Grafenia plc - Trading Statement and Acquisition Strategy
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a
25 March 2020
Trading Statement and Acquisition Strategy
When releasing our Interim Results on
Trading in the second half of the year has been mixed. Some months were slightly ahead of the same period last year and some months slightly behind. By
March, April and May are usually strong sales months, buoyed by events and exhibitions. Since the start of the coronavirus crisis, nearly every exhibition or event has been cancelled or postponed. Whilst sales have been softer than usual, they have not ceased. We continue to service clients and substitute alternative products. Clients have looked for help with their own "plan B", to offset business lost from events they planned to attend. We've seen more interest in online alternatives, as clients adjust to the current situation. Examples include restauranteurs needing to add online takeaway menus and personal trainers or martial arts and yoga instructors delivering video sessions which are booked, paid for and delivered by webcam.
Unfortunately, many of our clients were forced to close yesterday, in line with Government restrictions. Our near-term sales visibility has become clouded. We are taking all possible steps to control overheads during the crisis, but the trading environment is changing on a day by day basis and forecasting is challenging. We therefore expect it will take longer to reach our goal of EBITDA breakeven.
Nevertheless, our mid-term goal remains unchanged.
Whilst still an important part of our product mix, we have continued to reduce our reliance on sales of litho print. A greater proportion of our revenues come from subscription and service income, together with sales of signs, vehicle graphics and installation services. We have a more diversified product range than before.
It is likely that the print sector will be impacted significantly by the current market conditions. Volumes have been falling, margins eroding and an oversupply have already created a tough trading environment. Coronavirus seems certain to remove capacity further.
As we navigate a new world, where we cannot gather, meet prospects, or run classroom training, we've repositioned our Nettl partner subscription model. Nettl helps graphics businesses to diversify into web design, ecommerce solutions and search engine optimisation. We are making Nettl more accessible, with online-only training and remote support. It is difficult to foresee what clients will want, on the other side of this pandemic. However, it would seem reasonable to imagine more business will be done online and clients might invest more in ecommerce, booking systems and search engine optimisation. We're asking prospective Nettl partners to use the lock-down to up-skill and be ready for the recovery, so they can do all these things.
We previously announced our acquisition strategy, to roll-up the sign sector. So far, we have brought six businesses into the family. We combined four of those businesses to create two Nettl Business Superstores in Liverpool and Exeter, as well as developing a centralised sign and display hub in Manchester. In
We are prioritising our search for larger sign and graphics businesses, with turnover above
For further information:
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07973 191 632
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0203 328 5656
This information is provided by RNS, the news service of the
Quick facts: Grafenia Plc
Market Cap: £5.11 m
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