Western Selection Plc - Final Results PR Newswire

26th September 2018

Western Selection P.L.C.

(the “Company” or “Western”)

Unaudited Preliminary Results for the Year Ended 30th June 2018

The Company today announces its unaudited preliminary financial results for the year ended 30th June 2018.

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 are admitted to trading on one of the UK’s stock exchanges 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 companies (“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 relevant stock 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 Holdings, we need to be able to react quickly, and therefore to have readily available funds to invest.  To achieve this, we maintain a Treasury Operation consisting of a mix of cash, debt facilities and liquid investments.

Results for the year

The Company’s profit on ordinary activities after tax for the year was £784,000 (2017 – profit after tax £850,000).  Western sold 200,000 shares of its holding of 1,500,000 shares in Swallowfield during the year, realising an exceptional profit of £443,000 (2017 - £845,000).

Dividend income from Core Holdings has increased by 10% to £132,000 from £120,000 last year. This is mainly due to the slight increase in dividend being paid in the year by Swallowfield.  Dividend income from Treasury Operations decreased by 0.7% from £136,000 last year to £135,000.  Administrative expenses have increased by 7% reflecting the recruitment costs for the Company’s new Non-Executive Directors.

During the year Western increased its investment in Northbridge by £95,000.

Net assets per share have increased by 1% from 95p to 96p.

Core Holdings

Northbridge Industrial Services plc (“Northbridge”)

Northbridge hires and sells specialist industrial equipment to a non-cyclical customer base.  With offices or agents in the UK, USA, Dubai, Germany, Belgium, France, Australia, New Zealand, Singapore, Brazil and Korea, 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 and oil tools.  Further information about Northbridge is available on their website: www.northbridgegroup.co.uk

Northbridge, which is admitted to trading on AIM, announced its results for the year ended 31st December 2017 on 12th April 2018 and recorded a loss after tax of £4,626,000 for the year.  No dividend was recommended by Northbridge and no dividends were received by Western from Northbridge during the year.

During the year, Western invested £95,000 in acquiring 76,368 new ordinary shares in Northbridge pursuant to a share placing. Western now holds 3,300,000 Northbridge shares which represents 12.6% of Northbridge’s enlarged issued share capital.  The value of this investment at 30th June 2018 was £4,290,000 (2017 - £3,320,000) which represents approximately 25% (2017 - 19%) of Western’s net assets.

David 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, which is admitted to trading on AIM, announced its results for the 53 weeks ended 30th June 2018 on 25th September 2018 and recorded a profit after tax of £3,633,000 compared to a profit after tax of £2,572,000 for the comparable period last year.  Dividends of £78,500 were received from Swallowfield during the year (2017 – £66,900).  A final dividend of 4.2p per share has been declared and, if approved, Western will receive a further £54,600 of income in December 2018.

In March this year, Western sold 200,000 Swallowfield shares, realising a profit of £443,000, during the year. At the reporting date, being 30th June 2018, Western held 1,300,000 Swallowfield shares which represented 7.7% of Swallowfield’s issued share capital.  The market value of our reduced holding in Swallowfield on 30th June 2018 had decreased to £4,095,000 from the value of our holding at 30th June 2017 of £5,700,000. The value of this investment represents approximately 23.6% (2017 - 33%) of Western’s net assets.

Edward Beale is a non-executive director of Swallowfield.

Bilby Plc (“Bilby”)

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, which is admitted to trading on AIM, announced its results for the year ended 31st March 2018 on 16th July 2018 showing a profit after tax of £3,450,000 compared to a loss after tax of £180,000 for the previous year ended 31st March 2017.  Dividends of £54,000 were received from Bilby during the year (2017 - £53,000).  Bilby announced a final dividend of 2.0p per share which was paid in July 2018 and which provided Western with further income of £54,000.

Western holds 2,700,000 Bilby shares which represents approximately 6.7% of Bilby’s issued share capital. The market value of this investment on 30th June 2018 was £2,835,000 (2017- £1,917,000) which represents approximately 16% (2017 – 11%) of Western’s net assets.

Associated Companies

Tudor Rose International Limited (“Tudor Rose International”)

Tudor Rose International works closely with a number of leading UK branded fast-moving consumer goods companies, offering a complete sale, marketing and logistical service.  Based in Stroud, Gloucestershire, Tudor Rose International 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 441,090 A ordinary shares in Tudor Rose International which represents 49.5% of the company’s issued share capital.  Western also holds £1,000,000 of redeemable preference shares in Tudor Rose International at a par value of 1p per share. The Company has made available to Tudor Rose International a working capital facility of £750,000, bearing interest at the rate of base + 5% per annum, which has been fully drawn down at the year end.

Tudor Rose International, which is a private company, has a 31st December year end and, in the year to 30th June 2018, generated a trading profit before tax of £130,140. Turnover in the period was £19,032,000 (2017 - £17,145,000).  Western’s share of a profit after tax for the twelve months to 30th June 2018 was £41,000 (2017 – profit £49,550) and the book value of the investment at 30th June 2018 was £1,633,000 (2017 - £1,647,000) being 9.4 % (2017 –10%) of Western’s net assets. Including the loans to Tudor Rose International and its directors (£942,000), the total book value of the investment comes to £2,575,000 which is 15% of Western’s net assets.

Western has two nominees on the board of Tudor Rose International: Edward Beale and David Marshall.

Industrial & Commercial Holdings PLC (“ICH”)

ICH is a small unquoted PLC in which Western holds 15,252,774 shares which represents a 29.9% interest.  ICH owns land at Milngavie, adjacent to Dougalston golf course, just north east of Glasgow, which, with planning permission, has potential for residential development.  ICH has been making representations for its land to be included for housing development in the local authority’s next five-year plan, but it may take some time for permission to be received. 

As part of its continued efforts to obtain planning permission for the development of the land at Milngavie, ICH appointed Mactaggart & Mickel Limited (“M & M”), a family-controlled firm of contractors, as its development partner.  On 4th December 2017, Dougalston Limited, the Company’s subsidiary in which the land at Milngavie is held, entered into a conditional sale agreement (the “Agreement”) with

M & M in respect of the bulk of its landholding in Milngavie, Scotland. The Agreement is conditional on M & M obtaining suitable planning permission for housing development on the site and fulfilling or waiving fulfilment of any conditions in the grant of planning permission, within a period of between 3 to 6 years, depending on a number of factors. The Agreement allows ICH the opportunity to provide input to the planning process in order to maximise the value of the site.  The Agreement also provides for further payments in relation to any increases in value of the site arising from subsequent grants of planning permission for a period of up to 20 years. Dougalston Limited will retain ownership of small parts of the site that may have a future value.

The Agreement includes a formula for setting the net sale price based on the market value of the site once planning permission has been granted. The net sale price will include a minimum of three instalment payments of £25,000 each with the first payment having been made on the signing of the Agreement and the second and third instalments being paid on an annual basis thereafter. Both parties expect the planning and development process to run over the course of the next few years. However, M & M may terminate the Agreement early without completing the purchase of the property, but in doing so M & M will still be required to pay any remaining instalment(s).

David Marshall and Edward Beale are directors of ICH.

City Group PLC (“City Group”)

Western holds 48.6% and London Finance & Investment Group P.L.C. (Western’s largest shareholder) holds 51.4% of City Group, an unquoted public company, which provides head office and company secretarial services to both these and other companies.  City Group acts as a shared cost centre for related party clients and sells surplus time to unrelated clients.

Edward Beale and David Marshall are directors of City Group.

Treasury Operations

Treasury operations comprise bank borrowing facilities of £1,900,000 and liquid investments. At the year-end the Company had net debt of £940,000 (2017 – £1,147,000) and liquid investments valued at £4,329,000 (2017 - £5,348,000).  The Company had drawn down £975,000 of the bank borrowing facilities available as at 30th June 2018 (2017 – £1,225,000). In October 2017 the Company entered into an Interest rate swap agreement with Coutts & Co. The Interest swap was valued as a liability of £3,870 at 30th June 2018.


There has been strong growth across global stock markets in the last twelve months, but political and economic uncertainty continues. The UK continues to negotiate with the EU on Brexit but an agreed process remains unresolved and the follow-on implications are unclear.  In addition, the potential for further increases in the cost of borrowing in the UK is likely to impact on consumer spending.

Despite these uncertainties, we are confident that our Core Holdings are making steady progress and with our diverse investments in solid international companies in our Treasury Operations we will continue to grow our net assets and our dividend payment to Shareholders.

Dividend Declaration and Timetable

The Company paid an interim dividend of 1.1p per share on 20th March 2018.

A final dividend of 1.15p per share is proposed by the Board, making 2.25p for the year, compared to 2.2p for 2017.  The dividend timetable, if the dividend is approved by shareholders at the forthcoming AGM, is as follows:

Shares trade ex-dividend           Thursday 22nd November 2018

Record date                              Friday 23rd November 2018

Payment date                             Tuesday 11th December 2018

26th September 2018

The Company’s 2018 Report and Accounts will shortly be finalised and sent to shareholders.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

The Directors of the Company accept responsibility for the contents of this announcement.

For further information, please contact:

Western Selection P.L.C.     +44(0) 20 7796 9060

Cairn Financial Advisers LLP

James Caithie / Liam Murray  +44(0) 20 7213 0880

Statement of Comprehensive Income

For the year ended 30th June                                        2018   2017

                                                                    £000   £000

Income from investments in:

Listed Core holdings                                                 132    120

Other listed undertakings                                            135    136

                                                                     267    256

Administrative expenses                                            (348)  (325)

Profit on partial disposal of investment in core holdings            443    845

Profit on disposal of other investments                              483     50

Operating profit                                                     845    826

Share of (losses)/ profits of associated companies                  (17)     49

Finance income                                                        26     26

Finance costs                                                       (52)   (33)

Profit before taxation                                               802    868

Taxation                                                            (18)   (18)

Profit after taxation attributable to equity shareholders            784    850

Other comprehensive income

Items that may be reclassified subsequently to profit and loss:

Fair value recycled from equity on disposal                      (1,023)  (348)

Fair value adjustment on available for sale investments
                                                                     851  2,792

Total other comprehensive (expense)/income                         (172)  2,444

Total comprehensive income
                                                                     612  3,294

Basic and diluted earnings per share attributable to equity
holders                                                             4.4p   4.7p

Statement of Changes of Equity

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

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

Year ended
30th June

Balances at
1st July 2016   7,180   2,654       3       3,574         (200)    1,006  14,217

Profit for          -       -       -           -            49      801     850
the period

Items that          -       -       -       2,444             -        -   2,444
can be
to the income
statements –
Fair values
net of tax

comprehensive       -       -       -       2,444            49      801   3,294


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

dividends           -       -       -           -             -    (198)   (198)
paid in
respect of
the year

transactions        -       -       -           -             -    (386)   (386)

Balances at
30th June       7,180   2,654       3       6,018         (151)   1,421) 17,125)

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

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

Year ended
30th June

Balances at
1st July 2017   7,180   2,654       3       6,018         (151)    1,421  17,125

(Loss)/Profit       -       -       -           -          (17)      801     784
for the

Items that          -       -       -       (172)             -        -   (172)
can be
to the income
statements –
income – Fair
values net of

comprehensive       -       -       -       (172)          (17)      801     612


Final               -       -       -           -             -    (197)   (197)
dividend paid
in respect of
prior year

dividends           -       -       -           -             -    (198)   (198)
paid in
respect of
the year

transactions        -       -       -           -             -    (395)   (395)

Balances at
30th June       7,180   2,654       3       5,846         (168)    1,827  17,342

Statement of Financial Position

Registered Number 00234871

At 30th June                                               2018     2017

                                                           £000     £000

Non-current Assets:

Investment in Associated companies                        1,830    1,846

Investments classified as available for sale             15,549   16,285

Other receivables
                                                            192      192

                                                         17,571   18,323

Current Assets

Trade and other receivables                                 808       40

Cash and cash equivalents
                                                             35       78

                                                            843      118

Current Liabilities

Trade and other payables                                   (97)     (91)

Net Current Assets
                                                            746       27

Financial Liabilities falling due in more than one year
                                                          (975)  (1,225)

Net Assets
                                                         17,342   17,125


Share capital                                             7,180    7,180

Share premium account                                     2,654    2,654

Capital reserve account                                       3        3

Unrealised profits on investments                         5,846    6,018

Share of undistributed losses of associates               (168)    (151)

Realised profits
                                                          1,827    1,421

Shareholders’ Funds
                                                         17,342   17,125

Statement of Cash Flow

For the year ended 30th June                            2018  2018  2017  2017

                                                        £000  £000  £000  £000

Profit before taxation                                         802         868

Profit on disposal of investments in core holdings           (443)       (845)

Profit on disposal of other investments                      (483)        (50)

Share of results of associates                                  17        (49)

Net finance costs                                               26           7

Changes in working capital

Increase/(decrease) in trade and other receivables            (19)          45

(Decrease) in trade and other payables
                                                                 6         (8)

Cash absorbed by operations                                   (94)        (32)

Taxation paid                                                 (18)        (18)

Net finance costs
                                                              (26)         (7)

Net cash absorbed by operations                              (138)        (57)

Cash flow from investment activities

Investments in associated companies                    (750)       (500)

Purchase of Core Holdings                               (95)       (190)

Proceeds on disposal of Core Holdings                    666       1,385

Proceeds on disposal of other financial instruments 919         112

Purchase of other financial instruments
                                                           -       (623)

Net cash generated by investment activities
                                                               740         184

Financing activities

Loan drawdown                                          2,525         225

Loan repayment                                       (2,775)           -

Equity dividends paid                                  (395)       (386)

Net cash outflow from financing activities

                                                             (645)       (161)

Movement in cash and cash equivalents                         (43)        (34)

Cash and cash equivalents at start of year                      78         112

Cash and cash equivalents at end of year
                                                                35          78


Analysis of net debt

                          At start of year Cash Flow £000 At end of year £000


Cash and cash equivalents               78           (43)                  35

Bank borrowings
                                   (1,225)            250               (975)

Total net debt
                                   (1,147)            207               (940)


Cash and cash equivalents              112           (34)                  78

Bank overdraft
                                   (1,000)          (225)             (1,225)

Total net debt
                                     (888)          (259)             (1,147)


  1. Earnings per share

Earnings per share are based on the profit on ordinary activities after taxation of £784,000 (2017 - £850,000) and on 17,949,872 (2017 – 17,949,872) being the weighted average number of shares in issue during the period.

                          2018 2017

Basic earnings per share  4.4p 4.7p

Diluted earnings per share at 30th June 2018 and 30th June 2017 are the same as basic earnings per share.

  1. Net assets per share

The net assets per share are calculated taking investments at market value. 

  1. The Company has estimated Corporation Tax losses which cover the potential
     liability on the unrealised gains on investments.

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 (‘IFRS’). 

  1. The financial information does not give sufficient information to comply
     with IFRS which will be contained in the statutory accounts to be sent to

  2. The information in this preliminary results announcement has been prepared
     on the basis of the accounting policies which have been set out in the
     Company’s Report & Accounts for the year ended 30th June 2018 and does not
     constitute statutory accounts within the meaning of Section 434 of the
     Companies Act 2006.

  3. The accounts for the year ended 30th June 2017, which were prepared in
     accordance with International Financial Reporting Standards (‘IFRS’) as
     adopted by the EU, have been reported on by the Company's auditors and
     delivered to the Registrar of Companies. The report of the auditors was
     unqualified, did not draw attention to any matters by way of emphasis and
     did not contain statements under section 498(2) or (3) of the Companies Act
     2006. The statutory accounts for the year ended 30th June 2017 will be
     finalised on the basis of the financial information presented by the
     directors in this preliminary announcement. The auditors anticipate issuing
     an unmodified opinion.

  4. 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.