For smartwriter

Board Meeting Three Executive Summary Agenda Item: Two

From: Jean-Luc Breton, Managing Director, Cine FX Paris To: Board Directors

Launching Cine FX in London and New York

We are having a very successful year and Cine FX Paris not only involved in the production of TV ads – but since we made investments in equipment last year – we are now also providing post-production services for other production companies – particularly in special effects now demanded by many creative teams.

So not only are we producing TV ads for WRSX Paris – but we are also working with other agencies and production companies. I must say that there were many main board members who were against starting up this company five years ago when the Paris MD thought that it would be a real plus for the agency all those years ago. Some said that it was a 'vertical integration' that WRSX should not be involved with.

Since then, we have won awards – especially for WRSX Paris – which has attracted new clients. We conduct an armslength trading relationship with WRSX and al quotes are on the basis of competitive quotations. There are some within WRSX who said that there would be client objections to the agency placing business with a subsidiary company, but we have tried to keep the relationship as transparent and competitive as possible.

I would like to propose that this model be launched in London and New York, especially as there is demand for our services in these markets from our existing client relationships and there is the potential to increase the group turnover and profitability. Neither the UK nor US operations has a film production company and Cine FX Paris is an established brand name and our management is strong and successful.

Board Meeting Three Executive Summary Agenda Item: Three

From: Xiuxiu Li, Marketing Manager, The Tube, WRSX Group, Singapore To: Board Directors

Market opportunity Asian SMEs

I recently read an article by John Quelch called Advertising Companies will Learn to Love Google. Basically, the article says that advertising executives should stop worrying about Google as a competitor. With only 3% of the advertising spend in the US, Google is changing the world of advertising but not as fast as people assume.

More important, and here is the point of my proposed Agenda Item, Quelch maintains that Google is making it easy for a new wave of small and medium-sized businesses (SME's) to invest in advertising for the first time. Quelch sees this as a real opportunity for traditional advertising agencies and not a threat.

Here in Asia we have millions of small businesses looking to attract customers. They have limited budgets but there are so many of them that even with these small budgets there is an opportunity to make huge returns if the number of small business clients is large enough.

We have all the capabilities necessary to develop this business: fantastic creative teams, technological expertise in web design and in-depth knowledge of the Asian business marketplace.

My proposal is that we set up a new advertising business here in Asia to target these small and medium-sized businesses. The management of the new business could be drawn from our existing team and if this proves to be successful we could move beyond Asia- Pacific into other markets especially the US and Eastern Europe where a high percentage of businesses are SME's.

Board Meeting Three Executive Summary Agenda Item: Four

From: John Hooper, Managing Director, WRSX Retail Advertising To: Board Directors

Competitive advantage through backward integration into reprographics?

WRSX Retail Advertising division is having an excellent year. We have won two new clients that have added £20m to our turnover: the No 1 grocery retailer in the UK and also the No 2 electrical retailer. As the board will appreciate, this type of advertising – which involves hundreds of newspaper and magazine ads being created per week – requires that we work very closely with reprographics companies. While we come up with the design concept, supply the design, text and photographs for the adverts, it is the reprographics company that put all of that together, and after approval from us, produce the computer files from which the ads are printed in newspapers and magazines.

For the past three years we have worked very closely with SpectraGraphix – a reprographics service company based in the UK Midlands and also on the US East Coast – and WRSX Retail Advertising division has become their single largest customer in the UK, accounting for nearly 40% of their business.

The SpectraGraphix managing director has told me confidentially that he wants to retire within a year and I believe that this is a great opportunity to buy the company and increase both our service levels to our clients and our profitability.

As you will have seen from the internal memos in the past month, our grocery retail client is planning to launch into the US East Coast market during the next year, so this could be another good reason for buying a controlling interest in SpectraGraphix.

This will enable us to go to our retail clients with a complete service package at fair prices which I believe in turn will enable us to sign longer-term contracts. In the retail advertising business, this would be a great advantage. As you know, retail clients have a history of changing their advertising agency much more frequently than other sectors and if this service package can reduce client churn, I believe that it will benefit our business in the long term.

In addition to this, SpectraGraphix can offer a similar service to other WRSX subsidiaries enabling us to introduce cost reductions based on economies of scale which can be passed on to clients. With pressures on budgets, reducing our prices to clients will make us more competitive.

I hope that the Board will put this proposal on their agenda for the next meeting as I truly believe that this opportunity will not be around for very long.

Board Meeting Three Executive Summary Agenda Item: Five

From: Bjorn Krog Jensen, Group Market Insights Director, WRSX Group, London and Dominic Osborne, Managing Director, Barton Consulting Group, New York To: Board Directors

Changing organisational structure to meet our strategic challenges

Last year we engaged the Barton Consulting Group to examine the performance of the WRSX Group and to look at implementing changes that would drive future growth for the business. One thing is clear; that what has worked well in the past will not necessarily work well in the future. Dominic Osborne from the Barton Group is available to present the Barton conclusions to the Board this week.

Osborne and his team have done a good job. The research they have undertaken clearly demonstrates that WRSX Group is perceived as suffering from strategic drift and that WRSX must take the decision now either to change the way it operates significantly or continue to stagnate in terms of shareholder value and market perception.

Osborne points out that this stagnation is potentially dangerous if the Group wishes to remain independent. WRSX could become a target for a hostile takeover by a larger agency that would be able to drive out economies of scale and specialism, and through these, improved financial performance.

I am suggesting that we ask Osborne to attend our Board meeting to present the conclusions from the research and his main recommendation, which is to restructure WRSX from its existing multi-divisional structure to a matrix structure. A move to a matrix structure would be complicated, disruptive and potentially costly but I have listened to Dominic and it gets my vote.

Can we find space for this on our Board Agenda?

Board Meeting Three Executive Summary Agenda Item: Six

From: Tommy-Lee Pope, MD Direct Marketing, New York Office To: Board Directors

Bringing down print costs through Group buying power

Our Direct Marketing operation in New York has been looking at how to save costs. We have been struggling to make a profit and Lloyd Silberstein, who is on compassionate leave this week, asked me to come up with suggestions as to how cost-savings could be achieved in the business.

Our Direct Mail (or junk mail as it is sometimes called) business is a low margin business and bringing down our print costs would have a great influence on our margins. The pressure to 'buy American' here is significant and we may find that some people are unhappy with us buying print in from abroad. Our current suppliers would certainly not be happy and the unions might also kick-up about this. But we need to think about our own business and the opportunity to bring down our costs significantly is not one we should miss in my view.

Our own print requirements are generally for high-volume leaflets (maybe 20 million copies for an automotive client). Mainly high-quality (incorporating photographs, designed for impact and with high print quality on heavy paper) and sometimes personalised to the consumer. Turnaround times have not generally been an issue but an increasing percentage of our work is for 24 hour of 48 hour delivery which really puts us under pressure. In my view, it is essential to offer this fast turnaround service to some clients at a higher cost as well as the slower, cheaper options.

I have been doing some research on the Global trends for the print industry and these are attached.