Grafenia warns on profits as turnaround takes effect

The AIM-listed group, which has been undergoing restructuring under Gunning after selling off its Dutch arm for €2.35m last October, said the full effects of staff cuts, renegotiated supplier contracts and closure of underperforming stores would not be realised until the first half of the next financial year.

As such, results for the 12 months to end March will be "significantly below current market expectations".

House broker N+1Singer in November had forecast £14m revenue, £0.5m pre-tax profit and 1p of adjusted earnings per share for 2016, with £2.2m year-end net cash expected.

Of the ongoing businesses, Marqetspace, the online trade service for printers and resellers, was reported to be attracting new clients and an annualised monthly run rate of £3m is expected by the year end.

Gunning launched a simplified the Printing.com subscription model earlier in February and said very early reactions were encouraging, with several Marqetspace clients expressing interest "and it is conceivable that we will materially grow the number of printing.com partners during the next financial year".

Confidence was also expressed about the new 'ink on fabric' digital textiles product range, the Brambl website design tool and its retail web studio formula, Nettl.

Shares in Grafenia were down 21% at 8p just after noon on Wednesday.