Grafenia posts 'lockdown' results
Thursday, November 26, 2020
Grafenia has described its half-year results as an “interim lockdown statement” with sales down, but three acquisitions made along with investment in services that it hopes will pay off in future.
The Manchester-headquartered group posted overall sales down 37.6% at £5.25m in the six months to 30 September and its operating loss increased to £1.11m from £1.01m the prior year.
However, cash at bank increased from £2.54m to £3.68m.
Its Signs wing, currently made up of Image Group, was impacted by cancelled exhibition and events work and sales fell from £2.6m to £1.92m, although the business added new lines including hand sanitiser stations and sneeze screens. Sales to its Nettl and Printing.com partners halved at £920k compared with £1.9m the prior year, with many operations forced to physically close for much of the period.
Subscription and licence fee revenue was “reasonably resilient” at £980k (2019: £1.04m).
“In some cases we supported partners who chose to hibernate during lockdown. In those cases, we paused their subscription in exchange for extending their next renewal date. That adversely impacted subscription income. But we believe helping partners to survive the crisis is essential in enabling them to thrive when better days come,” said chief executive Peter Gunning.
Some of Grafenia’s 239 (182 in the UK and Ireland) worldwide Nettl partners have, unsurprisingly, struggled this year due to the Covid-19 situation and resulting economic downturn.
“We've seen an increase in distress situations, where businesses haven't been able to access sufficient government support. And cases where payment plan arrears have forced us to terminate,” Gunning added.
He said the group was still pushing ahead with plans to grow in the USA.
“We’ve been adding partners and franchisees despite the pandemic, albeit slower than we would have liked, as our usual acquisition methods were thwarted by events being cancelled. Our first franchise-owned, fully-branded, downtown Nettl store is being planned right now.”
Although the group’s company-owned stores were required to close for most of the period, teams serviced clients remotely. Sales were down 46% at £770k.
During the period Grafenia also made three small acquisitions: it took over digital design and marketing agency Eggshell Solutions in Birmingham, acquired Clear Design and merged with its Nettl of Dublin company store, and also expanded its signage presence with the acquisition of Dublin-based Sign Right.
One of Eggshell’s former owners has retired, with the remaining team moving into the Nettl of Birmingham operation. The companies had worked together for 15 years.
The business also launched its Works Makers third-party manufacturer platform over the summer, which now includes “hundreds” of new products and is being extending to suppliers in other countries.
Gunning told Printweek that while it was “early days” the Works Makers offering looked promising.
“We’ve been merchandising the product range since launching late summer. November’s been our best month so far and we see this being an important part of our future revenues,” he said.
The group is also offering its ‘w3shop’ web-to-print system to other printers and partners with the promise they can get set up and start selling “in minutes not months”.
“We’re looking for printers in other countries who already have trade or reseller clients. Print has been hit hard recently. Perhaps they’re looking to become less reliant on print sales. The printer would list their product range on our platform and then market w3shop by Nettl to their resellers,” Gunning explained.
“Help them build w3shop private client portals for their own clients. We share revenues. It’s a proven way to feed their presses and build stickier relationships with their resellers. And a gateway to helping those resellers do more for their clients, in the digital space. We’re inviting printers to get in touch.”
W3shop subscriptions start at £99 per month, with bundle upgrades if the shopkeeper wants to use their own production or add private branded templates.
Gunning said a mix of businesses were taking it up.
“Some are established print businesses, who want to complement their physical store. Perhaps to diversify their offering. W3shop covers a huge range of personalised print from core litho, through large-format and signage, to business gifting and promo swag. We also see people serving niche markets, like order of service or funeral prints. And we’re seeing entrepreneurs starting new businesses.”
The group is also working on a major upgrade of its systems in order to digitise all possible steps in the sign and graphics installation process.