Date: 8th September 2008
On behalf of: Western Selection P.L.C. ("Western" or "the Company")
Embargoed for: 0700hrs
Western Selection P.L.C.
Preliminary announcement of audited results for the year ended 30th June 2008
Western Selection P.L.C. (LSE: WSE), an investment company with a mix of
Strategic Investments and a General Portfolio of U.K. stocks, today announces
its Preliminary Results for the year ended 30th June 2008.
Highlights:
* Invested �728,000 to acquire 49.5% of Hartim Limited, the holding company
for Tudor Rose International Limited, a leading UK export management
company representing many famous British brands around the world.
* The issue of Western Warrant Units and the exercise of 2007 Warrants raised
�2,385,000 net of costs.
* The Company has cash deposits of �579,000 and an unused bank borrowing
facility of �2,500,000.
* Rise in the dividend to 2.60p per share on the increased capital (2007 -
2.55p).
* Increased holding in Swallowfield plc to just over 10%.
David Marshall, Chairman of Western commented:
"Although it has been a challenging year, we will continue to drive the growth
of the portfolio which we believe has significant long term potential. The
investment in Hartim Limited is a milestone for Western, and we expect that it
will contribute significantly to our earnings. With the strength of our balance
sheet we will continue to seek good investment opportunities that may arise in
the current climate. The Company's objective is to generate real growth in
value for shareholders over the medium to long term and pay a progressive
dividend."
- Ends -
Enquiries to:
Western Selection P.L.C. 020 7448 8950
Edward Beale
Redleaf Communications 020 7822 0200
Emma Kane/Sanna Sumner/Rebecca
Sanders-Hewett
FinnCap 020 7600 1658
Matthew Robinson/Ed Frisby
Loeb Aron & Co. Ltd. 020 7628 1128
Peter Freeman / Jonathan Willis-Richards
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 three
of its four 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
Western is an investment company with a mix of Strategic Investments and a
General Portfolio of U.K. stocks. The Company's objective is to generate real
growth in value for shareholders over the medium to long term and pay a
progressive dividend.
Net asset value per share
Since 1st July 2007, the net adjusted asset value per share has fallen by 42p
from 100p to 58p. Almost half of the decline in net asset value over the year
is due to the fall in the share price of Creston plc, one of our strategic
investments, from 163p to 47.5p. The dilution element of our Warrant issue and
the general fall in markets since the beginning of the year also contributed to
the overall decline as follows:
Net asset value per share at 30th June 2007 100 p
Dilution from exercise of Warrants (15)p
Reduction in Creston share price (19)p
Other - mainly general portfolio share price reductions (8)p
Net asset value per share at 30th June 2008 58 p
The issue of Warrant Units to our shareholders and the exercise of 2007
Warrants has raised �2,385,000 net of costs. At the year end the Company had
cash deposits of �579,000 and an unused bank borrowing facility of �2,500,000.
Ignoring exceptional items and associates, the Company would have made a profit
of �378,000 before associates and tax, compared to �355,000 last year.
Including exceptional items and the results of associates the loss after tax
for the year was �2,572,000 (2007 - profit �61,000).
We are pleased to announce a rise in the dividend to 2.60p per share on the
increased capital (2007 - 2.55p).
Strategic Investments
Creston plc
Creston reported an improvement in profits for the year to 31st March 2008 and
market forecasts are for it to continue to grow in the current year. The
company has agreed bank facilities to cover its deferred consideration payments
in respect of past acquisitions and after four years should be debt free.
Creston appears, on a historical basis, to be significantly undervalued as it
is now yielding 5.7% at a P/E of 5.7. At its recent AGM held on 1st September,
Creston's directors expressed confidence in current trading conditions being
experienced by the group.
Western maintained its holding of 3,000,000 shares in Creston (5.4%) during the
year. The value of this investment at 30th June 2008 was �1,425,000 (2007 - �
4,890,000) being 14% (2007 - 38%) of Western's assets. In view of the current
market value of the investment, we have been forced under IFRS to make a
provision for the difference between the cost and market value of our
investment in Creston, amounting to �3,019,000. This provision does not reduce
the Company's distributable profits.
Tudor Rose International Limited ("TRI")
On a more positive note, on 28th March 2008, we invested �728,000 to acquire
49.5% of Hartim Limited, the holding company for TRI, a leading UK export
management company representing many famous British brands around the world.
Full information on TRI can be obtained from their web site www.tudor-rose.com.
We do not expect dividends from this business in the first two years, while it
pays down debt, but we do expect that it will contribute significantly to our
earnings in future. Currently trading is good and we are anticipating an
increase in profits this year.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire and
sell specialist industrial equipment such as load banks, generators, pumps, air
compressors, heaters and chillers. Northbridge's first acquisition was
Crestchic Limited, one of the largest electrical load bank equipment
manufacturers in the world. The company's customers are leading national and
international companies in the oil, energy and shipping industries.
Northbridge announced profits of �1,154,000 for the year ended 31st December
2007 (2006 - �731,000) and declared a final dividend of 2p per share, making 3p
for the year (2006 - 2p). Western maintained its holding of 1,500,000 shares in
Northbridge (19.66%). The value of the investment at 30th June 2008 was �
2,558,000 (2007 - �2,768,000) being 24% (2007 - 19%) of Western's assets.
Swallowfield plc
Swallowfield's latest published results were for the 28 weeks to 12th January
2008 and showed a profit of �1,592,000 (2007 - �255,000)
Western increased its holding in Swallowfield during the year and now owns
1,156,000 shares, 10.27% of the issued share capital. The market value of the
Company's holding in Swallowfield on 30th June 2008 was �971,000 (2007 - �
455,000), being 9% (2007 - 5%) of Westerns' net assets.
For some time we have believed that the board did not contain a broad enough
mix of international business experience. During 2007 we approached the board
with a proposal that Peter Gyllenhammer (who holds 29% of the issued ordinary
shares) and David Marshall, our Chairman, join the board. The directors of
Swallowfield indicated that they would not support this proposal and no change
in the board has since taken place. We continue to work with other Swallowfield
shareholders to rectify this. During the period we acquired an additional
156,500 shares bringing our holding up to just over 10%. We will continue to
acquire shares in Swallowfield as and when they become available at acceptable
prices.
General Portfolio
During the year the General Portfolio outperformed the markets, falling by
14.8%. Our investments in FTSE100 and FTSE250 stocks, which comprise 58% of the
General Portfolio, decreased in value by 11.4% whereas the FTSE100 fell by
14.9% and the FTSE250 fell by 26.0%. Our investments in FTSE Small Cap and FTSE
Fledgling stocks, which make up 27% of our General Portfolio, decreased by 21.6
% compared to declines of 28.7% and 27.0% in those indices. We have taken a net
�1.5 million out of the General Portfolio in the year.
Share Capital and Warrants
On 10th December 2007 all of the 2007 Warrants were exercised raising a total
of �2,565,000; 5,130,088 new shares were issued and the issued share capital of
the Company increased to 17,955,309 shares of 40p each.
The directors consider Western's capital to comprise its ordinary share
capital, share premium, warrant and fair value reserves and accumulated
retained earnings. The primary objective in managing the capital is to provide,
over the long term, real growth in value for shareholders through a combination
of capital growth and distributions. Following the issue of shares from the
exercise of Warrants, the Company has no borrowing and there is no gearing
ratio.
Dividend
We are pleased to recommend an increased dividend of 2.6p per share for the
year on the increased capital. The increase in number of shares in issue will
lead to an increase in amount paid of 40% per cent. The dividend will be paid
on 10th October 2008 to shareholders on the register at the close of business
on 19th September 2008.
Outlook
The current economic conditions will make this a difficult year but with our
strong balance sheet we are confident of producing satisfactory results. Unless
there are any unexpected developments we anticipate maintaining our dividend.
D.C. Marshall
Chairman
8th September 2008
Income Statement
For the year ended 30thJune 2008 2008 2007
�000 �000
Income from investments in:
Listed strategic undertakings 155 104
Other listed undertakings 180 148
---------- ----------
335 252
Administrative expenses (3,361) (611)
- normal (342) (293)
- exceptional (3,019) (318)
Surplus on disposal of investments 420 517
---------- ----------
Operating (loss)/profit (2,606) 158
Share of results of associated companies 69 24
Finance income 14 -
Finance costs (49) (121)
---------- ----------
Profit before taxation (2,572) 61
Taxation - -
---------- ----------
(Loss)/Profit after taxation attributable to equity (2,572) 61
shareholders
====== ======
Basic and diluted earnings per share (16.4)p 0.51p
All profits and losses are on continuing activities.
Statement of Changes in Equity
Ordinary Share Fair
Share Premium Warrants Value Retained Total
capital account reserve reserve earnings
Year ended 30thJune 2007 �000 �000 �000 �000 �000 �000
Balances 30th June 2006 4,675 2,035 161 589 3,011 10,471
---------- ---------- ---------- ------- ---------- --------
Profit attributable to - - - - 61 61
shareholders
Fair value adjustment on - - - 1,810 - 1,810
listed undertakings, net
of profits realised
during the year and
reflected in the income
statement
---------- ---------- ---------- ------- ---------- -------
Total income and expense - - - 1,810 61 1,871
for the year
---------- ---------- ---------- ------- ---------- -------
New shares issued 455 273 - - - 728
Warrants reserve - 161 (161) - - -
released
Dividends paid in - - - - (287) (287)
respect of the previous
year
---------- ---------- ---------- ------- ---------- -------
Total transactions with 455 434 (161) - (287) 441
shareholders for the
year
====== ====== ====== ===== ====== =====
Balances at 30th June 5,130 2,469 - 2,399 2,785 12,783
2007
====== ====== ====== ===== ====== =====
Year ended 30thJune 2008
Balances at 1st July 5,130 2,469 - 2,399 2,785 12,783
2007
---------- ---------- ---------- -------- ---------- --------
Loss attributable to - - - - (2,572) (2,572)
shareholders
Fair value adjustment on - - - (1,850) - (1,850)
listed undertakings, net
of profits realised
during the year and
reflected in the income
statement
---------- ---------- ---------- -------- ---------- --------
Total income and expense - - - (1,850) (2,572) (4,422)
for the year
---------- ---------- ---------- -------- ---------- --------
New shares issued on 1,693 - - - - 1,693
exercise of Warrants
Warrant units issued - - 872 - - 872
Costs of issue - (180) - - - (180)
Warrants reserve 359 365 (724) - - -
released
Dividends paid in - - - - (327) (327)
respect of the previous
year
---------- ---------- ---------- -------- ---------- --------
Total transactions with 2,052 185 148 - (327) 2,058
shareholders for the
year
====== ====== ====== ===== ====== =====
Balances at 30th June 7,182 2,654 148 549 (114) 10,419
2008
====== ====== ====== ===== ====== =====
Balance Sheet
At 30thJune 2008 2008 2007
�000 �000
Non-current Assets
Investment in Associates 988 191
Investments 8,845 14,651
---------- ----------
9,833 14,842
Current Assets ---------- ----------
Trade and other receivables 36 16
Cash and cash equivalents 579 6
---------- ----------
615 22
Current Liabilities (amounts falling due within one year) (29) (2,081)
---------- ----------
Net Current Assets/(Liabilities) 586 (2,059)
---------- ----------
Net Assets 10,419 12,783
====== ======
Equity
Share capital 7,182 5,130
Share premium account 2,654 2,469
Warrants reserve 148 -
Fair value reserve 549 2,399
Retained (loss)/earnings (114) 2,785
---------- ----------
Shareholders' Funds 10,419 12,783
====== ======
Cash Flow Statement
For the year ended 30thJune 2008 2008 2008 2007 2007
�000 �000 �000 �000
Cash outflow from operating activities
Cash absorbed by operations (45) (39)
Interest paid (49) (121)
Interest received 14 -
Taxation paid - -
-------- --------
Net cash generated by operations (80) (160)
Cash flow from investing activities
Proceeds on disposal of investments 2,142 2,289
Purchase of investments (1,513) (2,790)
-------- --------
Cash absorbed by investing activities 629 (501)
Cashflow from financing activities
Proceeds from issue of new shares 2,385 429
Equity dividend paid (327) (286)
-------- --------
2,058 143
-------- --------
Movement in cash and cash equivalents 2,607 (518)
Net cash and cash equivalents at start of year (2,028) (1,510)
-------- --------
Net cash and cash equivalents at end of year 579 (2,028)
===== =====
Notes:-
1. The dividend for the year of 2.60p per share (2007 - 2.55p) will be paid
on 10th October 2008 to shareholders on the register at the close of
business on 19th September 2008.
2. Earnings per share are based on the (loss)/profit on ordinary activities
after taxation and on 15,692,448 (2007 - 12,078,903) being the weighted
average number of shares in issue during the period.
3. 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.
4. The financial information contained in this preliminary announcement of
results has been prepared under the recognition and measurement principles
of International Financial Reporting Standards. The financial information
does not give sufficient information to comply with IFRSs which will be
contained in the statutory accounts sent to shareholders.
5. This financial information has been prepared in accordance with the
recognition and measurement requirements of International Financial
Reporting Standards, International Accounting Standards and
Interpretations issued by the International Accounting Standards Board as
adopted by the European Union ('IFRSs').
The financial information in this preliminary announcement does not
constitute the company's statutory accounts for the years ended 30 June
2008 or 30 June 2007 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 2007 have been delivered to
the Registrar of Companies and those for 2008 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 1985,
s 237(2) or (3)."
Copies of this notification are held at the Company's office, 30 City Road,
London, EC1Y 2AG (tel. 020 7448 8950) and are available for a period of 14 days
from the date of this announcement.
END
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