Writtle made further good progress in 2012 as its ongoing model of equity involvement and decentralised growth created a motivational environment with low central costs. All operating companies were profitable and recent acquisitions continued to flourish.

Results and dividends

Turnover was £88.87m (2011: £62.89m), headline operating profit was £5.45m (2011: £3.78m) and profit before tax and minority interests was £3.60m (2011: £3m). The main exceptional item was a £0.97m loss on deemed disposal relating to the sale of minority shareholdings in the former Loewy Group companies to their management.
The directors are recommending a final dividend for 2012 of £345,000 (5.25p per share) to ordinary shareholders, making a total of £509,000 (7.75p per share) for the year (2011: £321,000 being 7.00p per share). The dividend will be paid on 31 May 2013 to shareholders on the register on 27 March 2013.

Principal activities and review of business

Writtle invests in media and marketing communications businesses with the aim of creating a substantial international marketing group.

There are two central pillars underpinning Writtle’s strategy: equity involvement and decentralised growth. Writtle will typically acquire majority shareholdings alongside management in businesses with potential for expansion and look for growth in these individual businesses, organically or by acquisition, rather than try to determine growth from the centre. If an opportunity to acquire a group of businesses in our sector presents itself, as Loewy did in 2011, we will look to dismantle any centralised head office or marketing structure and instead promote the individual company brands. Alongside this decentralised approach comes a re-incentivisation package for operational management through the opportunity to purchase equity on favourable terms in their companies, and participation in share option schemes in Writtle. This creates a lean head office structure as well as considerable incentives for management in their individual companies and the group as a whole.

A short review by operating company, each written by its directors, can be found in the 2012 Annual Report within the Investor relations section of the Writtle website. Each operating company has its own unique style and apart from overlaying similar financial controls, Writtle encourages individual company autonomy and identity.

2012 was an excellent year for Writtle. The performance of the Loewy Group companies acquired in 2011 exceeded expectations in their first full year of trading and the appointment of four directors from these companies to the Writtle Board reflects the important financial and strategic contribution to the group that these businesses are now making. The other 2011 acquisition, Arken, continued to perform well and we have more than recovered its purchase price in profits since Writtle took ownership. The acquisition vintage of 2011 sets the benchmark for future transactions and it is significant that in 2012 Writtle made only one acquisition, that of KTB PR through our Speed Communications business, as many potential targets failed to meet our strict criteria. If we cannot see substantial value uplift through growth or turnaround we will not pursue a transaction.

Other Writtle businesses continued to perform well, although business is never easy within an unsettled global economy. The retail sector in particular is haunted by the spectre of insolvency and we did not survive unscathed by bad debts with Clinton Cards and more recently Dreams going into administration. These losses were kept low by tight credit controls but nonetheless provided a sharp reminder that getting paid is as important as winning new business.

The other noteworthy factor in 2012 was the central cash management which reduced the group’s indebtedness by £2.92m over the year, to £11.69m, as our cash conversion from profits was excellent. This momentum has continued into 2013 and net debt levels have fallen by over £5m since their peak immediately after the Loewy acquisition in July 2011.

Post year end events

On 13 March 2013 we sold our 51% shareholding in Connect Archive and Mailing Products Limited for £460,000. The shareholding had been acquired in December 2011 for £10,000 as an opportunistic investment within the packaging sector, where the group still has an interest through Connect Packaging. As a low margin and capital intensive business Connect Archive and Mailing Products was not considered a long-term growth prospect and the consideration received represented an attractive return on our investment.

On 15 March 2013 Magnet Harlequin completed the acquisition of Bosham Holdings Limited, the holding company of Technik Limited, a £3.5m turnover company operating in a similar market to Magnet Harlequin which is one of the group’s most successful operating companies. The acquisition was funded through Magnet Harlequin’s own cash flow and a loan from Writtle. Magnet Harlequin’s directors are actively managing the new acquisition although the due diligence and acquisition contract were largely handled by Writtle head office to avoid distraction to Magnet Harlequin’s management team.

Further financial details of both the above transactions will be provided in the 2013 Annual Report.

Summary

Writtle has grown considerably over the past few years and yet your directors feel that there is considerable growth still to be achieved. The Writtle model is unusual in our sector where earn outs and centralised structure still prevail in a number of competitor groups. We firmly believe that in people businesses the real talent that clients seek lies not in head office but rather the brilliance of our specialist agencies.

We will continue to pursue this course; it has served us well thus far.

Robert Essex
Chairman
24 April 2013

http://www.fasttrack.co.uk/fasttrack/leagues/pt100programme.html

Magnet Harlequin Ltd (part of the Writtle Group) has acquired Technik Ltd to strengthen significantly its position as a market leader in the provision of creative and packaging management services. The combined businesses will offer design, artwork, digital, photography, post production, video, CGI, proofing, sampling, colour management, print production, print compliance and technology.

Commenting on the deal, Magnet Harlequin Managing Director Alan Wright said “I have known and admired Technik for many years. They have been a byword for client service and quality and offer expertise in areas complementary to that of our own. Magnet Harlequin has enjoyed strong growth in recent years and we are delighted to welcome Technik’s staff and clients into our Group.”

Technik founder and Managing Director Terry Walker who is retiring commented “After 37 years of growing Technik it was vital to find the right partner to take this business forward. Magnet Harlequin’s track record, technology and resources would obviously be attractive to our clients but equally important to me was Magnet Harlequin’s reputation for integrity and employee welfare; a philosophy I have shared throughout my working life. It is an exciting new chapter for Technik”.

Following the deal both companies will continue to trade under their existing brands and will operate ongoing from their current locations. Alan Wright becomes Managing Director of both businesses; all other management and production positions remain unaltered.

For more information, please contact: Scott McLean at Speed Communications – Scott.McLean@speedcommunications.com – phone: 0207 842 3266 OR Amy Hall at Magnet Harlequin – amy.hall@magharl.co.uk – phone: 01895 432400

Note to Editors

About Magnet Harlequin
Magnet Harlequin Ltd (www.magharl.co.uk) is based in West London with 120 staff and £10m turnover. It has further production offices in Southampton, Kowloon (Hong Kong) and Gurgaon (India).

About Technik
Technik Ltd (www.technik.co.uk) is based in Berkhamsted and Bradford, UK with 45 staff and £4m turnover.

About Writtle
Writtle Holdings Ltd (www.writtle.com) is an investment and management services company that own majority shareholdings in a portfolio of media and marketing services companies. Writtle is listed in the 2012 Sunday Times Buyout Track 100 as the 40th fastest growing PE backed private company in the UK and in the 2012 Sunday Times International Track 200 as having the 6th fastest growing International sales for a UK based private company.

Result and dividend
Turnover increased to £42.84m (2011: £23.12m) and trading profit* before tax was £2.96m (2011: £1.18m). The company will be paying an interim dividend of 2.5p per share (2011: 2.25p) on 31 October 2012 to shareholders on the register on 14 August 2012.

All group companies contributed to this fine performance, which further demonstrates the strength of the Writtle model. Equity involvement and decentralised growth provide a motivational management structure for Writtle’s operating companies that enable the group to maintain a low central overhead.

Review
With 18 operating companies, there are many highlights but as in previous years I will focus on major items of shareholder interest. A full review will appear in the annual report.

• Equity participation – operating companies. Last year’s acquisition of Loewy Group saw Writtle holding 100 per cent of Loewy’s operating company equity. In order to deliver the Writtle model to our new management teams, we dismantled Loewy’s expensive HQ structure then invited directors of the former Loewy operating companies to subscribe for new equity in their companies. We were delighted with the response and all our latest acquisitions now have directors holding equity interests in their businesses.

• Equity participation – Writtle. Given the favourable trading across the group we decided to exercise a call option over certain Loewy vendors’ Writtle shares and offer these shares to existing shareholders and directors. The offer was oversubscribed and we are pleased to welcome a number of operating company directors as shareholders in Writtle.

• Sale of freehold property. For some years Seymour Powell has been looking to expand, having outgrown their premises in Fulham, London SW6. We exchanged contracts for the sale of Seymour Powell’s property on 12 June and completed in July with proceeds received of £2m, a profit of £0.35m over book value. Having signed a short lease back on their sold premises, Seymour Powell have up to 18 months to look for more suitable and larger rented premises.

• Acquisition opportunities. A number of acquisitions have been reviewed in the period and given our strict criteria the majority were considered unsuitable. However, we did complete one deal, acquiring KTB PR though our Speed Communications PR business just after the period end. KTB has an expertise in sport health and wellbeing PR which complements and is now integrated into Speed’s existing consumer team.

• Finance. The good trading has resulted in a reduction in debt of over £1.75m by the end of June, with a further £2m reduction in July on receipt of the Seymour Powell property proceeds.

The performance of Writtle in the first half of the year has left us in a strong position to consider further growth opportunities. However, as usual, caution will be a priority and we will not risk our hard-won financial strength and reputation on deals in the name of ‘adding scale’ or other dubious rationales. We do not expect to avoid all the economic headwinds facing the UK and global economy, but we will be well prepared.

Robert Essex
Chairman
21 August 2012.

* Trading profit is stated before minority interests, exceptional gains on a property sale, amortisation and share-based payment charges and net losses on sale of minority shareholdings to directors, all of which will be itemised in the annual report.

KTB PR will be merged into the consumer team of Writtle’s PR business Speed, the multi-sector agency focused on the consumer, corporate, media and technology sectors.

Kate Bosomworth, founder and managing director of KTB PR, will lead Speed’s enlarged consumer team and will join the board of Speed.

The deal brings together two award-winning agencies to create a combined business with a turnover of £4 million, employing more than 45 people and clients including adidas, The Associated Press, The Celtic Manor Resort, Clinton Cards, The Economist, Maxinutrition, Technogym, Tesco, Toshiba and Virgin Media Business.

“Speed has the ambition to be a top 20 UK PR agency by 2015. A strong consumer offering is a critical cornerstone of this. As marketing services continue to develop at the same rapid pace as digital technologies and social media, we believe that the winners will be those organisations that can invest for the future whilst remaining entrepreneurial in their outlook,” said Will Whitehorn, chairman, Speed.

Writtle Holdings was named as the UK private company with the sixth-fastest growing overseas sales in the Sunday Times International Track 200. The company owns majority shareholdings with a combined turnover of approximately £100m and 18 businesses in specialist marketing services, businesses communications, design, packaging and retail marketing services.

For further information, contact:
Kate Bosomworth or Scott McLean, Speed:
kate.bosomworth@speedcommunications.com
scott.mclean@speedcommunications.com
Tel: +44 (0) 20 7842 3200.

Click on http://www.fasttrack.co.uk/fasttrack/leagues/int200leaguetable.asp?siteID=8&searchName=&yr=2012&sort=num&area1=99 for more details.

Results and dividends

Turnover was £62,892,367 (2010 – £35,607,746) of which £19,210,314 came from acquisitions and profit before tax increased to £2,999,547 (2010 – £1,609,680) with a contribution towards operating profit of £1,143,943 from acquisitions. The profit after tax and minority interests was £1,351,527 (2010 – £579,077).
The directors are recommending a final dividend for 2011 of £221,859 (4.75p per share) to Ordinary Shareholders, making a total of £320,577 for the year (2010 – £228,367). The dividend will be paid on 31 May 2012 to shareholders on the register on 17 February 2012.

Principal activities and review of business

The directors aim to present a fair, balanced and comprehensive review of the development and performance of the business during the year and of its position at the year end. The review is consistent with the size and non-complex nature of the business and is written in the context of the risks and uncertainties we face.
Writtle invests in media and marketing communications businesses. There are two central themes in Writtle’s success to date: equity involvement and decentralised growth. Writtle will typically acquire majority shareholdings alongside management in businesses with potential for expansion and look for growth in these individual businesses rather than try to determine growth from the centre. Additionally, all senior management are offered shares to purchase, or share options in Writtle. This creates a lean HQ structure as well as considerable incentives for management in their individual companies and the group as a whole.
A short review of individual Writtle businesses in 2011 follows this section and further details can be found on their websites. However, two events stood out in 2011: the acquisition of Arken’s business on 28 February 2011 and the acquisition of Loewy Group Ltd on 18 July 2011. Details of the financial performance of these acquisitions can be found in note 25 but both transactions demonstrate the impact Writtle’s model can have on a business or group of businesses.

Prior to acquisition, Arken had been loss-making and neglected within a debt-restricted plc (now in administration) with little opportunity to flourish. However, Arken was well known to Writtle’s directors as a business with potential and we were able to negotiate a purchase price at a discount to net assets. Arken’s management was strengthened and re-incentivised with equity and the results since acquisition have been excellent. A contract with a major UK retailer was won and delivered in a short timescale, resulting in a much larger project for 2012. There is still work to be done on Arken’s core business but the omens are good.
The acquisition of Loewy Group was a much more daunting prospect. In what could be a case study for corporate excess in the media sector, Loewy Group had been rapidly constructed over the last seven years through high-priced acquisitions funded by the Scylla and Charybdis of debt and earn out. Add a substantial central overhead which absorbed all the operating company profits and more, Loewy was clearly a challenge but underneath the centre we had identified some highly impressive operating companies, albeit jaded by the Loewy experience. If ever there was a vindication of the Writtle model, early results from Loewy post acquisition represented it. More than £2m per annum of central Loewy overhead was removed by the year end with no discernible negative effect on trading, the cost of which is fully borne in the 2011 figures, and the operating companies were encouraged to expand and invest. Losses have turned to profits and the former Loewy Group operating companies are now making substantial contributions to the overall group. There are also some outstanding individuals within these businesses and we expect a number of them to make a wider impact on the group’s performance in years to come.

Summary

The two acquisitions were the highlights of the year but elsewhere in Writtle our companies met the challenges of their markets and the wider economy well, as you can read from their reports in the following section.
Writtle has entered 2012 as a much larger entity than a year ago, which presents further opportunities at both group and individual company level. However, we are always mindful of the many challenges faced by businesses in an uncertain world – many outside our control – and we will continue to exercise caution as we plot our course forward.

Robert Essex
Chairman
28 March 2012

Click on www.fasttrack.co.uk for more details.

Writtle has continued to make good progress in the first half of 2011. First half turnover was £23,117,342 (2010: £16,905,786) which included £2,552,788 from Arken POP International in their first four months trading following Arken’s acquisition on 28 February 2011. Profit before tax increased to £1,181,222 (2010: £691,929) and the company will be paying an interim dividend of 2.25p per share (2010 : 2.00p) on 28th October 2011 to shareholders on the register on 15th July 2011.

Given the continuing uncertainty in the UK and World economies, this is a further satisfactory result and I am pleased to report that all Group companies were profitable in the period. Rather than give individual company reports, I have selected some of the highlights from the first half for your interest.

Company review

Acquisition of Arken POP International Ltd.
The acquisition of Arken on 28 February 2011 provides the Group with a permanent POP design and manufacturing base to complement our existing and very successful promotional POP business. The Arken business is well known to your directors and its acquisition completes a lengthy negotiation with the vendors. Early indications are that our patient pursuit of Arken has been vindicated with the business quickly returning to profitability under a revitalised management team, and some significant new business wins have followed. The challenge at Arken now is to reinforce its management and capacity as the business gears up for further growth.

Expansion into Asia
Following a new business win for a global DIY chain, Magnet Harlequin has opened an office in Hong Kong to mirror its UK operations. This has been a significant investment and after a lengthy start-up process the business has now gained traction and is at capacity, necessitating a move to larger premises which is planned for October. The new larger office will provide a ‘hub’ for the Group’s Far East activity and Less Packaging will be joining Magnet Harlequin in the office complex before the year end as it expands its packaging reduction offer to include compliance and sourcing.

Organic growth
Writtle had ten operating companies at the end of June 2011. It is worth remembering that four of these (Creo Retail Marketing, Maglabs, Interact and Less Packaging) began life in Writtle as start-ups but are now well established and successful businesses in their own right. Start ups take time and invariably incur early losses but ours have thus far demonstrated substantial growth in shareholder value.

Acquisitive growth
Arken is already proving to be a successful Writtle acquisition. Our acquisitions fall into two categories; turnaround or enhancement. Arken falls into the turnaround category, being loss making prior to acquisition. Our most successful turnaround acquisition to date has been Creo Print and Production and we hope Arken follows a similar path, which will again yield high shareholder returns. Our enhancement acquisition model involves taking an established business and improving its scale or profitability – or both. We achieve our goal in both acquisition models through equity incentives and empowering managements to grow their own businesses – our decentralised model. The acquisition model we are not interested in (but which is paraded in front of us by brokers on a regular basis) is what I will term the ‘Hollywood’ acquisition; high profile, often successful, but expensive companies, where the only rationale is adding ‘scale’ to an acquirer. These acquisitions are high risk; we cannot add much value and the downside risk is immense. We leave these to the publicly quoted sector.

Acquisition of Loewy Group
Although completed after the half year, most of the negotiations were completed prior. Loewy Group comprises six operating companies within our sector of marketing services. There is very little overlap with our current operations; indeed the ‘fit’ and industrial logic are remarkable. Loewy Group also fits both our acquisition criteria.
As a Group, Loewy has been unsuccessful in the past as it pursued a centralised strategy of acquisition and administration, with a large head office infrastructure. This centralised policy is common amongst media groups and has to be reversed; the costs involved far outweigh any benefits. Underneath the centre, however, there are some excellent operating companies which at the most need enhancement, through empowerment and equity incentive. It is very early days but we have liked what we have seen so far; there are some very impressive people within the Loewy operating companies.
We expect the next few months to be expensive and disruptive as we reduce Loewy’s central cost but there will be a much slimmer Loewy business, along Writtle lines, entering 2012.

Summary

As you can see from this report it has been a busy but highly productive first half of 2011. Business has remained good into quarter three and we look forward to completing a successful year.

Robert Essex
Chairman
16th September 2011