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22 Jan 2009 07:00
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Printing.com plcΒ (the "Company")
TradingΒ update
Trading
The first halfΒ of the current yearΒ saw trading volumes increase by circa 9% withΒ OctoberΒ alsoΒ showing progress. With over 90% of Printing.com orders being in essence end-client advertising material, the economic uncertainty hasΒ nowΒ impactedΒ on client confidence and accordingly Printing.com volumes.Β PostΒ the last update trading duringΒ November andΒ DecemberΒ has shown a decline of circa 3% in comparison to last year.Β
The daily run rate for JanuaryΒ so farΒ has continued at a similar level.Β At this juncture, analysis ofΒ work put in hand and alike, does notΒ indicateΒ further regression.Β
Ordinarily within the Company's business model, it is theΒ Franchisees who execute and fund promotional activity. Given theΒ presentΒ trading conditions, the Company has electedΒ to fund certain promotions and therebyΒ assist its Franchisees and boost the overallΒ promotional levels. Commencing with the 'January Sale' and extending throughΒ to the end of the Company's fiscal year, it is anticipated that these actionsΒ represent an investment of circa Β£125,000.
Estate Development
Over half of trading volumes across theΒ UKΒ andΒ IrelandΒ are generated by theΒ Company's Bolt-on Franchises, who by their very nature are engaged inΒ graphicsΒ arts services other than the Printing.com component with design,Β web consultancy, lithographic or digital printing being the principalΒ disciplines. TheΒ Company is aware that some Bolt-on Franchisees areΒ experiencing problems within their traditional businesses,Β withΒ some ofΒ theΒ associated revenues having fallen to a greater extentΒ than withinΒ Printing.com at large.
The Company is keen to supportΒ viable FranchisesΒ that encounterΒ short term problems but,Β inΒ situations where this is not possible, will seek to transfer the Printing.comΒ component to a new or neighbouring Bolt-on Franchise. Indeed, Printing.comΒ has a strong pipeline of prospective Bolt-onΒ Franchisees and is confidentΒ that,Β not withstanding someΒ 'churn'Β within the Bolt-onΒ Franchise network,Β theΒ estateΒ will continue to show expansion during the second half of the
fiscal year.
In the limited instances where Territory Franchisees fail, the previouslyΒ granted rights fall away, and the Company's preference isΒ toΒ operate theΒ business directly until the scopeΒ exists to re-franchise.Β IndeedΒ where re-franchising hasΒ happened, the subsequentΒ Franchisee has goneΒ on to fareΒ better.
International DevelopmentΒ
When announcing the interim results, the Company reported that it hadΒ secured an additional Master Licence Partner in a significant territory.Β The Master Licence which, subject to certain targets being met,Β covers theΒ US,Β has been granted to a well-established commercial printer inΒ Jacksonville,Β Florida. It is now anticipated that operations will commence with theΒ opening of two Printing.com stores inΒ JacksonvilleΒ andΒ Gainesville,Β FloridaΒ during April 2009, together with the launch ofΒ itsΒ franchising programmeΒ within the states ofΒ FloridaΒ andΒ Georgia.Β
Outlook
The Company'sΒ balance sheet remains strong,Β with significant cash and net fundsΒ -Β alsoΒ additional provisionsΒ wereΒ madeΒ against debtorsΒ prior toΒ reporting the Interim Results.Β
Taking all theΒ aboveΒ factorsΒ into account, some operational margin has beenΒ eroded andΒ volumes areΒ slightly lowerΒ thanΒ forΒ the corresponding period in the previous year.Β Consequently we believe the outturn for the year is likely to be slightly below market expectations.Β
However,Β the Printing.com offering is value-ledΒ and in the present economicΒ environmentΒ the scope exists to win additional clients.Β Indeed 2400 new clients placedΒ their first ordersΒ with the Printing.com network in the first two weeks of January, an increase of approximately 10% year onΒ year, reflecting our belief thatΒ the additional promotional investmentΒ has had a positive impact.Β
In what are challenging economic conditions,Β it is appropriate for us to remain cautious in our outlookΒ for the short term, but believe that the Company remains robust and well-placed toΒ meet such challenges andΒ capitalise on the economic upturn when it comes about.
For further information:
Printing.com plc
Tony Rafferty (Chief Executive) 07966 517 336
Alan RobertsΒ (Finance Director) 07977 277 521
Cubitt Consulting
Brian Coleman-Smith / Nicola Krafft / James Verstringhe 020 7367 5100
Brewin Dolphin Ltd (Nominated Adviser)
Richard Evans 0845 213 4853
ENDS
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