Grafenia sells manufacturing wing to focus on software

Jo Francis
Thursday, May 19, 2022

Grafenia has exited manufacturing after selling its Works Manchester wide-format and commercial print production hub to PFI Group in a £3m-plus deal, while CEO Peter Gunning has stepped down with immediate effect.

Grafenia: future focus is on software
Grafenia: future focus is on software

Gunning remains as a consultant to Nettl and will become the group's Spanish partner and master licence holder for WorksThing and Nettl in Spain, where he now lives.

COO Gavin Cockerill steps up to acting CEO at the AIM-listed business. 

Works Manchester, formerly Image Everything, was acquired by Grafenia nearly five years ago in a £3m deal that was its biggest acquisition at the time.

The deal also includes certain assets of Grafenia Operations, the Manchester litho and digital production hub that includes a Komori Lithrone GL840P H-UV eight-colour perfector installed in 2019. 

The sale to Rymack Sign Solutions, which trades as PFI Group, is expected to be completed within four weeks and is subject to a business purchase agreement that includes a TUPE arrangement with certain employees. 

The £3,165,000 deal is made up of £30,000 on completion; a £35,000 payment one month after completion and a further £35,000 two months following that; and then a deferred consideration involving four instalments of £766,250 on the first, second, third and fourth anniversary of completion. 

Grafenia said the combined manufacturing business being sold had gross assets of approximately £6.8m. PFI will also take on finance lease liabilities of £2.1m. 

Works Manchester will continue to manufacture and supply products to Grafenia’s partners, via the Grafenia platform, and will effectively become the group’s biggest ‘Works Maker’ partner. The deal also involves a five-year software licence to use production software W3P at £10,000 per month. 

The manufacturing facilities are at Trafford Park, Manchester and Eccles in Salford, with the business generating sales of £6.6m and a pre-tax loss of £300k in the pandemic-impacted year to 31 March 2021. 

Darren McMurray, CEO of PFI Group, said he was delighted to bring Works Manchester into the group. 

“Our ongoing partnership with Grafenia has many opportunities. Our scale and capability can help grow the range of products offered to Nettl and partners. Works Manchester is an impressive operation. We're excited about what we can do together.  We can't wait to get started with the team to build a successful future,” he said. 

Gunning has been CEO since the autumn of 2015, when he took over from founder Tony Rafferty. Prior to that he was CTO and has worked at the group for 24 years. 

Known for his distinctive way with words and creative turn of phrase, Gunning said of his departure: "Nearly a quarter of a century ago we opened our first store in Edinburgh. It's been a great privilege to build and develop a business in such a time of intense change. And now it's time for me to start something new. To bring Nettl and WorksThing to the businesses of Spain. 

“For the last decade, I've worked flowery-jacket to complicated-gilet with Gavin. I wish him and the team every success. I'd also like to thank our teams for their energy, good humour and attitude, particularly through dark days. I've worked with so many wonderful people along the way. Thank you all. Please make the most of the new opportunities that today brings. Hasta siempre.”

Cockerill (left) and Gunning at Drupa 2016


Commenting on the changes, chairman Jan Mohr described it as “an important transition” and said Cockerill’s experience made him the ideal fit for the firm’s future plans. 

“He's the key leader in engaging our partner network, helping develop a sales and onboarding structure for several hundred independent entrepreneurs. That skill is essential when leading Grafenia's future as a home for different software companies,” Mohr noted. 

“The future of Grafenia is in software. For many years, the software part of Grafenia has been consistently cash-flow generative and loved by our partners. Our DNA is to build scalable systems that make partners more effective. We want to double-down on that mindset and also expand the scope of software that the group offers.”

Mohr also praised Gunning for his contribution to the business. 

“Peter has done a tremendous job leading the group through the Covid-19 pandemic. We enter our new chapter as a better and leaner business. I would like to personally thank Peter for his hard work, passion and friendship,” Mohr stated. 

Grafenia’s agreement with Gunning’s Spain-based consulting company Perpetual Cielo Azul will involve him providing services to Nettl Systems, as well as advice on the technology integration of any acquisitions. 

He will be paid a fee of £15,565 per month for the first 12 months of the agreement, with a per-day consultancy fee subsequently. 

Last month Grafenia said it expected to file sales of at least £12m for the year ended 31 March 2022. 

The sale of Works Manchester and the commercial print manufacturing assets will effectively halve the size of the business, which was already deemed too small to be a PLC, resulting in a question mark over what it will do next. 

Grafenia’s share price rose by nearly 5.8% to 5.76p on the news (52-week high: 6.75p, low: 3.75p). Its market capitalisation is £6.6m.

PFI Group businesses have made a string of acquisitions over the past two years, most recently Kesslers International and Cestrian.



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