Sat, Aug

IR talks to... Steve Cheek

Towards the end of 2014 Callprint said it intended to double turnover to £25m in two years, and in particular was looking to acquire companies with large-format print and project management capability

. Since then you’ve made a number of acquisitions and other investments. How close has that activity brought you to that £25m target - and do you think you’ll achieve it on schedule?

We’re on target. March is our year-end and we’re looking like we’re up to £16m+ turnover - so a 30% growth for year one. That’s not including any turnover from last year’s acquisitions (PPS and Link 88). We are currently [at the time of writing] working on another two acquisitions, one of which will bring the extra £3m we’re looking for this year. Our target for 2016/17 is £25m including acquisitions - we certainly think that’s achievable.

Of course growing turnover is one thing - but what about growing profit?

Good question - our average gross margin across the group is up about 0.3%. We think that’s very positive given that as we are expanding so quickly there are significant growing pains. We are not just taking on more work, but different types of work, new staff, increasing an element of outsourcing to partners - and obviously there’s less margin when you do that. So to do all that and increase a couple of points on margin means we’re doing a successful job in terms of managing our work efficiently.

The problem for any company is that if you’re shrinking you have cashflow issues, and if you grow you have cashflow issues. So cashflow is still the biggest issues we find we have - and we think that will remain the case as we grow and investment is funnelled into new businesses, kit, and people.

Also, being a ‘solutions’ provider means you outsource more work - because you can’t concentrate on everything internally - and that means you end up paying suppliers quicker than you’re getting paid. Because a larger scale company allows you to some extent to deal with bigger clients - which is great - they tend to have extended payment terms.

You can anticipate elements of what I’ve flagged up - but not all. You can’t prepare for payment terms that you don’t know what they’re going to be; you can’t prepare for people not paying you – you just have to build in a contingency, which we have. But it’s also very important, if you’re going for the speed of growth that we are, that you have the support of the bank.

And is the bank being supportive then, given the more uncertain economic climate we keep being warned about?

There’s always instability in any market. But are we heading for a market crash? In my view, no. The market is constantly changing and you have to establish where the opportunities are and leave poor performing sectors behind. I think that’s what people find hard - changing their position when the market changes. We are very lucky in that we changed our position during the recession and have a great management team that sees where the markets are heading. And, we have great clients that tell us! If you listen to your clients they pretty much tell you where you need to be heading. Traditionally, printers have been good at talking and not so good at listening, but that’s turned around.

You have put a lot of emphasis on having operations in various regions of the UK (and I’ll come on to your exploits overseas). How close are you to having what you want, where you want it in terms of production/services capability?

Our goal is to provide clients with a single point solution anywhere in the world. That they can come to Callprint and say we need A, B, C and we can use our multiple locations and partners to deliver. So, how close are we to that? Until I have a location in every city, in every country, I won’t be satisfied! But what we do have now is a strong presence in the UK which covers most of the domestic territory, with fantastic partners.

So tell me more about your strategy in terms of fulfilment partners

We do all the client handling and management within Callprint. On the partners front, we use really trusted companies to deliver product for us where we have a production gap. We won’t necessarily fill that gap in-house. Where we have a really valuable partner doing a great job we’ll continue that route because it takes the pressure off us.

You also have operations in Dubai, and you’ve mentioned partnering in the US in the past. How much of the group’s work now comes from/is handled in the UK – and do you expect to see that ratio changing?

Dubai currently contributes about 5% of Callprint group turnover. We expect at minimum a double-digit growth there this year and see lots of opportunity over the next three years. We’ve invested in quite a bit in HP-based large-format kit there recently, and we really expect that part of the business specifically to grow, though we’ve seen increased demand for the whole range of services, largely because there are few companies there that offer a single point solution. Again we use partners there too, and we may well open a second office in the Middle East ourselves - and we’ve now identified Abu Dhabi as the likely location.

The US is harder to measure due to its set-up: Callprint along with NRI and Thomas Printworks formed Link DSG three years ago which looks at strategic targets that are blue chip companies needing international services - between us we have 55 locations across the US which we can use to offer that all important single point solution. Link’s turnover is separate from Callprint group obviously, and Link is where our focus is in terms of growing in the US.

Will we ever have a physical location in the US? I’m not sure. If the right opportunity presents itself perhaps, but it can’t put us in direct completion with our partners.

A key part of the Callprint strategy is to diversify and offer services beyond print per se. Can you give us a heads up on where print - and digital large-format in particular - now stands in terms longer term group development?

Our business is ultimately print. Areas like experiential campaigns are being requested more and more, and we employ project managers that can put together a whole raft of services via Callprint. But I would say about 60% of our business is related to wide-format, and the figure is higher than that if you include finishing services connected to wide-format.

That technology remains a key focus of the business. We may be shifting in terms of what type of application brings in what levels of work - for instance, we’ve seen a growing demand in relation to packaging - but it’s utilising our large-format printers and finishing kit.

Does digital inkjet continue to be an investment focus for the group then? And where do you see it fitting into the mix as you expand?

Wide-format inkjet is not only a focus for investment in terms of kit and people, but in terms of acquisition too.

The opportunity for offering wide-format-based print services is so diverse now. Take fabric print - which we don’t do in-house. We’re looking seriously at it - the direct-to-fabric print equipment is certainly more appealing to us now, but I’m not sure we are at the tipping point where it makes sense for us to invest yet, rather than have a partner provide a service to us.

On the whole, while inkjet continues to offer the best quality and efficiencies we will continue to invest in that technology as a route to market. But we’re always looking to new options too - and it might be through technology investment, or through acquisition.

How important do you think size is to a business continuing to be financially successful in today’s media landscape?

Size is always important. We’re quite a new company - we’re 25 next year. But as we’ve grown over the last couple of years, both geographically and in financial size, certain large companies now take us more seriously as a business, and consider us where perhaps they didn’t when we were smaller. I’m not saying that’s always the case, because we dealt with large companies before. But there are certainly those where scale is something they look at in terms of whether you can properly support them, before they even consider you.

But that’s not to say we only value big companies. Some of our best relationships are with those that started out as small companies and have grown alongside us. Those we helped out at the beginning have remained loyal and as they’ve grown have given us more work and helped us grow too.

I think it’s important that your business is set up to deal with clients of all sizes, and that you listen to them - not just about whatever job is in hand, but about how they see the market moving. Then you can move with it.



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