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, Swallowfield plc (Swallowfield), a leading manufacturer of cosmetics, toiletries and household products and Northbridge Industrial Services PLC (Northbridge) which was formed for the purpose of aquiring companies that hire and sell specialist industrial equipment.
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 international marketing services group. The results for the year to 31st March 2006, show a profit after tax of £2,927,000 (2005 – £2,640,000), equivalent to earnings of 8.04p per share (2005 –7.04p).
At 1st July 2005, Western owned 2,873,998 shares in Creston. During the year a further 126,002 shares were acquired at a cost of £207,903 by way of exercise of our warrants and participation in Creston’s fundraising. At the year end, the total holding of 3,000,000 shares represented 8.6% of Creston's issued share capital. The market value of the Company’s holding in Creston on 30th June 2006 was £4,845,000 (2005 –£4,455,000), being 40% of Western’s net assets. Mr. Marshall is the Non-Executive Chairman of Creston.
Northbrigde Industrial Service
Northbridge announced profits of £731,000 for the year ended 31st December 2006 and declared a maiden dividend of 2p per share. Western maintained its holding of 1,500,000 shares in Northbridge The value of the investment at 30th June 2007 was £2,768,000 (2006 - £1,598,000) being 19% of Western’s assets (2006 – 13%).
Northbridge was formed for the purpose of acquiring companies that hire and sell specialist industrial equipment such as generators, load banks, pumps, air compressors, heaters and chillers. Northbridge is seeking to acquire specialist niche businesses to give it the potential for expansion into outsourcing providers, capable of supplying a non-cyclical customer base. Northbridge’s first acquisition was Crestchic Limited, one of the largest electrical load bank equipment manufacturers in the world; selling and hiring to leading national and international customers.
Swallowfield PLC
Swallowfield has a long history of developing and producing aerosol, cosmetic and toiletry products stretching back to 1950. As one of Europe’s premier contract manufacturers of toiletries and cosmetics it offers an unrivalled breadth of product capabilities. Its skill in design, developing and producing gift packs and themed product ranges compliments its production capability.
Swallowfield’s latest published results were for the 28 weeks to 13th January 2007 and showed a profit of £255,000 (2006 – loss of 695,000 after reorganisation costs of £677,000)
Western owns 1,000,000 shares in Swallowfield which is 8.9% of the issued share capital. The market value of the Company’s holding in Swallowfield on 30th June 2007 was £795,000 (2006 - £455,000), being 5% (2006 - 4%) of Westerns’ net assets.
Tudor Rose International Limited
TRI is the U.K.’s leading export management company representing well-known British brands. It was founded in 1984 and works closely with a number of leading U.K. branded fast moving consumer goods companies, offering a complete sales, marketing and logistical service. Based in Stroud, Gloucestershire it has a turnover in excess of £15 million and sells into 78 countries worldwide including U.S.A., Spain, Portugal, Italy, Czech Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia, Australia and China.
With effect from 4th April 2008 Western invested £730,000 (including costs) to acquire a 49.5% stake in a new holding company that has purchased TRI. The other shareholders of this holding company are its incoming Chairman, John Gibson (8%), Mike Aird, TRI Managing Director, (35.5%), Stuart Dixon, TRI Finance Director (3%), and other members of the TRI management team (4%). TRI had net assets of £493,000 at 31st December 2007 and has been acquired by the new holding company for £3,250,000, approximately 8.5 times operating profit for the year ended 31st December 2007 (£393,000), with the balance of the funding coming from debt facilities provided by Royal Bank of Scotland. Western, which will account for this investment as an associated company, will be represented on the TRI board by Mr. E.J. Beale and Mr. L.H. Marshall who have been appointed as non-executive directors to join the three existing directors of the new holding company.
