22 Jan 2009 07:00
Printing.com plc (the "Company")
Trading update
Trading
The first half of the current year saw trading volumes increase by circa 9% with October also showing progress. With over 90% of Printing.com orders being in essence end-client advertising material, the economic uncertainty has now impacted on client confidence and accordingly Printing.com volumes. Post the last update trading during November and December has shown a decline of circa 3% in comparison to last year.
The daily run rate for January so far has continued at a similar level. At this juncture, analysis of work put in hand and alike, does not indicate further regression.
Ordinarily within the Company's business model, it is the Franchisees who execute and fund promotional activity. Given the present trading conditions, the Company has elected to fund certain promotions and thereby assist its Franchisees and boost the overall promotional levels. Commencing with the 'January Sale' and extending through to the end of the Company's fiscal year, it is anticipated that these actions represent an investment of circa £125,000.
Estate Development
Over half of trading volumes across the UK and Ireland are generated by the Company's Bolt-on Franchises, who by their very nature are engaged in graphics arts services other than the Printing.com component with design, web consultancy, lithographic or digital printing being the principal disciplines. The Company is aware that some Bolt-on Franchisees are experiencing problems within their traditional businesses, with some of the associated revenues having fallen to a greater extent than within Printing.com at large.
The Company is keen to support viable Franchises that encounter short term problems but, in situations where this is not possible, will seek to transfer the Printing.com component to a new or neighbouring Bolt-on Franchise. Indeed, Printing.com has a strong pipeline of prospective Bolt-on Franchisees and is confident that, not withstanding some 'churn' within the Bolt-on Franchise network, the estate will continue to show expansion during the second half of the
fiscal year.
In the limited instances where Territory Franchisees fail, the previously granted rights fall away, and the Company's preference is to operate the business directly until the scope exists to re-franchise. Indeed where re-franchising has happened, the subsequent Franchisee has gone on to fare better.
International Development
When announcing the interim results, the Company reported that it had secured an additional Master Licence Partner in a significant territory. The Master Licence which, subject to certain targets being met, covers the US, has been granted to a well-established commercial printer in Jacksonville, Florida. It is now anticipated that operations will commence with the opening of two Printing.com stores in Jacksonville and Gainesville, Florida during April 2009, together with the launch of its franchising programme within the states of Florida and Georgia.
Outlook
The Company's balance sheet remains strong, with significant cash and net funds - also additional provisions were made against debtors prior to reporting the Interim Results.
Taking all the above factors into account, some operational margin has been eroded and volumes are slightly lower than for the corresponding period in the previous year. Consequently we believe the outturn for the year is likely to be slightly below market expectations.
However, the Printing.com offering is value-led and in the present economic environment the scope exists to win additional clients. Indeed 2400 new clients placed their first orders with the Printing.com network in the first two weeks of January, an increase of approximately 10% year on year, reflecting our belief that the additional promotional investment has had a positive impact.
In what are challenging economic conditions, it is appropriate for us to remain cautious in our outlook for the short term, but believe that the Company remains robust and well-placed to meet such challenges and capitalise on the economic upturn when it comes about.
For further information:
Printing.com plc
Tony Rafferty (Chief Executive) 07966 517 336
Alan Roberts (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