The Aim-listed PLC had already flagged that its losses would be wider than prior expectations.
In the year to 31 March sales slipped by 2.97% to £10.45m, while EBITDA (earnings before interest, taxes, depreciation and amortisation) halved to £760,000 (2016: £1.52m). The pre-tax loss was £990,000 (2016 loss: £260,000).
Chief executive Peter Gunning told PrintWeek: “Over the past year we’ve made a lot of difficult decisions and put things in place for the future. With a fair wind I hope this will be a year of progress.”
The results were also impacted by a £260,000 hit after the group’s receivables were revalued.
“We helped some of our franchisees survive the downturn with extended terms. We are still supporting those partners and are not writing those debts off,” Gunning explained.
Gunning said the firm aimed to capitalise on its Nettl offering, going as far as saying there was a window of opportunity to turn it into “the world’s largest network of web and design studios” through an international roll-out. It has already begun the process in the Netherlands where it has signed up four founding partners.
“We are talking to quite a number of people about bringing Nettl to their countries – there is appetite for it. Scaling Nettl here and abroad is our number one priority,” Gunning stated.
He said Nettl was already the UK’s largest network, with 110 studios and had signed up partners from all of the “legacy” high street printing chains.
It has also added more than 30 partners for its revamped and simplified Printing.com offering.
The group has produced more orders as a result of its Project OnePrice offering, but at lower prices. Product revenues via Nettl and Printing.com fell by 3.34% to £3.76m, while licence fees increased from £1.4m to £1.49m.
The group has cut its corporate costs through reducing its number of non-executive directors and changing its auditor, while fresh chairman Jan-Hendrik Mohr, appointed in April, has opted to halve his own remuneration to £15,000.
Mohr said the success of his tenure as chairman “should be measured by whether we figure out a way to make better use of our public listing”.
The substantial costs of being a PLC were impacting profitability, Gunning said: “We need the right scale and currently we are sub-scale to be a PLC. We absolutely need to be bigger, so we have to scale.”
The group is planning further acquisitions in the signage space following the purchase of ADD Signs at the beginning of the year.
“We are still cash generative and being public makes it easier to raise funds depending on the size of the deal,” he added.
Gunning said that print remained “a material part of the business” despite the focus on software and technology, but described the price war in trade printing as “brutal”.
Sales at trade wing Marqetspace were effectively flat at £4.04m (2016: £4.05m).
Gunning said he did not know if prices had reached rock bottom.
“It is still tough and people will literally phone up and say ‘but you’re 23p more than that guy’ – that is the mentality of the trade,” he said.
“We’re trying to move away from that by leading the specification and the conversation with the end client.”
He also said there was considerable potential opportunity in the increasing amount of print being purchased online, either through open web shops or through portals.
Meanwhile, the group has already canned its dividend and Mohr said it had no immediate plans to reinstate it.
“We find dividends to be a tax-inefficient way to reward shareholders and currently see numerous accretive opportunities for internal reinvestment. Furthermore, it does seem that Grafenia is better off scaling up rather than reducing size by returning money to shareholders,” he said.
Grafenia's share price, which had been on an upward trend during the past month, fell by 0.68p, or 7.4%, to 8.45p on the news.
