Grafenia’s turnover in the year to 31 March increased by 9% to £15.96m, and gross profit grew by 2.5% to £8.55m.
Operating losses increased from £1.1m to just under £3m, and the bottom line loss for the year was £2.82m (2018 loss: £946k).
Chairman Jan-Hendrick Mohr said the group wanted to be transparent about its finances: “Some firms decide to back-out many costs from their profit and loss statement to arrive at some ‘adjusted’ figure,” he stated.
“I find that a slippery slope, as it opens the door to mark every cost as ‘extraordinary’ or ‘non-recurring’. Such accounting doesn’t help with cost discipline internally… or external readers either.”
Mohr said the business was getting close to the point where declines in litho print are being offset by increases in its other product lines.
The business raised £4.01m after the year end from existing investors to support its M&A strategy, and chief executive Peter Gunning said that, of two brackets of target size, the group would prioritise signage firms with sales of £3m-£5m, that will become ‘Nettl Works’ regional hubs to support the network.
“We are doing ‘productised’ signage at Image Group in Manchester for our national network, but for more complicated things we need to be closer to the end client,” he explained. “There are plenty of suitable businesses around for us to acquire, where we can keep what they’ve got and also feed the network.”
He also said the firm had identified 50 towns and cities that were potential targets for a Nettl Business Store or Superstore, although the signage hub acquisitions were the priority.
In the ultra-competitive trade printing market, Gunning said Grafenia had just launched a John Lewis-style ‘Crowd Pricing’ facility, whereby it would price match the same product and service.
“With the upgrade to our production plant completed we are ready to get more volume. When any partner finds a competing product at a lower price for the same service, everyone will get that price – it’s a bit like John Lewis never knowingly undersold.
“We are signalling that if competitors are cutting prices to tempt our partners, then we will defensively match them.”
He said the new eight-colour Komori Lithrone GL840P H-UV perfecting press installed at the beginning of the year was now fully up and running, and had transformed the group’s litho production offering.
“We are getting the speeds and changeovers promised. It takes 70 seconds to change jobs whereas it was 25 minutes, so it’s a sub-two minute change if we’re running on the same stock, and much reduced wastage.”
He reiterated previous comments about the need to reduce reliance on traditional printing.
“The printing industry is dealing with the perfect storm. Most businesses are facing rising costs, shrinking volumes, falling demand and increased competition. Capacity is coming out from our sector, but not quickly enough. Every day we decrease our reliance on traditional print sales, but we need to move faster,” Gunning stated.
In the US, Grafenia is now able to grant Nettl of America franchises in 37 of 50 states, with nine franchises granted so far and further promotion around US print shows planned for autumn.
Interim finance director Simon Barrell remains in place while the search continues for a full-time replacement, with Gunning hoping an appointment will be made before the firm’s next set of interim results.
He said he estimated that the business would be at breakeven on a monthly EBITDA run rate during the coming year, with a medium target of EBITDA margins of 10-15%.
Mohr also reported the sad news that the group’s former chairman Les Wheatley, who stepped down three years ago, had recently died after a long illness.
