Grafenia highlights mixed fortunes in trading update

By Richard Stuart-Turner, Thursday 19 February 2015

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Grafenia is confident of hitting targets for its new initiatives, cross-media design service Nettl and trade division MarqetSpace, but has warned on profits for the full year, according to an update from the PLC.

nettl-of-gloucester-exterior in Gloucester has recently converted to the Nettl format

In a trading statement released ahead of its ‘pre-close trading statement’ on 7 April, the £19.4m-turnover group said trading in its channel has been slightly softer since the last market update.

Grafenia chief executive Tony Rafferty said that the group wanted to help franchisees develop ways of winning bigger customers to grow sales.

“Our partners need to be leading now with more sophisticated online solutions. They need to be aiming higher up the food chain, to slightly bigger small to medium-sized enterprises.

“The way to do that is by leading with clever and savvy online solutions and then being able to offer the whole range of printed and promotional exhibition solutions as well, once they have the client relationship in place.”

The weakening of the euro against sterling also had an effect, reducing the company’s sterling receipts from Eurozone operations.

As a result, the board anticipates pre-tax profit for the current financial year being slightly below management expectations, albeit above that of last year, and accordingly slightly below the bottom end of current market estimates of £900,000 to £1m.

Last year the company posted a pre-tax profit of £755,000 and the market expectation was £900,000.

“This year I think we’re going to come somewhere around the middle of this range so we’re ahead of last year from a financial perspective,” said Rafferty.

“Earnings will have gone up so we would argue that is a good thing because my whole aim was to innovate and change the company, keeping the group debt free and generating cash, which is what we’re continuing to do.”

In November’s interim results Grafenia set out two key objectives for its new initiatives to be achieved by the end of this financial year and it believes that both of these will be met.

It wanted Nettl to have 25 studio locations and MarqetSpace to reach an annualised monthly run rate of £1m of revenue.

Grafenia is continuing the process of offering the Nettl service to franchisees and will also offer a bolt-on format. The group’s own branch in Birmingham was the first to convert to the Nettl format in September.

Over 500 buyers are now using MarqetSpace, which was launched in July last year. Rafferty said the division is "winning new customers every day" and will hit its revenue target by March.

Grafenia shares were down 0.75p, or 4.35%, to 16.5p in trading this morning (52-week high: 24.5p; low: 12.38p).

The company’s financial year ends on 31 March and results will be released in the first week of June.

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