New Grafenia strategy ‘hasn’t been successful yet’ admits chairman

Software group Grafenia wants to make better use of its stock market listing and continue acquiring businesses that meet its criteria and admitted it “hasn’t been successful yet”.

Performance was impacted in the year following a writedown of £0.81m against the sale of Rymack Signs Solutions, resulted in a pre-tax loss of £2.62m (2022: £1.71m). 

The Parent Company result for the year was a loss of £2.21m (2022: loss £0.41m).

Announcing the results this morning chief executive Gavin Cockerill said: “We’re currently trading in line with our internal forecasts and newly acquired business units are performing as expected. With the acquisitions we’ve added to the Group, on a run-rate basis, annualised sales would be approximately £17m. We’re therefore cautiously optimistic about the upcoming year. With a full year’s trade from our newly acquired businesses, our goal of achieving EBITDA at 10-15% of sales, after central costs, remains a realistic target.

“As we further reposition our business, the search for VMS businesses continues and our deal flow looks healthy. As previously announced, we are looking to raise additional funds to continue the execution of our acquisition strategy, both in terms of new acquisitions and funding existing obligations, and the growth of the Group.

Grafenia is still looking for niche software businesses to acquire. Its specialist M&A team, Software Circle has built a healthy deal flow and acquired four software businesses.

The five businesses are: Nettl Systems (graphics & Ecommerce); Vertical Plus (Ecommerce); Watermark (document management); CareDocs (care management); and TopFloor (property management).

Chairman Jan-Hendrik Mohr said: “In the next few years, our priorities will be all about scaling our acquisition and management processes to become the best owner for the right software companies, their founders, teams and customers. The current focus is the UK and Ireland.

“In past Chairman’s Statements I repeatedly said: ‘The success of my tenure should be measured by whether we figure out a way to make better use of our public listing.’

“More than ever, I want to be held accountable to that statement and to the ambition to use our public listing in a more sensible manner. Very clearly, I haven’t been successful yet but feel more positive than ever that our strategy of acquiring software companies is the best route forward to sustainable value creation. Several successful public peers in VMS come to mind. If Grafenia only achieves a small share of their success, shareholders will be greatly rewarded.”