Sales and margins down at Grafenia but new services see success

Richard Stuart-Turner
Tuesday, November 10, 2015

Half-year sales and margins are down at Grafenia although there was continued positive news for its trade printing service, Marqetspace, and its new Brambl website creation offering.

Turnover on continuing operations in the six months to 30 September was £5.3m - down 3.6% from £5.5m in the equivalent period last year - while EBITDA was down by 30.6% from £980,000 to £680,000.

The business made an operating loss of £104,000, in comparison with an operating profit of £169,000 during the same period in 2014. Its pre-tax loss for the period was £194,000 compared with £173,000 profit a year earlier.

The figures exclude the contribution of Grafenia BV, which was sold on 6 October for a cash consideration of €2.4m (£1.7m).

Including this contribution, turnover fell by 7.9% from £8.5m to £7.8m compared with the same period last year while EBITDA was down by 25.4% from £1.2m to £910,000. With the Grafenia BV contribution the firm made an operating profit of £80,000, down from £376,000 last year.

The firm’s net cash position fell from £1.1m to £340,000.

The group’s ongoing print revenues fell from £4.8m to £4.6m in the period. The firm’s UK and Ireland print partners, operating under the Printing.com, BrandDemand and Nettl brands, generated print revenues of £2.8m, down from £3.5m compared to the equivalent period last year.

However, there was positive news about continued progress in the company's Marqetspace trade printing service, which launched last year. Sale of print through Marqetspace W3P generated print revenues of £1.4m, up from £760,000 in 2014.

Grafenia said Marqetspace revenue ‘comfortably exceeded’ an annualised monthly run rate (AMRR) of £2m in both September and October 2015. The board said it believes an AMRR of £3m is achievable by the end of the financial year.

In a statement, Grafenia chairman Les Wheatley and acting chief executive Peter Gunning said the company was a more focused business following the sale of Grafenia BV.

Wheatley and Gunning said there had been a continued decline in sales through the traditional Printing.com franchise network but said the company aims to reverse this trend through recently launched additional marketing and operational support.

“We’ve got some things to do but we’re pleased with the way Marqetspace has grown in the period, and particularly pleased that we’re picking up business from the resellers that have been stung by the troubles in Calais,” said Gunning.

“We’re focusing back into our UK and Ireland home markets and we want to grow the number of partners we engage with and do things that help resellers to sell more things.”

He added: “Marqetspace continues to show promise and our objective is to grow the number of trading partners we have and assist their entry into the growing digital textiles market, with our new ink on fabric range.”

The range, which was launched at The Print Show last month, has extended the firm’s product offering into the digital textiles market.

The initial range consists of printed flags, banners and fabric display stands. Gunning said the company is aiming to continue to expand and add more products to the range.

“We installed a Dgen direct-to-fabric printer at our Manchester hub and we’ve been ramping up production there,” said Gunning.

“There’s an appetite for resellers to get into the growing digital textiles market and we’re trying to do things to help them to sell. If we can give them some tools and props then this will hopefully lead to sales.”

He added: “We will be doing a series of roadshows between January and March called Expoganza where we will be taking the ink on fabric range around the country to bring it closer to resellers who can come and see it.”

The company also reported some success with its new Brambl offering, a by-product of its Nettl webshops that is targeted at printers and designers who want to offer website creation services.

The firm said the service had attracted 43 subscribers by the end of the interim period, and that a further 27 have been added since the close of the period.

Gunning said Brambl could act as a stepping stone to Nettl for partners who decide they want to do more web work for their clients.

The board anticipate earnings for the current year to be second-half weighted, as expected, in line with previous year and management expectations.

Grafenia’s share price rose by 5.1% to 15.5p after the results (52-week low: 14p; high: 24.5p).

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