Chairman’s Statement

Writtle met its overall budget for the first half of 2014, with the lower turnover and profit figures against the comparable period last year reflecting both the disposal of non-core businesses at the end of 2013 and anticipated lower seasonal spend by home entertainment clients, coupled with general margin pressure in the retail sector.

Result and dividends
Turnover from continuing operations was £37.77m (2013: £38.52m) and operating profit from continuing operations was £1.53m (2013: £2.46m). There were no material exceptional items in the period. An unaudited profit and loss account and balance sheet is included with this interim report. The company will be paying an interim dividend of 3.00p per share (2013: 2.75p) on 31 October to shareholders on the register on 17 September 2014.

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

The Writtle model of decentralised growth and equity involvement is now well known in our sector but only rarely replicated. A number of our competitor groups still adhere to the belief that a large HQ and centralised sales and marketing function, often under a single brand, will generate significant cross selling opportunities but in our experience this only creates unjustifiable cost and rarely achieves its targets. We believe companies in our sector prefer to operate autonomously as part of a financially strong alliance, with cross-selling occurring naturally as a result of mutual respect and trust between group companies with a shared equity interest in Writtle.

We set our budgets for the first half lower than the previous year knowing that there were no blockbuster film releases in the period at Creo (Writtle’s largest company by turnover and profit in 2013) and contract renewals at major retailers had been secured at lower margins. As always there were some ups and downs amongst group companies but noteworthy performances were achieved by Epoch Design, Magnet Harlequin, Technik and Seymour Powell, each having exceeded budget and prior half-year result in the first half. The performance of Technik was particularly satisfying as it is Writtle’s most recent acquisition. Although some other group companies have fallen behind budget or prior year, I am pleased to report that all were profitable for the period.

Significant organic expansion plans were set in motion at four group companies. Arken completed an extension to its Newmarket factory in April to expand capacity and benefits are already flowing through. Creo has purchased additional land adjacent to its Aylesford manufacturing site and plans are well advanced for a factory extension in 2015, again to expand capacity. After a long search, having outgrown their Fulham offices, Seymour Powell finally found larger London premises in Southfields and following a substantial fit-out completed their move in August 2014. Internationally, Williams Murray Hamm opened an office in Chicago to service its growing North American client base, adding to Writtle’s existing overseas operations in Delhi and Hong Kong.

Corporate activity
Whilst no acquisitions or disposals were completed in the first half of 2014, we have reviewed a number of opportunities and would hope to report further developments in the second half. At the group level, we have also spoken to a number of nominated advisers who have approached us believing that Writtle’s track record and business model merits a flotation on AIM or similar. After careful consideration, we believe Writtle is still too small for public markets and would prefer to wait until we have achieved sufficient scale to justify the significant costs of a listing and to weather better the fluctuations of market sentiment. However, we are mindful that a number of shareholders have supported Writtle since its inception and some would welcome a market for their shares so we are exploring the possibility of a share buyback available for all shareholders, combined with a facility to buy or sell Writtle shares. We will provide details at the time of our annual results in April 2015.

Looking ahead, the second half has started well and we look forward to achieving another successful year.

Robert Essex
Chairman
25 September 2014