In a trading statement released today (23 March), the AIM-listed PLC referred to headwinds with transactional print due to wholesale prices continuing to decrease as raw material costs continue to go up. In response, the company has made moves to become less reliant on this output and increase focus on licence fees, signage and website sales.
Describing trading as “mixed”, Grafenia anticipates full-year 2018 revenues to come in just less than £15m – a 40% rise on the year before. However, EBITDA and pre-tax loss are expected to be reported this year at similar levels to the year before – £760,000 and £990,000 respectively.
Remodelling its Nettl network – now with 155 locations across the UK and Ireland – the new strategy will take advantage of a “converged” market in which “printers sell signs, signmakers sell websites, web designers sell printing” by acquiring profitable SMEs within the company’s criteria and then “rolling in” a local sign business to create a new Nettl business store in the area.
“We want to be the go-to place for clients to help them do the difficult things they want to do both online and offline,” said chief executive Peter Gunning. “As much as we would like to think it, people do not buy web from their printer so we have adjusted to become more web-first in our offering.
“Still, our Nettl studios’ output is about two thirds print and signage but now we need to get online first in order to get that print work. We want to reach end clients more and not be at the back of the queue – more than just a tab in a browser.
“To that end, we are adding new partners at the fastest rate we ever have.”
While no concrete timeline was disclosed, Gunning said he was “confident” that 300 Nettl sites in the UK was a “plausible” aim due to the scope of Grafenia’s Printing.com brand reaching a similar size. He said this would be a combination of fully branded city sites and partner businesses in smaller market towns and localities.
Grafenia carried out a number of acquisitions in 2017, starting with ADD Signs in January, which was been relocated into a 465sqm “superstore” and rebranded as Nettl of Liverpool Waters to provide display space, design, sign manufacture and installation.
Image Everything in Manchester was bought in July for £3m and acts as Grafenia’s centralised sign and display hub for its national output. According to Grafenia’s statement, its revenue exceeded rates in the previous year and new products are scheduled for launch.
December saw the acquisition of Nettl partner Nettl of Exeter in order to sustain the company’s new focus on web and signage. Next, Grafenia will acquire a sign business in the local area in order to roll the two businesses together in a larger superstore location.
Nettl's Dutch partners celebrate their "graduation"
International outreach has also been on the agenda for the Nettl brand, with 22 locations now established in the Netherlands and two Dutch staff hired to further fuel acquisitions in the territory. Nettl began marketing in France in December and five founder partners have now been trained, as well as one from Belgium.
Gunning said: “I think there is an international appetite for Nettl and we want to grow as far and fast as possible. We just want to meet people – clients and partners – who share our vision.
“The economy is anyone’s guess at the moment due to Brexit and all those retailers who may be affected, but we are going to keep doing our best and make sure what we deliver is what clients want – then we have a chance to achieve our plans.”
Grafenia will continue to invest in “opportunities to scale” its business, with a further focus on expanding its signage output, as it moves forward in 2018. Its 2017/2018 accounts are forthcoming.
