Before restructuring costs, profit decreased to £0.06m (2015: £0.52m), while costs of £0.31m relating to restructuring pushed the firm to a pre-tax operating loss of £0.26m (2015: £0.53m profit).
Turnover for the year 2015/16 fell by 2.3% to £10.8m (2015: £11m). EBITDA contracted by 27.6% to £1.52m (2015: £2.10m).
Peter Gunning, who was appointed chief executive in October after Tony Rafferty stepped down, said that although sales across all channels were ahead of this time last year, trading conditions were tough and would likely remain so. He cited heavy investment in price cuts to make its printing.com and Nettl partners more competitive, as a reason for the slip in profits.
“It’s been a transition year for us again. The traditional print market has continued to decline but the good news is our new products that were just ideas two years ago are now recording real growth,” he said.
“We have doubled size of the Nettl network and we are attracting new partners aside from those converting from printing.com. Nettl and Marqetspace are growing and the rebooted version on printing.com is now adding new subscriptions, with 10 new studios so far.”
Sales of printing via Nettl and printing.com brand partners were £5.18m (2015: £6.88m), with license fee income from brand partners contributing £0.60m (2015: £0.43m).
Gunning said the company was “bullish” on the future growth of both printing.com, under its new subscription model, and of the Nettl network.
The company has opened around 60 Nettl web outlets since last year and is now looking to expand overseas.
“It’s always been our goal to license what we do internationally and there are now three stores in New Zealand, with plans for a fourth, and we’re looking for partners in other countries now too. We hope to grow Nettl into the largest network of web studios in the world as well as in the UK,” Gunning said.
Grafenia’s SaaS web design application for graphic designers, Brambl launched alongside the Nettl initiative, has now been taken up by more than 200 partners worldwide.
The group’s trade print service Marqetspace, launched two years ago, continued to show strong growth despite tough competition in the UK and European markets, recording sales of £3.2m (2015: £1.9m).
Print sales via Flyerzone in the UK and Ireland were down at £0.49m (2015: £0.66m), while print sales in France via Flyerzone and printing.com also contracted to £0.34m (2015: £0.41m). The company sold its Dutch operations, Grafenia BV, in October last year.
The board used the publication of its annual results to announce its intention to acquire high-quality businesses to help boost its operations as a Plc. Due to the new acquisition strategy, it said, no dividends would be paid for the foreseeable future.
“It’s expensive to be a Plc so as well as pursuing organic growth in Marqetspace, Printing.com and Nettl, we are looking for businesses to acquire. We’re too small on the current scale for the costs of being a Plc, so we need to add revenue and profit to the group to create economies of scale.
“We want to signal to people who might be thinking of selling that we are actively looking for businesses to acquire and we want them to get in touch."
The company has employed two new non-exec directors, Conrad Bona in October 2015 and Jan Mohr in March this year, both with extensive experience in mergers and acquisitions, Gunning explained.
“We don’t want to close any doors. Ideally we’re looking for businesses around the same size, in the graphic arts sector, perhaps a franchise business in print or SaaS but they don’t have to be.
“Perhaps even another Plc that’s in a similar situation to ourselves, it may be sensible for us to come together,” he said.
Gunning said the company had looked at a few businesses on paper already.
“What we aren’t looking to do is rescue distressed companies, we want good quality businesses.”
