Grafenia cuts non-exec and chairman’s pay as losses hit £1m

Listed Manchester-based print and website design firm Grafenia – which continues to undergo a significant restructuring – is to cut non-exec pay until the performance of the company improves.

The company has posted a pre-tax loss of just under £1m for the year to the end of March 2017 (2016: £260,000 loss) on a turnover of £10.45m (2016: £10.77m).

As a result the company is reducing non-executive director annual pay by 25%, from £20,000 to £15,000, whilst reducing the Chairperson pay by 50%, from £30,000 to £15,000.

Chairman Jan-Hendrik Mohr said: “Performance of Grafenia and the non-executives has not been sufficient for some years now and we feel it is appropriate to first show we are worth any money before thinking about raising our compensation!”

The company also said it was looking at how to make better use of being stock market listed given that regulation requires it to “retain a small army of advisers” which “cause a perverse situation where most of our current operational profit is consumed by the cost of being a public company”.

After 10 years it has also changed is auditor from KPMG to the Manchester office of RSM.

But there was positive progress – during the year Grafenia’s Nettl UK Web Studio network doubled to over 110 locations, while 30 new printing.com locations opened.

Mohr said that the company remains “in transition”. He admitted that the company’s print revenues and profits have been declining for years, driven by pricing pressures, but said the company has enjoyed a strong increase in license revenues from partners subscriptions, especially under the Nettl web studio banner.

He added: “Nettl has been very well received and we continue to expect increasing license fee contribution as we add new partners. To drive network growth, we have expanded our sales team to find more Nettl partners. This has had a negative impact on our profitability in the short term.

“However, we view this as an excellent investment as the cost of acquisition, relative to the customer lifetime value of signing new partners, have proven highly attractive. “

Looking ahead to the current financial year, Grafenia said the outlook for print products is uncertain and trading remains tough, however it was upbeat about the opportunity to scale up Nettl, adding that it is increasingly encountering potential partner opportunities to sell the concept in international markets.