WSE.L Regulatory News (WSE)

31 Jan 2005 12:58

Western Selection P.L.C. 31st January 2005 Unaudited results for the six months to 31st December 2003 The directors are pleased to present the unaudited interim results of thecompany for the six months ended 31st December 2004.The continuing recovery in world stock markets in the second half of 2004,along with a good performance from our strategic investments in Creston andSwallowfield, has contributed to a further recovery in our net assets per share- up 3% from 23.2p at 30th June to 23.8p at 31st December 2004. We believe thatour mix of Strategic Investments together with a General Portfolio of U.K. andEuropean stocks is a sound investment policy for our Company. Our StrategicInvestments in Creston and Swallowfield are cash generative, which is a vitalingredient in difficult economic conditions. Over the five years to 31stDecember 2004, the value of our net assets per share has outperformed the FTSE100 index by 24%.The Company made a profit for the half year of ‚£114,000 (0.26p per share) aftertax, compared to last year's profit of ‚£104,000 (0.24p per share) after tax.Last year's results included profits taken on sales of General Portfolioinvestments of ‚£130,000 compared to ‚£212,000 this year.Investment policy and managementOur investment policy is to hold strategic stakes in a few special situationsand maintain a diversified portfolio of U.K. and European listed equities,together with a few holdings on AIM, Ofex and some unlisted issues. Strategicinvestments are minority positions where we seek to maintain a close workingrelationship with the management of the company. Western is represented on theboards of both of our strategic investments.An analysis of assets is set out below. The general portfolio is managed by twonon-executive directors, Andrew Hall and Michael Robotham, and the board as awhole takes decisions in relation to both our strategic and unlistedinvestments. Assets at market value 31st December 30th June 2004 2003 2004 ‚£000 ‚£000 ‚£000 Strategic Investments Creston plc 3,174 2,830 2,620 Swallowfield plc 885 795 775 Doctors Direct PLC # - 377 307 General Portfolio investments - UK 5,581 5,899 5,522 - Overseas 552 692 548 AIM, Ofex and other investments 1,175 840 806 _______ _______ _______ 11,367 11,433 10,578 Cash at bank and on deposit 11 3 10 Other net assets/(liabilities) (170) 43 (229) _______ _______ _______ 11,208 11,479 10,359 Bank overdraft (865) (871) (278) _______ _______ _______ Net assets 10,343 10,608 10,081 _______ _______ _______ Net assets per share 23.8p 24.4p 23.2p Number of shares in issue 43,512,379 43,511,903 43,511,903# During the period the investment in Doctors Direct was transferred from Strategic Investments to AIM, Ofex and other investments. General PortfolioThe performance of our General Portfolio has been held back by a decline in theprice of Sanctuary shares of almost 12%. Excluding Sanctuary, our GeneralPortfolio has increased in value by more than 4% since 30th June 2004. Strategic InvestmentsCreston plcCreston is a marketing services group, operating in the U.K., with significantinternational clients, whose strategy is to grow within its sector both byorganic growth and acquisition.Creston's results for the half-year to 30th September 2004 show a profit aftertax of ‚£1,022,000 (2003 - ‚£515,000), equivalent to earnings of 4.5p per share(2003 - 4.6p). Our income in the period from Creston, including their year-enddividend of 0.7p per share amounted to ‚£16,158 (2003 - ‚£32,000, which compriseda final dividend and a special interim dividend).Western exercised its option for 308,264 Creston shares at a price of ‚£1.31 pershare and now owns 2,308,264 shares, being 10.05% of Creston's issued sharecapital. The market value of the Company's holding in Creston on 31st December2004 was ‚£3,174,000 (30th June 2004 - ‚£2,620,000), being 26.7% of Western's netassets.I am the non-executive chairman of Creston.Swallowfield plcSwallowfield has a long history of developing and producing aerosol, cosmeticand toiletry products stretching back to 1950. As one of Europe's premiercontract manufacturers of toiletries and cosmetics it offers an unrivalledbreadth of product capabilities. Its skill in design, developing and producinggift packs and themed product ranges compliments its production capability.Swallowfield plans "to raise shareholder returns by driving down total inputcosts, improving manufacturing efficiencies, presenting new and excitingproduct ranges and improving our pricing strategies".Swallowfield's latest published results for the year to 30th June 2004 showed aprofit after tax, but before exceptional restructuring costs, of ‚£1,094,000(2003 - ‚£718,000). Exceptional restructuring costs of ‚£396,000 relating to aseries of restructuring actions designed to generate annual overhead savings of‚£500,000 were incurred during the year. The value of this business isunderpinned by net assets in excess of ‚£1 per share.We own 1,000,000 shares in Swallowfield being 8.88% of the issued sharecapital. The market value of the Company's holding in Swallowfield on 31stDecember 2004 was ‚£885,000 (30th June 2004 - ‚£775,000) being 7.5% of the netassets of the Company.Extraordinary General MeetingThe Company proposes to make an offer to shareholders owning less than [5,000]shares to buy back their shareholdings, consolidate its share capital and seekshareholder's approval for waivers for London Finance & Investment Group P.L.C.(which owns 40.48% of Western's issued share capital) from the requirements ofRule 9 of the City Code. A circular letter to shareholders will be posted withthe interim statement giving full details of these proposals and convening anExtraordinary General Meeting to consider and, if thought fit, approve them.ConclusionThe stock market enjoyed above average gains during the final quarter of 2004and while we do not expect a repeat of this performance in the short term, wehope to be able to increase our net asset value over the next six months.We declared a dividend of 0.55p per share for the year to 30th June 2004. It isnot our policy to pay interim dividends, but it is our intention, subject tounforeseen circumstances, to at least maintain the dividend for the currentyear, which we anticipate paying in October 2005.D.C. MARSHALLChairman Unaudited Profit and Loss Account Half year ended Year ended 31st December 30th June 2004 2003 2004 ‚£000 ‚£000 ‚£000 Interest receivable - 1 2 Income from investments in: Listed strategic undertakings 36 52 56 Other listed investments 51 51 212 Surplus on disposal of listed undertakings 212 130 (248) Net (increase)/decrease in provisions against (27) - 570 investments _______ _______ _______ 272 234 592 Administrative expenses (135) (118) (250) _______ _______ _______ Operating profit 137 116 342 Interest payable and similar charges (23) (12) (30) _______ _______ _______ Profit on ordinary activities before taxation 114 104 312 Taxation - - (5) _______ _______ _______ Profit on ordinary activities after taxation 114 104 307 Dividends - - (239) _______ _______ _______ Retained profit for the period 114 104 68 _______ _______ _______ Basic earnings per share 0.26p 0.24p 0.71p Diluted earnings per share 0.26p 0.24p 0.71p Dividend per share Nil Nil 0.55p Unaudited Balance Sheet 31st December 30th June 2004 2003 2004 ‚£000 ‚£000 ‚£000 Fixed assets 10,316 10,041 9,674 _______ _______ _______ Current assets 81 82 100 Cash at bank and in hand 11 3 10 Bank overdraft (865) (871) (278) Current liabilities (251) (42) (329) _______ _______ _______ Net current liabilities (1,024) (828) (497) _______ _______ _______ Total assets less current liabilities 9,292 9,213 9,177 _______ _______ _______ Capital and Reserves Called up share capital 4,351 4,351 4,351 Share premium account 1,647 1,646 1,646 Warrants reserve 355 355 355 Profit and loss account 2,939 2,861 2,825 _______ _______ _______ 9,293 9,213 9,177 _______ _______ _______ Net Assets at market value - ‚£000 10,343 10,608 10,081 Net Assets at market value per share - pence 23.8p 24.4p 23.2p Notes:-1. The results for the half-year are unaudited. They have been prepared on thebasis of the accounting policies adopted in the accounts for the year ended30th June 2004. The financial information in this interim announcement does notconstitute statutory accounts within the meaning of Section 240(5) of theCompanies Act 1985. The statutory accounts of Western Selection P.L.C. for theyear ended 30th June 2004 have been reported on by the company's auditors andhave been delivered to the Registrar of Companies. The report of the auditorswas unqualified and did not contain a statement under Section 237(2) or 272(3)of the Companies Act 1985.2. The calculation of earnings per share is based on the weighted averagenumber of shares in issue for the period and the profit on ordinary activitiesafter tax. Cash Flow Statement Half year ended Year ended 31st December 2004 30th June 2004 Notes ‚£000 ‚£000 ‚£000 ‚£000 Net cash inflow/(outflow) from operating (a) 134 (23)activities Returns on investments and servicing of finance Interest paid (23) (30) Interest received - 2 ______ ______ (23) (28) Taxation paid - (5) Financial investment Proceeds of disposal of fixed asset 1,237 2,639 investments Purchase of fixed asset investments (1,695) (2,386) ______ ______ Net cash (outflow)/inflow from financial (458) 253 investment activities Equity dividend paid (239) (226) ______ ______ Increase in debt (586) (29) Net debt at start of year (268) (239) ______ ______ Net debt at end of year (b) (854) (268) ______ ______ Notes:(a) Reconciliation of operating profit to net cash inflow from operatingactivitiesOperating profit 137 342 (Profit)/loss on sale of investments (212) 248 Net increase/(release) of provisions against 27 (570)investments Interest received - (2) Decrease/(increase) in debtors and accrued 20 (57)income Increase in creditors 162 16 ______ ______ Net cash (outflow)/inflow from operating 134 (23)activities ______ ______ (b) Reconciliation to movements in net debt At Cash At end start period flow period ‚£000 ‚£000 ‚£000 2004/2005 Cash at bank 10 1 11 Bank overdraft (278) (587) (865) ______ ______ ______ (268) (586) (854) 2003/2004 ______ ______ ______ Cash at bank 3 7 10 Bank overdraft (242) (36) (278) ______ ______ ______ (239) (29) (268) ______ ______ ______ Market value of General Portfolio 31 December 2004 ‚£000 % Sanctuary Group 1,958 31.9 Treatt 599 9.8 UCM Group 347 5.7 Bioquell 203 3.3 Shell Transport & Trading Co 200 3.3 BP 152 2.5 United Utilities 126 2.1 Julius Baer Holdings 125 2.0 Associated British Foods 117 1.9 Diageo 111 1.8 Gallaher Group 111 1.8 Prudential Corporation 106 1.7 Novartis 105 1.7 Imperial Tobacco Group 100 1.6 Johnson Matthey 99 1.6 British American Tobacco 99 1.6 Cadbury Schweppes 97 1.6 Nestle SA 95 1.5 Lloyds TSB Group 95 1.5 Siemens 93 1.5 Roche Holdings, Genusscheine 90 1.5 HSBC Bank 88 1.4 Scottish & Newcastle 87 1.4 GlaxoSmithKline 79 1.3 Standard Chartered 77 1.3 Mersey Docks & Harbour Co 75 1.2 Gibbs & Dandy 61 1.0 Others (less than 1%) 638 10.4 _______ _______ 6,133 100.0 _______ _______ This interim report will be sent to shareholders shortly and copies areavailable from the Company Secretaries, City Group P.L.C. at the registeredoffice at 25 City Road, London EC1Y 1BQ.END