Western Selection Plc - Final Results

Western Selection Plc - Final Results

PR Newswire

LONDON, United Kingdom, December 28

28 December 2023

Western Selection PLC

(the "Company" or "Western")

Final Results for the Year Ended 30 June 2023

The Company today announces its audited final financial results for the year ended 30 June 2023.

Strategic Report

Reorganisation of the Company's activities

On 28 December 2023, the Company announced that, after considerable analysis and consideration, the Board had decided that it is in the best interests of Shareholders to restructure the Company's activities, return capital to shareholders and to continue as a private holding company with a reduced size of operations. The Company's strategy following the return of capital to shareholders will be to manage the remaining investments in Industrial & Commercial Holdings PLC and City Group PLC with a view to developing these investments into financially viable assets.

Western's objective has been to generate growth in value for shareholders over the medium to long-term. However, the Company has not been able to consistently fulfil this objective. The Board has considered alternative means to generate growth in shareholder value but has concluded that in the current regulatory environment the Company is too small to meet its strategic objective, is unable to raise additional share capital without significantly diluting the interests of existing Shareholders and the Company is not an attractive acquisition target for other companies.

Accordingly, the Board now proposes to return surplus capital to Shareholders by means of a Capital Reduction, details of which, together with other related proposals, are set out in a Circular to Shareholders which Shareholders will have received along with the Annual Report & Accounts.

Results for the year

The Company's net assets per share for the year have increased to 81p (2022: 56p). During the year, the Board took the decision to realise the Company's Core Holdings investments and sold the remaining 1,065,500 shares in Crestchic Plc (formerly Northbridge Industrial Services Plc) for £4,135,000 and 3,795,000 shares in Kinovo for £1,450,000. The proceeds from these disposals were invested in our Treasury Operations. After the year end, the Company sold the balance of its holding of shares in Kinovo for £1,416,000.

At the end of the year, our exposure to shares in our quoted Core Holdings had reduced to 10% of net assets (2022: 31%).

The Core Holdings paid dividends in the period to the value of £13,000 (2022: £49,000). Dividends to the value of £107,000 (2022: £148,000) were received from companies within the Treasury Portfolio.

Following this, the Company is reporting a profit on ordinary activities after tax for the year of £613,000 (2022 - loss after tax £438,000) and total comprehensive profit of £4,548,000 (2022 - loss of £75,000).

Dividend

As the Company had not received sufficient dividend income, no dividend is recommended by the Board.

Core Holdings

Crestchic Plc (formerly Northbridge Industrial Services Plc)

Western sold all of its shares in Crestchic during the year.

Kinovo Plc ("Kinovo") (formerly Bilby Plc)

Kinovo, which is admitted to trading on AIM, announced its results for the year ended 31 March 2023 on 8 August 2023 showing a total comprehensive loss of £548,000 compared to a total comprehensive loss of £10,882,000 for the previous year ended 31 March 2022. No interim dividend was paid during the year (2022 - Nil). No final dividend (2022 - £0.05p per share) was received.

During the year Western sold 3,795,000 of Kinovo shares releasing £1,450,000 of funds.

As at 30 June 2023 Western held 3,705,000 Kinovo shares which represents 12.07% of Kinovo's issued share capital. The market value of this investment on 30 June 2023 was £1,500,525 (2022- £1,125,000), which represents approximately 10.3% (2022 - 11.3%) of Western's net assets.

As at 21 July 2023 all remaining shares in Kinovo had been sold.

Associated Companies

Industrial & Commercial Holdings PLC ("ICH")

ICH is a small unquoted PLC in which Western holds 15,252,774 shares which represents a 29.9% interest. ICH owns land at Milngavie, adjacent to Dougalston golf course, just north-east of Glasgow, which, with planning permission, has potential for residential development.

Over the past two years, ICH, in conjunction with its development partners, Mactaggart & Mickel (M&M), have been making substantial submissions in pursuit of gaining planning permission for the land holding at Dougalston, Milngavie.

There is no certainty that any extension of the Company's agreement with M&M or a new agreement with a new party will provide the level of funding to ICH that has been available to date. Depending on any agreement that may be reached, ICH may require refinancing prior to planning permission being awarded. Furthermore, there is no certainty that planning permission will ever be awarded for this site.

ICH's land at Milngavie has not been included for housing development in the local development plan ("LDP") to date. Following comments made by the Reporters' Unit when reviewing the most recent LDP, and an increase in the housing allocation that needs to be included in the next LDP, ICH is optimistic that a specified part of the land will be included for housing development in the next LDP. The land at Milngavie owned by ICH was professionally valued at £425,000 on 27 April 2023 factoring in that no planning permission had been granted. This valuation was for the land only and excluded the costs of maintaining the property or administration of ICH. No buyers have been found for the Company's shareholding in ICH notwithstanding this valuation.

If planning permission is granted for the land, the value of the Company's investment in ICH will depend on the conditions attached to the planning permission; in particular, the number and size of houses that may be built and the amount of any planning gain required from the developers. The Company is unable to predict what this value will be but hopes that the value of the Company's 29.9% shareholding will be substantially greater than the current carrying value of £36,000. The Company is also unable to predict the timing of any receipt of funds by ICH or the timing of any realisation of the investment by the Company.

City Group PLC ("City Group")

Western holds 48.6% and London Finance & Investment Group PLC (Western's largest shareholder) holds 51.4% of City Group, an unquoted public company, which provides company secretarial and head office management services to the Company, various related parties and to third parties. The Company's shareholding in City Group is valued at £10,000. The balance of City Group's issued ordinary shares are held by the Company's major Shareholder, London Finance & Investment Group PLC.

City Group has been profitable in recent years, but fee income from the Company of £71,945 in the year to 30 June 2023 is expected to be substantially reduced following the delisting of the Companyand its re-registration as a private company. City Group has advised that it is forecasting to make a loss in 2024. City Group has advised that it is forecasting to make a loss in 2024. City Group has recently moved from leased offices to serviced offices and has advised that other cost saving initiatives are underway, but it is not certain when, or if, City Group will be able to return to profitability. City Group has substantial reserves to allow it to continue to operate until it becomes profitable.

David Marshall and Edward Beale are directors of ICH and City Group.

Treasury Operations

Treasury Operations consist of cash balances, portfolio investments, fixed term deposits and UK Gilts.

During the year the Company sold all of its general portfolio investments releasing £7,360,000. All funds have been placed in short term deposits and UK Gilts.

Cash and other financial assets

The Treasury operations include foreign currency bank accounts (GBP, EUR, USD, CHF and AUD) and a borrowing facility of up to £2,000,000 secured over the Treasury investment portfolio.

At the year-end, the Company had cash of £1,855,525 (2022 - £1,259,475), fixed term deposits of £6,200,000 and UK Gilts of £5,008,000 The Company had no outstanding bank borrowing at the year-end (2022 - £Nil). As at 15 December 2023, the latest practicable date prior to the issue of the Annual Report & Accounts, the Company had cash of £146,933 and fixed term deposits of £14,400,000. The Company had no outstanding bank borrowings.

Outlook

The outlook for the UK and world economy is very uncertain. The ongoing war in Ukraine continues to disrupt energy and food supplies and inflation remains a major economic concern. Interest rates have risen, but real rates remain negative. If the proposed return of capital to Shareholders is approved, the Company's admission to trading on the AQSE Growth Market will be cancelled and the Company will be re-registered as a private company. The Company's strategy will then be to realise its illiquid investments, ICH and City Group, in an orderly manner and to return surplus cash to its remaining Shareholders.

Summary of Net Assets

			2023						2022
			Carrying						Carrying
	Cost		Value				Cost		Value
	£000		£000		%		£000		£000		%
Quoted Core Holdings
Crestchic Plc	-		-		-		997		2,024		20
Kinovo Plc	1,503		1,501		10		3,043		1,125		12
Total	1,503		1,501		10		4,040		3,149		32
Associated companies (a)
Industrial & Commercial Holdings Plc	187		36		0		187		40		0
City Group Plc	82		10		0		82		10		0
Total	269		46		0		269		50		0
Net cash	1,856		1,856		13		1,259		1,259		13
Other net current assets (b)	11,118		11,118		77		5,430		5,505		55
Net Assets	14,746		14,521		100		10,998		9,963		100

Notes:

(a) The carrying value of these associated companies is cost less impairment plus the Company's share of profits/(losses).

(b) Other net assets include non-cash assets within Treasury Operations and other working capital balances.

28 December 2023

The Company's 2023 Report & Accounts will be sent to shareholders shortly.

The information contained in this announcement was previously classified as inside information for the purposes of the UK Market Abuse Regulation. Upon the publication of this announcement, this information is considered to be in the public domain.

The directors of the Company accept responsibility for the contents of this announcement.

For further information, please contact:

Western Selection PLC	[phone]
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson / James Western	[phone]

Statement of Comprehensive Income

For the year ended 30 June		2023		2022
		£000		£000
Income from investments in:
Listed Core Holdings		13		49
Treasury investments		171		148
		184		197
Administrative expenses		(293)		(234)
Profit/(Loss) on disposal of treasury portfolio investments		743		(127)
Fair value adjustment on treasury portfolio investments		-		(142)
Operating profit/(loss)		634		(306)
Share of profit of associated companies		12		6
Impairment provision		(16)		(130)
Foreign exchange on bank balances		(6)		10
Finance costs		-		(2)
Profit/(Loss) before taxation		624		(422)
Taxation		(11)		(16)
Profit/(Loss) after taxation attributable to equity shareholders		613		(438)
Basic and diluted profit/(loss) per share attributable to equity holders		3.4p		(2.4)p
Other comprehensive income
Profit on disposal of Core Holdings		2,990		1,225
Fair value adjustment on Core Holdings		945		(862)
Total other comprehensive profit		3,935		363
Total comprehensive profit/(loss)		4,548		(75)

Statement of Changes of Equity

	Share capital	Share premium account	Capital reserve account	Unrealised profit/(loss) on investments	Share of undistributed losses of associates	Realised profit	Total
	£000	£000	£000	£000	£000	£000	£000
Year ended 30 June 2023
Balances at 1 July 2022	7,180	2,654	3	(817)	(58)	1,001	9,963
Profit for the year	-	-	-	-	12	601	613
Unrealised profits on treasury investments reclassified to realised equity on disposal	-	-	-	(74)	-	74	-
Other comprehensive profit	-	-	-	945	-	2,990	3,935
Unrealised profit on Core Holdings reclassified to realised equity on disposal	-	-	-	(57)	-	57	-
Total comprehensive profit	-	-	-	814	12	3,722	4,548
Unpaid dividends	-	-	-	-	-	10	10
Balances at 30 June 2023	7,180	2,654	3	(3)	(46)	4,733	14,521
	Share capital	Share premium account	Capital reserve account	Unrealised profit/(loss) on investments	Share of undistributed losses of associates	Realised profit/(loss)	Total
	£000	£000	£000	£000	£000	£000	£000
Year ended 30 June 2022
Balances at 1 July 2021	7,180	2,654	3	679	(64)	(414)	10,038
(Loss)/profit for the year	-	-	-	(142)	6	(302)	(438)
Unrealised losses on foreign exchanges reclassified to realised equity on disposal	-	-	-	8	-	(8)	-
Other comprehensive profit/(loss)	-	-	-	(862)	-	1,225	363
Unrealised profit on Core Holdings reclassified to realised equity on disposal	-	-	-	(500)	-	500	-
Total comprehensive loss	-	-	-	(1,496)	6	1,415	(75)
Balances at 30 June 2022	7,180	2,654	3	(817)	(58)	1,001	9,963

Statement of Financial Position

Registered Number 00234871

At 30 June		2023		2022
		£000		£000
Non-current Assets:
Investment in Associated companies		46		50
Investments in Core Holdings		1,501		3,149
		1,547		3,199
Current Assets
Treasury portfolio investments		-		5,529
Treasury other financial assets		11,208		-
Trade and other receivables		30		27
Cash and cash equivalents		1,856		1,259
		13,094		6,815
Current Liabilities
Trade and other payables		(120)		(51)
		(120)		(51)
Net Current Assets		12,974		6,764
Net Assets		14,521		9,963
Equity
Share capital		7,180		7,180
Share premium account		2,654		2,654
Capital reserve account		3		3
Unrealised loss on investments		(3)		(817)
Share of undistributed losses of associates		(46)		(58)
Realised profits		4,733		1,001
Shareholders' Funds		14,521		9,963

Statement of Cash Flow

For the year ended 30 June		2023		2022
		£000		£000
Profit/(Loss) before taxation		624		(422)
Adjustment for non-cash items
Profit on sale of treasury investments		(817)		127
Fair value adjustment on treasury investments		74		142
Foreign exchange on bank balances		6		(10)
Impairment provision		16		130
Share of results of associates		(12)		(6)
Net interest (receivable)/ payable		(64)		2
Changes in working capital
Increase in trade and other receivables		(3)		(6)
Increase/(Decrease) in trade and other payables		68		(35)
Cash absorbed by operations		(108)		(78)
Taxation paid		(11)		(16)
Net interest received/(paid)		46		(2)
Net cash absorbed by operations		(73)		(96)
Cash flow from investment activities
Proceeds on disposal of Core Holdings		5,585		3,817
Purchase of treasury investments		(1,088)		(2,373)
Proceeds on disposal of treasury investments		7,360		574
UK Gilts		(4,990)		-
Fixed term deposits		(6,200)		-
Net cash generated by investment activities		667		2,018
Financing activities
Loan repaid		-		(700)
Unpaid dividends		9		-
Net cash absorbed by financing activities		9		(700)
Movement in cash and cash equivalents		603		1,223
Cash and cash equivalents at start of year		1,259		26
Foreign exchange		(6)		10
Cash and cash equivalents at end of year		1,856		1,259

Analysis of net debt
		At start of year £000		Cash Flow £000		Foreign exchange £000		At end of year £000
2023
Cash and cash equivalents		1,259		603		(6)		1,856
Total net cash		1,259		603		(6)		1,856
2022
Cash and cash equivalents		26		1,223		10		1,259
Loan		(700)		700		-		-
Total net cash/(debt)		(674)		1,923		10		1,259

Notes

1. Earnings per share

Earnings per share are based on the profit on ordinary activities after taxation of £613,000 (2022 - loss of £438,000) and on 17,949,872 shares (2022 - 17,949,872) being the weighted average number of shares in issue during the period.

	2023		2022
Basic and diluted earnings/(loss) per share	3.4p		(2.4)p

Diluted earnings per share at 30 June 2023 and 30 June 2022 are the same as basic earnings per share.

2. Net assets per share

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. Financial Information

The financial information contained in this preliminary announcement of results has been prepared under the recognition and measurement principles of UK-adopted international accounting standards ('UK-adopted IAS') in conformity with the requirements of the Companies Act 2006.

The financial information does not give sufficient information to comply with UK-adopted IAS which will be contained in the statutory accounts to be sent to shareholders.

The information in this final results announcement has been prepared on the basis of the accounting policies which have been set out in the Company's Report & Accounts for the year ended 30 June 2023 and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.

The accounts for the year ended 30 June 2023, which were prepared in accordance with UK-adopted IAS, 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 2023 are finalised on the basis of the financial information presented by the directors in this announcement. The auditors have issued an unmodified opinion.

4. Copies of this Announcement

Copies of this announcement are held at the Company's registered office, Central Court, Suite 1.01, 25 Southampton Buildings, London WC2A 1AL (tel. [phone]) and are available for a period of 14 days from the date of this announcement.

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identi?ed by their use of terms and phrases such as 'believe', 'could', "should" 'envisage', 'estimate', 'intend', 'may', 'plan', 'potentially', "expect", 'will' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements re?ect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

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