TIDMGRA
RNS Number : 1872Y
Grafenia plc
03 May 2023
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the UK Market Abuse Regulation.
With the publication of this announcement, this information is now
considered to be in the public domain.
3 May 2023
Grafenia plc
("Grafenia" or "the Company" or the "Group")
Pre-close statement and Trading Update
Grafenia plc (AIM: GRA) announces the following pre close
statement and trading update for the year ended 31 March 2023
("FY23").
Since releasing our half year results on 24 November 2022, we
have continued to focus on and invest in building the structure
required to become a serial acquirer of vertical market software
businesses. Becoming the permanent home for those businesses and
their management talent.
Today, the Group looks a little different. This time last year,
we existed solely in the graphics space. We owned a manufacturing
hub in Manchester (Works Manchester), business stores, superstores
and online print platforms, and we licenced our software around the
world.
Two things have changed since then. We no longer own Works
Manchester and Grafenia no longer exists solely in the graphics
space. We do still own business stores, superstores and online
print platforms and we continue to drive recurring revenues and
product sales by licensing our software around the world through
our Nettl Systems business unit.
Following the sale of Works Manchester, as well as continuing
our push for organic growth, we have doubled down on our
acquisition strategy with the aim of creating long term growth in
shareholder value. Focussing on vertical market software
businesses, we look for niche platforms, with low churn where the
majority of sales are recurring in nature. Through our specialist
M&A team, Software Circle, we've built a healthy deal flow and
successfully acquired four software businesses that have met our
criteria.
Grafenia is now home to a stable of five software business units
across multiple sectors. In terms of sales, Nettl Systems currently
remains the largest of those. Each business is run in a
decentralised way by its own management team, supported by the
Grafenia Board. Those businesses have been, in the main, acquired
during the latter stages of the FY23.
In that time, we have successfully onboarded our newly acquired
businesses and they are contributing to profitability. On behalf of
the Board, we welcome our new team members to the Grafenia family
and thank all of our teams and owners across the Group for making
that onboarding a success.
Our Current Portfolio:
Business Sector Date Initial Deferred Unaudited
Unit Acquired Consideration Consideration Group Sales
FY23
Nettl Systems Graphics & Ecommerce n/a n/a n/a GBP9.5m
Vertical Ecommerce 01/10/22 GBP1.25m GBP1.0m GBP1.0m
Plus
Watermark Document Management 07/12/22 GBP1.50m GBP1.0m GBP0.4m
CareDocs Care Management 18/01/23 GBP2.98m GBP0.52m GBP0.5m
TopFloor Property Management 17/02/23 GBP3.42m GBP0.85m GBP0.2m
Total GBP9.15m GBP3.37m GBP11.6m
We've grown again on the previous year. We expect to end the
full year with sales from continuing operations in excess of
GBP11.6m (2022: GBP8.2m). An increase of GBP3.4m (41%).
Approximately GBP9.5m (2022: GBP8.2m) of total sales, came from
our Nettl Systems business. A 16% organic increase of GBP1.3m.
GBP2.1m of total sales was generated by the four acquisitions
acquired during the latter stages of FY23 as detailed in the above
table. A 26% growth in sales by acquisition.
Sales from discontinued operations were approximately GBP0.9m
(2022: GBP3.4m).
We expect our operating businesses to generate a positive EBITDA
of GBP0.4m after central costs of GBP0.8m. Deducting the associated
non-recurring deal costs involved in the acquisitions, the EBITDA
overall is GBP0.1m (2022 GBP0.3m).
With the acquisitions we've added to the Group, on a run rate
basis, annualised sales would be approximately GBP17m. We are
currently considering raising additional funds to continue the
execution of our acquisition strategy and the growth of the
Group.
Cash at 31 March 2023 was GBP2.0m (2022: GBP1.5m). During the
year we utilised our bond facility issuing GBP11.2m of Bonds, at
nominal value, raising GBP9.5m before expenses. We deployed GBP9.6m
of capital. Net debt as at 31 March 2023 was GBP16.3m (2022:
GBP5.3m).
Leadership Team
Gavin Cockerill has successfully led the Group's repositioning
as Acting CEO over the last 12 months. After an extensive board
review, we are very pleased to announce that Gavin will lead the
Group as CEO going forward.
Jan-Hendrik Mohr, Chairman of Grafenia, said:
"The board is very pleased with Gavin's leadership over the last
year. We started with the idea of becoming the right home for
vertical market software companies in the UK and Ireland. Gavin has
combined the existing strengths of our rich legacy in Nettl Systems
and applied that to our growing group of software companies."
Outlook
We're cautiously optimistic about the upcoming year. With a full
year's trade from our newly acquired businesses, our goal of
achieving EBITDA at 10-15% of sales, after central costs, is a
realistic target. Our search for software businesses continues and
our deal flow looks healthy. We will update the market with more
detailed progress when releasing our final results for FY23 which
is expected to be at the end of July.
For further information:
Grafenia plc
Gavin Cockerill (CEO) 07968 510 662
Allenby Capital Limited (Nominated Adviser and Broker)
David Hart / Piers Shimwell (Corporate Finance) 0203 328
5656
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