Writtle half year trading report and interim dividend announcement
I am pleased to present Writtle’s results for the six months to 30 June 2015 which saw growth in both turnover and profit from continuing operations.
New FRS102 accounting standards
The financial information is prepared under the FRS102 accounting standards which were introduced for UK companies from 1 January 2015. Comparative period financial information has been restated in accordance with the new standards.
Result and dividends
Turnover from continuing operations was £39.25m (2014: £35.50m) and operating profit from continuing operations was £0.94m (2014: £0.85m). The new accounting standards make little difference to full year reported profits but the changes (primarily the revised treatment for the recognition of employee holiday pay) further weight Writtle’s profits towards our traditionally stronger second half of the year. The company will be paying an interim dividend of 3.3p per share (2014 3.0p) on 30 October 2015 to shareholders on the register on 22 September 2015.
Writtle invests in media and marketing communications businesses with the aim of creating a substantial international marketing group.
The progress in Writtle’s overall turnover and profit masks a number of trading highs and lows in our portfolio of operating companies.
Those group companies exposed to major UK retailers endured a torrid time in the first half as that sector went through its challenges and changes. Magnet Harlequin and Technik suffered from lower retailer spend and contract renegotiations, while Arken saw a
major high street roll out delayed from the first half into the second half of the year. These companies are now back on track but it does provide a reminder that Writtle is well served by having a wide range of businesses and market sectors.
On the plus side, Creo continued to grow apace as new contract wins came on stream. The Creo performance is all the more creditable as it has been achieved despite the distraction and upheaval of a major building programme (approaching completion) to double capacity at its Aylesford factory.
Other performances of note were achieved by Seymour Powell, Maglabs and 20.20, the first two for the positive impact made by new CEOs and the latter for its success in further
diversifying from its traditional retailer base into sport and leisure. 20.20 holds a leading position in the strategic design and commercial enhancement of sports stadia with projects ranging from Premier League football clubs to Grade 1 racecourses in the UK and US.
We stepped up our search for an acquisition of scale in the first six months of the year, assisted by an external corporate finance house, to search for opportunities that we may hitherto have missed. With a good track record and funding readily available, it is not difficult for Writtle to find companies for sale but it is difficult to find ones which fit our criteria of our being able to add value and adding significant scale to the group – at the right price of course. A number of discussions have taken place but to date we have not found the right business to give us transformative scale. What the process has highlighted is the quality of some of our own businesses in comparison to those we are looking at and it is not surprising that we do occasionally receive approaches and enquiries for parts of our group. We give careful consideration to serious approaches but unless there is a compelling logic and a compelling price, our preferred course is to create further value by organic growth and acquisition.
The share trading opportunity we created in May this year was a success with £0.84m changing hands in matched bargains for Writtle shares. This share trading avoided the significant costs associated with formal markets, albeit without the premium valuation that a formal market can deliver. We will announce with the full year results whether we will be repeating the process next May, having gauged shareholder interest.
Current trading is good and I look forward to reporting on another successful year.
22 September 2015