TIDMGRA
RNS Number : 5635A
Grafenia plc
08 June 2016
Grafenia plc
("Grafenia", "the Group" or "the Company")
Preliminary Results for the period ended 31 March 2016
Financial Highlights Continuing Activities*
2016 2015 Change
* 2.3%
Turnover GBP10.77m GBP11.02m
EBITDA GBP1.52m GBP2.10m * 27.6%
Operating Profit before
restructuring costs GBP0.06m GBP0.52m
(Loss)/Profit before
Tax GBP(0.26)m GBP0.53m
Tax Income GBP0.27m GBP0.07m
Total Comprehensive
income GBP0.06m GBP0.85m
EPS Continuing Activities
** 0.02p 1.28p
Dividend per share 0.25p 1.50p
Capital Expenditure GBP1.82m GBP1.26m
Net Cash GBP0.69m GBP1.28m
Net Funds*** GBP0.36m GBP1.27m
*Continuing activities for 2016 and 2015 exclude Grafenia BV
which was sold on 6 October 2015 - summary financials are included
in note 7 to the accounts
** EPS - there are no dilutive factors
*** Net funds is the net of cash and cash equivalents less other
interest bearing loans and borrowings
Operational highlights
-- Over 60 Nettl Web Studios now open or contracted in the UK
& Ireland - doubling the network in the last year
-- First Nettl master licence launched in New Zealand
-- Over 10 additional partners under new Printing.com subscription model
-- MarqetSpace passes GBP3m annualised monthly run rate
-- New capital allocation and acquisition strategy
For further information:
Grafenia plc
Peter Gunning (Chief Executive) 07973 191 632
Alan Roberts (Finance
Director) 0161 848 5713
N+1 Singer (Nominated
Adviser)
Richard Lindley / James
White 0207 496 3000
Chairman's Statement
In order to focus on the development of the Group's new and
existing channels in the UK and Ireland, our Dutch subsidiary
Grafenia BV was sold in October 2015. During the second half of the
financial year, the renewed focus of the Group has helped to
increase the number of graphic professional partners we have
trading relationships with in the UK and Ireland and provided these
partners with tools which help them sell more of our product range
to their clients. Our aim is to expand the range of products we
sell to each customer and, where appropriate, license our
intellectual property, systems and brands to help our partners grow
their businesses.
Opportunities to license our intellectual property overseas
continue to be investigated and we are in discussions with certain
parties.
The strengthening of Sterling against the Euro during the
financial year made the ongoing supply of print to the Eurozone
less rewarding.
Results from continuing operations
Group turnover decreased by 2.30% to GBP10.77m (2015:
GBP11.02m). EBITDA contracted by 27.6% to GBP1.52m (2015:
GBP2.10m). Operating profit before restructuring costs decreased to
GBP0.06m (2015: GBP0.52m). Costs relating to restructuring of
GBP0.31m resulted in an operating loss of GBP0.25m and a loss
before tax of GBP0.26m (2015: profit of GBP0.53m).
As in the prior year, the Group gained Research &
Development Relief which generated a tax income of GBP0.27m (2015:
GBP0.1m).
Cash
The Group had a net cash position of GBP0.69m (2015: GBP1.28m)
at the year end, despite capital investment totalling GBP1.82m
(2015: GBP1.26m,) which included GBP0.37m of assets financed. This
principally reflected investment in the Group's SaaS platform and
new plant to produce our Ink-on-Fabric range.
People at Grafenia and Board changes
The effort of the workforce is key to our organisation's success
and for this, as ever, I am thankful for the dedication and hard
work of our Staff across the Group.
Following the disposal of Grafenia BV and the resultant scaling
down of the Group's operations, Tony Rafferty chose to step down as
Chief Executive and left the Group. The Board wishes to thank Tony
for his years of unstinting service and drive developing the Group
into a leading print supply provider in the United Kingdom.
Peter Gunning was confirmed as Chief Executive and the Board has
been strengthened through the appointment of Conrad Bona, as a
Non-executive Director in October 2015, and with the appointment of
Jan Mohr, as a Non-executive Director in March 2016.
It is important to note that the Chief Executive's remuneration
package has been tightly aligned with creating shareholder value.
His bonus is based on incremental growth in the underlying free
cash flow of the business over the long-term, therefore he only
benefits if there is an increase in shareholder value.
Board - Strategic Review
The Board has undertaken an extensive business review and has
concluded that it will pursue potential acquisition opportunities
to enhance shareholder value.
The Board sees substantial potential value creation in combining
several undersized, but high-quality businesses, in order to
realise economies of scale. The Board is keenly aware of the fact
that high-quality businesses are only value-accretive provided they
are purchased at sensible prices. Transactions will only be pursued
if both the quality and the price are right.
We are mindful that any fundraising should be structured in a
way that best protects the economic interests of all existing
shareholders but simultaneously, allows the Company to meet its
fundraising objectives. The Board welcomes input from all
shareholders on our capital allocation strategy.
Dividend
Given the strategy of pursuing acquisition opportunities, the
Board has decided not to release further funds in the form of
dividends for the foreseeable future. Therefore, no final dividend
will be paid (2015: 1.00p). The total dividend for the year
therefore comprises the interim dividend of 0.25p (2015: 1.50p).
However, the Directors will continue to assess market conditions
and may opportunistically purchase Company shares when the gap
between price and value is deemed large enough.
Outlook
Following the disposal of our Dutch business, we have scaled
back our cost base to reflect the different shape of our business.
The benefit of these cost reductions has begun to be realised in
the current financial year.
Last year we launched two new initiatives, Marqetspace and
Nettl, both of which were embryonic. This year, both of these
channels have been proven and exhibited strong growth.
In Marqetspace, we have a scalable method of attracting new
trade buyers, which contribute to our production volume and
increase efficiency. We expect Marqetspace sales to continue to
grow this year.
With Nettl, we have established the largest retail network of
web design studios in the UK and our focus remains on growing the
network to over 200 partners. Our first international partner has
launched Nettl studios in New Zealand and we continue to pursue
other licensing opportunities.
The printing.com model has been updated to be more relevant and
we have attracted new partners. We expect to grow the network in
the current year.
Les Wheatley
Chairman
8 June 2016
Strategic Report
Chief Executive's Statement
Overview
Grafenia operates a vertically integrated business model. We
manufacture printed marketing, stationery and display graphics in
our Manchester-based production hub. Each month we make and ship
over 12,000 individual orders.
We sell to business clients through a mixture of channels which
include; directly owned Nettl web studios, Nettl and printing.com
studios operated under license by our partners, white label trade
partners, and ecommerce sites such as Marqetspace and
Flyerzone.
Orders are placed and managed using W3P, our proprietary
cloud-based platform. W3P hosts over 150 public 'w3shops', where
end clients (typically SOHOs/SMEs) can place print orders online.
These could be 'upload and print' jobs or, where the customer
doesn't have a print-ready design, by editing an online template
from our extensive library.
Our partners also operate over 500 private web-to-print portals
for larger corporate and franchise-based businesses. We call these
'w3client' sites. They make it easy for larger businesses to
control their marketing and maintain brand integrity. The client's
own users place orders via w3client and our partners either route
jobs automatically to our production hub, or produce them using
their own equipment.
As well as print, we sell ecommerce and websites to SME clients
directly and via our partners. These partners use cross-media
components of our W3P platform, as well as marketing collateral and
sales tools supplied by us.
A focus on our core competencies
We believe Grafenia has three core competencies: the management
of complex logistics required to manufacture thousands of print
orders each month; the operation of sophisticated
Software-as-a-Service ("SaaS") platforms, and the development of
brands.
The markets we operate in have become more competitive and
margins on printing continue to erode. To mitigate this erosion, we
are pursuing a strategy of licensing our software, systems, IP and
brands both domestically and internationally.
Brand Partner channels
Nettl is our network of neighbourhood web studios. Over recent
years we have witnessed a change in client behaviour. SME and SOHO
clients are increasingly prioritising web, ecommerce and digital
ahead of printing. Whilst printing is still a big part of a
client's marketing mix, websites are increasingly viewed as
essential and provide significant sales opportunities for us, and
our partners.
In September 2014, we converted our Company-owned printing.com
studios to the Nettl format. Nettl puts web first, replicating what
clients are increasingly doing. However, whilst we lead with web to
develop client relationships, sales of print and display remain the
largest part of a Nettl studio's revenues.
In the first half of the year, we invited printing.com partners
to become Nettl partners. These early adopters helped us to refine
the systems and processes.
Like printing.com, Nettl is a bolt-on formula for established
graphics businesses. It's a whole business system, which helps
partners do more web using our marketing collateral, sales tools
and methodologies. Nettl partners use W3P to deploy websites,
ecommerce web shops, complex EPOS integrations and inventory
management systems. W3P manages all aspects of the order cycle,
from sales pitch and proposal, to project delivery, hosting, domain
renewals, billing and subscriptions.
In the second half, we introduced a new Nettl subscription
package whereby partners pay an initial license fee in return for
classroom training and a marketing starter pack. They then pay a
monthly subscription to use W3P, the Nettl brand and for access to
marketing collateral. In addition, they pay deployment and ongoing
monthly hosting fees for each website launched at wholesale
prices.
The majority of Nettl partners promote printing.com's product
range and are listed on the printing.com website. Nettl partners
pay for print and display at wholesale prices and place their
orders through W3P. Since many partners are both Nettl and
printing.com, for the purposes of reporting we combine the revenues
and refer to them as our 'brand partners'.
Today we have over 60 Nettl web studios in the UK and Ireland.
Whilst we expect further printing.com partners to convert to Nettl,
we anticipate that future Nettl partners will be sourced from our
trade partner client base.
During the first half of the year, the printing.com network
continued to contract, as partners became white label partners or
upgraded to Nettl studios.
In February 2016, we launched a new simpler printing.com
subscription model. Over a third of existing partners have now
converted to this subscription. Partners remaining on legacy
agreements will decide this year whether to switch to a new partner
subscription, upgrade to Nettl or become white label and release
their territory.
The new printing.com subscription provides partners with local
geographic exclusivity over use of the brand, access to our
technology and a suite of marketing collateral to help sell more
printing and display. Since launch, we have added over 10 new
printing.com studios. Like Nettl, new partners pay an initial
license fee, a monthly subscription fee and buy print at wholesale
prices.
New partners have been a mix of Marqetspace clients, W3P
partners and businesses we previously had no relationship with. We
anticipate more Marqetspace clients will see value in the new
proposition and during this year there will potentially be a net
gain of printing.com partners.
Sales of printing via Nettl and printing.com brand partners were
GBP5.18m (2015: GBP6.88m). License fee income from our brand
partners was GBP0.60m (2015: GBP0.43m).
Trade Partner channels
We launched Marqetspace in 2014 as an online trade service for
graphic professionals who outsource printing. The channel has
continued to grow this year and we have sold print and display
products to over 2,000 resellers, printers and designers.
Some trade clients order directly from marqetspace.com (one of
our largest w3shop websites). These clients pay no license fees and
we establish a simple online trading relationship with them, backed
up by our customer support team. Our field-based account managers
provide additional support and demonstrate our product range.
Others partners place orders via our W3P platform and use our
back-office to manage their business. They typically pay monthly
subscription fees to use W3P and transactional fees for jobs they
produce themselves.
We call both of these white label 'trade partners', since they
use their own business name and their end client is not exposed to
any of Grafenia's brands.
Using our 'w3shop' module, trade partners can set up public
ecommerce stores instantly merchandised with the entire Marqestpace
product range and TemplateCloud's designer template library. They
choose their desired retail margin and start selling.
Using our 'w3client' module, trade partners who have key
accounts with corporate customers, franchise networks or multi-site
enterprises can set up private branded stores. These password
controlled websites host the client's branded templates for their
marketing collateral and their digital asset store.
Marqetspace is an important part of our sales funnel. Our goal
is to attract more clients and to help them to sell more of our
print and display products.
Once we have established a trading relationship, our aim is to
develop deeper partnerships. This involves converting trade
partners into brand partners, licensing our printing.com and Nettl
brands and other intellectual property and systems to them.
Marqetspace provides us with a pool of talent to begin these
conversations.
Sales of printing to trade partners were GBP3.21m (2015:
GBP1.88m). License fee income from white label partners using W3P,
w3shop and w3client was GBP0.40m (2015: GBP0.41m).
Other channels
We license our W3P platform and brands to partners through
Master Licenses in other countries.
Each of our Master License partners is different whilst some use
our platform on a white label basis to offer systems to their own
reseller network, others utilise the printing.com or Nettl brand to
attract local partners. However, there are some who simply use our
Application Programming Interfaces(APIs)to sell designer templates
on their web-to-print websites.
Each Master License partner pays us license fees, typically
linked to the scale and success of their local operation. Income
from Master Licenses and APIs was GBP0.61m (2015: GBP0.71m). The
previous year benefited from setup fees from two new partners.
During the second half of the year, our existing printing.com
Master Licensee in New Zealand acquired the Nettl Master License.
They have since opened three Nettl web studios and have begun
marketing Nettl to their network. Grafenia receives a royalty based
on local license fees and print revenues.
We are actively seeking partners in other countries to exploit
the Nettl formula.
Print sales via Flyerzone in the UK and Ireland were GBP0.49m
(2015: GBP0.66m). Print sales in France via Flyerzone and
printing.com were GBP0.34m (2015: GBP0.41m). All these channels
make a contribution to our print volumes.
New product development
In the second half of the year we installed direct-to-fabric
printing machinery and finishing equipment to widen the gamut of
product we sell through our network.
This enabled us to enter the fast growing digital textiles
market. Our range includes flags, expo displays, tension graphic
systems, soft signage and fabric furniture.
Displays are typically composed of two parts - an aluminum
frame, which clips together to form the skeleton, and a fabric
display graphic. To achieve economies of scale we buy frames in
bulk and currently have to prepay. This is represented by a
decrease in cash and increase in our stock position from previous
years.
We held three 'Expoganza' gallery events in February 2016 to
launch the fabric range. Around 500 partners and trade clients
attended in Manchester, London and Bristol. For many of our
partners, this was the first time they had seen displays of this
type.
We believe it's important for end clients to see fabric displays
in person and have invested in getting them into as many locations
as possible. Over 250 partners have demo stands on their
premises.
Ink on fabric is sold across all our channels and is included
within the figures for sales of printing. We anticipate growth in
the current year.
Brambl is our SaaS web design application for graphic designers.
Brambl was created as part of our Nettl initiative and is being
used by over 200 partners in the UK and internationally to easily
build websites for their clients. Whilst revenues are modest, so
are ongoing development costs and Brambl is a feeder stream for
future Nettl partners.
Current Trading
Trading conditions remain challenging. Since the start of this
year, sales across all channels have been softer than budgeted,
albeit ahead of the same period last year. Our markets are
intensely competitive and it is unlikely that margins on the sale
of traditional printing will improve in the near future.
As well as attracting more trade partners, we remain focused on
mitigating margin pressure by expanding our array of value-added
products and services, which help our partners succeed. We will
continue to seek to license our systems and brands in the UK and
overseas.
We note recent surveys, including those by the CBI and BPIF, on
the uncertainty surrounding Brexit with challenges in retail sales
and the print industry. Our customers are principally small
businesses and their confidence may be impacted by the outcome of
the referendum. However, the trade print market is expected to grow
as more printers choose to outsource their production and we
anticipate growth, despite these potential headwinds.
Peter Gunning
Chief Executive
8 June 2016
Strategic Report - Financial Review
The commentary below is in relation to continuing operations of
the Group.
Revenue
Group revenues from continuing operations decreased by 2.30% to
GBP10.77m (2015: GBP11.02m). Revenues from the Eurozone were 5.02%
of the total (2015: 5.35%), as disclosed in the Segmental Analysis
note.
Gross Profit
The Group's definition of Gross Profit is revenue less direct
materials (including the cost of distribution when made direct to
customers). Gross Profit decreased as a percentage from 70.8% to
66.3%, reducing in monetary terms to GBP7.13m (2015: GBP7.81m) as
margins on the sale of printing were eroded.
EBITDA / Operating Profit
The year showed a decrease in EBITDA, which is operating profit
before interest, tax, depreciation and amortisation, to GBP1.52m
representing a margin of 14.1% (2015: GBP2.10m, 19.1%) of
turnover.
The Operating Profit for the year before restructuring costs
decreased to GBP0.06m (2015: GBP0.52m).
Restructuring costs
Costs of GBP0.31m (2015: nil) were incurred primarily being
severance payments to employees leaving the business. This resulted
in an operating loss of GBP0.25m and a loss before tax of GBP0.26m
(2015: profit of GBP0.53m).
Pre-Tax Loss
The Group recorded a pre-tax loss of GBP0.26m (2015: GBP0.53m),
being 0.5% (2015: 4.8%) of Group revenue.
Staff costs increased in the year to GBP3.78m (2015: GBP3.73m),
and rose as a percentage of revenue to 35.1% from 33.85%. The
increase in staff costs as a percentage of revenue reflected the
investment in the establishment and development of the new sales
channels. The depreciation and amortisation charge from continuing
operations for the year was GBP1.46m (2015: GBP1.58m). The most
significant element remains the charge for the amortisation of
software development.
Interest Received and Charged
Interest received and charged in the period were negligible.
Taxation
As in the prior year the Group gained Research & Development
Relief which generated a tax income of GBP0.27m (2015: GBP0.1m).
With the Group's track record of receiving R&D Tax Relief the
policy has changed to one of accruing for the current year
claim.
Earnings Per Share (EPS)
EPS in 2016 were 0.14p (2015: 1.80p), based on a weighted
average number of shares in issue of 46,639,156 (2015: 47,071,835).
There is no dilution of continuing EPS in either year.
Cash Flow
At the year end the Group had cash balances of GBP0.69m (2015:
GBP1.28m). Net funds were GBP0.36m (2015: GBP1.27m). Operational
cash outflow was GBP0.1m (2015 inflow: GBP1.94m). The working
capital movement included a reduction in Trade Creditors of
GBP0.63m and reflects the change in supply from third parties
following the disposal of Grafenia BV. Other significant cash
outflows included dividends paid of GBP0.59m (2015: GBP0.76m).
Capital Expenditure
The total capital expenditure for the year was GBP1.82m (2015:
GBP1.26m), which included GBP0.37m of assets financed. with the
major item being software development for Nettl and the Group's
SaaS platforms, totalling GBP1.01m (2015: GBP1.07m).
Manufacturing capacity at the Manchester Hub provides scope for
growth. However, expenditure will continue to be incurred on
software development and enhancement to support our Partners and
business streams.
Share Capital and Share Options
As the 2004 Employee Share Option Scheme has lapsed no employee
options were exercised or granted during the year.
During the year the Company purchased 1,424,000 of its own
shares at an average price of 11.78p (2015: nil).
Principal Risks and Uncertainties
The following are some of the principal risks relating to the
Group's operations:
-- uncertainty in the general economic environment may impact upon revenues and profitability;
-- markets operated in are extremely competitive posing a threat to profitability;
-- technological advances in manufacturing and or software may
impact on operational effectiveness and earnings potential;
-- a major catastrophe could impact the UK Production Hub. A
disaster plan exists and losses are insured
against but there could be a significant impact in the short and medium term;
o the Group and its Clients depend on the W3P SaaS platform and
all reasonable operational contingency is embedded for resilience
in the event of a catastrophe;
-- the ability to retain and recruit key people, across a
multitude of disciplines, is essential in
maintaining and growing the business;
-- Group SaaS platforms are developed in-house but use third
party components, for which the necessary
rights exist but there is no certainty that these rights will be retained indefinitely.
Treasury Policies
Surplus funds are intended to support the Group's short term
working capital requirements. These funds are invested through the
use of short term deposits and the policy is to maximise returns as
well as provide the flexibility required to fund on-going
operations. The Board anticipate cash balances to rise moving
forward particularly given the change in dividend policy.
The Board's option to purchase Company shares will only be
exercised when the price is markedly below value, any such buyback
will enhance earnings per share and funds are available. It is not
the Group's policy to enter into financial derivatives for
speculative or trading purposes.
Alan Q. Roberts
Finance Director
8 June 2016
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2016
Note 2016 2015
Continuing Operations GBP000 GBP000
Revenue 3 10,766 11,024
Raw materials and consumables
used (3,631) (3,219)
Gross profit 7,135 7,805
Staff costs (3,776) (3,728)
Other operating charges (1,838) (1,979)
Depreciation and amortisation (1,462) (1,576)
Restructuring costs (308) -
Total expenses (7,384) (7,283
Operating (loss)/profit (249) 523
Operating (loss)/profit analysed
as:
Operating profit before restructuring
costs 59 523
Restructuring costs (308) -
Operating (loss)/profit (249) 523
Financial income 5 9
Financial expenses (16) -
Net financing expense (11) 9
(Loss)/profit before tax (260) 532
Tax income 4 270 71
Profit from continuing operations
after tax 10 603
Profit from discontinued operations
after tax 7 54 245
Profit for the year 64 848
Total comprehensive income for
the year 64 848
EPS - Continuing Operations 5 0.02p 1.28p
EPS - Discontinued Operations 5 0.12p 0.52p
EPS - Total(2) 5 0.14p 1.80p
(1) Restated to reflect the disposal of Grafenia BV
(2) Earnings per share suffers no dilution
Consolidated Statement of Changes in Equity
Year ended 31 March Share Share Merger Treasury Retained
2015 Capital premium reserve Shares Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP0000 GBP000
Balance at 31 March
2014 475 - 838 (69) 4,567 5,811
Profit and total comprehensive
income for the year - - - - 847 847
Dividends paid - - - - (706) (706)
Total movement in
equity - - - - 141 141
Balance at 31 March
2015 475 - 838 (69) 4708 5,952
Year ended 31 March
2016
Profit and total comprehensive
income for the year - - - - 64 64
Own shares acquired - - - (168) - (168)
Dividends paid - - - - (586) (586)
Total movement in
equity - - - (168) (522) (690)
Balance at 31 March
2016 475 - 838 (237) 4,186 5,262
Consolidated Statement of Financial Position
At 31 March 2016
2016 2015
GBP000 GBP000
Non-current assets
Property, plant and equipment 1,513 1,114
Investments in subsidiaries - -
Intangible assets 2,893 4,372
Other receivables 27 26
Total non-current assets 4,433 5,512
Current assets
Inventories 316 202
Trade and other receivables 2,608 2,287
Current tax repayable 231 -
Cash and cash equivalents 686 1,277
Total current assets 3,841 3,766
Total assets 8,274 9,278
Current liabilities
Other borrowings (66) -
Trade and other payables (1,363) (1,701)
Current tax payable - (121)
Accruals and deferred income (699) (813)
Other liabilities (108) (288)
Total current liabilities (2,236) (2,923)
Non-current liabilities
Other borrowings (264) -
Deferred tax liabilities (512) (403)
Total non-current liabilities (776) (403)
Total liabilities (3,012) (3,326)
Net assets 5,262 5,952
Equity attributable to equity
holders of the parent
Share capital 475 475
Share premium - -
Merger reserve 838 838
Treasury shares (237) (69)
Retained earnings 4,186 4,708
Total equity 5,262 5,952
Consolidated Statement of Cash Flows
for year ended 31 March 2016
2016 2015
GBP000 GBP000
Cash flows from operating activities
Profit for the year 64 847
Adjustments for:
Depreciation, amortisation and
impairment (continuing operations) 1,462 1,655
(Surplus) on sale of subsidiary (279) -
Net finance expense / (income) 11 9
Foreign exchange (loss)/gains - (14)
Tax (income)/ expense (223) 9
Operating cash flow before changes
in working capital and provisions 1,035 2,506
Change in trade and other receivables (322) (16)
Change in inventories (114) (34)
Change in trade and other payables (632) (513)
Cash (used) / generated from
operations (33) 1,943
Interest paid (16) -
Income tax received /(paid) (20) (130)
Net cash (outflow)/inflow from
operating activities (69) 1,813
Cash flows from investing activities
Proceeds from sale of subsidiary 1,728 -
Proceeds from sale of plant and
equipment - 5
Interest received 5 5
Acquisition of plant and equipment (438) (172)
Capitalised development expenditure (513) (518)
Acquisition of other intangible
assets (500) (571)
Dividends received - -
Net cash generated by/(used in)
investing activities 282 (1,251)
Cash flows from financing activities
Proceeds from the issue of share - -
capital
Purchase of own shares (168) -
Payment of finance leases (40) -
Dividends paid (586) (706)
Net cash used in financing activities (794) (706)
Net decrease in cash and cash
equivalents (581) (144)
Exchange (loss)/gain on cash
and cash equivalents (10) 20
Cash and cash equivalents at
start of year 1,277 1,401
Cash and cash equivalents at
31 March 686 1,277
Notes
(forming part of the preliminary financial statements)
1 Basis of preparation
Grafenia is a company incorporated and domiciled in the UK.
These Financial Statements do not include all information
required for full annual financial statements, and should be read
in conjunction with the Financial Statements of the Group as at and
for the year ended 31 March 2016.
The comparative figures for the year ended 31 March 2015 are not
the Company's statutory accounts for that financial year. Those
accounts have been reported on by the Company's auditors and
delivered to the Registrar of Companies. The report of the auditors
was (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
These condensed consolidated preliminary financial statements
were approved by the Board of Directors on 8 June 2016.
2 Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements as at
and for the year ended 31 March 2015.
3 Segmental information
As in the prior year the Group's primary operating segments are
geographic being the UK & Ireland, Europe and others. The
segmental analysis by nature of service is also consistent with the
prior year being conventional printing services, online printing
services and license income.
This disclosure correlates with the information which is
presented to the Chief Operating Decision Maker, the Chief
Executive (CEO), who reviews revenue (which is considered to be the
primary growth indicator) by segment. The Group's costs, finance
income, tax charges, non-current liabilities, net assets and
capital expenditure are only reviewed by the CEO at a consolidated
level and therefore have not been allocated between segments in the
analysis below.
Of the Group revenue from continuing operations of
GBP10,766,000, GBP9,551,000 was generated in the UK (2015:
GBP9,762,000). Revenue generated outside the UK is primarily
attributable to France GBP427,000 (2015: GBP456,000) and Republic
of Ireland GBP306,000 (2015: GBP295,000). No single customer
provided the Group with over 10% of its revenue.
Of the Group's non-current assets (excluding deferred tax) of
GBP4,433,000, GBP4,394,000 are located in the UK. Non-current
assets located outside the UK are in France GBP12,000, (2015:
13,000) and the Republic of Ireland GBP27,000, (2015:
GBP28,000).
Analysis by location of sales
UK & Europe Other Total
Ireland
GBP000 GBP000 GBP000 GBP000
Period ended 31 March
2016
Segment revenues 9,857 540 369 10,766
Operating Expenses (10,707)
Results from operating
activities 59
Exceptional restructuring
costs (308)
Net finance expense (11)
Loss before tax (260)
Tax Income 270
Profit from discontinued
operations after tax 54
Profit for the period 64
Assets - Unallocated
net assets 5,262
UK & Europe Other Total
Ireland
GBP000 GBP000 GBP000 GBP000
Period ended 31 March
2015
Segment revenues 10,058 590 376 11,024
Operating Expenses (10,501)
Results from operating
activities 523
Net finance income 9
Profit before tax 532
Tax Income 71
Profit from continuing
operations after tax 603
Profit from discontinued
operations after tax 245
Profit for the period 848
Assets - Unallocated
net assets 5,535
Analysis by type
Printing Printing Licence Total
services services Income
- online
sales
GBP000 GBP000 GBP000 GBP000
Period ended 31
March 2016
Segment revenues 635 8,589 1,541 10,766
Operating Expenses (10,707)
Results from operating
activities 59
Exceptional restructuring
costs (308)
Net finance expense (11)
Loss before tax (260)
Tax Income 270
Profit from continuing
operations 10
Profit from discontinued
operations after
tax 54
Profit for the period 64
Unallocated net
assets 5,262
Analysis by type
Printing Printing Licence Total
services services Income
- online
sales
GBP000 GBP000 GBP000 GBP000
Period ended 31 March
2015
Segment revenues 801 8,771 1,452 11,024
Operating Expenses (10,501)
Results from operating
activities 523
Net finance income 9
Profit before tax 532
Tax Income 71
Profit for the period
for continuing operations 603
Profit from discontinued
operations 245
Profit for the period 848
Unallocated net assets 5,535
4 Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in profit and loss except to the
extent that it relates to items recognised directly in equity, in
which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years.
The adjustment in the tax expense for prior years is primarily
due to R&D tax reclaims. These amounts are recognised by the
Group when the claims have been drafted. The amounts reclaimed
differ from the development costs capitalised under IAS and
therefore the difference is not recognised as part of the tax base
of these assets.
Recognised in the income statement
2016 2015
GBP000 GBP000
Current tax expense
Current year (219) 167
Foreign tax 54 92
Adjustments for prior years (167) (290)
(332) (31)
Deferred tax expense
Origination and reversal of temporary
differences (see note 6) 52 (149)
Movement due to change in rate of
tax (56) -
Adjustment in respect of prior year 113 189
Net tax (223) 9
The tax (credit)/expense in the
income statement is disclosed as
follows:
Total tax in income statement on
continuing operations (270) (71)
Total tax in income statement on
discontinued operations 47 80
Total tax in income statement (223) 9
Reconciliation of effective tax rate
Factors affecting the tax charge for the current period:
The current tax credit for the period is lower (2015: lower)
than the standard rate of corporation tax in the UK of 20% (2015:
21%). The differences are explained below:
2016 2015
GBP000 GBP000
(Loss)/Profit on continuing operations (260) 532
Profit on discontinued operations 101 325
(Loss)/Profit for the period (159) 857
Tax using the UK corporation tax
rate of 20% (2015:21%) (32) 180
Effects of:
Permanent differences (87) 14
Overseas tax losses not recognised - 1
Difference in overseas tax rate 10 4
Losses carried forward - (97)
Adjustments in respect of prior
periods - current tax (167) (290)
Adjustments in respect of prior
periods - deferred tax 113 189
Unrelieved losses carried into
following year 75 8
Withholding tax 10 -
R&D losses surrendered 83 -
R&D super deduction (171) -
Movement due to the change in the (57) -
tax rate
Total tax (repayment)/expense (223) 9
The Group tax debtor amounts to GBP231,000 (2015 creditor:
GBP121,000). The deferred tax liabilities as at 31 March 2016 have
been calculated using the tax rate of 18% which was substantively
enacted at the balance sheet date.
The UK corporation tax rate has been progressively reduced over
the last 4 years. The October 2015 statement announced that the
rate will further reduce to 19% from 1 April 2017 and 18% from 1
April 2020.
5 Earnings per share
The calculations of earnings per share are based on the
following profits and numbers of shares:
2016 2015
GBP000 GBP000
Profit after taxation for the financial
year from continuing operations 10 603
Profit after taxation on discontinued
operations 54 245
Weighted average number of shares
Number Number
of of
Shares Shares
For basic earnings per ordinary
share 46,639,156 47,071,835
Exercise of share options - -
For diluted earnings per ordinary
share 46,639,156 47,071,835
Share options in issue at year end all had exercise prices
higher than the average market price of ordinary shares during the
period, therefore they are not treated as dilutive for the purposes
of the earnings per share calculation.
The holders of ordinary shares are entitled to
receive dividends as declared from time to time
and are entitled to one vote per share at meetings
of the Company.
The holders of deferred shares shall not be entitled
to any participation in the profits or the assets
of the Company and the deferred shares do not
carry any voting rights.
6 Dividends
2016 2015
GBP000 GBP000
Final dividends paid in respect of
prior year but not recognised as
liabilities in that year 471 471
Interim dividends paid in respect
of the current year 115 235
Total dividend paid in the year 586 706
After the balance sheet date the Board proposed no final
dividend would be made (2015: GBP471,000/1.00p per qualifying
ordinary share).
7 Discontinued operations and restructuring costs
The disposal of Grafenia BV was completed on 6 October 2015 and
was treated as a post balance sheet subsequent event when the
Company issued its Interim Report and it applied IFRS 5 at that
time.
The results for discontinued operations for the period and
previous year were as follows:
Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
Revenue 2,551 5,980
Expenses (2,729) (5,636)
Operating (Loss)/Profit (178) 344
Finance revenue - 5
Finance expense - (24)
Surplus on disposal of discontinued
operations 279 -
Profit before tax 101 325
Taxation (47) (80)
Profit for the period from discontinued
operations 54 245
The above profit on disposal of business of GBP0.34m is
calculated as proceeds of GBP1.73m less costs of disposal of
GBP0.07m less net assets disposed of GBP1.38m. In addition to the
disposal of Grafenia BV, other discontinued operations include the
wind up of PDC SA and Grafenia France SA being reorganised into
Grafenia France sarl, which have been included in the expenses of
discontinued operations.
The net cash flows attributable to discontinued operations for
the period and previous year were as follows:
Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
Operating cash flows 329 75
Investing cash flows (15) (25)
Financing cash flows (386) (146)
Net cash outflow (72) (96)
Exchange (loss)/gain on cash and
cash equivalents (1) 18
8 Annual Report
The Annual Report will be sent to shareholders on or around 28
June 2016 and will be available on the Company's website
www.grafenia.com from that date.
Copies of this announcement are available on the Company's
website www.grafenia.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QVLBBQQFBBBE
(END) Dow Jones Newswires
June 08, 2016 02:12 ET (06:12 GMT)
Grafenia (LSE:GRA)
Historical Stock Chart
From Jun 2024 to Jul 2024
Grafenia (LSE:GRA)
Historical Stock Chart
From Jul 2023 to Jul 2024
