the comparative period last year. Swallowfield has not paid dividends in
respect of both the current and comparable periods, nor during the second half
of Western's year ended June 2014. Our share of the results of associates has
declined compared with the comparative period.
An analysis of assets is shown on the face of the Statement of Financial
Position.
Business Model
Western's objective is to generate growth in value for shareholders over the
medium to long term and pay a progressive dividend.
As reported at June, the Company's new business model will be to take sizeable
minority stakes in relatively small companies at a pre-IPO or IPO stage, and
have directors in common through which we can provide advice and support for
these growing companies. These may or may not be associated companies. Our
aim is that these Core Holdings will grow to a stage at which our support is no
longer required and our stake can then be sold over time into the market.
Companies that are targeted as core holdings will have an experienced
management team and a credible business model, and other good prospects for
growth.
Our objective is not to build a diversified portfolio, but to identify a
limited number of good opportunities for growth in value. This may well see
risk concentrated even further than it has previously been.
To acquire these stakes in new core investment holdings, we need to be able to
react quickly, and so we need to have readily available funds to invest. To
achieve this we will maintain a treasury operation consisting of cash, debt
facilities and liquid investments. We have ceased to have a general portfolio
of investments.
Activities
Treasury activities
During the period we made a net disposal of investments held in Treasury to the
value of £823,000, clearing borrowings. The value of our Treasury investments
increased over the period by 6% to £2,424,000 and yielded 3% (£39,000).
Treasury investments represent 15% of Western's assets.
Core Holdings
Creston plc ("Creston")
Creston is a marketing services group whose strategy is to grow within its
sector both by organic growth and through selective acquisition to become a
substantial, diversified marketing services group. Further information about
Creston is available on their website: www.creston.com.
Creston's results for the half-year to 30th September 2014 show a profit after
tax of £3,123,000 (2013: £1,148,000). Creston declared an interim dividend of
1.35p per share, an increase of 13% on the prior year.
Western owns 3,000,000 shares in Creston (5.0%) with a market value at 31st
December 2014 of £3,840,000 (30th June 2014: £3,150,000), being 23% of
Western's assets.
Northbridge Industrial Services plc ("Northbridge")
Northbridge hires and sells specialist industrial equipment to a non-cyclical
customer base. With offices or agents in the U.K., U.S.A., Dubai, Germany,
Belgium, France, Australia, Singapore, India, Brazil, Korea and Azerbaijan,
Northbridge has a global customer base. This includes utility companies, the
oil and gas sector, shipping, construction and the public sector. The product
range includes loadbanks, transformers, generators, compressors, loadcells and
oil tools. Further information about Northbridge is available on their website:
www.northbridgegroup.co.uk.
Northbridge's latest results, for the half year to 30th June 2014, showed
profit after tax of £2,568,000 (2013: £1,949,000). Northbridge declared an
interim dividend of 2.20p per share, an increase of 10% on the prior year.
Western owns 1,875,000 shares, representing 10% of Northbridge's share capital.
The market value of this investment at 31st December 2014 was £7,406,000 (30th
June 2014: £9,750,000), representing 44% of Western's assets.
I am a Non-Executive Director of Northbridge.
Swallowfield plc ("Swallowfield")
Swallowfield is a market leader in the development, formulation, manufacture
and supply of cosmetics, toiletries and related household products for global
brands and retailers operating in the cosmetics, personal care and household
goods market. Further information about Swallowfield is available on its
website: www.swallowfield.com.
Swallowfield announced its annual results to 30th June 2014 on 18th September
2014 showing a profit after tax of £157,000 compared to a loss of £910,000
(restated) for the comparable period last year. No dividends were received from
Swallowfield during the year (2013 - £118,000).
Western owns 1,869,149 shares in Swallowfield (16.5% of their issued share
capital). The market value of the Company's holding in Swallowfield on 31st
December 2014 was £1,589,000 (30th June 2014: £1,813,000) representing 10% of
the Company's assets.
Mr Beale is a Non-Executive Director of Swallowfield
Hartim Limited ("Hartim")
Hartim offers a complete export sales, marketing and logistical service to a
number of well known UK branded fast moving consumer goods companies. This
investment is accounted for as an associated company.
Our share of Hartim's estimated results for the period ended 31st December 2014
is a profit after tax of £23,000 (2013 - £161,000, plus an exceptional profit
in 2013 of £167,000 due to the release of surplus provisions relating to the
closure of its Australian subsidiary).
At 31st December 2014, Western owned 49.5% of Hartim. The carrying value of the
Company's equity investment in Hartim on 31st December 2014 was £591,000 (31st
December 2013: £514,000) representing 3% of the Company's assets. In addition,
loans of £660,000 (equivalent to a further 4% of the Company's assets) have
been made to Hartim and its executive directors.
Mr. E. J. Beale is a Non-Executive Director of Hartim.
Industrial & Commercial Holdings P.L.C. (ICH)
ICH is a small unquoted PLC in which Western holds a 29.9% interest. It owns
land with potential for residential planning permission at Milngavie, adjacent
to Dougalston golf course, just north east of Glasgow. ICH is currently making
representations for its land to be included in the local authority's next five
year plan, but it may take some time for permission to be received. The
Company's share of ICH's loss for the period was £3,000.
Mr D. C. Marshall and Mr J. M. Robotham are directors of ICH.
City Group P.L.C.
Western holds 48.6% and London Finance & Investment Group P.L.C. (Western's
largest shareholder) holds 51.4% of City Group P.L.C., which provides head
office and company secretarial services to both these and other companies. The
Company's share of City's profit for the period was £18,000.
Mr D. C. Marshall, Mr E. J. Beale and Mr J. M. Robotham are directors of City
Group P.L.C.
Outlook
The Company's net asset value per share will continue to remain volatile
reflecting movements in the market and the illiquidity of its core holdings. We
are optimistic about the prospects for Hartim and our quoted core holdings.
The Board has declared an increased interim dividend of 1.05p per share (2014:
0.95p) that will be paid on Friday, 27th March 2015 to shareholders on the
register at the close of business on 13th March 2015. Subject to unforeseen
circumstances, we expect to show satisfactory results for the period to 30th
June 2015 and to declare a similar final dividend for the current year, which
the Board anticipates paying in October 2015.
D.C. MARSHALL
Chairman
Unaudited Statement of Comprehensive Income
Half year ended Year ended
31st December 30th June
2014 2013 2014
£000 £000 £000
Income from investments in:
Core holdings 163 120 229
Other listed investments 39 39 97
Surplus on disposal of listed undertakings 139 6 440
341 165 766
Administrative expenses - normal (166) (134) (314)
Operating profit 175 31 452
Share of results of associated companies 38 143 194
Share of exceptional profit of associated - 167 167
company
Interest receivable 20 - 20
Finance expense (8) (3) (23)
Profit on ordinary activities before taxation 225 338 810
Taxation (3) (2) (7)
Profit on ordinary activities after taxation 222 336 803
Other Comprehensive Income
Fair value recycled from equity on disposal (159) 2 (313)
Fair value adjustment on listed undertakings (1,673) 1,820 3,515
Deferred taxation on fair values 137 - (137)
Total comprehensive income (1,473) 2,158 3,868
Earnings per share 1.2p 1.9p 4.5p
Interim dividend per share 1.05p 0.95p 0.95p
Final dividend per share - 1.05p
Total dividends in respect of the year 2.00p
Unaudited Changes in Shareholders' Equity
Half year ended Year ended
31st December 30th June
2014 2013 2014
£000 £000 £000
Total comprehensive income (1,473) 2,158 3,868
Dividends paid (188) (188) (359)
(1,661) 1,970 3,509
Equity shareholders' funds at start of period 18,308 14,799 14,799
Equity shareholders' funds at end of period 16,647 16,769 18,308
Unaudited Statement of Financial Position
31st December 30th June
2014 2013 2014
£000 £000 £000
Non-current assets
Core holdings
Creston plc 3,840 2,790 3,150
Northbridge Industrial Services plc 7,406 9,200 9,750
Swallowfield plc 1,589 1,570 1,813
Investments in Associates 708 1,279 669
Treasury investments 2,424 2,966 3,062
Trade and other receivables 660 - 660
16,627 17,805 19,104
Current assets - trade and other receivables 64 17 24
Cash at bank/(overdraft) 68 (976) (590)
Other current liabilities - trade and other (112) (77) (93)
payables
Net current assets/(liabilities) 20 (1,036) (659)
Deferred taxation - - (137)
Total assets less current liabilities 16,647 16,769 18,308
Capital and Reserves
Called up share capital 7,180 7,180 7,180
Share premium account 2,654 2,654 2,654
Capital reserve 3 3 3
Unrealised profits and losses on investments 5,035 5,486 6,731
Share of undistributed (losses)/profits of (211) (300) (249)
associates
Realised profits 1,986 1,746 1,989
Equity shareholders' funds 16,647 16,769 18,308
Net assets per share 93p 93p 102p
Number of shares in issue 17,949,872 17,949,872 17,949,872
Unaudited Statement of Cash Flow
Half year ended Year ended
31st December 30th June
2014 2013 2014
£000 £000 £000
Profit before taxation 225 338 810
Profits on sale of investments (139) (6) (440)
Share of results of associates (38) (143) (194)
Share of exceptional results of associates - (167) (167)
Net interest (received)/paid (12) 3 3
(Increase)/Decrease in debtors and accrued (40) 6 (2)
income
Increase /(Decrease) in creditors 18 (20) (3)
14 11 7
Taxation paid (3) (2) (7)
Net interest received/(paid) 12 (3) (3)
Cash generated by operations 23 6 (3)
Investment activities
Proceeds of disposal of treasury investments 926 169 168
Purchase of treasury investments (103) (174) (173)
823 (5) (5)
Disposal of part of core holdings - - 566
Loans to Hartim and its directors - (660) (660)
Net cash inflow/(outflow) from investment 823 (665) (99)
activities
Financing activities
Equity dividend paid (188) (188) (359)
Net cash outflow from financing activities (188) (188) (359)
Movement in cash and cash equivalents 658 (847) (461)
Net cash and cash equivalents at start of (590) (129) (129)
year
Net cash and cash equivalents at end of year 68 (976) (590)
Reconciliation to movements in cash and cash equivalents
At start Cash At end
of Period Flow of Period
£000 £000 £000
Half year ended
31st December 2014
Bank overdraft (590) 658 68
31st December 2013
Bank overdraft (129) (847) (976)
Year ended 30th June 2014
Bank overdraft (129) (461) (590)
Notes:-
1. The results for the half-year are unaudited. The information contained in
this report does not constitute statutory accounts within the meaning of
the Companies Act 2006. The statutory accounts of Western Selection P.L.C.
for the year ended 30th June 2014 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.
2. This report has been prepared in accordance with the accounting policies
contained in the Company's Annual Report and Accounts 2014.
3. 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.