Print firm revenues rise to £15.7m following acquisition

Printing firm Grafenia said revenues are expected to be approximately £15.75m over the financial year.

The Manchester firm said the increase of just over £1m was partly due to a full 12 months of trading from Image Everything which was acquired earlier this year.

In a trading statement the firm said subscription and licence fee income grew to approximately £1.98m.

The firm’s Nettl partner network has grown to 228 locations around the world.

It now has 173 active Nettl partners in the UK and Ireland, 27 in Benelux, 13 in France, eight in the USA, four in New Zealand and three in Australia.

During the year the company also added 44 new printing.com partners and currently have 85 printing.com locations.

The company said it has commenced pre-launch activity to start Nettl of America.

To comply with federal and state laws it has positioned Nettl as a co-branded franchise model.

The compliance and registration process is now complete and the company is able to grant franchises in 38 of 50 US states.

Eight franchises have been launched so far, in Florida, Ohio and Georgia.

According to estimates the US could support between 1,500 and 2,000 Nettl locations.

Revenue in our company-owned Nettl stores grew to approximately £2.56m.

The firm closed a legacy store in central London after the year end, at a break in the lease.

This store was loss making and, given its small footprint, no longer fitted the profile.

A statement said: “Like many businesses and most in the print sector, we have faced rising input costs, particularly with paper.

“This has impacted our product gross margin, although our transition to become less reliant on trade litho print sales has meant that our overall gross margin has increased in absolute terms.

“Our overheads have increased as we include the costs of three businesses we’ve acquired during the year, as well as a full year of Image, compared to a portion in the prior year.

“We have also expensed costs of acquiring Nettl partners and opening stores. This will result in the group generating negative EBITDA for the year ended 31 March 2019.

“However, it’s important to note that this does not reflect our cost-base moving forward as we’ve taken significant steps to reduce our overheads.

“As previously announced, we made the decision to replace three ageing litho presses with a single new high-specification machine.

“This has been installed and has brought savings in labour, power and waste paper. More importantly, it has released space in our Manchester production hub.

“We’ve installed a new mezzanine floor and plan to combine Image’s main factory in our Manchester hub.

“We are forecasting that sales of litho print will continue to decline and we will experience further margin pressure. However, we are expecting further growth in the sales of signage, display and ink-on-fabric digital textiles, all of which have grown this year.

“As a result of these changes to our cost base, we estimate we will be breakeven on a monthly EBITDA run rate during the current financial year. “

Since the year-end, trading in the first quarter has been in-line with the company’s internal budgets.

The firm continues to review an extensive list of potential sign acquisition opportunities that could become either regional hubs or Nettl Business Superstores.