The business announced the departure of founder Tony Rafferty and sale of its Dutch operations on the same day, retreating to a mainly UK position from which to nurture ways of growing again.
The company, launched as Printing.com, has suffered from increasing competition, especially in Europe. Its model of fulfilling Dutch orders from a Manchester production hub has been hit by huge discounting in the Netherlands and the rise in the value of sterling against the euro which has hit margins.
“It became too expensive to supply the Dutch business from the UK,” says Gunning. “Consequently we made the decision to sell these businesses in July.” The sale to Reclameland, the country’s largest online print business, has netted €2.35 million for Grafenia. Production of Flyerzone products for Belgium and the Netherlands will shift to Reclameland which is already searching for new premises. The Dutch purchaser owns the Printdeal.co.uk website which has been suspended.
Grafenia retains the Flyerzone brands in the UK, Ireland and France. Nevertheless the business is halved in size, making it too small to support the executive structure it had and the associated salaries. Rafferty took the decision to step down, though remains the second largest shareholder.
Gunning has been operations director having joined the company 17 years ago and been a board member for 15 of those. He is now acting CEO. This is because he has no direct experience of running a listed business and needs to show a safe pair of hands before being confirmed in the role.
The board is further enhanced with the appointment of Conrad Christian Bona as non executive director. He brings a background as a lawyer qualified in a number of juristrictions and is part of Grayscott, a London based business consultancy. Gavin Cockerill steps up to the main board, filling the gap left by Gunning's promotion.
Gunning will now have to implement a refocused business strategy. The Printing.com arm has been enhanced by direct to consumer print with Flyerzone, but Grafenia is not dependent on this for the future. Gunning identifies two areas to concentrate on in the immediate future. First is the Marquetspace trade supply operation targeting a network of resellers. This has been running ahead of projections and in September generated more than £2 million of revenue.
The company has installed a Dgen textile printer at the Manchester production hub in order to enable resellers to offer their clients product in what is a sector growing at 25% a year. “This is one of the only growth areas in print,” he says. “And most of our partners have not done much yet in this space. Everybody knows about banners; this is so much better for pop up exhibition kits than banners.”
This will be demonstrated at the Print Show in Birmingham where Grafenia's presence also include an area devoted to its Nettl web design service. This allows partners to offer their customers a full website design and management service, including support for commerce and data handling.
However, the complexity of the sale means that the uptake is slower than hoped, says Gunning. “But almost every printer is thinking about what they can offer customers. And their customers want to do business on the web, whether it’s the hairdresser selling shampoo on line or the coffee shop taking orders through a website. The printer has the existing relationship with those customers to offer the additional web services.”
There are 36 Nettl sites in operation where partners have to “invest and decide to join us on the journey” says Gunning. As a consequence it has packaged the web design tool as Brambl, an application that should be simple for a designer familiar with Photoshop to use. This is winning supporters, selling 43 in the first month.
Peter Gunning has become acting CEO of Grafenia with the departure of its founder Tony Rafferty. Gunning will lead back to the roots strategy after the sale of its Dutch business with a focus on building its fabric printing and web design applications and partnerships under the Brambl and Nettl brands.