TIDMGRA

RNS Number : 4137H

Grafenia plc

24 November 2022

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

24 November 2022

Grafenia plc

("Grafenia", "the Group" or "the Company")

Unaudited Interim Results for the period ended 30 September 2022

Financial highlights

 
                               Six months 
                                       to  Six months to 
                             30 September   30 September 
                                     2022           2021 
Continuing operations 
 Turnover                        GBP4.97m       GBP4.39m 
EBITDA*                        GBP(0.05)m       GBP0.27m 
Operating Loss                 GBP(0.49)m     GBP(0.23)m 
Loss Before Tax                GBP(0.54)m     GBP(0.39)m 
Tax                              GBP0.05m       GBP0.15m 
Total Comprehensive Loss       GBP(0.48)m     GBP(0.24)m 
EPS                               (0.42)p        (0.21)p 
Development Expenditure          GBP0.18m       GBP0.31m 
 
Cash and Cash Equivalents        GBP5.01m       GBP2.67m 
Net Debt                       GBP(3.28)m     GBP(4.49)m 
 
 

*Earnings before interest, tax, depreciation and amortisation

Operational highlights

   --              Completed the sale and separation of Works Manchester 
   --              Revenue from continuing operations up by GBP0.58m, a 13% increase 
   --              Licence fees and subscriptions up by GBP0.04m, a 4% increase 
   --              Partner product spend saw 31% increase, up by GBP0.36m 
   --              Revenue from online and trade up by GBP0.25m, a 27% increase 
   --              Investment in Software Circle - our acquisition strategy, is bearing fruit 
   --              Raised GBP4.25m through additional bond issue to fund acquisitions 

Interim Statement

Our team has spent the past six months laying the foundations for the next part of our journey. In our Annual Report, we discussed the ongoing transition of our business and the sale of our manufacturing hub Works Manchester, announced on 19 May 2022. Our teams have worked hard to ensure that transition has been smooth. We'd like to thank everyone involved for successfully managing the process. Simplifying our business and completing the transition to one focussed on software and systems.

Previously we divided our reporting structure into two business units: everything software and licence (we call this business unit Nettl Systems); and everything production (we called that Works Manchester). Given the sale of Works Manchester on 31 May 2022, you'll see below that we are reporting results from "continuing" and "discontinued" operations, as we did in our full year results released in July. In plain English, "continuing" are the figures for the period as if we had sold Works Manchester at the beginning of the comparative periods. "Discontinued" is everything else.

Trading Results and Cash

Revenue from continuing operations rose to GBP4.97m (2021: GBP4.39m). Total revenue reduced to GBP5.84m (2021: GBP6.31m) following the disposal of Works Manchester at the end of May 2022, meaning discontinued operations only contributed revenue of GBP0.87m (2021: GBP1.92m).

Total gross profit fell to GBP2.66m (2021: GBP3.44m), again as a result of the sale of Works Manchester. Our overall Gross margin percentage fell to 45.5% (2021: 54.5%) as, following the sale, Works Manchester became our largest Works Maker and we entered into a five-year supply agreement to provide products through our platforms for our Company stores and Partners. This change reduces the gross profit percentage of the Group, but at the same time reduces staff costs and overheads. To accurately reflect the performance of continuing operations, the financials have been presented to show the results had the disposal and new supply agreement been in effect for both the current and the comparative financial years. Gross Profit from continuing operations was GBP2.02m (2021: GBP1.83m). It fell slightly as a percentage of revenue, 40.6% (2021: 41.7%), as a greater proportion of revenue has been generated through our brand partners in the first six months of this financial year compared to last.

Total operating costs reduced in total following the Sale of Works Manchester, with total staff costs of GBP1.60m (2021: GBP1.91m) and total other operating charges of GBP1.00m (2021: GBP1.04m). Our continuing operations have however experienced increases. Covid related employee wage support schemes ended, and we invested in both people and professional fees in our pursuit of additional software companies to bring into the Grafenia group. Alongside this, as with most other businesses, we experienced inflationary pressures, particularly on wages with higher costs of living, and a higher rate of national insurance. As a result, staff costs for continuing operations increased to GBP1.18m (2021: GBP0.84m) and other operating charges increased to GBP0.85m (2021: GBP0.64m). This led to EBITDA from continuing operations falling to a loss of GBP0.05m (2021: profit GBP0.27m) and an operating loss from continuing operations of 0.49m (2021: loss of GBP0.23m). With the sale of Works Manchester, the overall operating loss reduced to GBP0.44m (2021: 0.53m).

At 30 September 2022, the Company had cash of GBP5.01m (2021: GBP2.67m) and debt of GBP8.29m (2021: GBP7.16m). An additional GBP4.25m of cash was raised from a bond issue on 27 September 2022 to fund the acquisition of Vertical Plus Limited in October 2022, along with further acquisitions that are expected to be announced in the near future. Our operating activities utilised GBP0.29m of cash (2021: generated GBP0.43m) as we transitioned to our new operating model.

Capital expenditure was GBP0.18m (2021: GBP0.34m). Almost all of this amount was invested in the ongoing development of our platform which underpins our operations and is licensed to our partners.

Trading Review

We've improved the revenue performance of Nettl Systems. Our investment in Software Circle is beginning to bear fruit and we continue to make progress building the best operating model for our new focus.

Nettl Systems

Our Nettl Systems business operates within the Graphics sector. Licencing software and brands to graphic professionals. Designers, printers, signmakers, marketing agencies and other graphic professionals use our marketing tools, workflow management system and supply chain to deliver the best service to their clients. We also own five Nettl company stores in Birmingham, Dublin, Exeter, Liverpool and Manchester all utilising our software platform. We use these to train new people, refine new software initiatives and develop best practice.

We have hundreds of partners who utilise this best practice and licence our systems. Partners pay us a monthly subscription which gives them access to our systems, training and support. Using the Nettl system, they're able to buy factory-direct print and display that is seamlessly integrated from multiple suppliers. We call them Works Makers. Partners resell these products to clients.

Increasingly, partners are also reselling recurring subscriptions for centralised digital marketing services like SEO, Social Media and Paid Search. We expect to extend these centralised service offerings to help partners increase the recurring revenues they generate.

An example of this is the launch of SEO Console. A platform for clients available through the Nettl system, to help get found in online searches. Clients have access to a portal that enables them to optimise their website and manage listings and reviews. Working alongside our current SEO service offering, our partners can resell SEO Console as recurring subscriptions to their clients.

Partners that use the Nettl or printing.com brand in conjunction with their own, we call 'brand partners'. They're our exclusive partner in their neighbourhood. We licence printing.com and Nettl directly in the UK and Ireland. We also licence Nettl in Belgium, France, the Netherlands and in the USA. In Australia and New Zealand, we have a master licence agreement.

In the interim period, revenue from Nettl Systems increased by 13% to GBP4.97m (2021: GBP4.39m). Within this segment, company stores decreased by 5% to GBP1.18m (2021: GBP1.24m). This decrease was due to team transitions in two store locations. Licence fee and subscription income increased to GBP1.07m (2021: GBP1.04m). We continue to listen to feedback from our partners and extend the capabilities of our platform. This has helped us improve partner retention rates during the period. Most recently we've improved enquiry management with 'The Pipeline' and made it easier for partners to build proposals, estimates, jobs and orders using their own Standard Price List items. We're currently working on improving the User Interface of key order screens. Our aim is to equip our partners with the tools they'll need in the studio of tomorrow.

Along with the successful transition of Works Manchester to new owners PFI, we've continued to add new Works Makers to widen the product range available to our partners. The products our partners buy from us at wholesale prices - like signage, printing and promo goods - has increased by 31% to GBP1.53m (2021: GBP1.17m).

We also sell print and signs to professional buyers through Marqetspace and a few other online channels. We utilise our w3shop software module, available as part of the Nettl System. It is a fertile ground for cultivating Nettl partners and gives us insight into where gaps in our product range are. That knowledge has been used to find new Works Makers to improve the product range available throughout our software systems. We continue to see an increase in Marqetspace revenues to GBP1.19m (2021: GBP0.94m)

Software Circle

With our renewed focus on Software & Systems, as detailed in our Annual Report, our acquisition strategy is now aimed at software businesses. To extend our scale, capability and resilience. We have continued to invest in building the structure required for us to be a serial acquirer and permanent home for software businesses and management talent.

Our team of analysts and searchers actively look for software businesses that match our criteria, for us to acquire and become part of the Group. We've made progress in building a scalable, acquisition flywheel.

We're particularly interested in Vertical Market Software (VMS) businesses. Niche, mission critical platforms, where revenues are recurring in nature. The kind of software that is the glue holding a business together. Keeping clients using it, year after year. Perhaps where the owner is thinking about retirement planning or a change of pace. Often looking for a commercial partner to take care of their IP, team and client base for the long term. We're an ideal permanent home. Providing continuity of support and helping maintain relationships.

We'll retain their brands but we're not planning to integrate or migrate them to our platform. They'll keep their technology stack and be run in a decentralised way.

The investment in our Software Circle team and progressing ongoing potential deals, has impacted the EBITDA for this period. However, that investment is starting to bear fruit with the acquisition of Vertical Plus Ltd detailed in our announcement on 22 September 2022. Having raised funds for other acquisitions in the pipeline, detailed in our update of 27 September 2022 we're hopeful of adding other businesses to the Group. We will provide further updates as things come to fruition.

If you own a vertical market software business or get talking with someone who does, please hop to www.grafenia.com/acquisition or email letmein@grafenia.com .

Outlook

Trading continues to outperform the same period last year. November looks set to continue that trend. It is difficult to foresee how business confidence will be impacted by the economic climate. However, sales are in line with current internal forecasts.

Our attention is focussed on building our recurring revenue streams. That's by a mix of buying and successfully running software companies through Software Circle. And by building tools to licence to professionals in the graphic arts, print and sign sectors with Nettl Systems.

In the last few announcements, we've discussed our goal of achieving 10-15% EBITDA. With reducing the size of the group in May 2022 following the disposal of Works Manchester, whilst retaining the central costs of operating a publicly listed business and investing in our acquisition strategy, these levels of return have not yet been possible. However, given our improved trading to date, alongside the acquisition of Vertical Plus, and other acquisitions expected to follow, we firmly believe that this goal remains achievable in the mid-term.

   Jan Mohr                                               Gavin Cockerill 
   Chairman                                              Acting Chief Executive Officer 

23 November 2022

Unaudited Interim Results for the period ended 30 September 20 22

Consolidated Statement of Comprehensive Income

for the six months ended 30 September 202 2

 
                        Unaudited     Unaudited  Unaudited   Unaudited     Unaudited  Unaudited     Audited       Audited     Audited 
                       Six months    Six months        Six  Six months    Six months        Six  Year ended    Year ended  Year ended 
                            to 30         to 30     months       to 30         to 30     months    31 March      31 March    31 March 
                        September     September      to 30   September     September      to 30       202 2          2022        2022 
                             2022          2022  September        2021          2021  September 
                 Note                                 2022                                 2021 
                           GBP000        GBP000     GBP000      GBP000        GBP000     GBP000      GBP000        GBP000      GBP000 
                       Continuing  Discontinued      Total  Continuing  Discontinued      Total  Continuing  Discontinued       Total 
                        operation     operation              operation     operation              operation     operation 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Revenu e          3         4,969           870      5,839       4,386         1,921      6,307       8,916         3,445      12,361 
Raw materials 
 and 
 consumables 
 used                     (2,946)         (235)    (3,181)     (2,555)         (317)    (2,872)     (5,377)         (286)     (5,663) 
Gross profit                2,023           635      2,658       1,831         1,604      3,435       3,539         3,159       6,698 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Staff costs               (1,179)         (417)    (1,596)       (838)       (1,075)    (1,913)     (2,019)       (2,221)     (4,240) 
Doubtful debt 
 expense                     (49)          (10)       (59)        (90)           (2)       (92)        (32)          (11)        (43) 
Other operating 
 charges                    (848)         (155)    (1,003)       (636)         (402)    (1,038)     (1,322)         (763)     (2,085) 
Earnings before 
 interest, 
 tax 
 depreciation 
 and 
 amortisation                (53)            53          -         267           125        392         166           164         330 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Depreciation 
 and 
 amortisation               (440)             -      (440)       (495)         (429)      (924)       (944)         (569)     (1,513) 
Operating loss              (493)            53      (440)       (228)         (304)      (532)       (778)         (405)     (1,183) 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Financial 
 income                        54             -         54           5             -          5           6             -           6 
Financial 
 expenses                    (96)          (21)      (117)       (164)          (92)      (256)       (346)         (186)       (532) 
Net financing 
 expense                     (42)          (21)       (63)       (159)          (92)      (251)       (340)         (186)       (526) 
 
Loss before tax             (535)            32      (503)       (387)         (396)      (783)     (1,118)         (591)     (1,709) 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Taxation                       51             -         51         150             -        150         559             -         559 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Loss for the 
 period                     (484)            32      (452)       (237)         (396)      (633)       (559)         (591)     (1,150) 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Re-measurement 
 to fair value 
 on 
 discontinued 
 operations        12           -         (235)      (235)           -             -          -           -         (686)       (686) 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Total 
 comprehensive 
 loss 
 for the period             (484)         (203)      (687)       (237)         (396)      (633)       (559)       (1,277)     (1,836) 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
Earnings per 
 share            7       (0.42)p       (0.18)p    (0.60)p     (0.21)p       (0.34)p    (0.55)p     (0.49)p       (1.12)p     (1.60)p 
---------------  ----  ----------  ------------  ---------  ----------  ------------  ---------  ----------  ------------  ---------- 
 

Consolidated Statement of Financial Position

at 30 September 202 2

 
                                                Unaudited       Unaudited    Audited 
                                     Note    30 September    30 September   31 March 
                                                     2022            2021       2022 
                                                   GBP000          GBP000     GBP000 
Non-current assets 
   Property, plant and equipment                      972           4,705      1,077 
   Intangible assets                                1,233           3,282      1,391 
   Deferred consideration 
    receivable                       8              1,804               - 
Total non-current assets                            4,009           7,987      2,468 
---------------------------------  ------  --------------  --------------  --------- 
 
Current assets 
   Inventories                                         26             434         29 
   Trade and other receivables       4              1,329           2,426      1,281 
   Deferred consideration 
    receivable                       8                618               -          - 
   Prepayments                                        106             320        283 
   Cash and cash equivalents                        5,008           2,669      1,462 
   Assets relating to disposal 
    group                            12                 -               -      6,234 
---------------------------------  ------  --------------  --------------  --------- 
Total current assets                                7,087           5,849      9,289 
---------------------------------  ------  --------------  --------------  --------- 
 
Total assets                                       11,096          13,836    1 1,757 
---------------------------------  ------  --------------  --------------  --------- 
 
Current liabilities 
  Other interest-bearing 
   loans and borrowings               6               386           1,345        308 
  Trade and other payables           5              1,012           2,708      1,512 
  Deferred income                    5                  -              24         77 
  Liabilities relating to 
   disposal group                    12                 -               -      3,530 
Total current liabilities                           1,398           4,077      5,427 
---------------------------------  ------  --------------  --------------  --------- 
 
Non-current liabilities 
  Other interest-bearing 
   loans and borrowings               6             7,900           5,811      3,842 
  Deferred tax liabilities                              -             323          - 
---------------------------------  ------  --------------  --------------  --------- 
Total non-current liabilities                       7,900           6,134      3,842 
---------------------------------  ------  --------------  --------------  --------- 
Total liabilities                                   9,298          10,211      9,269 
---------------------------------  ------  --------------  --------------  --------- 
 
Net assets                                          1,798           3,625      2,488 
---------------------------------  ------  --------------  --------------  --------- 
 
Equity 
   Share capital                                    1,145           1,145     1, 145 
   Share premium account                            7,866           7,866     7, 866 
   Merger reserve                                     838             838       83 8 
   Retained earnings                              (8,202)         (6,312)   ( 7,515) 
   Translation reserve                                 63               -         66 
   Share based payment reserve                         88              88         88 
Total equity                                        1,798           3,625      2,488 
---------------------------------  ------  --------------  --------------  --------- 
 

Consolidated Statement of Changes in Shareholders Equity

for the six months ended 30 September 202 2 (unaudited)

 
                                    Share     Share     Merger   Retained      Share  Translation 
                                    Capital   Premium   Reserve   earnings     based      reserve    Total 
                                                                             payment 
                                                                             reserve 
                                     GBP000    GBP000    GBP000     GBP000    GBP000       GBP000   GBP000 
 
Opening shareholders' 
 funds at 1 April 2021                1,145     7,866       838    (5,679)        84            -    4,254 
Loss and total comprehensive 
 income for the period 
 from continuing operation                -         -         -      (237)         -            -    (237) 
Loss and total comprehensive 
 income for the period 
 from discontinued operation              -         -         -      (396)         -            -    (396) 
Share option reserve                      -         -         -          -         4            -        4 
 
Closing shareholders' 
 funds at 30 September 
 2021                                 1,145     7,866       838    (6,312)        88            -    3,625 
---------------------------------  --------  --------  --------  ---------  --------  -----------  ------- 
 
Loss and total comprehensive 
 income for the period 
 from continuing operation                -         -         -      (322)         -            -    (322) 
Loss and total comprehensive 
 income for the period 
 from discontinued operation              -         -         -      (881)         -            -    (881) 
Retranslation of net 
 assets of overseas subsidiaries          -         -         -          -         -           66       66 
 
Closing shareholders' 
 funds at 31 March 2022               1,145     7,866       838    (7,515)        88           66    2,488 
---------------------------------  --------  --------  --------  ---------  --------  -----------  ------- 
 
Loss and total comprehensive 
 income for the period 
 from continuing operation                -         -         -      (484)         -            -    (484) 
Loss and total comprehensive 
 income for the period 
 from discontinued operation              -         -         -      (203)         -            -    (203) 
Retranslation of net 
 assets of overseas subsidiaries          -         -         -          -         -          (3)      (3) 
 
Closing shareholders' 
 funds at 30 September 
 2022                                 1,145     7,866       838    (8,202)        88           63    1,798 
---------------------------------  --------  --------  --------  ---------  --------  -----------  ------- 
 
 

Consolidated Statement of Cash Flows

for the six months ended 30 September 202 2

 
                                                          Unaudited  Unaudited    Audited 
                                                               Half  Half year  Full year 
                                                               year       2021      202 2 
                                                              202 2 
                                                             GBP000     GBP000     GBP000 
Cash flows from operating activities 
Loss for the period                                          ( 484)      (237)     ( 559) 
Adjustments for: 
Depreciation, amortisation and impairment                       440        495        944 
Release of deferred profit on sale of plant and 
 equipment                                                        -        (5)        (9) 
Share based payments                                              -          4          4 
Net finance expense                                              42        159        340 
Bad debt expense                                                 49         90       (54) 
Foreign exchange loss                                             -          -         66 
Tax income                                                    ( 51)      (150)     ( 559) 
Operating cash flow before changes in working 
 capital and provisions                                         (4)        356        173 
--------------------------------------------------------  ---------  ---------  --------- 
Change in trade and other receivables                           149      (778)       (86) 
Change in inventories                                             3          -          2 
Change in trade and other payables                            (519)        441        184 
Cash (utilised) / generated by operations                     (371)         19        273 
--------------------------------------------------------  ---------  ---------  --------- 
Interest received                                                 2          5          - 
Tax (paid)/received                                            (21)          -          - 
Net cash (outflow) / inflow from operating activities 
 from continuing operation                                    (390)         24        273 
--------------------------------------------------------  ---------  ---------  --------- 
Net cash inflow / (outflow) from operating activities 
 from discontinued operation                                    104        403      (139) 
--------------------------------------------------------  ---------  ---------  --------- 
Net cash (outflow) / inflow from operating activities         (286)        427        134 
--------------------------------------------------------  ---------  ---------  --------- 
 
Cash flows from investing activities 
Proceeds from sale of subsidiary                                100          -          - 
Acquisition of plant and equipment                             ( 2)       (19)      ( 27) 
Capitalised development expenditure                          ( 175)      (307)     ( 525) 
Acquisition of other intangible assets                            -        (8)      ( 20) 
Net cash used in investing activities from continuing 
 operation                                                    ( 77)      (334)     ( 572) 
--------------------------------------------------------  ---------  ---------  --------- 
Net cash used in investing activities from discontinued 
 operation                                                        -        (2)        (3) 
--------------------------------------------------------  ---------  ---------  --------- 
Net cash used in investing activities                          (77)      (336)      (575) 
--------------------------------------------------------  ---------  ---------  --------- 
 
Cash flows from financing activities 
Proceeds from loans                                           4,250          -          - 
Repayment of loans                                           ( 150)       (79)      (196) 
Capital payment of lease liabilities                          ( 56)       (58)     ( 115) 
Interest payment of lease liabilities                         ( 31)       (36)      ( 67) 
Net cash inflow / (outflow) from financing activities 
 from continuing operation                                    4,013      (173)      (378) 
--------------------------------------------------------  ---------  ---------  --------- 
Net cash inflow / (outflow) from financing activities 
 from discontinued operation                                   (95)         11      (330) 
--------------------------------------------------------  ---------  ---------  --------- 
Net cash inflow / (outflow) from financing activities         3,918      (162)      (708) 
--------------------------------------------------------  ---------  ---------  --------- 
Net (decrease) / increase in cash and cash equivalents 
 from continuing operations                                   3,546      (483)      (677) 
Exchange difference on cash and cash equivalents                (9)          -          - 
Net (decrease) / increase in cash and cash equivalents 
 from discontinued operations                                     9        412      (472) 
Cash and cash equivalents at start of perio d                 1,462      2,740      2,740 
Cash and cash equivalents at end of period                    5,008      2,669      1,591 
--------------------------------------------------------  ---------  ---------  --------- 
 

Comprises of:

 
Cash and cash equivalents from continuing 
 operation                                    5,008  2,483  1,462 
Cash and cash equivalents from discontinued 
 operation                                        -    186    129 
--------------------------------------------  -----  -----  ----- 
 

Notes

(forming part of the interim financial statements)

   1        Basis of preparation 

Grafenia plc (the "Company") 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 Company as at and for the year ended 31 March 2022. 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 interim financial statements are prepared on the same basis as the financial statements for the year ended 31 March 2022, in which our full set of accounting policies, including critical judgements and key sources of estimation uncertainty, can be found.

The Directors review a two-year forecast when approving the interim financial statements to ensure that adequate cash resources are in operational existence to support trading for the foreseeable future.

These condensed consolidated interim financial statements were approved by the Board of Directors on 23 November 2022.

   2        Significant accounting policies 

The accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company in its consolidated financial statements for the year ended 31 March 2022.

   3        Segmental information 

The Company's primary operating segments are geographic being UK & Ireland, Europe and others. The secondary segmental analysis is by nature of sales channel and service.

This disclosure correlates with the information which is presented to the Acting Chief Executive (CEO), the Chief Operating Decision Maker pursuant to IFRS 8, who reviews revenue (which is considered to be the primary growth indicator) by segment. The Company'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.

Analysis by location of sales

 
                                        UK & 
                                     Ireland       Europe       Other       Total 
                                      GBP000       GBP000      GBP000      GBP000 
 Six months ended 30 September 
  2022                                 5,653          103          83       5,839 
-------------------------------  -----------  -----------  ----------  ---------- 
 Six months ended 30 September 
  2021                                 5,987          123         197       6,307 
-------------------------------  -----------  -----------  ----------  ---------- 
 Year ended 31 March 2022             11,723          289         349      12,361 
-------------------------------  -----------  -----------  ----------  ---------- 
 

Revenue generated outside the UK is attributable to partners in Belgium, France, Ireland, New Zealand, The Netherlands and the USA. No single customer provided the Group with over 10% of its revenue.

DISAGGREGATION OF REVENUE

The disaggregation of revenue from contracts with customers is as follows:

 
                                      Continuing Operations                   Discontinued        Total 
                                                                                Operation 
                        Licence   Company      Brand     Online 
                           Fees    Stores    Partner    & Trade                         Works 
                                               Print                          Sign Businesses 
                         GBP000    GBP000     GBP000     GBP000    GBP000              GBP000    GBP000 
 Six months 
  ended 30 September 
  2022                    1,074     1,177      1,531      1,187     4,969                 870     5,839 
---------------------  --------  --------  ---------  ---------  --------  ------------------  -------- 
 Six months 
  ended 30 September 
  2021                    1,036     1,242      1,171        937     4,386               1,921     6,307 
---------------------  --------  --------  ---------  ---------  --------  ------------------  -------- 
 Year ended 
  31 March 2022           2,135     2,462      2,439      1,880     8,916               3,445    12,361 
---------------------  --------  --------  ---------  ---------  --------  ------------------  -------- 
 
   4          Trade and other receivables 
 
                                           Unaudited  Unaudited    Audited 
                                           Half year  Half year  Full year 
                                               202 2      20 21      202 2 
                                              GBP000     GBP000     GBP000 
Trade receivables                              2,181      3,229      3,290 
Less provision for trade receivables         (1,031)    (1,122)    (1,089) 
-----------------------------------------  ---------  ---------  --------- 
Trade receivables net                          1,150      2,107      2,201 
-----------------------------------------  ---------  ---------  --------- 
Total financial assets other than 
 cash and cash equivalents classified 
 at amortised cost                             1,150      2,107      2,201 
-----------------------------------------  ---------  ---------  --------- 
 
Corporation tax                                   72        247        167 
Other receivables                                107         72         70 
-----------------------------------------  ---------  ---------  --------- 
Total Other receivables                          179        319        237 
-----------------------------------------  ---------  ---------  --------- 
Total trade and other receivables              1,329      2,426      2,438 
-----------------------------------------  ---------  ---------  --------- 
Total relating to discontinued operation           -      1,155      1,157 
Total relating to continuing operation         1,329      1,271      1,281 
-----------------------------------------  ---------  ---------  --------- 
 
   5        Trade and other payables 
 
                                   Unaudited   Unaudited     Audited 
                                   Half year   Half year   Full year 
  Current liabilities                   2022        2021        2022 
                                      GBP000      GBP000      GBP000 
 
Trade payables                           686       1,382       1,445 
Accruals                                 183         443         373 
Other liabilities                        143         883         529 
--------------------------------  ----------  ----------  ---------- 
Total financial liabilities, 
 excluding 'non-current' loans 
 and borrowings classified 
 as financial liabilities 
 measured at amortised cost            1,012       2,708       2,347 
--------------------------------  ----------  ----------  ---------- 
Total relating to discontinued 
 operation                                 -         844         835 
Total relating to continuing 
 operation                             1,012       1,864       1,512 
--------------------------------  ----------  ----------  ---------- 
Deferred Income                            -          24          77 
--------------------------------  ----------  ----------  ---------- 
Total relating to discontinued             -           -           - 
 operation 
Total relating to continuing 
 operation                                 -          24          77 
--------------------------------  ----------  ----------  ---------- 
Total trade and other payables         1,012       2,732       2,424 
--------------------------------  ----------  ----------  ---------- 
 
 
   6        Borrowings 
 
                                   Unaudited   Unaudited                          Audited 
                                   Half year   Half year                        Full year 
  Current liabilities                  202 2       202 1                            202 2 
                                      GBP000      GBP000                           GBP000 
Invoice financing                          -         509                              512 
Lease liabilities                        116         673                              683 
Loans                                    270         163                              172 
                                         386       1,345                            1,367 
 -------------------------------  ----------  ----------  ------------------------------- 
Total relating to discontinued 
 operation                                 -       1,073                            1,059 
Total relating to continuing 
 operation                               386         272                              308 
--------------------------------  ----------  ----------  ------------------------------- 
 Non-current liabilities 
Lease liabilities                        830       2,851                            2,517 
Loans                                    465         771                              683 
Bearer bonds                           6,605       2,189                            2,270 
--------------------------------  ----------  ----------  ------------------------------- 
                                       7,900       5,811                            5,470 
 -------------------------------  ----------  ----------  ------------------------------- 
Total relating to discontinued 
 operation                                 -       1,905                            1,628 
Total relating to continuing 
 operation                             7,900       3,906                            3,842 
--------------------------------  ----------  ----------  ------------------------------- 
 

On 27 September 2022 the Company issued further bonds via the perpetual bond facility put in place in July 2020. The Company issued GBP5.00m of the Bonds, at nominal value, to investors, raising GBP4.25m before expenses.

   7           Earnings per share 

The calculations of earnings per share are based on the following profits and numbers of shares:

 
                                                    Unaudited         Unaudited      Audited 
                                                   Six months        Six months   Year ended 
                                              to 30 September   to 30 September     31 March 
                                                        202 2             202 1        202 2 
                                                       GBP000            GBP000       GBP000 
Loss for the period from continuing 
 operations                                             (484)             (237)        (559) 
Profit for the period from discontinued 
 operations                                             (203)             (396)      (1,277) 
                                             ----------------  ----------------  ----------- 
Total loss after taxation for the 
 financial year                                         (687)             (633)      (1,836) 
 
Weighted average number of shares 
 in issue                                         114,490,828       114,490,828  114,490,828 
-------------------------------------------  ----------------  ----------------  ----------- 
Basic earnings per share                              (0.60)p           (0.55)p      (1.60)p 
-------------------------------------------  ----------------  ----------------  ----------- 
Basic earnings per share from continuing 
 operation                                            (0.42)p           (0.21)p      (0.49)p 
Basic earnings per share from discontinued 
 operation                                            (0.18)p           (0.34)p      (1.12)p 
-------------------------------------------  ----------------  ----------------  ----------- 
 

Share options had no dilutive effect on the weighted average number of shares and therefore no diluted earnings per share have been stated.

   8          Deferred consideration receivable 
 
                                 Unaudited   Unaudited       Audited 
                                 Half year   Half year     Full year 
                                      2022        2021          2022 
                                    GBP000      GBP000        GBP000 
Receivable within one year             618           -             - 
Receivable after one year            1,804           - 
Total deferred consideration 
 receivable                          2,422           -             - 
------------------------------  ----------  ----------  ------------ 
 

The total discounted cash consideration still to be received for disposal of the manufacturing operation based in Manchester referred to as 'Works Manchester' is GBP2.42m (GBP2.81m gross consideration).

   9          Dividend 

The Directors are not declaring an Interim Dividend (2021: Nil).

   10        Post Balance Sheet Events 

On 1 October 2022 the Company completed the acquisition of Vertical Plus Limited, an ecommerce software business, for total consideration rising to GBP2.88m. The acquisition is expected to be cash flow generative and earnings enhancing in the first year after acquisition.

   11        Related Party Transactions 

As part of the Bond issue on 27 September 2022, Mediqon Group AG, where our Chairman, Jan-Hendrik Mohr, is CEO, were issued GBP4.2m nominal nominal value of the bonds, at the same discount rate as other participants.

   12        Discontinued operation 

On 31 May 2022, the group sold its manufacturing operation based in Manchester. The manufacturing operation, referred to as 'Works Manchester' consists of the legal entity, Works Manchester Limited, along with the Manchester based production assets, related leases and staff contracts of Grafenia Operations Limited. Accordingly, these assets and liabilities have been designated as held for sale and separately disclosed in the statement of financial position and the financial impact of the discontinued operation is separately disclosed in the Statement of comprehensive income.

Following the disposal, Grafenia entered into a five-year supply agreement with Works Manchester Limited to provide products to our Company stores and Partners. This change reduces the gross profit percentage of the group, but at the same time reduces staff costs and overheads. To accurately reflect the performance of continuing operations, the Statement of comprehensive income has been presented to show the results had the disposal and new supply agreement been in effect for both the current and the comparative financial years.

Following preparation of the Completion Accounts, the total discounted cash consideration to be received was reduced from GBP2.70m (GBP3.16m gross consideration) to GBP2.47m (GBP2.91m gross consideration), with the final instalment due in May 2026. The GBP0.23m impairment has been recognised within discontinued operations in the current period.

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IR PPGMCGUPPGMW

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November 24, 2022 02:00 ET (07:00 GMT)

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