Monday 3
October 2016
Western Selection P.L.C.
(the “Company”)
Unaudited
Preliminary Results for the Year Ended 30
June 2016
The Company today announces its unaudited preliminary financial
results for the year ended 30 June
2016.
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 for the year before exceptional items was
£64,000 (2015 – profit before exceptional items £159,000). In
the previous year Western sold its investment in Creston plc,
realising an exceptional gain of £2,615,000. After this
exceptional item our profit for that year was £2,774,000.
Dividend income from Core Holdings, excluding Creston, has
increased by 11% to £129,000 from £116,000 last year, which
includes £58,000 from the investment acquired at the start of the
year in Bilby Plc. Dividend income from Treasury Operations
increased by 19% from £85,000 last year to £101,000.
Administrative expenses have decreased by 11% reflecting lower
corporate advisory fees.
During the year Western re-invested the proceeds of last year’s
sale of Creston in its Core Holdings (£3,294,000) and in liquid
investments (£1,038,000).
Shareholders’ funds per share have increased by 5% from 75p to
79p reflecting increases in values of the Core Holdings and
Treasury portfolios.
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 announced its unaudited interim results for the six
months ended 30th June 2016 on
29th September 2016 and recorded a
loss after tax of £2,338,000 for the period.
Western acquired a further 1,323,632 Northbridge shares during
the year for £964,000 bringing its holding to 3,223,632
shares. Western’s holding is now 12.45% of Northbridge’s
issued share capital. The value of this investment at
30th June 2016 was £2,772,000 (2015 -
£3,895,000) being 19% (2015 - 29%) 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 25th June 2016 on 20th
September 2016 and recorded a profit after tax of £2,001,000
compared to a profit of £746,000 for the comparable period last
year. Dividends of £52,000 were received from Swallowfield
during the year (2015 – nil). A final dividend of 2.3p per share
has been declared and Western will receive a further £46,000.
Western acquired a further 130,851 Swallowfield shares during
the year for £203,000. At the reporting date, Western owned
2,000,000 Swallowfield shares which was 11.9% of Swallowfield’s
issued share capital. The market value of this investment on
30th June 2016 had increased to
£3,400,000 from the value at 30th June
2015 of £2,019,000. The value of this investment is 24%
(2015 - 15%) of Western’s net assets.
On 23rd September 2016
Western sold 200,000 Swallowfield shares for £520,000 before
selling expenses.
Mr E. J. 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.
In July 2015, the Company invested
£1,500,000 in acquiring 1,875,000 shares in Bilby and in
April 2016, a further investment of
£545,000 for 462,088 Bilby shares. Western now holds
2,337,088 shares, which is 5.9% of Bilby’s issued share capital.
The market value of this investment on 30th
June 2016 was £2,968,000 which is 21% of Western’s net
assets.
Bilby announced its results for the year ended 31st March 2016 on 14th
July 2016 showing a profit after tax of £954,000 compared to
a profit of £1,426,000 for the 14 month period ended
31st March 2015. Dividends
of £58,000 were received from Bilby during the year. Bilby
announced a final dividend of 2.00p per share which was paid in
September 2016 which provided Western
with further income of £46,700.
Tudor Rose International Limited
(previously Hartim Limited) (“Tudor Rose International”)
Tudor Rose International 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, 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 49.5% of the issued share capital of Tudor Rose
International, which has a 31st December year end and which
generated trading profits before tax in the year to 30th June 2016 of £71,000. Turnover in the
period was £18,542,000 (2015 - £18,022,000). Western’s share of a
profit after tax, including a charge for disallowed tax losses, for
the twelve months to 30th June 2016
was £35,000 (2015 – loss of £5,000) and the book value of the
investment at 30th June 2016 was
£1,290,000 (2015 - £1,223,000) being 9% (2015 - 9%) of Western’s
net assets.
Western has two nominees on the Board of Tudor Rose
International: Mr E. J. Beale and Mr
L. H. Marshall.
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 for housing development
in the local authority’s next five year plan, but it may take some
time for permission to be received.
Western subscribed £80,750 for 8,074,982 shares in ICH pursuant
to a rights issue, which was completed in July 2016, and now holds 15,252,744 ICH
shares.
Mr D. C. Marshall, Mr L H
Marshall and Mr E J Beale are directors of ICH.
City Group P.L.C. (“City Group”)
Western holds 48.6% and London Finance & Investment Group
P.L.C. (Western’s largest shareholder) holds 51.4% of City Group
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. Mr E. J. Beale is
Chief Executive of City Group and Mr D.C.
Marshall, Mr L.H. Marshall
and Mr J.M. Robotham 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 £888,000 (2015 cash – £3,889,000) and liquid
investments valued at £4,488,000 (2015 - £2,450,000). The
Company had drawn down £1m of the facility at 30th June 2016 (2015 -nil) and has also invested
part of the proceeds of the sale last year of Creston plc shares
totalling £1,038,000 in the portfolio of liquid investments.
Outlook
The recent Brexit vote is likely to exacerbate volatility in
stock markets and consequently in the value of the Company’s
holdings. Exchange rate movements impose additional
volatility on the valuation of the Company’s holdings of shares in
overseas companies. The Company’s strong balance sheet
provides it with the opportunity to capitalise on any opportunities
that may arise.
The annual 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 7148 7900 |
Statement of Comprehensive Income
For the year ended
30th June |
|
2016 |
|
2015 |
|
Notes |
£000 |
|
£000 |
Income from
investments in: |
|
|
|
|
Listed strategic
undertakings |
|
129 |
|
238 |
Other listed
undertakings |
|
101 |
|
85 |
|
|
230 |
|
323 |
Administrative
expenses |
|
(290) |
|
(324) |
Profit on disposal of
investment in Creston plc |
|
- |
|
2,615 |
Profit on disposal of
other investments |
|
49 |
|
143 |
Operating
(loss)/profit |
|
(11) |
|
2,757 |
Share of
profits/(losses) of associated companies |
|
52 |
|
(3) |
Interest
receivable |
|
45 |
|
41 |
Finance costs |
|
(9) |
|
(11) |
Profit before
taxation |
|
77 |
|
2,784 |
Taxation |
|
(13) |
|
(10) |
Profit after taxation
attributable to equity shareholders |
|
64 |
|
2,774 |
Other comprehensive
income |
|
|
|
|
Items that may be
reclassified subsequently to profit and loss :- |
|
|
|
|
Fair value recycled
from equity on disposal |
|
(31) |
|
(1,885) |
Fair value adjustment
on listed undertakings |
|
1,073 |
|
(5,470) |
Deferred taxation on
fair values |
|
- |
|
137 |
Total Other
Comprehensive profit/(loss) |
|
1,042 |
|
(7,218) |
|
|
|
|
|
Total comprehensive
profit/(loss) |
|
1,106 |
|
(4,444) |
Basic and diluted
profit per share attributable to ordinary equity holders |
1 |
0.4p |
|
15.5p |
Statement of Changes of Equity
|
Share capital |
Share premium account |
Capital reserve account |
Unrealised profits on investments |
Share of undistributed
profits/
(losses) of associates |
Realised profits |
Total |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
Year ended
30th June 2015 |
|
|
|
|
|
|
|
Balances at
1st July 2014 |
7,180 |
2,654 |
3 |
6,731 |
(249) |
1,989 |
18,308 |
Profit for the
period |
- |
- |
- |
3,019 |
(3) |
(242) |
2,774 |
Items that can be
reclassified to the income statements – Other Comprehensive loss –
Fair values net of tax |
- |
- |
- |
(7,218) |
- |
- |
(7,218) |
Total Comprehensive
loss |
- |
- |
- |
(4,199) |
(3) |
(242) |
(4,444) |
Transactions with
shareholders |
|
|
|
|
|
|
|
Final dividend paid in
respect of prior year |
- |
- |
- |
- |
- |
(188) |
(188) |
Interim dividends paid
in respect of the year |
- |
- |
- |
- |
- |
(189) |
(189) |
Total transactions
with shareholders |
- |
- |
- |
- |
- |
(377) |
(377) |
Balances at
30th June 2015 |
7,180 |
2,654 |
3 |
2,532 |
(252) |
1,370 |
13,487 |
|
Share capital |
Share premium account |
Capital reserve account |
Unrealised profits on investments |
Share of undistributed
profits/
(losses) of associates |
Realised profits |
Total |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
Year ended
30th June 2016 |
|
|
|
|
|
|
|
Balances at
1st July 2015 |
7,180 |
2,654 |
3 |
2,532 |
(252) |
1,370 |
13,487 |
Profit for the
period |
- |
- |
- |
- |
52 |
12 |
64 |
Items that can be
reclassified to the income statements – Other Comprehensive income
– Fair values net of tax |
- |
- |
- |
1,042 |
- |
- |
1,042 |
Total Comprehensive
Income |
- |
- |
- |
1,042 |
52 |
12 |
1,106 |
Transactions with
shareholders |
|
|
|
|
|
|
|
Final dividend paid in
respect of prior year |
- |
- |
- |
- |
- |
(188) |
(188) |
Interim dividends paid
in respect of the year |
- |
- |
- |
- |
- |
(188) |
(188) |
Total transactions
with shareholders |
- |
- |
- |
- |
- |
(376) |
(376) |
Balances at
30th June 2016 |
7,180 |
2,654 |
3 |
3,574 |
(200) |
1,006 |
14,217 |
Statement of Financial Position
At 30th
June |
|
2016 |
|
2015 |
|
Notes |
£000 |
|
£000 |
Non-current
Assets: |
|
|
|
|
Investment in
Associated companies |
|
799 |
|
666 |
Investments classified
as available for sale |
|
13,628 |
|
8,364 |
Trade and other
receivables |
|
692 |
|
660 |
|
|
15,119 |
|
9,690 |
Current
Assets |
|
|
|
|
Trade and other
receivables |
|
85 |
|
24 |
Cash and cash
equivalents |
|
112 |
|
3,889 |
|
|
197 |
|
3,913 |
Current
Liabilities |
|
|
|
|
Trade and other
payables |
|
(99) |
|
(116) |
Net Current
Assets |
|
98 |
|
3,797 |
|
|
|
|
|
Financial
Liabilities falling due in more than one year |
|
(1,000) |
|
- |
|
|
|
|
|
Net Assets |
|
14,217 |
|
13,487 |
Equity |
|
|
|
|
Share capital |
|
7,180 |
|
7,180 |
Share premium
account |
|
2,654 |
|
2,654 |
Capital reserve
account |
|
3 |
|
3 |
Unrealised profits on
investments |
|
3,574 |
|
2,532 |
Share of undistributed
losses of associates |
|
(200) |
|
(252) |
Realised profits |
|
1,006 |
|
1,370 |
Shareholders’
Funds |
|
14,217 |
|
13,487 |
Statement of Cash Flow
For the year ended
30th June |
|
2016 |
2016 |
2015 |
2015 |
|
Notes |
£000 |
£000 |
£000 |
£000 |
Profit before
taxation |
|
|
77 |
|
2,784 |
Profit on sale of
Creston Plc |
|
|
- |
|
(2,615) |
Profit on sale of
investments |
|
|
(49) |
|
(143) |
Share of results of
associates |
|
|
(52) |
|
3 |
Net interest
receivable |
|
|
(36) |
|
(30) |
Changes in working
capital |
|
|
|
|
|
Increase in trade and
other receivables |
|
|
(93) |
|
- |
Increase/(decrease) in
trade and other payables |
|
|
(17) |
|
22 |
Cash
(absorbed)/generated by operations |
|
|
(170) |
|
21 |
Taxation paid |
|
|
(13) |
|
(10) |
Net interest
received |
|
|
36 |
|
30 |
Net cash
(absorbed)/generated by operations |
|
|
(147) |
|
41 |
Cash flow from
investment activities |
|
|
|
|
|
Proceeds on disposal
of financial instruments |
|
78 |
|
931 |
|
Purchase of financial
instruments |
|
(1,038) |
|
(104) |
|
|
|
(960) |
|
827 |
|
Investments in
associate |
|
(81) |
|
|
|
Purchase of Core
Holdings |
|
(3,213) |
|
(52) |
|
Disposal of Core
Holdings |
|
- |
|
4,040 |
|
|
|
(4,254) |
|
4,815 |
|
Net cash
(absorbed)/generated by investment activities |
|
|
(4,254) |
|
4,815 |
Financing
activities
Loan Drawdown |
|
1,000 |
|
- |
|
Equity dividend
paid |
|
(376) |
|
(377) |
|
Net cash
inflow/(outflow) from financing activities |
|
|
624 |
|
(377) |
Movement in cash
and cash equivalents |
|
|
(3,777) |
|
4,479 |
Cash and cash
equivalents/(overdrafts) at start of year |
|
|
3,889 |
|
(590) |
Cash and cash
equivalents at end of year |
|
|
112 |
|
3,889 |
Analysis of net
(debt)/funds |
|
|
|
|
At start of
year
£000 |
Cash
Flow
£000 |
At end
of year £000 |
2016 |
|
|
|
Cash and cash
equivalents |
3,889 |
(3,777) |
112 |
Bank
borrowings |
- |
(1,000) |
(1,000) |
Total net
(debt)/funds |
3,889 |
(4,777) |
(888) |
2015 |
|
|
|
Cash and cash
equivalents |
- |
3,889 |
3,889 |
Bank borrowings |
(590) |
590 |
- |
Total net
(debt)/funds |
(590) |
4,479 |
3,889 |
|
|
|
|
Notes
1. Earnings per share
Earnings per share are based on the profit on ordinary
activities after taxation of £64,000 (2015 - £2,774,000) and on
17,949,872 (2015 – 17,949,872) being the weighted average number of
shares in issue during the period.
|
|
2016 |
2015 |
Basic earnings per share |
|
0.4p |
15.5p |
Diluted earnings per share at 30th June 2016 and 30th June 2015 are the same as basic earnings per
share.
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 information in this preliminary results
announcement has been prepared on the basis of the accounting
policies which have been set out in the accounts for the year ended
30 June 2015 and does not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006. The accounts for the year ended 30 June 2015, 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 30 June 2016 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.
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.