PLACINGAND ADMISSION TO AIM

A project is in place to upgrade the Company’s Flyerlink® software. This second generation
Flyerlink® running within a Linux environment is believed by the Director’s to be suitable to provide
the Company’s software infrastructure for the foreseeable future. The project is nearing its
completion and will be introduced following successful performance in field trials.
Intellectual Property
The Group relies on its use of its Flyerlink® software for the effective operation of its business and
retains the ownership of the intellectual property rights in respect of this software. The upgrade of
Flyerlink® has been carried out by an external consultant who jointly owns the intellectual property
in the upgraded software with the Company. The upgraded software cannot be used by anyone
outside the Group in the printing environment.
The Hub
Printing.com’s UK Hub is located in Trafford Park, Greater Manchester and embraces both leading
edge production facilities and a well equipped training suite, the National Training Centre. The
training suite can accommodate up to 40 people in three well-equipped seminar rooms. The
training suite is utilised most days, reflecting the importance given to the development of Group
employees, the employees of its Franchises and the Franchisees themselves.
Most ODPs produce each order on a job-by-job basis with each colour added individually. As a
result, it would be usual to pay more, say, for a two colour business card than for a single colour
card, with a three colour business card being even more expensive. To provide this service an ODP
would normally have ‘small format’ printing equipment located at its shop premises, requiring
capital investment and ongoing labour costs.
By contrast Printing.com has centralised printing facilities utilising leading technology to achieve
economies of scale. The Group’s systems allow many printing orders to be processed together on
large format sheets of card or paper. For example, up to 121 sets of business cards can be produced
simultaneously, effectively spreading the set up costs associated with the printing process across the
number of orders being produced. All work is produced in ‘process colour’ or ‘four colour’, more
commonly referred to as “full colour”, whereby four primary inks (cyan, magenta, yellow and black)
are utilised to reproduce a wide range of colours.
The Directors believe that this centralised approach yields the following benefits:
● numerous colours can be incorporated into the graphic design without additional printing
costs being incurred;
● colour photographs can be included at no extra production cost;
● the unit production cost is lower than the traditional ‘small format’ method; and
● by passing on to clients the cost savings, substantial competitive advantage may be achieved.
The Hub was relocated to new premises between February and August 2003, which at
approximately 30,000sq/ft are substantially larger than the previous facilities. To facilitate this move,
significant additional capital equipment was procured earlier than would have otherwise been
required so as to enable a smooth transition between old and new Hubs. Following the move, the
Directors estimate that the Hub’s capacity (measured as the full retail value of output) is in the order
of £20m to £25m, which compares with the current level of utilisation estimated to be
approximately £14m. This suggests that significant additional volume could be transacted by
incurring only the additional cost of raw material and manufacturing wages. A programme of
ongoing investment is planned, albeit at a substantially lower level than previously incurred, with
the aim of providing even greater operational efficiencies.
Market and competitors
The UK ODP market is estimated to be worth in excess of £1billion, and may be in excess of £2billion
if small commercial printers are also taken into account. With the exception of the Kall Kwik and
Prontaprint chains, the sector is highly fragmented.
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