Grafenia raises £1.1m to continue growth

By Richard Stuart-Turner, Monday 25 March 2019

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Grafenia has raised around £1.1m before expenses via a share subscription, which will be used to further expand the business.

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The Nettl of America team at the Lakehouse, Orlando

The PLC, which is listed on the AIM market, has conditionally raised the money via a subscription of 7,868,517 new shares at 13.5p per subscription share from existing investors. This represents approximately 9.29% of the company's issued ordinary share capital as enlarged by the subscription.

The subscription price represents a premium of approximately 20% to the closing mid-market price on Friday (22 March), the last practicable date prior to the company entering into the subscription.

Grafenia non-executive director Conrad Bona is taking 222,222 of the new subscription shares with existing major investors Langfrist and Value Focus taking 3,148,148 and 2,962,962 subscription shares respectively.

Application has been made to the London Stock Exchange for the subscription shares to be admitted to trading on AIM. It is expected that admission will become effective and dealings in the subscription shares will commence at 8am on Thursday (28 March).

The board of Grafenia, which owns the Nettl, Printing.com and Marqetspace brands, said it has a clear strategy to accelerate growth through the acquisition of sign businesses and to open further Nettl Business Superstores.

The group has also recently invested in its Manchester printing hub. Two B1 presses at the site have already been moved out, with a third due to leave in the next fortnight, and have been replaced with one new high-spec Komori Lithrone GL840P H-UV eight-colour perfector.

This has freed up space that will help the company to integrate its 2017 acquisition Image Everything's operations into the Manchester hub, with the lease on Image Everything's building coming to an end this summer.

The board said it has forecast “significant savings and improvement in efficiencies” by consolidating the facilities, which are around three miles apart, and added it is not anticipating labour reductions as a result of this process, with nearly 50 staff set to move across.

“We’ve got three factories in close proximity, so two of them will be combined. That has to happen by the end of August. We’ve already given notice and all the teams know what the plans are,” said Grafenia chief executive Peter Gunning, who added it had “always been our intention to consolidate both sites when the timing was right”.

“We’re not doing this to save labour, we’re doing it to save on rent and get more out of having everybody in the same building. It will open up new opportunities and make things a little bit easier.”

As well as assisting with this consolidation, Grafenia said it also intends to use the net proceeds of the share subscription for the group's general working capital requirements, to make further small acquisitions that would act as regional manufacturing and installation hubs, and to invest in Nettl of America.

Debuted at an event in Orlando, Florida on 7 March, in the US Nettl has been launched as a bolt-on franchise model which is regulated by federal and state law. Grafenia said it has completed pre-sale registration and disclosure requirements to begin marketing in selected states.

“We launched Nettl of America at an Expoganza event at the Lakehouse in Orlando. This was an intimate get-together of designers, printers and signmakers mostly from Florida, but some people also came from Georgia,” said Gunning.

“We have undertaken several exploratory meetings with potential franchisees and the directors believe that the scope exists to grow a Nettl franchise network in the US.”

He added: “The team have put a tremendous amount of effort into upgrading our platform to work in a different currency, with different tax rules and translating our marketing and product range to work with different sizes, different weights and different words.”

Grafenia's share price was up by 11% to 12.5p at the time of writing.

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