STRATEGIC INVESTMENT PORTFOLIO
The strategic portfolio contains investments in smaller companies quoted on UK stock markets. Western's holding in these companies is more substantial, but less liquid than its holdings in the general portfolio. In addition Western often has board representation in the investee company.
The Company's current strategic investments consist of: Creston PLC (Creston), a marketing services company; Northbridge Industrial Services PLC (Northbridge) which was formed for the purpose of acquiring companies that hire and sell specialist industrial equipment; Swallowfield plc (Swallowfield), a leading manufacturer of cosmetics, toiletries and household products and Hartim Limited, the holding company for Tudor Rose International Limited, a leading UK export management company representing many famous British brands around the world.
Creston PLC
Creston is a marketing services group whose strategy is to grow within its sector both by organic growth and through selective acquisition to become a substantial, diversified marketing services group.
The audited results for the year to 31st March 2011, show a profit after tax of £10,400,000 (2010 - £5,133,000), equivalent to fully diluted earnings of 12.39p per share (2010 - 8.74p). Western maintained it's holding of 3,000,000 shares in Creston (4.9%) with a value at 30th June 2011 of £3,390,000 (2010 - £2,752,000) being 23% (2010 - 25%) of Western's assets.
Mr Marshall is the non-executive chairman of Creston.
Northbridge Industrial Service
Northbridge was formed for the purpose of acquiring companies that hire and sell specialist industrial equipment supplying a non-cyclical customer base including utility companies, the public sector and the oil and gas industries. In particular it will seek to acquire specialist businesses that have the potential for expansion into complete outsourcing providers. Sales are made to the U.K., U.S.A., Brazil, Singapore, Germany, UAE and Korea; Northbridge also has subsidiaries operating in Perth, Dubai and Azerbaijan.
Northbridge announced profits of £3,036,000 for the year ended 31st December 2010 (2009 - £1,571,000) and declared a final dividend of 3.05p per share, making 4.6p for the year (2009 - 4.1p).
Northbridge acquired Tasman Oil Tools Pty Ltd, based in Perth, Western Australia, which specialises in the rental of equipment for the onshore and off-shore oil industry throughout Australia, after raising approximately £8 million by way of an open offer. Western took up 325,000 shares in that offer at a cost of £406,250, increasing its holding to 2,200,000 shares in Northbridge, which is 14.19% of the issued share capital. The value of the investment at 30th June 2011 was £6,094,000 (2010 - £2,508,000) being 40% (2010 - 23%) of Western’s assets.
Mr Marshall is a non-executive director of Northbridge.
Swallowfield PLC
Swallowfield is involved 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. Swallowfield announced its interim results to January 2011 showing a profit after tax of £519,000 compared to £533,000 for the comparable period last year. Dividends of £116,000 (2010 - £87,000) were received from Swallowfield during the year.
Western increased its holding in Swallowfield during the year and since the year end. At 31st August 2011 Western owns 1,868,149 shares which is 16.52% of the issued share capital. The market value of the Company's holding in Swallowfield on 30th June 2011 was £1,922,000 (2010 - £1,816,000), being 13% (2010 - 17%) of Western's net assets.
Swallowfield has had turnover of £52.4 million, £49.1 million and £44.8 million over the last three years and despite this their market capitalisation remains at £13 million. Whilst Western has played a role in bringing about some changes to the board during the year, we believe there may still be scope for improvement, and Western will continue to monitor board performance.
Hartim Limited
Hartim is the unquoted holding company for Tudor Rose International Limited ('TRI') which was founded in 1984. It works closely with a number of leading UK branded fast moving consumer goods companies, offering a complete sales, marketing and logistical service. Based in Stroud, Gloucestershire, TRI sells into 78 countries worldwide including USA, Spain, Portugal, Italy, Czech Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia, Australia and China. Hartim has recently acquired a distribution business in Australia to improve the service that it can offer to principals.
Western holds 49.5% of Hartim, which has a 31st December year end and achieved profits in 2010 of £540,000 after tax on turnover of £22,282,000. Western's share of the consolidated profit after tax for the twelve months to 30th June 2011 was £337,000 (2010 - £150,000) and the book value of the investment at 30th June 2011 was £1,465,000 (2010 - £1,129,000), being 10% (2010 - 10%) of Western's assets.
Western has two nominees on the board of Hartim: Mr E. J. Beale and Mr L. H. Marshall.
