Writtle 2010 Trading Report and Dividend Announcement
The Chairman presents his statement for the year ended 31 December 2010.
Introduction
Writtle Holdings Ltd made further good progress in 2010; all group companies were profitable and some showed remarkable improvement on the previous year. Writtle’s model of decentralised growth and equity involvement for directors is proving to be a winning formula for employees and shareholders alike. The business is well placed for further growth.
Results and Dividends
Writtle’s turnover was £35,607,746 (2009 £26,672,555) generating an operating profit of £2,039,645 (2009 £1,296,275), profit before tax of £1,609,680 (2009 £795,826) and a profit after tax and minority interests of £579,077 (2009 £172,620).
The directors are recommending a final dividend for 2010 of £155,290 (4.25p per share) making a total of £228,367 for the year (last year £207,313). The dividend will be paid on 27 May 2011 to shareholders on the register at 14 February 2011.
Individual company results are reported in the Company Performance section.
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 noncomplex nature of the business and is written in the context of the risks and uncertainties we face.
The company’s strategy is to build a substantial group of marketing services businesses operating in areas where its directors have considerable experience: Point of Purchase; Retail Design and Strategy; Artwork, Design and Production of Print and Packaging; Technology for Marketing.
The group has been founded by acquisition and start ups, with further growth coming through investment and recruitment into those businesses. Our medium to long term horizon means we have been able to build our group prudently at a steady rate without the demands of short term performance reporting. Since the group’s inception we have acquired shareholdings in companies at reasonable prices and improved performance by investing in management teams and modern technology. Our start ups have been founded by experienced management teams backed by Writtle’s resources, and in all our group companies management have an equity interest in their individual companies or Writtle itself through equity or share options.
The long term returns for Writtle’s shareholders are expected to be delivered by the growth in value of its group companies which should be enhanced by being part of the Writtle Group. In the short term the group has a commitment to paying dividends to shareholders.
Connect Packaging Ltd
Connect was very much the star of the show last year, returning to profit after two years of losses. The management team has focused on developing niche markets and controlling costs despite continual raw material price rises which have inevitably squeezed margins. Most encouragingly, the upturn in trading has continued into 2011.
Creo Retail Marketing Ltd
Creo had another solid year with only a tightening of margins in a competitive market holding back results. Some impressive new account wins at the year end should underpin the next phase of Creo’s development.
Creo Print and Production Ltd
The most significant event in Creo Print and Production’s year was the installation of an Agfa M Press Digital Printer. Despite the disruption and reduction in profit caused by the 6 months commissioning of this major investment, the end result has exceeded expectations and transformed Creo Print and Production’s manufacturing potential. This additional capacity, combined with an impressive new business drive, has taken the business to a higher level of performance at the start of 2011.
The Less Packaging Company Ltd
Less had a solid first year’s trading and is now set to expand rapidly as major brands and retailers have recognised its unique offer as the answer to some of the most pressing environmental concerns weighing on corporate consciences. A major uplift in scale is planned for 2011.
Magnet Harlequin Ltd
Another of the group’s star performers last year, Magnet Harlequin turned round its disappointing 2009 with an excellent performance in 2010. Some important new client wins and growth from existing clients were testimony to the excellent service, quality and innovation provided by Magnet Harlequin as its markets recovered strongly.
Maglabs Ltd
Maglabs consolidated its fine first year’s trading with an even better second year and is now established as a leading provider of integrated technology solutions and digital asset management. Maglabs is expanding its client base and exploring new technology and markets.
20/20 Ltd
20|20 had a more mixed year after stellar performances in 2008 and 2009. A reluctance from retailers to commission major new concepts could not be offset by some smaller wins. It is too early to say whether this trend has been reversed but 20|20 remains a market leader in retail design and consultancy, winning a number of prestigious awards for its work during the year.
Interact-2020 Ltd
Interact had an excellent first full year as a specialist brand experience agency. Interact has benefited from sharing office space and working on clients with 20|20 although it is fast outgrowing its start up status with high level recruitment and client wins gathering pace.
Beyond Communications Ltd
Like 20|20, Beyond had a flatter year in 2010 but the business has great potential to expand in 2011. Writtle’s recent acquisition of permanent point of purchase manufacturing facilities allows Beyond to focus on its core business areas of health and beauty and fashion in store design and the commercialisation of shopping centres. Beyond’s existing permanent POP manufacturing work is outsourced but will now be channelled through the group’s newly acquired business.
Post Balance Sheet Event
On 28 February 2011, Writtle completed the purchase of the trade and certain assets and liabilities of Arken POP Ltd, a permanent point of purchase display manufacturer based in Newmarket. Arken POP International Ltd, as our new company is now known, will provide a valuable design and manufacturing resource for the group’s companies involved in POP design, in particular Beyond Communications Ltd.
Fundraising
Writtle’s successful business model has presented us with a number of opportunities. These opportunities range from further start ups or small bolt ons to larger acquisitions. We review many prospects in a year and we turn most down, usually because of unrealistic vendor price expectations. However, one of the advantages of Writtle’s performance ‘bucking the trend’ has been that as we have strengthened, others have weakened in the recession which has presented us with an increased potential deal flow which we would be imprudent to fund from existing resources. Your directors have therefore decided to raise additional capital of £1.4m in a rights issue, details of which are enclosed with this annual report.
Summary
If my reports have a familiar ring it is because our business model remains unaltered. Writtle invests in the strongest management teams and we support them to grow their businesses, either through providing advice, structure or funding. We have enjoyed considerable success to date but we believe there is much more that can be achieved. 2011 has started well and we look forward to the full year with confidence.
Robert Essex
Chairman
1 April 2011