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ABOUT WESTERN SELECTION
Since Western Selection P.L.C. is an investment company, it has no employees and out-sources all finance, administration and company secretarial tasks to City Group P.L.C., a company in which it has a 48.6% interest.
Western holds substantial stakes in a number of U.K. small-cap growth companies (the strategic portfolio), and maintains a portfolio of U.K. and international blue-chip companies (the general portfolio) to smooth out the performance of small-cap holdings.
The directors of Western believe that the company's strategic portfolio has the greatest potential for growth. As the risk associated with these strategic investments is correspondingly greater, the company maintains a general portfolio to generate an increasing income stream, covering overheads and the dividend payment.
The composition of the general portfolio is designed to generate a more predictable income stream than that of the strategic portfolio. The general portfolio comprises holdings in blue-chip companies, with investment concentrated in the industry sectors perceived as having the greatest potential for long-term growth. Therefore although the general portfolio can be considered lower risk, via this sector-based or "themed" investment strategy, it has the potential to generate above average returns.
The company funds its investments through a combination of capital and revenue reserves and an overdraft facility. The company's overdraft facility which is secured against the general portfolio allows it to react to investment opportunities at short notice, and also to take advantage of the current low cost of debt. As of 30th June 2007, the company had drawn down £2,034,000 (of a maximum £2,5000,000) of this facility.
The company's income from capital gains is sheltered against tax due to a loss on disposal of a trading subsidiary realised in 1991 and management expenses. Western is able to offset a further £2,5000,000 of capital gains against these tax losses.
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