In its interim results, the renamed parent company of posted a 3.4% drop in sales to £10.08m in the six months to 30 September, and an 11.4% fall in pre-tax profits to £305,000. However, EBITDA increased by 8.4% to £1.29m.

Print sales overall were down £500,000 at £9.4m, and sales at its franchise network slumped by £1.2m, or 21%, to £4.4m.

Sales of its W3P online ordering and web-to-print system increased by almost 24% to £566,000, while Template Cloud sales grew to £77,000 (2012: £24,000).

Chief executive Tony Rafferty said: “The business is in a transition. It’s probably taking longer than we thought, but we are seeing momentum.

“Our SaaS developments are eating up all the profit at the moment, but the reality is you can’t start something new without investing in it, and that’s what we’re doing. I’m one of the largest shareholders in Grafenia and I’m very excited about it,” he added.

The group signed up 19 new agreements for its W3P online ordering and web-to-print solution during the period, and Rafferty said adoption was increasing.

“We granted the highest number of W3P deals in October, after the period end,” he said. “Many SME litho and digital printers have been around the houses and looked at all the web-to-print offerings, and they have found that W3P is easier to use.”

The new W3P web shop facility came out of beta testing last month.

“It’s early days and it’s just starting to gain momentum,” Rafferty added. “My agenda is to have 1,000 printers who get rid of their website that loses them money and replace it with a web shop that makes money.”

He said the business remained cash-generative, and the reduction in net cash, from £1.14m to £530,000, was the result of a strategic move: “We are simply paying suppliers quicker than a year ago in order to take advantage of settlement discounts.”

The firm cut its interim dividend to 0.33p (2012: 1.05p). Grafenia’s share price fell from 21.5p to 19.25p on the news.

Rafferty will shortly publish a book ‘Web-to-Print MD-to-MD’, that will challenge conventions about the business-to-business and business-to-consumer markets.