WESTERN SELECTION PLC - Final Results PR Newswire

Date:         30 September 2015

On behalf of: Western Selection P.L.C. (“Western” or “the Company")



Western Selection P.L.C.

Preliminary announcement of unaudited results for the year ended 30th June 2015

Western’s objective is to generate growth in value for shareholders over the medium to long term and pay a progressive dividend. 

Our business model is to take sizeable minority stakes in relatively small companies, usually immediately before or as their shares come to market, and have directors in common through which we can provide advice and support for these growing companies.  These may or may not become associated companies.  The 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, a credible business model and also good prospects for growth.  Core Holdings may be in any sector where management feels it has specific competence.

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 therefore to have readily available funds to invest.  To achieve this we will maintain a Treasury Operation consisting of a mix of cash, debt facilities and liquid investments.

Results for the year

The Company’s profit for the year before exceptional items was £159,000 (2014 - £202,000).  During the year Mr D. C. Marshall stepped down as a director of Creston. Western subsequently sold its investment in Creston plc for £4,040,000, realising an exceptional gain of £2,615,000.  After this exceptional item our profit for the year was £2,774,000 compared to a profit last year after exceptional items of £803,000.

Dividend income from Core Holdings has increased slightly to £238,000 from £229,000 last year.  Dividend income from Treasury Operations decreased slightly from £97,000 last year to £85,000.  Administrative expenses have increased by 3% reflecting the full year impact of last year’s increase in directors’ fees.

Shareholders’ funds per share have fallen substantially from 102p to 75p primarily due to the fall in value of our investment in Northbridge Industrial Services plc.  We continue to believe in the long term prospects for Northbridge Industrial Services plc.

Dividend

The Company paid an interim dividend of 1.05p per share on 27th March 2015.

A final dividend of 1.05p per share is proposed, making 2.1p for the year, compared to 2.0p for 2014.  The dividend will be paid on 4th December 2015 to shareholders on the register at the close of business on 20th November 2015.

Core Holdings

Northbridge Industrial Services plc (“Northbridge”)

Northbridge hires and sells specialist industrial equipment to a global customer base.  It has offices or agents in the U.K., U.S.A., Dubai, Germany, Belgium, France, Australia, Singapore, India, Brazil, Korea and Azerbaijan.  Customers include 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 will announce its unaudited interim profits after tax for the six months ended 30th June 2015 on 30th September 2015.

Western acquired a further 25,000 Northbridge shares on 2 June 2015 for £52,000 bringing its holding to 1,900,000 shares.  Western’s holding is 10.2% of Northbridge’s issued share capital.  The value of this investment at 30th June 2015 was £3,895,000 (2014 - £9,750,000) being 29% (2014 - 53%) of Western’s net assets.

Mr D. C. Marshall is 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 their website: www.swallowfield.com.

Swallowfield announced its annual results to 30th June 2015 on 22nd September 2015 and recorded a profit after tax of £746,000 compared to a profit of £157,000 for the comparable period last year.  No dividends were received from Swallowfield during the year (2014 – nil).  Profits are expected to recover further in the current year and dividends are expected to be resumed shortly.

At the reporting date, Western owned 1,869,149 shares which is 16.5% of Swallowfield’s issued share capital.  The market value of this investment on 30th June 2015 had increased by 11% to £2,019,000 from the value at June 2014 of £1,813,000. This is 15% (2014 - 10%) of Western’s net assets.

Mr E. J. Beale is a non-executive director of Swallowfield.

Bilby Plc (“Bilby”)

In July 2015 we invested £1,500,000 in acquiring 1,875,000 shares in Bilby which is 5.5% of their issued share capital. 

Bilby is an established, and award winning, provider of gas installation, maintenance and general building services to local authority and housing associations across London and South East England.  They have a strategy of growing organically and by acquisition.  Further information about Bilby is available on their website: www.bilbyplc.com.

Bilby announced its results for the 14 month period to 31st March 2015 on 23rd June 2015 showing a profit after tax of £1,552,000.  It has announced a dividend of 2.32p per share payable in August which will provide us with income of £43,500.

Hartim Limited (“Hartim”)

Hartim is the unquoted holding company for Tudor Rose International Limited (“TRI”) which was founded in 1984.  It works closely with a number of leading UK branded fast moving consumer goods companies, offering a complete sales, marketing and logistical service.  Based in Stroud, Gloucestershire, TRI sells into 78 countries worldwide including USA, Spain, Portugal, Italy, Czech Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia, Australia and China. 

Western holds 49.5% of Hartim, which has a 31st December year end, and which generated trading profits before tax in the year to 30th June 2015 of £68,000.  Turnover in the period was £18,022,000 (2014 - £20,448,000).  Western’s share of a loss after tax, including a charge for disallowed tax losses, for the twelve months to 30th June 2015 was £5,000 (2014 –profit of £382,000, after exceptional profit on former Australian subsidiary of £337,000) and the book value of the investment at 30th June 2015 was £1,223,000 (2014 - £1,228,000) being 9% (2014 - 7%) of Western’s assets.

Western has two nominees on the Board of Hartim: Mr E. J. Beale and Mr L. H. Marshall (a director of City Group P.L.C., Western’s company secretary).

Industrial & Commercial Holdings PLC (“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.  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.  City Group P.L.C. acts as a shared cost centre for related party clients and sells surplus time to unrelated clients. Mr E. J. Beale is Chief Executive of City Group P.L.C. and Mr D.C. Marshall and Mr J.M. Robotham are directors of City Group P.L.C.

Treasury Operations

Treasury operations comprise bank borrowing facilities of £1,500,000 and liquid investments. At the year end we held cash balances of £3,889,000 (2014 – nil) and liquid investments valued at £2,450,000 (2014 - £2,910,000).  We had no debt at 30th June 2015 (2014 - £590,000).  Since the year end cash balances have reduced by £1,500,000 due to the investment in Bilby.

Outlook

The outlook for the global equity markets uncertain.  In the short term our shareholders funds per share will continue to remain volatile reflecting movements in the market and the non-liquidity of its Core Holdings.  We are invested in sensible businesses whose value we expect will shine through in the medium to long term, despite any short term hiccups.

D.C. Marshall
Chairman



Unaudited Statement of Comprehensive Income


For the year ended 30th June                                      2015    2014

                                                                  £000    £000

Income from investments in:

Listed strategic undertakings                                     238     229 

Other listed undertakings                                          85      97 

                                                                  323     326 

Administrative expenses                                          (324)   (314)

Profit on disposal of investment in Creston plc                 2,615       - 

Profit on disposal of other investments                           143     440 

Operating profit                                                2,757     452 

Share of (losses)/profits of associated companies before           (3)    194 
exceptional items

Share of associated company’s exceptional item                      -     167 

Share of (losses)/profits of associated companies                  (3)     361

Interest receivable                                                41      20 

Finance costs                                                     (11)    (23)

Profit before taxation                                          2,784     810 

Taxation                                                          (10)     (7)

Profit after taxation attributable to equity shareholders       2,774     803 

Other comprehensive income

Items that may be reclassified subsequently to profit and loss
:-

Fair value recycled from equity on disposal                    (1,885)   (440)

Fair value adjustment on listed undertakings                   (5,470)  3,642 

Deferred taxation on fair values                                  137    (137)

Total Other Comprehensive (loss)/profit                        (7,218)  3,065 

Total Comprehensive (loss)/profit                              (4,444)  3,868 

Basic and diluted profit per share attributable to ordinary      15.5p    4.5p
equity holders





Unaudited Statement of Changes in Equity


                                                        Share of
                                                   undistributed
                        Share  Capital  Unrealised     profits/
                Share premium  reserve  profits on   (losses) of Realised
              capital account  account investments    associates  profits   Total

                 £000    £000     £000        £000          £000     £000    £000

Year ended
30th June
2014

Balances at     7,180   2,654        3      3,666          (610)   1,906  14,799 
1st July 2013

Profit for          -       -        -          -           361      442     803 
the period

Items that          -       -        -      3,065             -        -   3,065 
can be
reclassified
to the income
statements
-Other
Comprehensive
Income – Fair
values net of
tax

Total               -       -        -      3,065           361      442   3,868 
Comprehensive
Income

Transactions
with
shareholders

Final               -       -        -          -             -     (188)   (188)
dividend paid
in respect
of prior year

Interim             -       -        -          -             -     (171)   (171)
dividends
paid in
respect of
the year

Total               -       -        -           -            -     (359)   (359)
transactions
with
shareholders

Balances at     7,180   2,654        3      6,731          (249)   1,989  18,308 
30th June
2014

Year ended
30th June
2015

Balances at     7,180   2,654        3      6,731          (249)   1,989  18,308 
1st July 2014

Profit for          -       -        -      3,019           (3)     (242)   2,774
the period

Items that          -       -        -     (7,218)            -         - (7,218)
can be
reclassified
to the income
statements
-Other
Comprehensive
Income – Fair
values net of
tax

Total               -       -        -     (4,199)          (3)     (242) (4,444)
Comprehensive
Loss

Transactions
with
shareholders

Final               -       -        -          -             -     (188)   (188)
dividend paid
in respect
of prior year

Interim             -       -        -          -             -     (189)   (189)
dividends
paid in
respect of
the year

Total               -       -        -          -             -     (377)   (377)
transactions
with
shareholders

Balances at     7,180   2,654        3      2,532          (252)   1,370  13,487 
30th June
2015





Unaudited Statement of Financial Position


At 30th June                                    2015     2014

                                                £000     £000

Non-current Assets

Investment in Associates                        666      669 

Investments classified as held for sale       8,364   17,775 

Trade and other receivables                     660      660 

                                              9,690   19,104 

Current Assets

Trade and other receivables                      24       24 

Cash and cash equivalents                     3,889        - 

                                              3,913       24 

Current Liabilities

Trade and other payables                       (116)    (683)

Net Current Assets/ (Liabilities)             3,797     (659)

Non-current Liabilities

Deferred taxation                                  -    (137)

Net Assets                                   13,487   18,308 

Equity

Share capital                                 7,180    7,180 

Share premium account                         2,654    2,654 

Capital reserve account                           3        3 

Unrealised profits on investments             2,532     6,731

Share of undistributed losses of associates    (252)    (249)

Realised profits                              1,370     1,989

Shareholders' Funds                          13,487   18,308 





Unaudited Statement of Cash Flow


For the year ended 30th June                    2015     2015   2014        2014

                                                £000     £000   £000        £000

Profit before taxation                                 2,784                810 

Profit on sale of Creston plc                         (2,615)                  -

Profit on sale of investments                           (143)             (440)

Share of results of associates                             3              (361)

Net interest (receivable)/payable                        (30)                 3 

Changes in working capital

(Increase) in trade and other receivables                  -                 (2)

Increase/(decrease) in trade and other                    22                 (3)
payables

Cash generated by operations                              21                  7 

Taxation paid                                            (10)                (7)

Net interest received/(paid)                              30                 (3)

Net cash generated/(absorbed) by                          41                 (3)
operations

Cash flow from investment activities

Loan to associated company                        -            (660)

Proceeds on disposal of financial               931             168 
instruments

Purchase of financial instruments              (104)           (173)

                                                827             (5) 

Purchase of Core Holdings                       (52)              - 

Disposal of Core Holdings                     4,040             566 

                                              4,815             561 

Net cash generated by investment                       4,815               (99) 
activities

Financing activities

Equity dividend paid                           (377)           (359)

Net cash outflow from financing                         (377)              (359)
activities

Movement in cash and cash equivalents                  4,479               (461)

Net cash and cash equivalents at start of               (590)              (129)
year

Net cash and cash equivalents at end of   (a)          3,889               (590)
year




Note (a)           Analysis of cash and cash equivalents


                           At start of year  Cash Flow  At end of year

                                       £000       £000            £000

2014/2015

Cash and cash equivalents                -      3,889           3,889 

Bank borrowings                       (590)       590               - 

Total cash and equivalents            (590)     4,479           3,889 

2013/2014

Bank borrowings                       (129)      (461)           (590)

Total net debt                        (129)      (461)           (590)



Notes:-


1. Earnings per share are based on the profit on ordinary activities after
   taxation and on 17,949,872 (2014 - 17,949,872) being the weighted average
   number of shares in issue during the period.

2. The net assets per share are calculated taking investments at market
   value. The Company has estimated Corporation Tax losses which cover the
   potential liability on the unrealised gains on investments.

3. The financial information contained in this preliminary announcement of
   results has been prepared under the recognition and measurement principles of
   International Financial Reporting Standards and Interpretations issued by the
   International Accounting Standards Board as adopted by the European Union
   (‘IFRSs’). The financial information does not give sufficient information to
   comply with IFRSs which will be contained in the statutory accounts sent to
   shareholders.

4. The financial information in this preliminary announcement does not
   constitute the company’s statutory accounts for the years ended 30th June
   2015 or 30th June 2014 but is derived from those accounts. The financial
   statements for both years have been prepared in accordance with IFRSs as
   adopted by the EU. The statutory accounts for 2014 have been delivered to the
   Registrar of Companies and those for 2015 will be delivered following the
   Company’s annual general meeting. The auditors reports on the accounts for
   both years were unqualified, did not include references to any matters to
   which the auditors drew attention by way of emphasis without qualifying their
   reports and did not contain statements under the Companies Act 2006, sections
   498 (2) or (3).



Copies of this notification are held at the Company’s office, 6 Middle Street, London, EC1A 7JA (tel. 020 7796 9060) and are available for a period of 14 days from the date of this announcement.

Enquiries to:


Western Selection P.L.C.                 020 7796 9060
Edward Beale

Loeb Aron & Co. Ltd.                     020 7628 1128
Peter Freeman / Jonathan Willis-Richards