Alongside the announcement of its year-end results, which saw a drop of 12.6% in group sales, chief executive Tony Rafferty said the PLC was refocusing its strategy. He admitted that the W3P web-to-print service, initially envisaged as a business that could supersede Printing.com, had produced lower than expected revenues.

W3P licence fees, including a fifth master licence, increased from £420,000 to £850,000.

“W3P is a clever thing we developed for a niche market, but it’s not likely to be the biggest division of the group,” Rafferty said. “We have, however, just released a very important new responsive version. It’s a big software investment for us.”

Both Nettl and Marqetspace use the W3P software-as-a-service (SaaS) platform.

The group could also exit from its continental online operations, Flyerzone.nl and Drukland.nl. It said it was “exploring strategic partnership and other options” due to the increasingly competitive Dutch market.

Grafenia’s continental results were impacted by the strength of sterling, which Rafferty said accounted for most of the £1.34m fall in sales there to £6m. It also turned down some low-margin work, which maintained the unit’s profitability.

Group sales in the year to 31 March fell 12.6% to £17m, but margins improved, with pre-tax profits increasing 13.2% to £860,000, pushing margins up to 5.1%.

The group had already warned in February that profits would be slightly below market expectations of £900,000-£1m.

Looking to the future, Rafferty said trade printing service Marqetspace had the potential to be a £10m-turnover business within three years.

It has signed up more than 1,000 clients for the business, which in March achieved sales that were the equivalent to an annualised rate of more than £1m.

The group is in the process of transitioning its business model away from the “cherished” Printing.com offering, which continued to decline in the firm’s latest results, with print revenues from Printing.com down 24.4% to £6.2m and the number of franchisees falling from 156 to 104.

Grafenia also achieved its target of establishing 25 Nettl cross-media outlets by its year-end. 20 of them were former Printing.com operations, and five were Grafenia-owned Printing.com businesses.

The first Nettl store opened last September.

“We’ve been listening to our Printing.com partners,” Rafferty added. “Clients go to the web designer first, they sit higher up the value chain. With Nettl we can give our partners a real differentiator.”

It is targeting a further 50, and is aiming for half of those to come from outside the established Printing.com network. The firm has also simplified the revenue model for Nettl. “We’ve rolled the technology contribution into the royalty, which gives people one figure to digest rather than three,” he said.

Nettl users are now charged a 17.5% royalty and minimum monthly fee of £750.

Grafenia’s capex spend increased from £1.16m to £1.26m, with £1.07m going on software development. Net cash at the year-end was £1.28m (2014: £1.4m).

It increased its divided by 12.8% to 1.5p.

The group also said trading in April and May had been “softer than anticipated” but the beginning of June was “more encouraging”.

The group’s share price fell by 2.93p, or almost 14%, to 18.07p following the results announcement.

“We take a long-term view about the share price,” Rafferty added.