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WESTERN SELECTION PLC - Half-yearly Report

Thursday, February 28, 2013 6:12 AM


Date:              28 February 2013
On behalf of:      Western Selection P.L.C. ("the Company" or "Western")
                   For immediate release
                           Western Selection P.L.C.
                                Interim Results

Western Selection P.L.C. (PLUS: WESP), a strategic investment company with a mix of Strategic Investments and a General Portfolio of mainly listed stocks, today announces its unaudited interim results for the six months ended 31st December 2012.

Chairman's Statement

The Directors are pleased to present the unaudited interim results of the Company for the six months ended 31st December 2012.

Our net assets per share decreased 3% to 70p at 31st December 2012 from 72p at 30th June 2012. Our Strategic Investments decreased in value by 3%. Our General Portfolio increased by 5% compared with increases of 11% in the FTSE Eurofirst 300 index and 6% in the S&P 500 index over the half year. At the close of business on 15th February 2013, our net asset value was 83.7p per share.

Dividend income from Strategic Investments has increased by 8% from the comparative period last year. Our share of the results of associates has improved compared with the comparative period in which Hartim incurred start-up losses on its new Australian acquisition and legal costs in connection with a lease dispute.

The Company achieved a profit for the half year of £78,000 (0.4p per share) compared to a loss of £86,000 for the same period last year (0.5p per share). Operating profit before associates was £101,000, up from £79,000 last year.

Our underutilised borrowing facilities will allow us to take advantage of any buying opportunities when they arise.

Investment policy and management

Western's investment policy is to hold strategic stakes in a few special situations and maintain a diversified portfolio of high quality U.K. and internationally listed equities. Strategic investments are minority positions where we seek to maintain a close working relationship with the management of the investee. Western has nominees on the boards of three of our four strategic investments and is working to improve relations with the Swallowfield board.

An analysis of assets is shown on the face of the Statement of Financial Position.

General Portfolio

The value of our general portfolio increased over the period by 5% to £ 2,652,000. The general portfolio represents 21% of Western's assets. We will seek to invest further in the general portfolio when we perceive suitable companies that appear to be undervalued.

Strategic Investments

Creston plc ("Creston")

Creston is a marketing services group with a strategy to grow within its sector to become a substantial, diversified international marketing services group. Further information about Creston is available on its website: www.creston.com.

Creston's results for the half-year to 30th September 2012 show a profit after tax of £8,259,000 including a deferred consideration write-back of £3,450,000 (2011: £2,821,000). Creston declared an interim dividend of 1.0p per share, an increase of 20% on the prior year.

Western owns 3,000,000 shares in Creston (4.9%) with a market value at 31st December 2012 of £2,370,000 (30th June 2012: £1,650,000), being 19% of Western's assets.

I am a Non-Executive Director of Creston.

Northbridge Industrial Services plc ("Northbridge")

Northbridge hires and sells specialist industrial equipment to a non-cyclical customer base. With offices or agents in the U.K., U.S.A., Dubai, Germany, Belgium, France, Australia, Singapore, India, Brazil, Korea and Azerbaijan, 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, generators, compressors, loadcells and oil tools. Further information about Northbridge is available on its website: www.northbridgegroup.co.uk.

Northbridge's latest results, for the half year to 30th June 2012, showed profit after tax of £1,027,000 (2011: £1,656,000). Northbridge declared an interim dividend of 1.85p per share, an increase of 6% on the prior year.

Western owns 2,200,000 shares, representing 14.2% of Northbridge's share capital. The value of this investment has been volatile and at 31st December 2012 was £5,170,000 (30th June 2012: £5,984,000), representing 41% of Western's assets.

I am 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 its website: www.swallowfield.com.

Swallowfield's latest results, for the year to 30th June 2012, showed profit after tax of £1,263,000 (2011: £1,082,000). Swallowfield declared a final dividend of 4.1p, unchanged on the prior year. Swallowfield has warned that full year results for the year ending 30th June 2013 will be below last year's results.

At 31st December 2012, Western owned 1,869,149 shares in Swallowfield (16.5% of their issued share capital). The market value of the Company's holding in Swallowfield on 31st December 2012 was £1,925,000 (30th June 2012: £2,187,000) representing 15% of the Company's assets.

Hartim Limited ("Hartim")

Hartim offers a complete export sales, marketing and logistical services to a number of well known UK branded fast moving consumer goods companies. This investment was acquired on 28th March 2009 and is accounted for as an associated company.

Hartim's estimated results for the year ended 31st December 2012 showed a loss of £1,000 (2011 £220,000) after tax and exceptional items. These results include losses incurred in turning round its Australian distributor acquired out of administration last year.

At 31st December 2012, Western owned 49.5% of Hartim. The carrying value of the Company's investment in Hartim on 31st December 2012 was £1,123,000 (30th June 2012: £1,124,000) representing 9% of the Company's assets.

Mr. Beale is a Non-Executive Director of Hartim.

Conclusion & Outlook

The short term outlook for the developed world remains uncertain, but our strong financial position provides a degree of cautious optimism.

The Board has declared an increased interim dividend of 0.85p per share (2012: 0.8p) that will be paid on Friday 22nd March 2013 to shareholders on the register at the close of business on 8th March 2013. Subject to unforeseen circumstances, we expect to show satisfactory results for the period to 30th June 2013 and to declare a similar final dividend for the current year, which the Board anticipates paying in October 2013.

                                                                  D.C. MARSHALL
                                                                       Chairman


Unaudited Statement of Comprehensive Income

                                                    Half year ended       Year
                                                                         ended
                                                      31st December  30th June
                                                       2012     2011      2012
                                                       £000     £000      £000
Income from investments in:
Listed strategic undertakings                          198      183       320
Other listed investments                                46       40        88
Surplus on disposal of listed undertakings               -        7        72
                                                   -------- --------  --------
                                                       244      230       480
Administrative expenses - normal                      (143)    (151)     (282)
                                                   -------- --------  --------
Operating profit                                       101       79       198
Share of results of associated companies                91      (14)     (177)

Share of exceptional loss of associated company (101) (138) (165)

Finance expense                                        (11)     (12)      (34)
                                                   -------- --------  --------
Profit/(Loss) on ordinary activities before             80      (85)     (178)
taxation
Taxation                                                (2)      (1)       (4)
                                                   -------- --------  --------
Profit/(Loss) on ordinary activities after              78      (86)     (182)
taxation
Other Comprehensive Income
Fair value recycled from equity on disposal              -      (23)       74

Fair value adjustment on listed undertakings (239) (2,647) (1,723)

                                                   -------- --------  --------
Total comprehensive income                            (161)  (2,756)   (1,831)
                                                     ======   ======    ======
Basic earnings/(loss) per share                        0.4p    (0.5)p    (1.0)p
Interim dividend per share                            0.85p     0.8 p      0.8p
Final dividend per share                                 -         -       0.9p

Changes in Shareholders' Equity

Total comprehensive income                             (161)   (2,756)   (1,831)
Dividends paid                                         (162)     (153)     (296)
                                                    --------  --------  --------
                                                       (323)   (2,909)   (2,127)
                                                                                

Equity shareholders' funds at start of period 12,895 15,022 15,022

                                                    --------  --------  --------

Equity shareholders' funds at end of period 12,572 12,113 12,895

                                                      ======    ======    ======


Unaudited Statement of Financial Position

                                                       31st December    30th June
                                                       2012       2011       2012
                                                       £000       £000       £000
Non-current assets
Strategic Investments
Creston plc                                          2,370      2,070      1,650
Northbridge Industrial Services plc                  5,170      4,576      5,984
Swallowfield plc                                     1,925      2,187      2,187
Associates                                           1,263      1,463      1,273
General Portfolio investments                        2,652      2,579      2,535
                                                   --------   --------   --------
                                                    13,380     12,875     13,629
                                                   --------   --------   --------
Current assets - trade and other receivables            20         24         71
Bank (overdraft)/cash at bank and in hand             (725)      (714)      (707)
Other current liabilities - trade and other           (103)       (72)       (98)
payables
                                                   --------   --------   --------
Net current liabilities                               (808)      (762)      (734)
Total assets less current liabilities               12,572     12,113     12,895
                                                     ======     ======     ======
Capital and Reserves
Called up share capital                              7,180      7,180      7,180
Share premium account                                2,654      2,654      2,654
Capital reserve                                          3          3          3
Unrealised profits and losses on investments           917        136      1,157
Share of undistributed profits of associates           344        544        354
Realised profits and losses                          1,474      1,596      1,547
                                                   --------   --------   --------
Equity shareholders' funds                          12,572     12,113     12,895
                                                     ======     ======     ======
Net assets per share at market value - pence            70p        67p        72p
Number of shares in issue                        17,949,872 17,949,872 17,949,872
Notes:-
1.   The results for the half-year are unaudited. The information contained in
     this report does not constitute statutory accounts within the meaning of
     the Companies Act 2006. The statutory accounts of Western Selection P.L.C.
     for the year ended 30th June 2012 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.
2.   This report has been prepared in accordance with the accounting policies
     contained in the Company's Annual Report and Accounts 2012.
3.   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.
Cash Flow Statement
                                                    Half year ended       Year
                                                                         ended
                                                     31st December   30th June
                                                       2012     2011      2012
                                                       £000     £000      £000
Profit/(Loss) before taxation                           80      (85)     (178)
Profits on sale of investments                           -       (7)      (72)
Share of results of associates                         (91)      14       177
Share of exceptional results of associates             101      138       165
Net interest paid                                       11       12        34

Decrease/(Increase) in debtors and accrued income 51 108 61

(Decrease)/Increase in creditors                         5       26        52
                                                   -------- --------  --------
                                                       157      206       239
Taxation paid                                           (2)      (1)       (4)
Net interest paid                                      (11)     (12)      (34)
                                                   -------- --------  --------
Cash generated by operations                           144      193       201
                                                   -------- --------  --------
Investing activities
                                                                              

Proceeds of disposal of fixed asset investments - 69 211

Purchase of fixed asset investments                      -        -         -
                                                   -------- --------  --------
                                                         -       69       211
Purchase of strategic investments                        -      (26)      (26)
                                                   -------- --------  --------
Net cash inflow from investing activities                -       43       185
                                                   -------- --------  --------
Financing activities
Equity dividend paid                                  (162)    (153)     (296)
                                                   -------- --------  --------
Net cash outflow from financing activities            (162)    (153)     (296)
                                                   -------- --------  --------
Movement in cash and cash equivalents                  (18)      83        90

Net cash and cash equivalents at start of year (707) (797) (797)

                                                   -------- --------  --------

Net cash and cash equivalents at end of year (725) (714) (707)

                                                   -------- --------  --------

Reconciliation to movements in cash and cash equivalents

                                                    At start     Cash   At end
                                                      Period     Flow   Period
                                                        £000     £000     £000
Half year ended
31stDecember 2011
Bank overdraft                                         (707)     (18)    (725)
                                                      ======   ======   ======
31stDecember 2011
Bank overdraft                                         (797)      83     (714)
                                                      ======   ======   ======
Year ended 30thJune 2012
Bank overdraft                                         (797)      90     (707)
                                                      ======   ======   ======


Composition of General Portfolio

at 31stDecember 2012
                                           Carrying
                                              value
                                               £000              %
Diageo                                          207            7.8
British American Tobacco                        183            6.9
Royal Dutch Shell                               156            5.9
Unilever                                        143            5.4
Bioquell                                        139            5.2
Sarasin International Equity Income Fund        133            5.0
Imperial Tobacco                                128            4.8
Phillip Morris International                    102            3.9
RSA Insurance                                   101            3.8
Balfour Beatty                                   98            3.7
Novartis                                         70            2.6
Reckitt Benckiser                                70            2.6
Schindler                                        68            2.6
Chevron                                          66            2.5
Colgate Palmolive                                66            2.5
Exxon                                            65            2.5
Lockheed Martin                                  62            2.3
Pernod Ricard                                    62            2.3
BASF                                             61            2.3
Heineken                                         59            2.2
BHP Billiton                                     58            2.2
L'Oreal                                          58            2.2
Nestlé                                           57            2.1
Procter and Gamble                               55            2.1
Kellogg                                          54            2.0
Zurich Financial Services                        51            1.9
Becton Dickinson                                 51            1.9
United Technologies                              50            1.9
Brown Forman                                     47            1.8
Danone                                           46            1.8
Total                                            45            1.7
ABB                                              41            1.6
                                           --------       --------
Total                                         2,652            100
                                             ======         ======
10

(Source: PR Newswire )
(Source: Quotemedia)

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