31st Jan 2006 12:49
Western Selection P.L.C. (Incorporated in England - No. 234871) 31st January 2006TO THE MEMBERSThe directors are pleased to present the unaudited interim results of thecompany for the six months ended 31st December 2005.Our net assets per share have increased by 12.6% in the period to 97.38p pershare, reflecting the continuing recovery in world stock markets in the secondhalf of 2005. The good performance from our strategic investment in Creston,has been offset by a poor performance from our strategic investment inSwallowfield and a fall in the value of our investment in UCM, following profitwarnings from both companies. We believe that our mix of Strategic Investmentstogether with a General Portfolio of U.K. and European stocks is a soundinvestment policy for our Company.The Company made a profit for the half year of ‚£126,000 (1.14p per share) aftertax, compared to last year's profit of ‚£114,000 (1.04p per share) after tax.Last year's results included profits taken on sales of investments of ‚£212,000compared to ‚£68,000 this year.During the period 810,088 shares were issued on exercise of warrants, raising ‚£518,000. There are now 669,509 warrants in issue and the final exercise date is28 days after our Annual General Meeting to be held later 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 shares. Strategicinvestments are minority positions where we seek to maintain a close workingrelationship with the management of the company. Western is represented on theboards of one of our two 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 2005 2004 2005 ‚£000 ‚£000 ‚£000 Strategic Investments Creston plc 5,849 3,174 4,455 Swallowfield plc 455 885 765 General Portfolio investments - UK 4,587 5,581 4,481 - Overseas 671 552 702 AIM, Ofex and other investments 936 1,175 886 _______ _______ _______ 12,498 11,367 11,289 Cash at bank and on deposit 25 11 25 Other net assets/(liabilities) 20 (170) (269) _______ _______ _______ 12,543 11,208 11,045 Bank overdraft (1,161) (865) (1,637) _______ _______ _______ Net assets 11,382 10,343 9,408 _______ ______ _______ Net assets per share * 97.4p 95.2p 86.5p Number of shares in issue * 11,688,182 10,878,094 10,878,094* 2004 figures have been adjusted for the share consolidation and sub-division.General PortfolioThe value of our general portfolio, excluding UCM, increased by 5% over theperiod. During the period we realised profits from our general portfolio of ‚£200,000. Of this sum ‚£132,000 has been utilised in the Unaudited Profit andLoss Account, on page 3, to write back the provisions made last year againstour investment in Sanctuary Group. This holding was sold in July and Augustwithout further loss.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 2005 show a profit aftertax under IFRS of ‚£765,000 (2004 - ‚£729,000), equivalent to earnings of 2.14pper share (2004 - 3.17p). Creston's headline, diluted earnings per share haveincreased 54% to 6.70p from 4.34p.Western owns 2,873,998 shares in Creston (8.2%) with a market value at 31stDecember 2005 of ‚£5,849,000 (30th June 2005 - ‚£4,455,000), being 51% ofWestern's net assets.I am the non-executive chairman of Creston.Swallowfield plcSwallowfield formulates, manufactures and packages high quality householdgoods, toiletries and cosmetics across the whole spectrum of consumer marketsfor own label and brand names. Swallowfield announced in December that as itonly expected to break even for the year (before restructuring costs), it wouldnot be paying an interim dividend, and it would shortly finalise acomprehensive reorganisation and rationalisation programme across the entirebusiness.Swallowfield's latest published results for the year to 30th June 2005 showed aprofit after tax, but before exceptional restructuring costs, of ‚£76,000 (2004- ‚£816,000). The value of this company is underpinned by net assets in excessof 85p per share, compared to the current share price of 45p.We own 1,000,000 shares in Swallowfield (8.88% of their issued share capital).The market value of the Company's holding in Swallowfield on 31st December 2005was ‚£455,000 (30th June 2005 - ‚£765,000) representing 4% of our net assets.ConclusionThe stock market enjoyed above average gains during the final quarter of 2005and 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 2.32p per share for the year to 30th June 2005. It isnot our policy to pay interim dividends, but it is our intention, subject tounforeseen circumstances, to maintain the dividend for the current year, whichwe anticipate paying in October 2006. D.C. MARSHALL Chairman Unaudited Profit and Loss Account Half year ended Year ended 31st December 30th June 2005 2004 2005 ‚£000 ‚£000 ‚£000 Income from investments in: Listed strategic undertakings 65 36 106 Other listed investments 43 51 173 Surplus on disposal of listed undertakings 68 212 461 Net decrease/(increase) in provisions 132 (27) (209)against investments _______ _______ _______ 308 272 531 _______ _______ _______ Administrative expenses (155) (135) (308) Operating profit 153 137 223 Interest payable and similar charges (27) (23) (66) _______ _______ _______ Profit on ordinary activities before 126 114 157 taxation Taxation - - (4) _______ _______ _______ Profit on ordinary activities after 126 114 153 taxation Dividends - - (252) _______ _______ _______ Retained profit/(loss) for the period 126 114 (99) _______ _______ _______ Basic earnings per share 1.14p 1.04p 1.40p Diluted earnings per share 1.14p 1.04p 1.40p Dividend per share Nil Nil 2.32p Unaudited Balance Sheet 31st December 30th June 2005 2004 2005 ‚£000 ‚£000 ‚£000 Fixed assets 10,834 10,316 10,932 _______ _______ _______ Current assets 411 81 67 Cash at bank and in hand 25 11 25 Bank overdraft (1,161) (865) (1,637) Current liabilities (390) (251) (336) _______ _______ _______ Net current liabilities (1,115) (1,024) (1,881) _______ _______ _______ Total assets less current liabilities 9,719 9,292 9,051 _______ _______ _______ Capital and Reserves Called up share capital 4,675 4,351 4,351 Share premium account 2,035 1,647 1,646 Warrants reserve 161 355 355 Profit and loss account 2,848 2,939 2,699 _______ _______ _______ 9,719 9,292 9,051 _______ _______ _______ Net Assets at market value - ‚£000 11,382 10,343 9,408 Net Assets at market value per share - pence 97.38p 95.2p 86.5pNotes:-1. The results for the half-year are unaudited. They have been prepared on the basis of the accounting policies adopted in the accounts for the year ended 30th June 2005. The financial information in this interim announcement does not constitute statutory accounts within the meaning of Section 240(5) of the Companies Act 1985. The statutory accounts of Western Selection P.L.C. for the year ended 30th June 2005 have been reported on by the company's auditors and have been delivered to the Registrar of Companies. The report of the auditors was 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 average number of shares in issue for the period and the profit on ordinary activities after tax. The figures for 2004 have been adjusted for the share consolidation and sub-division. Cash Flow Statement Half year ended Year ended 31st December 2005 30th June 2005 Notes ‚£000 ‚£000 ‚£000 ‚£000 Net cash outflow from operating (a) (82) (2) activities Returns on investments and servicing of finance Interest paid (27) (66) Taxation paid - (4) Financial investment Proceeds of disposal of fixed asset 1,379 2,362 investments Purchase of fixed asset investments (1,080) (3,368) ______ ______ Net cash inflow/(outflow) from 299 (1,006)financial investment activities Financing activities Proceeds of new share issues 518 - Equity dividend paid (252) (239) Compensation recovered from sale 20 (27) of fractions /(paid to shareholders) on share consolidation ______ ______ Net cash inflow/(outflow) from 286 (266) financing activities ______ ______ Decrease/(Increase) in debt 476 (1,344) Net debt at start of year (1,612) (268) ______ ______ Net debt at end of year (b) (1,136) (1,612) ______ ______ Notes:(a) Reconciliation of operating profit to net cash inflow from operating activities Operating profit 153 (223) Profit on sale of investments (68) (461) Net increase/(release) of provisions (132) 209 against investments Decrease/(increase) in debtors and (344) 33 accrued income (Decrease)/increase in creditors 309 (6) Net cash (outflow)/inflow from (82) (2)operating activities (b) Reconciliation to movements in net debt At start Cash At end period flow period ‚£000 ‚£000 ‚£000 2005 Cash at bank 25 - 25 Bank overdraft (1,637) 476 (1,161) (1,612) 476 (1,136) 2004/2005 Cash at bank 10 15 25 Bank overdraft (278) (1,359) (1,636) (268) (1,344) (1,612) Market value of General Portfolio 31st December 2005 ‚£000 % Treatt 699 13.3 Royal Dutch Shell 240 4.6 UCM Group 193 3.7 Bioquell 188 3.6 BP 186 3.5 Nestlƒ© 174 3.3 Johnson Matthey 141 2.7 United Utilities 134 2.6 BHP Billiton 133 2.5 Roche Holdings 131 2.5 Prudential Corporation 128 2.4 Diageo 126 2.4 Associated British Ports 126 2.4 GlaxoSmithKline 125 2.4 Novartis 122 2.3 Cadbury Schweppes 110 2.1 Standard Chartered 104 2.0 Lloyds TSB Group 98 1.9 HSBC Bank 93 1.8 Shanks Group 85 1.6 Travis Perkins 84 1.6 Eni 80 1.5 Forth Ports 80 1.5 McBride 80 1.5 British American Tobacco 78 1.5 Associated British Ports 70 1.3 Imperial Tobacco Group 69 1.3 Gallaher Group 66 1.2 Royal & Sun Alliance Insurance 63 1.2 Swire Pacific 61 1.2 BOC Group 60 1.1 Gibbs & Dandy 60 1.1 Cobham 60 1.1 Renishaw 58 1.1 Balfour Beatty 57 1.1 Hutchinson Whampoa 55 1.1 Others (less than 1%) 841 16.0 _______ _______ 5,258 100.0 _______ _______ 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 30 City Road, London, EC1Y 2AG.ENDWESTERN SELECTION PLCRelated Shares:
WSE.L