REG - Jaywing PLC - Final Results
06/09/2022 14:15
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RNS Number : 4775Y Jaywing PLC 06 September 2022
This announcement contains inside information
Jaywing plc
06 September 2022
Jaywing plc
("Jaywing" or "the Company")
Final Results and Publication of Annual Report
Jaywing Plc (AIM: JWNG), the UK agency specialising in data science, announces
its audited results for the year ended 31 March 2022 and that a General
Meeting will be held on Thursday 29th September 2021 at the offices of Jaywing
plc, Albert Works, Sidney Street, Sheffield, S1 4RG at 12:00pm. The Company is
today posting copies of the Annual Report and Accounts to shareholders, an
electronic copy of which is available to view on the Company's website:
www.jaywing.com/investors/ (http://www.jaywing.com/investors/)
Enquiries:
Jaywing plc: Christopher Hughes (Company Secretary) Tel: 0333 370 6500
Cenkos Securities plc: Nicholas Wells / Callum Davidson (Nominated Adviser)
Tel: 0207 397 8920
Financial highlights
2022 Restated*
£'000 2021
£'000
Revenue 23,324 20,165
Adjusted EBITDA((1)) 2,206 2,181
Adjusted EBITDA((1)) excluding salary sacrifice and Covid-19 government 2,166 651
support ((3))
Operating Loss (6,086) (1,040)
Loss before Tax (6,560) (1,491)
Cash Generated from Operations 1,587 2,258
Cash Generated from Operations excluding salary sacrifice and Covid-19 1,547 728
government support ((3))
Net Debt pre IFRS 16((2)) (8,040) (7,586)
Loss per share (6.90p) (1.54p)
* See note 33
Reconciliation of Operating Loss with Adjusted EBITDA
2022 Restated*
£'000 2021
£'000
Operating Loss (6,086) (1,040)
Add Back:
Impairment of Goodwill ((4)) 6,131 -
Depreciation of property, plant & equipment 327 259
Depreciation and impairment of right of use assets 752 666
Amortisation of intangibles 730 1,118
EBITDA 1,854 1,003
Impairment of other intangibles - 690
Restructuring costs 352 488
Adjusted EBITDA 2,206 2,181
Salary sacrifice and Covid-19 government support credit ((3)) (40) (1,530)
Adjusted EBITDA** excluding salary sacrifice and Covid-19 government support 2,166 651
((3))
Adjusted EBITDA** excluding salary sacrifice and Covid-19 government support 9.3% 3.2%
margin ((3))
* See note 33
(1) Adjusted EBITDA represents EBITDA before restructuring costs and
impairment charges
(2) Including accrued interest
(3) In response to the Covid-19 pandemic there was a voluntary salary
sacrifice scheme in the UK companies between April
2020 and August 2020 which reduced payroll costs by £749k.
Government support of £40k in the year ending 31 March
2022 (2021: £781k) was received, refer to note 2 for details.
(4) This non-cash charge has been recognised against the UK Cash Generating
Unit ("CGU") and follows a Group restructuring
during the course of FY22 during which all UK operations were
integrated into one business unit and the previous 4 units
were moved into one UK CGU. This impairment has also taken into
account the general economic environment and
headwinds facing the UK operations. Further details of this
impairment are shown in Note 14 to the Consolidated Financial
Statements.
Chairman's Statement
Results
I am very pleased to report revenue for FY22 of £23.3m (2021: £20.2m), a
growth of 16% on FY21, which demonstrates a strong recovery from the impact of
Covid 19 on FY21 revenues. This comprises a 13% growth in UK revenue and a 25%
growth in Australia's revenue.
Adjusted EBITDA for the Group, excluding salary sacrifice and Covid-19
government support income of £40k (2021: £1.530k), was £2,166k (2021:
£651k), a £1,515k improvement in the underlying Adjusted EBITDA, excluding
these credits. The underlying Adjusted EBITDA margin as a percentage of
revenue for FY22 amounted to 9.3% compared with 3.2% in FY21.
Cash Generated from Operations for the year, excluding salary sacrifice and
Covid-19 government support receipts improved by £819k to £1,547k (2021:
£728k).
During the course of FY22, the Company carried out additional restructuring to
further improve business efficiencies, the full effect of which are expected
to be realised in FY23.The re-organisation of the business in FY21 into market
and client facing business divisions continues to provide Jaywing with an
increased focus on a more comprehensive and solution-based service offering to
clients.
On 26(th) August 2022, post year end, we were delighted to announce the
acquisition of Midisi Limited, a marketing software development business,
which owns the intellectual property rights for the 'Decision' software that
Jaywing currently sells to certain clients under a license arrangement, and
which enables the automation of Pay-Per-Click advertising management in real
time.
We believe this acquisition will provide a strategic platform for the Group to
help drive revenue and profits from an advanced and client tailored
proposition that combines data analysis and advanced technology to help
improve business efficiencies for both our clients and Jaywing.
Strategy
Following the acquisition of Midisi, the Group plans to focus on further
organic growth on the back of a strong new business pipeline. The Group will
promote and further develop the recently acquired Decision software as well as
explore opportunities for further investment in advanced data analysis
products, the application of technology to marketing challenges and related
people resources to support our data science led service offerings to clients.
Jaywing Australia, which is led by a successful and autonomous professional
team, has continued to demonstrate a track record of strong financial
performance during the year with sales up by 25%. The ongoing collaboration
with the UK business on clients and services, where required, will now include
the opportunity to promote the Decision software in Australia, and we will
work with the Australian team to explore opportunities to further accelerate
scale and market reach.
Funding
The Company remains in discussions with each of the holders of the secured
debt about a potential debt reorganization to provide a more sustainable long
term support facility for the Group. Details of this debt are contained in
Note 18 and Note 30.
Board
In April 2022 we announced that Caroline Ackroyd, the Company's Chief
Financial Officer and a board director had resigned to pursue other interests.
Interim CFO support was then provided by Ajay Handa (who did not join the
Board) until 31 August 2022, when the Company announced the appointment of
Christopher Hughes as the Company's Chief Financial Officer. Christopher is
expected to join the Board in due course.
People
Our staff have remained resilient to the challenges of a fast-changing
business environment and have worked closely with our customers to help serve
their varied and challenging business needs and continued to win and welcome
new customers to Jaywing. The Board would like to thank all our staff for
their ongoing hard work and dedication.
Ian Robinson
Non-Executive Chairman
Chief Executive's Report
Overview
Following two challenging years for the business I am delighted to report a
strong set of results for the financial year 2022, which establishes the
foundation for growth moving forward. The combination of 16% year-on-year
revenue growth and improved cost efficiencies has enabled us to increase
underlying Adjusted EBITDA (excluding salary sacrifice and Covid-19 government
support) by 233% to £2.2m. Cash generated from operations decreased by
£0.7m on the previous year, to £1.6m due to the previous year's salary
sacrifice and significant Covid-19 government support, but increased £0.8m
when these are excluded, supported by strong revenue growth.
We have also been able to complete the acquisition of Frank Digital in
Australia and the integration of our two businesses there as "Jaywing
Australia" is underway.
There have been a number of legacy issues to resolve in the last two years,
including commitments relating to the Put Options for both Australian
acquisitions, and a legal claim in relation to a 2016 acquisition (now
resolved in favour of Jaywing with costs awarded to the Company). The
Company is now well positioned to drive revenues and profitability through
2022/23 and beyond.
Jaywing UK
UK revenue increased by 13% compared with the prior year, driven by some
notable new business wins. Our focus on an integrated marketing proposition,
enabled by data science, is resonating with existing and potential clients.
The acceleration of the move towards digital since the pandemic started has
reinforced the need to really understand marketing effectiveness, and we have
been able to deliver both outstanding results and unprecedented insight to our
clients.
Amongst our existing marketing clients, the biggest increases in spend came
from Castrol, HSBC, Savills and La Redoute, and their spend on performance
marketing, in particular, has increased significantly.
Key new clients included Rush Hair & Beauty, Hallmark Cards, Cox
Automotive, CityFibre and Skipton Building Society. Our new business wins
have accelerated through the year, with the most recent marketing successes
including BNP Paribas, Restore Group and Verdant.
In Risk Consulting, revenues increased 39%, from a combination of strong
growth of existing client revenues and a number of key wins. The biggest
existing client spend increases came from HSBC, Starling Bank, Chetwood
Financial and Vanquis Bank. Significant wins included Swinton Insurance,
Redwood Bank and Connected Places Catapult. We are continuing to develop our
Regulatory Risk revenue stream, and we are also seeing increased demand to
apply our modelling capabilities to ESG-related risk assessment.
Towards the end of 2021 we implemented some additional cost savings to improve
the efficiency of our operations, including the closure of our Newbury office
and the merging of some functions to drive economies of scale. The full
benefits of this will be seen in the financial year ending 31 March 2023, but
it supported a 10 percentage point underlying improvement in contribution
margin in the UK for the full year and a 6 percentage point improvement in
EBITDA margin. EBITDA, excluding salary sacrifice and Covid-19 government
support, improved by £1.6m year-on-year.
Our opportunity pipeline has grown steadily through the last year, giving
confidence for the year ahead. In Quarter 4 alone, we won new business with
an annualised revenue of £3.3m.
Jaywing Australia
Our Australian businesses have experienced a different impact from the
pandemic over the last 18 months. Revenues have continued to grow strongly,
but it has become more challenging to deliver those revenues cost-effectively,
with the closure of the borders severely restricting migrant labour, leading
to dramatic wage inflation. This has been seen in both the cost of new hires
and in the impact on existing employee retention. Average salary costs per
employee have increased by around 30% year on year, which has squeezed margins
and EBITDA.
Revenue grew by 25% for the full year, with key clients including Fiskars,
Navitas, CSR and Athena. However, staff costs, including both wage inflation
and additional heads to support higher volumes, increased by 58%, reducing
Australia's EBITDA (excluding Covid-19 government support) by £0.7m
year-on-year.
Now that the borders have reopened, there are signs that wage inflation will
move back to more normal levels from here on, allowing future revenue
increases to flow through to profitability.
In the first quarter of the year the main focus in Australia has been on
integrating Frank Digital into Jaywing Australia, following the completion of
the Put Option. The combination of the businesses will allow us to deliver a
compelling integrated marketing proposition, whilst driving efficiencies in
delivery as one larger business, led by Tom Geekie as CEO. Both companies
have now relocated to a new office in Barangaroo, Sydney, which will further
support the new combined proposition and operating model.
Acquisition of Midisi Limited
On 26th August 2022, post period end, the Company completed the acquisition of
Midisi Limited, a marketing software development business, which owns the
intellectual property rights for the 'Decision' software ("the Acquisition").
Decision is an award-winning Artificial Intelligence solution for online
marketing activity that Jaywing currently sells to certain clients which
enables them to automate Pay-Per-Click advertising management.
The acquisition will enable Jaywing to take full ownership of the IP for
Decision, thus providing a full revenue contribution from Decision sales. The
costs of running Decision are relatively fixed and the planned further growth
of Decision sales to existing and new customers is expected to help improve
Jaywing's overall margins as well as increase its recurring revenues. The
acquisition will provide a core platform for establishing an in-house Research
& Development unit within Jaywing to develop and introduce new
technologies to solve client challenges. The Directors believe that there is
a strong commercial rationale for the acquisition.
The Directors believe that the Acquisition will be immediately
earnings-enhancing from the retention of 100% of revenues, and that both the
revenue and profit will increase over time as Jaywing focuses on adding new
clients and developing the proposition further.
The initial consideration for the acquisition was £400,000, which was paid
from Jaywing's existing cash resources, plus excess cash of £845,230. Further
fixed payments totalling £1.4m will be paid at 6-monthly intervals over 42
months, plus an additional performance-related earn-out payable at 6-monthly
intervals between months 13 and 49, funded out of planned cashflows generated
from Decision revenues. The earn-out relates to revenues generated from
Decision, and the maximum earn-out payment is capped at £3.2m.
Employees
Whilst the impact of the pandemic has diminished over time, its effects on
working patterns are long-lasting. Our employees have continued to adapt to
working and collaborating in a hybrid model, and we recognise that our people
are our most important asset. During the year we brought all UK employees
together onto common contracts, under one company (Jaywing UK Ltd), rather
than split between entities. We are also continuing to invest in a
combination of experienced hires and talented but less experienced recruits,
who represent the Company's future management.
Group revenue per employee grew by 13% in the year to £78.8k (2021: £69.8k).
I would like to thank all our colleagues in both the Australian and UK
businesses for their continuing outstanding contribution over the last 12
months.
Future Outlook
Jaywing has generated new business wins and growth in its opportunity
pipeline, although the Board remains cautious about the effects of potential
recession in the UK and Australia. The Board believes there are significant
opportunities for revenue in both of its key markets and this coupled with the
restructured cost base gives confidence for the year ahead.
Andrew Fryatt
Chief Executive Officer
Jaywing plc
6 September 2022
Strategic Review
Results
Revenue for FY22 was £23.3m (2021: £20.2m), a growth of 16% on FY21, a
pleasing result as the business continues its recovery from the Covid pandemic
and benefits from its go to market approach.
Adjusted EBITDA excluding salary sacrifice and Covid-19 government support
income of £40k (2021: £1.530k), was £2,166k (2021: £651k), a £1,515k
improvement in the underlying Adjusted EBITDA, excluding these credits. The
result was achieved through revenue growth of 16% and strong cost control but
no salary sacrifices and significantly reduced Covid-19 government support in
the current year.
Adjusted EBITDA for FY22 was £2,206k (£2,181k) and FY21 benefiting from
£1.5m of salary sacrifice and Covid-19 government support.
The statutory operating loss was £6,086k (2021: loss of £1,040k) and the
statutory loss before taxation was £6,560k (2021: £1,491k) following an
impairment to Goodwill of £6.1m. This non-cash charge has been recognised
against the UK Cash Generating Unit ("CGU") and follows a Group restructuring
during the course of FY22 during which all UK operations were integrated into
one business unit and the previous 4 units were moved into one UK CGU. This
impairment has also taken into account the general economic environment and
headwinds facing the UK operations. The acquisition goodwill relating to the
Australia CGU remains unimpaired. Further details of this impairment are shown
in Note 14 to the Consolidated Financial Statements.
Net cash from operations was down £519k to £1,289k (2021: £1,808k) due no
salary sacrifice and significantly reduced Covid-19 government support in the
current year, partially offset by strong revenue growth.
Cashflow generated from operations excluding salary sacrifice and Covid-19
government support amounted to £1,547k compared with £728k for the prior
year. The Cash Flow statement shows the movement in the cash position of the
business.
Non-IFRS measures
The financial statements contain all the information and disclosures required
by the relevant accounting standards and regulatory obligations that apply to
the Group. The annual report and financial statements also include measures
which are not defined by generally accepted accounting principles such as
IFRS. We believe this information, along with comparable IFRS measures, is
useful as it provides investors with a basis for measuring the underlying
performance of the Group on a comparable basis. The Board and its executive
management use these financial measures to evaluate the Group's underlying
operating performance. Non-IFRS financial measures should not be considered in
isolation from, or as a substitute for, financial information presented in
compliance with IFRS. Similarly, non-IFRS measures as reported by us may not
be comparable with similar measures reported by other companies.
Key performance indicators used by the Board and executive managers include:
2022 Restated*
£'000 2021
£'000
Revenue 23,324 20,165
Adjusted EBITDA((1)) 2,206 2,181
Adjusted EBITDA % 9.5% 10.8%
Adjusted EBITDA** excluding salary sacrifice and Covid-19 government 2,166 651
support((3))
Operating Loss (6,086) (1,040)
Loss before Tax (6,560) (1,491)
Adjusted EBITDA** excluding salary sacrifice and Covid-19 government support 9.3% 3.2%
margin((3))
Net Debt pre IFRS16((2)) (8,040) (7,586)
Loss per share (6.90p) (1.54p)
Average headcount 296 289
Revenue per head 78.8 69.8
Cash generated from operations 1,587 2,258
Client numbers at year end 197 173
* See note 33
(1) Adjusted EBITDA represents EBITDA before restructuring costs and
impairment charges
(2) Including accrued interest
(3) In response to the Covid-19 pandemic there was a voluntary salary
sacrifice scheme in the UK companies between April
2020 and August 2020 which reduced payroll costs by £749k.
Government support of £40k in the year ending 31 March
2022 (2021: £781k) was received, refer to note 2 for details.
(4) This non-cash charge has been recognised against the UK Cash Generating
Unit ("CGU") and follows a Group restructuring
during the course of FY22 during which all UK operations were
integrated into one business unit and the previous 4 units
were moved into one UK CGU. This impairment has also taken into
account the general economic environment and
headwinds facing the UK operations. Further details of this
impairment are shown in Note 14 to the Consolidated Financial
Statements.
Net Debt
At 31 March 2022, Net Debt including accrued interest (pre IFRS16) was £8.0m
(2021: £7.6m), representing gross debt of £8.7m (2021: £8.4m) net of cash
of £0.7m (2021: £0.8m). The Company's gross debt is represented by an amount
of £7.7m (2021: £7.7m) drawn down from the secured debt funding provided by
the "Jaywing Facility" together with £1.0m (2021: £0.7m) of accrued and
unpaid interest on the Jaywing Facility. Jaywing Facility is described fully
described in Note 30 and Note 18 to the Financial Statements.
On 11 August 2022 the Jaywing Facility was increased by £1.0m to £9.2m. The
Jaywing Facility has continued to be provided to the Company on the same terms
as the original secured loan facility acquired on 2 October 2019.
Australia
On 2 November 2021Jaywing plc agreed under the terms of a variation agreement
with Matt Barbelli as the sole director of Frank Digital Pty Ltd ("Frank
Digital") in Australia to accelerate the exercise of the Put and Call Option
in relation to the 25% of the shares in Frank Digital held by Barbelli
Enterprises Pty Ltd ATF Barbelli Holdings Trust ("BEP"). Jaywing now owns 100%
of the shares in Frank Digital. The acceleration of this payment was agreed to
facilitate Jaywing's strategy, specifically the timely integration of its two
Australian businesses. Jaywing and Frank Digital had entered into an agreement
on 27 February 2018, whereby Jaywing acquired 75% of the shares of Frank
Digital, with the remaining 25% subject to a Put and Call Option, exercisable
from February 2022. The variation agreement that accelerated timing was agreed
between Jaywing, BEP, Matt Barbelli and Massive Group Pty Ltd and provided for
the immediate acquisition of this 25% stake for a consideration of AUS $1.2m
(c.£0.7m).
On 21 October 2020, the business completed the acquisition of the remaining
25% of the shares in Massive Group PTY Ltd ("Massive Group") which were not
already owned by Jaywing following the exercise of the put option in relation
to that 25% stake by entities controlled by the two directors of Massive Group
in Australia. Jaywing and Massive Group had entered into an Agreement on 7
July 2016, whereby Jaywing acquired 75% of the shares of Massive Group, with
the remaining 25% subject to a put and call option exercisable from July 2020.
Jaywing now owns 100% of the shares in Massive Group, which has traded as
Jaywing Australia since 2017.
The 25% stake was acquired by Jaywing on 21 October 2020 for a consideration
of $4.0m (c.£2.2m), comprising $3.0m (c.£1.66m) payable immediately,
followed by a series of monthly payments totalling $1.0m (c.£0.5m) between
the acquisition date and June 2021. At 31 March 2021 the outstanding balance
was $0.5m (c £0.3m) which was fully satisfied on 30 June 2021. The total
consideration for the purchase of the 100% interest in Massive Group is $9.6m
(c. £5.4m).
Impairment
As required by IAS 36, the Company has carried out an impairment review of the
carrying value of our intangible assets and goodwill. The weighted average
cost of capital ("WACC") was calculated with reference to long-term market
costs of debt and equity and the Company's own cost of debt and equity,
adjusted for the size of the business and risk premiums. The calculated WACC
rate used for the impairment review was 11.5% for Australia and 11.8% in the
UK (2021: both 11.5%). This was applied to cash flows for each of the cash
generating units using estimated growth rates in each business unit. The
impairment review was based on two main cash generating units being the UK and
Australia. As part of the review, a number of scenarios were calculated using
the impairment model. These looked at what effect changes in the WACC rates
and movements in EBITDA would have to the outcome.
The Group has impaired former acquisition goodwill by £6.1m. This non-cash
charge has been recognised against the UK Cash Generating Unit ("CGU") and
follows a Group restructuring during the course of FY22 during which all UK
operations were integrated into one business unit and the previous 4 units
were moved into one UK CGU. This impairment has also taken into account the
general economic environment and headwinds facing the UK operations. The
acquisition goodwill relating to the Australia CGU remains unimpaired.
As part of the prior year restructuring, we have retired the Epiphany brand in
the year, this resulted in an impairment to the carrying value of the
trademark of £690k in the reported 2021 results.
Share Options
The Company's Performance Share Plan terminated on 8 October 2020 and there
are no outstanding share options. This resulted in a credit of £696k through
the share option reserve in the prior year. No further balance remains.
Going Concern
The Group financial statements have been prepared on a going concern basis in
accordance with UK Adopted International accounting standards. In coming to
their conclusion, the Directors have considered the Group's profit and cash
flow forecasts for period of at least 12 months from the date these financial
statements were approved.
In determining the appropriate basis of preparation of the financial
statements, the Directors are required to consider whether the Group can
continue in operational existence for the foreseeable future.
In addition to the normal process of preparing forecasts for the Group, the
Board has also considered downside risks and the potential impact of the
economic environment on the cash flows of the Group for a period to 30
September 2024. This has been done by looking at various scenarios within the
forecasts for the potential effect of changes in the market during the
forecast period.
In considering their position the Directors have also had regard to letters of
support in respect of the secured debt which have received from each of the
holders of that debt. Details of this debt are contained in Note 18 and Note
30.
The Group financial statements do not include the adjustments that would
result if the Group were unable to continue as a going concern. The Directors
have a reasonable expectation that the Group has adequate resources to
continue in existence for the foreseeable future and have concluded it is
appropriate to adopt the going concern basis of accounting in the preparation
of the financial statements.
Streamlined Energy and Carbon Reporting (SECR)
Under the Companies (Directors' Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018, we are mandated to disclose our
UK energy use and associated greenhouse gas (GHG) emissions. Specifically, and
as a minimum, we are required to report those GHG emissions relating to
natural gas, electricity and transport fuel, as well as an intensity ratio,
under the Streamlined Energy and Carbon Reporting (SECR) Regulations.
To ensure we achieve the transparency required, and deliver effective
emissions management, we implement and utilise robust and accepted methods.
Accordingly, whilst the Regulations provide no prescribed methodology, we
collate our GHG data annually and complete the calculation of our carbon
footprint using the latest Defra (Department for Environment, Food and Rural
Affairs)/BEIS (Department for Business, Energy & Industrial Strategy)
emissions factors.
The period covered for the purposes of the SECR section is 1 April 2021 to 31
March 2022 and our calculations are for the following scope:
- Buildings- related energy - natural gas (Scope 1) and
electricity (Scope 2) and
- Employee owned vehicles (grey fleet) (Scope 3)
Calculation Methodology
The Jaywing GHG emissions were assessed in accordance with Defra's
'Environmental reporting guidelines: including Streamlined Energy and Carbon
Reporting Requirements' and use the 2019 emission factors developed by Defra
and BEIS.
Results
Element 2021/22 (tCO2e)
Direct emissions (Scope 1) - natural gas and LPG 59,126
Indirect emissions (Scope 2) - from purchases electricity 63,396
Total tCO2e (Scope 1 & 2) 122,522
Other indirect emissions (Scope 3) - grey fleet travel 20,964
Gross Total Emissions 143,486
Intensity metric (Gross Emissions): Tonnes of CO2e per employee 586
Total energy consumption (kWh) 621,382
Energy Efficiency
As an office-based business, our environmental impact is low and our Corporate
Social Responsibility policy is available on https://investors.jaywing.com,
which covers our approach to the environment and sustainability.
At Jaywing, we
· encourage the use of remote working facilities to avoid
travelling where possible
· encourage the use of public transport wherever possible, both
through our environmental policy and expenses policy, and where not possible,
encourage car sharing or environmentally friendly alternatives. We discourage,
where possible, the use of domestic flights
· operate a cycle to work scheme
· designed our head office to be as energy efficient as possible,
with measures such as passive-stack ventilation and a large amount of secure
cycle storage plus showering facilities to encourage cycling
· have switch off policies, including PIR activated lighting in
some buildings, as well as trying to use energy as efficiently as possible
· have a clear policy on the use of plastics, with particular
attention paid to single use plastics
· aim to recycle all waste material that can be recycled and use
local facilities to reduce the transportation of waste materials
· aim to purchase energy efficient, environmentally and
ecologically friendly products
· monitor our energy usage within our buildings.
All policies, including our environmental policy, are reviewed annually.
Section 172 statement
In making decisions over the year, the Directors have considered what would be
most likely to promote the success of the Company for the benefit of all
stakeholders and have had regard for the following:
· the likely long-term consequences of any decision;
· the interests of the Group's employees;
· the need to foster the Group's business relationships with
suppliers, customers and others;
· the impact of the Company's operations on the community and the
environment;
· the desirability of the Company maintaining a reputation for high
standards of business conduct; and the need to act fairly as between
shareholders of the Company.
In 2019 the Company adopted the Corporate Governance Code for Small and
Mid-Size Quoted Companies from the Quoted Companies Alliance (the "QCA Code").
The Board considers the QCA Code is an appropriate code of conduct for the
Company. There are details of how the Company applies the ten principles of
the QCA Code on the Company's investor website. The Corporate Governance
Statement forms part of this report.
The Chairman's Statement and Chief Executive's Report describe the Group's
activities, strategy and future prospects, including the considerations for
long term decision making.
The Company considers that its major stakeholders are its employees, clients,
lenders and shareholders. When making decisions, the interests of these
stakeholders are considered informally as part of the Board's group
discussions.
The Company is committed to being a responsible employer and strives to create
a working environment where its employees are actively engaged and can
contribute to its success.
The Company understands the value of maintaining and developing relationships
with its clients and suppliers, to support its potential for future growth.
The Board does not believe that the Group has a significant impact on the
environments within which it operates. The Board recognises that the Group
has a duty to be responsible and is conscious that its business processes
minimise harm to the environment, and that it contributes as far as is
practicable to the local communities in which it operates. The Group's
Corporate and Social Responsibility Policy is available on the Group's
investor website and the SECR report for the Group is included in this report.
The Board recognises the importance of maintaining high standards of business
conduct. The Group operates appropriate policies on business ethics and
provides mechanisms for whistle blowing and complaints which all employees are
aware of. These are maintained by the Policy Steering Committee.
The Board aims to maintain good relationships with its shareholders and treats
them equally. The Group has presented at forums for retail investors and has
regular contact with its major shareholders.
Andrew Fryatt
Chief Executive Officer
Jaywing plc
6 September 2022
Principal Risks and Uncertainties
The evaluation of the Company's risk management process is the responsibility
of the Board. Jaywing has developed its risk reporting framework in
conjunction with the business leadership team who take an active and
responsible role in this process. Below is a summary of the current key risks.
Risk Mitigation
1.Pandemics and major incidents
Since late March 2020, Jaywing has been impacted by the Covid-19 pandemic, The Company was quick to take action to mitigate the impact of this reduction
with disruption to client and staff. in demand by putting in place measures to minimise the financial effect on the
Company.
Most of Jaywing's staff can work effectively from home and we continue to
provide good levels of service and support to existing clients as well as
adding new business.
We continue to monitor the well-being of staff working remotely and provide
support as required.
In July 2021 we started a staged return to the office under a hybrid model of
remote working and remain under this model now.
2.Loss of key staff
Jaywing is dependent on its ability to recruit and retain staff with adequate The expertise of Jaywing's people is a key source of competitive advantage and
experience and technical expertise to service its clients. the Company's remuneration and incentive packages are reviewed regularly to
retain and incentivise key staff. The Company also provides an attractive and
collaborative working environment and culture.
3. Loss of business from clients / adverse economic environment
Loss of business from clients could lead to a reduction in overall revenue and The Company aims to minimise such losses by continuing to focus on providing a
profitability. high quality service to its clients at all times as well as offering a wide
range of services to existing clients and adding new clients through its new
business activities.
Jaywing has restructured its main business sectors based on clients and
markets with the aim of getting closer to each client with Jaywing's full
range of services tailored to their needs and the markets they operate in.
This has strengthened our ability to use our full range of services to offer
them relevant and effective solutions.
Jaywing's client concentration risk is low.
The impact of revenue losses on profitability is mitigated by ensuring that
the Company's cost base is efficiently aligned with its revenues.
4. Changes in technology
The digital marketing industry is characterised by constant developments in Jaywing is committed to innovation in data science led products and services
technology, online media and data science. In this environment, it is vital to and has dedicated resources to this. The Company has close relationships with
be at the forefront of this change, to ensure Jaywing can provide the benefits online media owners (e.g. Google) and has early access to new product
of these changes in technology to its clients and remain competitive. developments as a consequence of the significant online media budgets that it
manages on behalf of its clients.
Jaywing also has a specialist team focused on the use of technology whose
brief is to keep themselves abreast of new developments through their own
research and through their relationships with technology providers.
5. Liquidity
Poor trading and cash flow performance could lead to a lack of ongoing support Jaywing's key financial measures are focussed on cash generation and net debt.
from its lenders and an inability to raise equity to meet the needs of the The Company monitors its trading and cash flow performance closely and takes
business. prompt action to mitigate any adverse trends.
6. Compliance with regulations and changes in legislation
Failure to comply with regulations such as GDPR and changes in legislation
could lead to reputational damage for Jaywing and its clients as well as fines
and loss of business. Jaywing engages advisers in relevant specialisations to assist with
compliance. Experts in Jaywing's business areas can ensure client initiatives
are all compliant, alongside external input where appropriate.
Board of Directors
Ian Robinson, Non-Executive Chairman
Chair of Audit & Risk Committee and member of Remuneration and Nomination
Committees
Ian is a Non-Executive Director and Chairman of the Audit Committee of
Gusbourne plc, an AIM listed English sparkling-wine business. He is also a
nonexecutive Director of a number of other privately-owned businesses. He is a
Fellow of the Institute of Chartered Accountants in England & Wales and
holds an honours degree in Economics from the University of Nottingham.
Andrew Fryatt, Chief Executive,
Andrew has more than 30 years' experience in technology-dependent businesses,
primarily in the Retail and Telecoms sectors. Following an honours degree in
Economics from the University of Cambridge, he began his career in the Mars
Group, progressing through various marketing roles before joining Kingfisher
Group in a senior marketing role. His experience included senior marketing and
commercial roles before moving into general management, and he has run major
divisions of Daisy and Zen Internet, as well as gaining experience as CEO of
Ideal Shopping Direct plc. He has a particular focus on customer excellence
and has received several awards on behalf of his businesses for delivering
outstanding service.
Mark Carrington, Non-Executive Director
Member of Audit & Risk, Remuneration and Nomination Committees
Mark is a Fellow of the Association of Chartered Certified Accountants. He is
a Non-Executive Director of a number of privately-owned businesses both in the
UK and Overseas. He is also involved in the provision of management services
to a number of other privately-owned and AIM listed businesses.
Philip Hanson, Non-Executive Director
Chair of Remuneration and Nomination Committees and member of Audit & Risk
Committees
Philip is a fellow of the Chartered Institute of Marketing and has extensive
experience in marketing and ecommerce both in the UK and internationally,
having held a number of senior roles in the FMCG and retail financial services
sectors - latterly as Global Marketing & ecommerce Director for Travelex.
He is also Non-Executive Director of the Bettys & Taylors Group. He was a
Director of the French and Australian entities of the Goelet family wine
business (SCEA Domaine de Nizas and Red Earth Nominees Pty Ltd respectively)
until December 2020. He is a Non-Executive Director of Silver Blue LLC which
oversees the worldwide agriculture assets of the Goelet family. Philip was a
Director of Travelex Card Services Ltd until December 2015.
Directors' Report
The Directors submit their Annual Report on the affairs of the Group and the
Company and the audited Financial Statements for the year ended 31 March 2022.
Principal activity
The principal activity of the Company, and Group, during the year under review
is providing agency and consulting services in the areas of creative and brand
strategy, performance marketing, data science and risk.
Results and dividend
The Group's loss after taxation for the year ended 31 March 2022 was £6.4m
(2021: loss of £1.4m as restated, see note 33). The Directors do not propose
to pay a dividend.
Net assets at 31 March 2022 were £12.2m (2021: £19.0m as restated, see note
33).
Future developments
The future developments of the Group are referred to in the Chief Executive's
Report.
Political and charitable donations
The Group made charitable donations of £1k (2021: £3k) and no political
donations during the current or prior year.
Directors' interests
The present membership of the Board, together with biographies on each, is set
out on page 13. All those Directors served throughout the year or from
appointment. The Directors' interests in shares in the Company are set out in
the Directors' remuneration report.
Directors' third-party indemnity provisions
The Group maintains appropriate insurance to cover Directors' and Officers'
liability. The Group provides an indemnity in respect of all the Group's
Directors. Neither the insurance nor the indemnity provides cover where the
Director has acted fraudulently or dishonestly.
Employees
The Group is an Equal Opportunities Employer and no job applicant or employee
receives more or less favourable treatment on the grounds of age, gender,
marital status, sexual orientation, race, colour, religion or belief.
It is the policy of the Group that individuals with disabilities, whether
registered or not, should receive full and fair consideration for all job
vacancies for which they are suitable applicants. Employees who become
disabled during their working life will be retained in employment wherever
possible and will be given help with any necessary rehabilitation and
retraining.
Employees of the Group and its Subsidiaries are regularly consulted by local
managers and kept informed of matters affecting them and the overall
development of the Group.
The Group is committed to maintaining high standards of Health and Safety for
its employees, customers, visitors, contractors and anyone affected by its
business activities. Health and Safety is on the agenda for all regularly
scheduled Board meetings.
Financial instruments
Details of the financial risk management objectives and policies of the Group,
including hedging policies, are given in Note 32 to the Consolidated Financial
Statements.
Share Capital
Details of the Company's Share Capital, including rights and obligations
attaching to each class of share, are set out in Note 21 of the Consolidated
Financial Statements.
There are no restrictions on the transfer of ordinary shares in the capital of
the Company, other than customary restrictions contained within the Company's
Articles of Association and certain restrictions which may be required from
time-to-time by law, for example, insider trading law. In accordance with the
Model Code, which forms part of the Listing Rules of the Financial Conduct
Authority, certain Directors and employees are required to seek the prior
approval of the Company to deal in its shares.
The Company is not aware of any agreements between shareholders that may
result in restrictions on the transfer of securities and/or voting rights. The
Company's Articles of Association contain limited restrictions on the exercise
of voting rights.
The Company's Articles of Association may only be amended by special
resolution at a General Meeting of shareholders.
Major interests in shares
As at 31 March 2022, the Company had been notified, in accordance with chapter
5 of the Disclosure and Transparency Rules, of the following voting rights as
shareholder of the Company:
2022 2021
Number of voting rights % %
Lord Michael Ashcroft 23,919,737 25.6 25.6
Lombard Odier Investment Managers Group 22,020,709 23.6 23.6
J & K Riddell 5,372,638 5.8 5.8
A Gardner 5,037,470 5.4 5.4
Bailey Family 4,687,500 5.0 5.0
Canaccord Genuity Group Inc 3,805,000 4.1 4.1
H & J Spinks 3,508,772 3.8 3.8
M Boddy 3,366,667 3.6 5.4
Miton UK Microcap Trust plc 2,871,035 3.1 3.8
Corporate Social Responsibility
The Board recognises the importance of social, environmental and ethical
matters and it endeavours to take account of the interests of the Group's
stakeholders, including its investors, employees, clients, suppliers and
business partners when operating the business.
General Meeting
Your attention is drawn to the Notice of Meeting either enclosed with this
Annual Report or online at https://investors.jaywing.com, which sets out the
resolutions to be proposed at the forthcoming General Meeting.
Post Balance Sheet Events
Bloom legal case
On 12 April 2022 there was a high court judgment in the case of "Others vs
Jaywing" where the judge found that the Claimants' claim must be dismissed in
its entirety and awarded costs, of which £419k has so far been recovered post
year end.
Acquisition of Midisi Limited
On 26(th) August 2022, post period end, the Company completed the
acquisition of Midisi Limited, a marketing software development business,
which owns the intellectual property rights for the 'Decision' software. ("the
Acquisition)
The Directors believe that the Acquisition will be immediately
earnings-enhancing from the retention of 100% of revenues, and that both the
revenue and profit will increase over time as Jaywing focuses on adding new
clients and developing the proposition further.
The initial consideration for the Acquisition was £400,000, and which was
paid from Jaywing's existing cash resources, plus excess cash of £845,230.
Further fixed payments totalling £1.4m will be paid at 6-monthly intervals
over 42 months, plus an additional performance-related earn-out payable at
6-monthly intervals between months 13 and 49, funded out of planned cashflows
generated from Decision revenues. The earn-out relates to revenues generated
from Decision, and the maximum earn-out payment is capped at £3.2m.
Connected to the acquisition, and to provide further working capital to the
Group, the Company has increased the headroom in its existing short-term
finance facility by £1m, through a variation of the existing debt agreement
with its lenders, DSC Investment Holdings Ltd and 1798 Volantis Fund Ltd. This
would cover the initial transaction costs, with subsequent payments funded out
of the Company's cashflows.
Increase in debt facility
On 11 August 2022, post year end, the Company increased its existing
short-term finance facility of £8.2m by £1m to £9.2m , through a variation
of the existing debt agreement with its Lenders. Further details are provided
in Notes 30 and 18 to the Consolidated Financial Statements
Auditor
The Directors at the date of approval of this Annual Report confirm that:
· so far as each Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
· the Directors have taken all the steps that they ought to have
taken as Directors, in order to make themselves aware of any relevant audit
information and to establish that the Company's auditor is aware of that
information.
This confirmation is given and should be interpreted in accordance with the
provisions of s418 of the Companies Act 2006.
The auditor, Grant Thornton UK LLP, has indicated its willingness to remain in
office, and a resolution that it be re-appointed will be proposed at the
General Meeting.
By Order of the Board
Andrew Fryatt
Director
Dated: 6 September 2022
Directors' Remuneration Report
In preparing this report, we have followed the QCA's Corporate Code of
Governance and drawn on best practice available.
The Remuneration Committee
During the year the Remuneration Committee comprised:
Philip Hanson (Chairman)
Ian Robinson
Mark Carrington
The Committee met four times during the year.
The Committee seeks input from the Company Secretary. The Committee makes
reference to external evidence of pay and employment conditions in other
companies and is free to seek advice from external advisers.
Remuneration policy
The Group's policy on remuneration for the current year and, so far as is
practicable, for subsequent years, is set out below. However, the Remuneration
Committee believes that it should retain the flexibility to adjust the
remuneration policy in accordance with the changing needs of the business. Any
changes in policy in subsequent years will be detailed in future reports on
remuneration. The Group must ensure that its remuneration arrangements attract
and retain people of the right calibre in order to ensure corporate success
and to enhance shareholder value. Its overall approach is to attract, develop,
motivate and retain talented people at all levels, by paying competitive
salaries and benefits to all its staff. Pay levels are set to take account of
contribution and individual performance, wage levels elsewhere in the Group,
and with reference to relevant market information. The Group seeks to reward
its employees fairly and give them the opportunity to increase their earnings
by linking pay to achieving business and individual performance targets.
Executive Directors are rewarded on the basis of individual responsibility,
competence and contribution, and salary increases also consider pay awards
made elsewhere in the Group as well as external market benchmarking.
During the year to 31 March 2022 there were two Executive Directors on the
Board as follows:
Andrew Fryatt (Chief Executive) - Appointed 21 April 2020
Caroline Ackroyd (Chief Financial Officer) was appointed to the Board on 22
April 2021. On 14 March 2022 we announced that Caroline Ackroyd, the Company's
Chief Financial Officer and a board director had resigned to pursue other
interests. Interim CFO support was then provided by Ajay Handa (who did not
join the Board) until 31 August 2022, when the Company announced the
appointment of Christopher Hughes as the Company's Chief Financial Officer.
Christopher is expected to join the Board in due course.
The Executive Directors participate in a pension scheme but do not participate
in any Group healthcare arrangements.
Non-Executive Directors' fees
Fees for Non-Executive Directors are determined by the Board annually, taking
advice as appropriate and reflecting the time commitment and responsibilities
of the role. The Non-Executive Chairman received an annual fee of £50,000.
Non-Executive Directors' fees currently comprise a basic fee of £30,000 per
annum plus £10,000 for chairing a committee.
Non-Executive Directors do not participate in the annual bonus plan, pension
scheme or healthcare arrangements. The Company reimburses the reasonable
expenses they incur in carrying out their duties as Directors.
Remuneration components - Executive Directors
A proportion of each Executive Director's remuneration is performance related.
Basic salary
Basic salary is set by the Remuneration Committee by considering the
responsibilities, individual performance and experience of the Executive
Directors, as well as the market practice for executives in a similar position
and wage levels elsewhere in the Group. Basic salary is reviewed (but not
necessarily increased) annually by the Remuneration Committee.
Annual bonus plan
The Executive Directors are eligible to participate in the annual bonus plan.
The range of award is based on annual salary.
The performance requirements, for the ability to earn a bonus, are set by the
Committee annually.
Long Term Incentive Plan (LTIP)
There is currently no LTIP although the Remuneration Committee is exploring
the development of a new scheme.
Directors' remuneration
The total amounts of the remuneration of the Directors of the Group for the
years ended 31 March 2022 and 2021 are shown below:
31 March 2022 2021
£ £
Aggregate emoluments 554,022 276,897
Sums paid to third parties for Directors' services 30,000 27,500
584,022 304,397
The emoluments of the Directors are shown below:
31 March 2022 2022 2022 2021 2022 2021
Fees and salary Bonus Total Total Pension contributions Pension contributions
£ £ £ £ £ £
Andrew Fryatt Appointed 21 April 2020 220,000 55,000 275,000 194,051 8,800 13,712
Caroline Ackroyd Appointed 22 April 2021 167,147 21,875 189,022 - 6,686 -
Resigned 14 March 2022
Ian Robinson 50,000 - 50,000 46,025 - -
Philip Hanson 40,000 - 40,000 36,821 - -
Mark Carrington* 30,000 - 30,000 27,500 - -
Total 507,147 76,875 584,022 304,397 15,486 13,712
* Fee paid to a third party for the Director's services
The salary of the highest paid Director was 5 times the average salary of all
Group employees excluding the Directors in the table above (2021: 4.7 times).
During the prior year, as part of the Covid-19 mitigation factors, the
directors took a 20% pay reduction from April to August 2020.
Pensions
The Group made pension contributions on behalf of the Executive Directors. The
amount is shown in the table above.
Directors' service agreements and letters of appointment
Contracts of service are negotiated on an individual basis as part of the
overall remuneration package. The contracts of service are not for a fixed
period. Details of these service contracts are set out below:
Date of contract Notice period Company with whom contracted
Date of appointment
Andrew Fryatt 26 March 2020 21 April 2020 6 months Jaywing plc
Caroline Ackroyd 7 September 2020 22 April 2021 N/A resigned 14 March 2022 Jaywing plc
In the event of termination of their contracts, each Director is entitled to
compensation equal to their basic salary and bonus for their notice period.
Non-Executive Directors have letters of appointment, the details of which are
as follows:
Date of contract Notice period Company with whom contracted
Ian Robinson 21 May 2014 3 months Jaywing plc
Philip Hanson 27 April 2017 3 months Jaywing plc
Mark Carrington 21 March 2018 3 months Jaywing plc
( )
Directors' interests in shares
The Directors' interests in the share capital of the Company are set out
below:
31 March 2022 2021
Number of shares Number of shares
Ian Robinson 470,267 470,267
Philip Hanson 109,462 109,462
Andrew Fryatt 96,969 96,969
Other related party transactions
No Director of the Group has, or had, a disclosable interest in any contract
of significance subsisting during or at the end of the year.
Disclosable transactions by the Company under IAS 24, Related Party
Disclosures, are set out in Note 30. There have been no other disclosable
transactions by the Company and its Subsidiaries with Directors of the Company
or any of the subsidiary companies and with substantial shareholders since the
publication of the last Annual Report.
By Order of the Board
Philip Hanson
Dated: 6 September 2022
Corporate Governance Statement
This report is prepared by the Board and describes how the principles of
corporate governance are applied, to the extent applicable for a company the
size of Jaywing plc. The Board has adopted the QCA Corporate Governance Code
and considers that the Company complies with each of the principles of the
Code. The following should be noted with regard to the independence of the
Company's Non-Executive Directors. The Board considers Philip Hanson, a
Non-Executive Director, to be independent. The Board notes that Ian Robinson
and Mark Carrington are associated with one of the Company's major
shareholders which could appear to impair their independence for the purposes
of the Code. However, the Board considers that both Ian Robinson and Mark
Carrington can bring an independent view to bear on all matters dealt with by
the Board and its various Committees. Independence is a Board judgement. There
are details of how the Group applies the ten principles of the QCA Code on the
Group's investor website.
The Board
At 31 March 2022, the Board comprised Non-Executive Chairman Ian Robinson and
Non-Executive Directors Philip Hanson and Mark Carrington. Andrew Fryatt was
appointed to the Board as Chief Executive Officer on 22 April 2020. The Board
is responsible to the shareholders for the proper management of the Group and
meets at least six times a year to set the overall direction and strategy of
the Group. All strategic operational and investment decisions are subject to
Board approval.
Caroline Ackroyd, Chief Financial Officer, joined the business in September
2020, and was appointed to the Board on 22 April 2021. Caroline resigned
effective on 14 March 2022 and was replaced by an Interim Chief Financial
Officer (non-statutory director), Ajay Handa, on the same date.
The roles of Chief Executive Officer and Chairman are separate and there is a
clear division of their responsibilities. All Directors are subject to
re-election at least every three years
The Chairman's role is to provide leadership to the Board, plan and conduct
Board meetings effectively, ensure the Board focuses on its key tasks, and
engage the Board in assessing and improving its performance.
Board committees
Remuneration Committee
The Remuneration Committee comprises Philip Hanson (Chair), Ian Robinson and
Mark Carrington. The Remuneration Committee, on behalf of the Board, meets at
least once a year and as and when necessary to review and approve as
appropriate the contract terms, remuneration and other benefits of the
Executive Directors and senior management and major remuneration plans for the
Group as a whole.
The Remuneration Committee approves the setting of objectives for all the
Executive Directors and authorises their annual bonus payments for achievement
of objectives. The Remuneration Committee approves remuneration packages
sufficient to attract, retain and motivate Executive Directors required to run
the Group successfully, but does not pay more than is necessary for this
service.
The Committee did not award any share options or pay rises to Executive
Directors during the year. It awarded an annual bonus to the CEO and CFO as
set out in the Directors Remuneration Report in respect of the prior financial
year. It has not awarded an annual bonus in respect of the year to 31 March
2022. Further details of the Group's policies on remuneration and service
contracts are given in the Directors' Remuneration report.
Audit & Risk Committee
The Audit & Risk Committee comprises Ian Robinson (Chair), Mark Carrington
and Philip Hanson. By invitation, the meetings of the Audit & Risk
Committee may be attended by the other Directors and the auditor. The
Committee meets not less than three times annually. The Audit & Risk
Committee oversees the monitoring of the adequacy and effectiveness of the
Group's internal controls, accounting policies and financial reporting and
provides a forum for reporting by the Group's external auditor. Its duties
include keeping under review the scope and results of the audit and its cost
effectiveness, consideration of management's response to any major audit
recommendations and the independence and objectivity of the auditor.
The Audit & Risk Committee review the significant estimates, judgements
and risks in relation to the annual report and these are outlined in the
Strategic Review. The Committee also reviews the risks outlined in the
Principal Risks and Uncertainties and challenges the Executive Directors on
the controls and processes in place to manage these. The effectiveness of the
external audit process has been assessed through discussions with both
management and the auditors, and it is proposed that Grant Thornton be
reappointed as external auditor.
Nomination Committee
The Nomination Committee comprises Philip Hanson (Chair), Ian Robinson and
Mark Carrington. It is responsible for nominating to the Board candidates for
appointment as Directors, having regard for the balance and structure of the
Board. The committee meets at least once a year. The terms of reference for
all committees are available on the Group's website.
Company Secretary
The Company Secretary is responsible for advising the Board through the
Chairman on all governance issues. All Directors have access to the advice and
services of the Secretary.
Board performance and evaluation
In addition to the re-election of Directors every three years, the Board has a
process for evaluation of its own performance and that of its committees and
individual Directors, including the Chairman.
Attendance at Board and Committee meetings
The Directors attended the following Board and Committee meetings during the
year ended 31 March 2022:
Board Remuneration Audit & Risk Nomination
Total meetings held 12 4 3 2
Ian Robinson 12 4 3 2
Philip Hanson 12 4 3 2
Mark Carrington 12 4 3 2
Andrew Fryatt 12 - 3 -
Caroline Ackroyd 9 - 2 -
Relationships with shareholders
The Board recognises the importance of effective communication with the
Company's shareholders to ensure that its strategy and performance is
understood and that it remains accountable to shareholders. The Company
communicates with investors through Interim Statements, audited Annual
Reports, press releases and the Company's website:
https://investors.jaywing.com. At the Company's AGM shareholders are given the
opportunity to question the Board. The Company obtains feedback from its
broker on the views of institutional investors on a non-attributed and
attributed basis and any concerns of major shareholders would be communicated
to the Board.
Internal controls
The Board acknowledges its responsibility for establishing and maintaining the
Group's system of internal controls and will continue to ensure that
management keeps these processes under regular review and improves them where
appropriate.
Management structure
There is a clearly defined organisational structure throughout the Group with
established lines of reporting and delegation of authority based on job
responsibilities and experience.
Financial reporting
Monthly management accounts provide relevant, reliable, up-to-date financial
and non-financial information to management and the Board. Annual plans,
forecasts and performance targets allow management to monitor the key business
and financial activities and the progress towards achieving the financial
objectives. The annual budget is approved by the Board.
Monitoring of controls
The Audit Committee receives regular reports from the auditor and assures
itself that the internal control environment of the Group is operating
effectively. There are formal policies and procedures in place to ensure the
integrity and accuracy of the accounting records and to safeguard the Group's
assets. Significant capital projects and acquisitions and disposals require
Board approval.
Corporate Social Responsibility
The Board recognises the importance of social, environmental and ethical
matters and it endeavours to take into account the interests of the Group's
stakeholders, including its investors, employees, clients, suppliers and
business partners when operating the business.
Employment
At a subsidiary level, each individual company has established policies which
address key corporate objectives in the management of employee relations,
communication and employee involvement, training and personal development and
equal opportunity. The Board recognises its legal responsibility to ensure the
wellbeing, safety and welfare of its employees and to maintain a safe and
healthy working environment for them and for its visitors. Health and Safety
is on the agenda for regularly scheduled plc Board and Executive Team
meetings.
Environment
By their nature, the Group's regular operations are judged to have a low
environmental impact and are not expected to give rise to any significant
inherent environmental risks over the next 12 months.
By Order of the Board
Andrew
Fryatt
Dated: 6 September 2022
Directors' Responsibilities Statement
The Directors are responsible for preparing the Directors' Report, the
Strategic Report, Directors Renumeration Report and the Financial Statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors must prepare the financial
statements in accordance with UK-adopted international accounting standards.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs and profit or loss of the company and group for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable international financial reporting
standards in conformity with UK-adopted international accounting standards
have been followed, subject to any material departures disclosed and explained
in the financial statements; and
· prepare the financial statements on the going concern basis,
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and the Company's transactions, and
disclose with reasonable accuracy, at any time, the financial position of the
Group and the Company and enable them to ensure that the financial statements
and Directors Renumeration report comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Group and the
Company and hence, for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
To the best of our knowledge:
· the group financial statements, prepared in accordance with
UK-adopted international accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the company
and the undertakings included in the consolidation taken as a whole; and
· the Strategic Report and Directors' Report include a fair review of
the development and performance of the business and the position of the
company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they
face.
By Order of the Board
Andrew Fryatt
Dated: 6 September 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 March
Restated*
2022 2021
Note £'000 £'000
Gross revenue 30,168 25,957
Direct Costs (6,844) (5,792)
Revenue 1 23,324 20,165
Other operating income 2 40 793
Operating expenses* 3 (29,450) (21,998)
Operating (Loss) (6,086) (1,040)
Finance costs 4 (474) (451)
(6,560) (1,491)
Loss before tax
Tax (expense) / credit 5 123 119
Loss for the year (6,437) (1,372)
Loss for the year is attributable to:
Non-controlling interests 12 71
Owners of the parent (6,449) (1,443)
(6,437) (1,372)
Other comprehensive income
27 279 (6)
Items that will be reclassified subsequently to profit or loss
Exchange differences on retranslation of foreign operations
Total comprehensive loss for the period (6,158) (1,378)
Total comprehensive loss is attributable to:
Non-controlling interests 26 12 71
Owners of the Parent (6,170) (1,449)
(6,158) (1,378)
Basic and diluted loss per share
Loss per share 6 (6.90p) (1.54p)
The accompanying Notes form part of these Consolidated Financial Statements.
*The comparative information has been restated due to fair value adjustments
misstated in the prior period as discussed in note 33.
Consolidated Balance Sheet
As at 31 March 2022 Restated*
2021
Note £'000 £'000
Non-current assets
Property, plant and equipment 12 2,173 2,060
Goodwill* 14 21,705 27,581
Deferred tax asset* 20 644 586
Other intangible assets 15 69 799
24,591 31,026
Current assets
Trade and other receivables* 16 6,415 6,056
Contract assets 17 453 619
Current tax asset 32 46
Cash and cash equivalents 18 714 752
7,614 7,473
Total assets 32,205 38,499
Current liabilities
Borrowings 18 8,754 8,338
Trade and other payables 19 7,931 8,065
Contract Liabilities 17 1,408 1,163
Current lease liabilities 13 395 666
Current tax liabilities - 194
Provisions 19 42 42
18,530 18,468
Non-current liabilities
Non-current lease liabilities 13 1,448 877
Deferred tax liabilities 20 - 113
1,448 990
Total liabilities 19,978 19,458
Net assets 12,227 19,041
Equity
Equity attributable to owners of the parent
Share capital 21 34,992 34,992
Share premium 22 10,088 10,088
Capital redemption reserve 24 125 125
Treasury shares 23 (25) (25)
Share option reserve 25 - -
Foreign currency translation reserve 27 118 (161)
Retained earnings* 28 (33,071) (26,332)
Equity attributable to owners of the parent 12,227 18,687
Non-controlling interest 26 - 354
Total equity 12,227 19,041
*The comparative information has been restated due to fair value adjustments
misstated in the prior period as discussed in note 33.
These Financial Statements were approved by the Board of Directors on 6
September 2022 and were signed on its behalf by:
Andrew Fryatt
Director
Company number: 05935923
The accompanying Notes form part of these Consolidated Financial Statements.
Consolidated Cash Flow Statement
For the year ended 31 March 2022 Restated*
2021
Note £'000 £'000
Cash flow from operating activities
Loss after tax* (6,437) (1,372)
Adjustments for:
Impairment of Goodwill 3 6,131 -
Depreciation of property, plant & equipment 3 327 259
Depreciation and impairment of right of use assets 3 752 666
Amortisation of intangibles 3 730 1,118
Impairment of other intangibles - 690
Financial costs 4 474 451
Taxation expense / (credit) 5 (123) (119)
Operating cash flow before changes in working capital 1,854 1,693
(Increase) in trade and other receivables (168) (901)
(Decrease) / Increase in trade and other payables (99) 1,466
Cash generated from operations 1,587 2,258
Interest paid (58) (74)
Tax paid (240) (376)
Net cash flow from operating activities 1,289 1,808
Cash flow from investing activities
Payment of deferred consideration (442) (377)
Acquisition of intangible assets - (3)
Acquisition of property, plant and equipment 12 (163) (98)
Net cash outflow from investing activities (605) (478)
Cash flow from financing activities
Acquisition of non-controlling interest* - (1,925)
Repayment of Lease Liabilities (IFRS16) (722) (649)
Net cash (outflow) from financing activities (722) (2,574)
Net decrease in cash and cash equivalents (38) (1,244)
Cash and cash equivalents at beginning of year 752 1,996
Cash and cash equivalents at end of year 714 752
Cash and cash equivalents comprise:
Cash at bank and in hand 714 752
The accompanying Notes form part of these Consolidated Financial Statements.
*The comparative information has been restated due to fair value adjustments
misstated in the prior period and restatement of acquisition of
non-controlling interest in 2021 reclassified from investing activities to
financing activities as discussed in note 33.
Consolidated Statement of Changes in Equity
Share Capital Share Premium Account Capital Redemption Reserve Treasury Shares Share Option Reserve Foreign Currency Translation Reserve Retained Earnings Equity attributable to parent Non-controlling Interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2020 34,992 10,088 125 (25) 696 (155) (24,868) 20,853 1,339 22,192
Acquisition of subsidiaries NCI* - - - - - - (717) (717) (1,056) (1,773)
Transactions with owners - - - - - - (717) (717) (1,056) (1,773)
Profit/(loss) for the period* - - - - - - (1,443) (1,443) 71 (1,372)
Transfer in relation to lapsed share options* - - - - (696) - 696 - - -
Retranslation of foreign currency - - - - - (6) - (6) - (6)
Total comprehensive income for the period - - - - (696) (6) (1,464) (2,166) (985) (3,151)
Balance at 31 March 2021 (as previously stated) 34,992 10,088 125 (25) - (161) (24,124) 20,895 354 21,249
Prior year adjustment (see note 33) - - - - - - (2,208) (2,208) - (2,208)
Balance at 31 March 2021 (as restated) 34,992 10,088 125 (25) - (161) (26,332) 18,687 354 19,041
Acquisition of subsidiaries NCI* - - - - - - (290) (290) (366) (656)
Transactions with owners - - - - - - (290) (290) (366) (656)
Profit/(loss) for the period - - - - - - (6,449) (6,449) 12 (6,437)
Retranslation of foreign currency - - - - - 279 - 279 - 279
Total comprehensive income for the period - - - - - 279 (6,739) (6,460) (354) (6,814)
Balance at 31 March 2022 34,992 10,088 125 (25) - 118 (33,071) 12,227 - 12,227
The accompanying Notes form part of these Consolidated Financial Statements.
*The comparative information has been restated due to fair value adjustments
misstated in the prior period as discussed in note 33.
Principal Accounting Policies
Jaywing plc is a Company incorporated in the UK and is AIM listed.
The Consolidated Financial Statements consolidate those of Jaywing plc and its
subsidiaries (together referred to as the 'Group').
The Consolidated Financial Statements have been prepared and approved by the
Directors in accordance with UK Adopted International accounting standards.
The Consolidated Financial Statements have been prepared under the historical
cost convention.
The principal accounting policies of the Group are set out below. The policies
have remained unchanged from the previous year.
Going concern
The Group financial statements have been prepared on a going concern basis in
accordance with UK Adopted International accounting standards. In coming to
their conclusion, the Directors have considered the Group's profit and cash
flow forecasts for period of at least 12 months from the date these financial
statements were approved.
In determining the appropriate basis of preparation of the financial
statements, the Directors are required to consider whether the Group can
continue in operational existence for the foreseeable future.
In addition to the normal process of preparing forecasts for the Group, the
Board has also considered downside risks and the potential impact of the
economic environment on the cash flows of the Group for a period to 30
September 2024. This has been done by looking at various scenarios within the
forecasts for the potential effect of changes in the market during the
forecast period.
In considering their position the Directors have also had regard to letters of
support in respect of the secured debt which have received from each of the
holders of that debt confirming that the debt will not be called in and
support will be provided for the foreseeable future. Details of this debt are
contained in Note 18 and Note 30.
The Group financial statements do not include the adjustments that would
result if the Group were unable to continue as a going concern. The Directors
have a reasonable expectation that the Group has adequate resources to
continue in existence for the foreseeable future and have concluded it is
appropriate to adopt the going concern basis of accounting in the preparation
of the financial statements.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the
Group has the rights to variable returns from its involvement with the
investee and has the ability to affect these returns through its power over
the investee. In assessing control, potential voting rights that are currently
exercisable or convertible are taken into account. The Financial Statements of
subsidiaries are included in the Consolidated Financial Statements from the
date that control commences until the date that control ceases. Transactions
between subsidiary companies are eliminated on consolidation.
Revenue
Revenue is generated mainly under the following four contractual models:
1. Monthly retainers
2. Project-based
3. Consulting day rates
4. Licences (with and without support)
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identify the contract with the customer
2. Identify the performance obligations
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations
5. Recognise revenue when the performance obligations are satisfied
The Group often enters into transactions involving a range of the Group's
products and services, for example providing a client with data consultancy
and brand development work. In all cases, the total transaction price for a
contract is allocated amongst the various performance obligations based on
their relative stand-alone selling prices.
Revenue is recognised over time, as the Group satisfies performance
obligations by transferring the promised goods or services to its customers in
accordance with IFRS15.35 (c).
The Group recognises contract liabilities for consideration received in
respect of unsatisfied performance obligations and reports these on the face
of the consolidated balance sheet. Similarly, if the Group satisfies a
performance obligation before it receives the consideration, the Group
recognises a receivable in its consolidated balance sheet as a contract asset.
Monthly retainers
A client will sign up to a contract for a period of between six and 18 months,
with a fixed fee each month for an agreed amount of work to be performed.
Under each contract, there may be more than one service provided to the
customer, such as Pay Per Click (PPC) and Search Engine Optimisation (SEO)
management. These will have agreed KPIs and are separately identifiable, hence
are identified as separate performance obligations. These services will be set
out in the contract with revenue amounts associated and the revenue streams
will be recognised separately. Most fees are fixed but some fees are variable
each month and are based on a ratchet scale calculation.
The transaction price is set out in the contract for each service provided and
revenue is allocated to the various performance obligations on this basis. The
customer may choose to take additional services for a period of time, which
would be subject to a separate agreement. Any performance fees payable under a
contract would relate to a specific month and be calculated in line with the
provisions set out in the contract.
Revenue is recognised over time as the customer simultaneously receives and
consumes the benefits of the services as the service is performed. It is
recognised using the output method, on a straight-line basis over the life of
the contract as the amount of work required to perform under these contracts
does not vary significantly from month to month, therefore the straight-line
method provides a faithful depiction of the transfer of goods or services.
Project-based
A client will enter into a framework agreement that covers all work performed
by Jaywing and will then issue a brief or work order for a specific piece of
work to be performed. This could be the development of a website for a client,
or the production of a creative campaign. The work would normally take a
period of between one and six months to complete.
Normally, a specific brief or work order is provided for a project under the
overall framework agreement. This will detail the services to be provided to
the customer, with a price set out against each element as appropriate. The
transaction price is set out in the work order for each element of the
project. Due to the high degree of interdependence between the various
elements of these projects, they are accounted for as a single performance
obligation.
The customer may choose to vary the scope at any stage, and that would be
subject to an updated work order. That work order would still be part of the
original contract as those services would not be distinct from those in the
original contract, hence this does not create a separate performance
obligation.
Revenue is recognised over time, using the input method as Jaywing's
performance creates or enhances an asset that the customer controls as the
asset is created or enhanced, and the revenue recognised reflects the efforts
or inputs Jaywing has made to the satisfaction of the performance obligation.
Consulting day rates
A client will enter into a contract for a piece of work that is quoted as a
number of days charged at a rate per day. This work will be either risk,
marketing or data based and could involve building models, databases and
analysis of data. There may be various elements to the work quoted, however
due to the high degree of interdependence between these, they are accounted
for as a single performance obligation. Invoices will usually be raised
monthly for the number of days of work performed.
A specific piece of work is contracted for, which will normally be a number of
days' work charged at a rate per day, with different rates for different
levels of seniority. The transaction price is set out in the contract. The
customer may choose to vary the scope at any stage, and that would be subject
to an updated work schedule. That work order would still be part of the
original contract as those services would not be distinct from those in the
original contract, hence this does not create a separate performance
obligation.
Revenue is recognised over time as the customer simultaneously receives and
consumes the benefit of the services as the services are performed. It is
recognised using the input method, based on the number of days' work performed
during the month.
Licences
A client enters into a contract for a product licence, including support from
Jaywing, to run that product and interpret the results from it. The product
and support are not separately identifiable because the client is not able to
operate the product licence without this support as they do not have the
skills or a login to the system. Therefore, they are accounted for together as
a single performance obligation. The license price is set out in the contract.
Revenue is recognised over time based on the provision of the licence and
support during the month as the customer simultaneously receives and consumes
the benefit of the services as the services are provided.
There are no differences in payment terms for each of these categories; the
only differences in payments terms are from individual terms agreed with
clients which are between 30 and 60 days.
Gross revenue and direct costs - alternative performance measures
We recognise gross revenue and revenue in the financial statements. Gross
revenue and direct costs represent non-IFRS 15 measures and are given to
disclose where the group act as agent to certain customers, based on the level
of control which the group holds over the services provided. Direct costs are
recognised in line with the gross revenue recognised. This information is
given as it is considered useful to the users of the financial statements.
Foreign currency
Transactions in foreign currencies are translated into the entity's functional
currency at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated at the foreign exchange rate ruling at that
date. Foreign exchange differences arising on translation are recognised in
profit or loss.
Dilapidations provision
Provision is made for expected future dilapidations costs in respect of
property held under leases. The estimated costs are capitalised within
leasehold improvements and depreciated over the remaining lease term based on
the present value of expected future cash flows.
Classification of instruments issued by the Group
Instruments issued by the Group are treated as equity (i.e. forming part of
shareholders' funds) only to the extent that they meet the following two
conditions:
§ they include no contractual obligations upon the Company (or Group as the
case may be) to deliver cash or other financial assets, or to exchange
financial assets or financial liabilities with another party, under conditions
that are potentially unfavourable to the Company (or Group); and
§ where the instrument will or may be settled in the Company's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Company's own equity instruments, or is a
derivative that will be settled by the Company exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the items are classified as a
financial liability. Where the instrument so classified takes the legal form
of the Company's own shares, the amounts presented in these Financial
Statements for called up Share Capital and Share Premium Account exclude
amounts in relation to those shares.
Finance payments associated with financial liabilities are dealt with as part
of finance expenses.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
Depreciation is charged to profit or loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and
equipment. Land is not depreciated. The estimated useful lives are as follows:
Leasehold improvements - over period
of lease
Office equipment
- 3 - 5 years
Buildings
- over period of lease
It has been assumed that all assets will be used until the end of their
economic life.
Intangible assets and goodwill
All business combinations are accounted for by applying the acquisition
method. Goodwill represents the difference between the cost of the acquisition
and the fair value of the net identifiable assets acquired. Identifiable
intangibles are those that can be sold separately, or that arise from legal or
contractual rights, regardless of whether those rights are separable, and are
initially recognised at fair value. Development costs incurred in the year,
which meet the criteria of IAS 38, are capitalised and amortised on a
straight-line basis over their economic life.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units and is not amortised but is tested annually
for impairment.
Other intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation is charged to profit or loss on a straight-line basis over the
estimated useful lives of intangible assets, unless such lives are indefinite.
Intangible assets with an indefinite useful life and goodwill are
systematically tested for impairment at each balance sheet date. Other
intangible assets are amortised from the date they are available for use.
The estimated useful lives are as follows:
Customer relationships - 4
to 12 years
Development costs
- 3 to 6 years
Trademarks
- 2 to 20 years
Order books
- 1 year
Impairment
For goodwill that has an indefinite useful life, the recoverable amount is
estimated annually. For other assets, the recoverable amount is only estimated
when there is an indication that an impairment may have occurred. The
recoverable amount is the higher of fair value less costs to sell and value in
use. Value in use is determined by assessing net present value of the asset
based on future cash flows.
An impairment loss is recognised whenever the carrying amount of an asset or
its cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in profit or loss.
Impairment losses recognised in respect of cash-generating units, are
allocated first to reduce the carrying amount of any goodwill allocated to the
cash-generating unit and then to reduce the carrying amount of the other
assets in the unit on a pro rata basis. A cash generating unit is the smallest
identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. With
the exception of goodwill, all assets are subsequently reassessed for
indications that an impairment loss previously recognised no longer exists.
Put/call options
In the previous year the put/call option in Frank Digital PTY had been valued
by an independent assessor and was recognised with both a service and
non-service element in the accounts. The non-service element was fully
recognised as at the date of acquisition and the fair value reviewed annually.
The service element was treated as a cash-settled share-based payment with the
share-based payment valued at the point of inception and the cost being spread
over the life of the asset. In the year the put/call option has been executed
and settled.
Fair value measurement
Management uses valuation techniques to determine the fair value of financial
instruments and non-financial assets. This involves developing estimates and
assumptions consistent with how market participants would price the
instrument. Management bases its assumptions on observable data as far as
possible, but this is not always available. In that case, management uses the
best information available. Estimated fair values may vary from the actual
prices that would be achieved in an arm's length transaction at the reporting
date (see Note 32).
Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension plans are
recognised as an expense in profit or loss as incurred.
Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to settle the
obligation. If the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
Leases
The Company reports using IFRS 16, whereby the Company now recognises a lease
liability and a right of use asset.
The Group leases four offices and printers. The Group has elected not to
separate lease and non-lease components and instead accounts for these as a
single lease component. The lease agreements do not impose any covenants other
than the security interests in the leased assets that are held by the lessor.
Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any lease
incentives receivable;
• variable lease payment that are based on an index or a rate, initially
measured using the index or rate as at the commencement date;
• amounts expected to be payable by the group under residual value
guarantees;
• the exercise price of a purchase option if the group is reasonably certain
to exercise that option; and
• payments of penalties for terminating the lease, if the lease term
reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability. The lease payments are
discounted using the interest rate implicit in the lease. If that rate cannot
be readily determined, which is generally the case for leases in the group,
the lessee's incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value to the right of use asset in a similar economic
environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group, where possible, uses
recent third-party financing received by the individual lessee as a starting
point, adjusted to reflect changes in financing conditions since third party
financing was received.
If the Group is exposed to potential future increases in variable lease
payments based on an index or rate, which are not included in the lease
liability until they take effect, then when adjustments to lease payments
based on an index or rate take effect, the lease liability is reassessed and
adjusted against the right of use asset.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period.
Right of use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease
incentives received;
• any initial direct costs; and
• restoration costs.
Right of use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right of use asset is
depreciated over the underlying asset's useful life.
Payments associated with short-term leases of equipment and all leases of
low-value assets are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of 12 months or
less.
Incentives received to enter into an operating lease are credited to the
profit and loss account, to reduce the lease expense, on a straight-line basis
over the period of the lease. Associated costs, such as maintenance and
insurance, are expensed as incurred.
Net financing costs
Net financing costs comprise interest payable and interest receivable on funds
invested. Interest income and interest payable are recognised in profit or
loss as they accrue using the effective interest method.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax
is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income, or directly in equity, in which case
it is recognised in other comprehensive income or in equity, respectively.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date,
and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes, except to the extent that it arises on:
· the initial recognition of goodwill;
· the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business combination;
· differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.
Financial assets
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
borrowings that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and cash
equivalents for the purpose only of the statement of cash flows.
Trade and other receivables
Trade and other receivables are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
IFRS 9's impairment requirements use more forward-looking information to
recognise expected credit losses - the 'expected credit loss (ECL) model'.
Recognition of credit losses is no longer dependent on the Group first
identifying a credit loss event. Instead the Group considers a broader range
of information when assessing credit risk and measuring expected credit
losses, including past events, current conditions, reasonable and supportable
forecasts that affect the expected collectability of the future cash flows of
the instrument.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial instrument.
Financial liabilities
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in profit or loss over the
period of the borrowings on an effective interest basis.
Trade and other payables
Trade payables are initially recorded at fair value and thereafter at
amortised cost using the effective interest rate method.
Segmental reporting
The Group reported its operations based on location of the business (United
Kingdom & Australia) as well as three client-facing segments which sit
within the operating segments: Retail, FMCG and Financial & Professional
Services.
Share Capital
Share Capital represents the nominal value of shares that have been issued.
Share Premium
Share Premium includes any premiums received on issue of Share Capital. Any
transaction costs associated with the issuing of shares are deducted from
Share Premium, net of any related income tax benefits.
Capital Redemption Reserve
Capital Redemption Reserve represents the amount by which the nominal value of
the shares purchased or redeemed is greater than proceeds of a fresh issue of
shares.
Shares Purchased for Treasury
Represents the nominal value of the shares purchased by the Company.
Share Option Reserve
Represents the cumulative fair value charge of share options in issue.
Foreign Currency Translation Reserve
Represents the exchange differences on retranslation of foreign operations.
Retained Earnings
Retained Earnings includes all current and prior period retained profits and
share-based employee remuneration.
Non-controlling interests
The profit or loss attributable to the non-controlling ownership stakes in
subsidiary companies is transferred from Retained Earnings to non-controlling
interests each year.
Significant judgement in applying accounting policies and key estimation
uncertainty
When preparing the financial statements, management makes a number of
judgements, estimates and assumptions about the recognition and measurement of
assets, liabilities, income and expenses.
Accounting estimates and judgements
Judgements made by the Directors in the application of these accounting
policies that have a significant effect on the Consolidated Financial
Statements, together with estimates with a significant risk of material
adjustment in the next year, are discussed in Note 32 to the Consolidated
Financial Statements.
Accounting estimates
Impairment of goodwill and other intangible assets
The carrying amount of goodwill is £21,705k (2021: £29,789k) and the
carrying amount of other intangible assets is £69k (2021: £799k). The
Directors are confident that the carrying amount of goodwill and other
intangible assets is fairly stated and have carried out an impairment review.
The forecast cash generation for each CGU and the WACC represent significant
assumptions and should the assumptions prove to be incorrect, there would be a
significant risk of a material adjustment within the next financial year. The
sensitivity to the key assumptions is shown in Note 14.
Accounting judgements
Recognition of revenue
The Directors consider that they act as a principal in transactions where the
Group has control over the goods and services prior to being transferred to
the customer. Where this is via an agency arrangement and the Group does not
have full control over the goods and services, it recognises gross billings as
gross revenue, with the direct costs being deducted to present the reportable
revenue figure under IFRS 15. For other income sources, revenue recognition is
assessed in line with the five steps of IFRS.
Recognition of contract assets and liabilities
Contract assets related to the portion of performance obligations already
fulfilled by the Group and for which the definitive right to receive cash was
subject to completing further work under the relevant contract. Contract
assets are converted into trade receivables at the point that work delivered
to the client is invoiced resulting in the Group's unconditional right to
receive cash. Contract assets therefore represent a portion of future payments
receivable by the Group under existing contracts.
Contract liabilities consist of cash advances received from customers on
account of work orders received and the remaining liabilities relate to the
amount of performance obligations still to be fulfilled and for which payment
has already been received from the client.
Identification of performance obligations
The determination of the number of distinct performance obligations in a
contract requires judgement, based on whether the customer can benefit from
use of the service on its own or together with other resources that are
readily available to it, and also whether the promise to transfer the service
is separately identifiable from other promises in the contract.
Allocation of the transaction price to performance obligations
Where a contract contains multiple performance obligations, the transaction
price is required to be allocated to the different performance obligations.
Wherever possible, the transaction price is allocated on a standalone selling
price basis, by reference to the agreed customer statement of works. In the
event that this is not available, the price is allocated to the various
performance obligations on a reasonable basis with reference to the expected
time involved in performing the service and management's experience of similar
projects.
IFRS 16
Under IFRS 16 the Group is required to make a judgement in determining the
discount rate to be used in calculating the present value of lease payments
when recognising the lease liabilities and right of use asset. For the
discount rate the Group has used the lessee's incremental borrowing rate,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right of use asset
in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group, where possible, uses
recent third-party financing received by the individual lessee as a starting
point, adjusted to reflect changes in financing conditions since third party
financing was received.
The right of use asset is depreciated over the term of the lease. The term has
been determined with reference to the lease agreements and any expected
extension based on management's judgement beyond the end of the lease end date
specified in the lease agreement.
Capitalisation of internally developed software
Distinguishing the research and development phases of a new customised
software project and determining whether the recognition requirements for the
capitalisation of development costs are met requires judgement. After
capitalisation, management monitors whether the recognition requirements
continue to be met and whether there are any indicators that capitalised costs
may be impaired.
Notes to the Consolidated Financial Statements
1. Segmental analysis
Information reported to the Group's Chief Executive (the Chief Operating
Decision Maker) for the purposes of resource allocation and assessment of
segment performance is focused on the category of customer for each type of
activity.
The Group reported its operations based on location of the business (United
Kingdom & Australia).
During the year, no customer accounted for greater than 10% of the Group's
revenue (2021: None).
Revenue by Operating Segments
2022 2021
£'000 £'000
United Kingdom 18,099 15,969
Australia 5,225 4,196
23,324 20,165
All revenue is recognised over time.
Gross revenue in the UK was £24,858k (2021: £21,706k), and in Australia
£5,310k (2021: £4,251k).
Revenue by Client Facing Sectors
Analysis is presented on client facing sectors to aid in understanding
performance.
2022 2021
£'000 £'000
Retail 9,625 7,337
FMCG 4,725 6,317
Financial & Professional Services 8,974 6,511
23,324 20,165
"Retail"
includes:
Retail, Travel & Leisure, Hospitality, Property & Utilities
"FMCG"
includes:
Consumer Goods, Industrial, Telecoms, Support Services, Healthcare, Education,
Public Sector & Non-Profit
"Financial & Professional Services " includes: Financial &
Professional Services
Non-current assets by Geographic Markets
The Group's non-current assets (other than financial instruments, investments
accounted for using the equity method, deferred tax assets and post-employment
benefit assets) are located into the following geographic markets:
2022 Restated*
2021
£'000 £'000
United Kingdom 21,576 28224
Australia 3,015 2,802
24,591 31,026
*See note 33.
Non-current assets are allocated based on their physical location of the
component's operations.
2. Other operating income
2022 2021
£'000 £'000
Covid-19 government support 40 781
Other income - 12
40 793
The Group has taken the option to present income received from Government
sources in relation to Covid-19 as other operating income, rather than netted
against costs. The Group received funds from the UK Government under the
Covid-19 Job Retention Scheme of £37k (2021: £451k). Under the corresponding
scheme in Australia, Cashflow boost and Job Keepers, the Group received £3k
(2021: £330k).
Other income includes amounts received from the administrator of a client for
a contractual obligation to perform services on their behalf. During the year,
the Group received no further distribution (2021: £12k). It is anticipated
there may be further distributions in the future but the Board is unaware of
the quantum or timing of these potential receipts.
3. Operating expenses
2022 Restated*
2021
Continuing operations: £'000 £'000
Wages and salaries 14,865 13,135
Social Security Costs 1,724 1,267
Other Pension Costs 915 707
Impairment of Goodwill 6,131 -
Depreciation of property, plant & equipment 327 259
Depreciation and impairment of right of use assets 752 666
Amortisation 730 1,118
Release of deferred consideration (882) -
Court legal fees 774 -
Restructuring costs 352 488
Impairment of other intangible assets - 690
Other operating expenses 3,762 3,668
Total operating expenses 29,450 21,998
*See note 33
Impairment of other intangible assets in 2021 relates to the retirement of a
brand name as part of the restructuring activities and the move towards
trading only as Jaywing in the UK.
The results included legal expenses of £774k offset by the release of
deferred consideration following the successful conclusion of a court case
associated with the 2016 acquisition of Bloom Media (UK) Limited.
4. Finance costs
2022 2021
£'000 £'000
Interest expense 416 403
Interest on lease liabilities (see note 13) 58 74
Fair values finance charge / (credit) on Put / Call option - (26)
Total 474 451
5. Tax credit
2022 Restated*
The tax credit / (charge) is based on the loss for the year and represents: 2021
£'000 £'000
UK corporation tax at 19% (2021: 19%) 48 169
Adjustment in respect of prior period - 55
Total current tax 48 224
Deferred tax:
Origination and reversal of timing differences (171) (343)
Total tax charge / (credit) (123) (119)
2022 2021
The tax credit can be explained as follows:
£'000 £'000
Loss before tax (6,560) (1,138)
Tax using the UK corporation tax rate of 19% (2021: 19%) (1,246) (216)
Effect of:
Recognition of previously unrecognised losses (125) -
Goodwill impairment 1,164 -
Non-deductible expenses / credit 84 42
Prior year adjustment - 55
Current year credit (123) (119)
*See note 33
6. Loss per share
2022 Restated*
2021
Pence per Pence per
Share Share
Basic loss per share (6.90p) (1.54p)
Diluted loss per share (6.90p) (1.54p)
Loss per share has been calculated by dividing the loss attributable to
shareholders by the weighted average number of ordinary shares in issue during
the year.
The calculations of basic and diluted loss per share are:
2022 Restated*
2021
£'000 £'000
Loss for the year attributable to shareholders (6,449) (1,443)
Weighted average number of ordinary shares in issue:
2022 2021
Number Number
Basic and diluted 93,432,217 93,432,217
*See note 33
7. Auditor's remuneration
2022 2021
£'000 £'000
Auditor's remuneration:
Audit of Company Financial Statements 45 40
Other amounts payable to the auditor and its associates in respect of:
Audit of Subsidiary Company Financial Statements 111 97
Audit related assurance services 5 4
Taxation compliance services 30 30
Taxation advisory services - 66
Amounts paid to the Group's auditor in respect of services to the Company,
other than the audit of the Company's Financial Statements, have not been
disclosed separately as the information is required instead to be disclosed on
a consolidated basis. In addition to last year's reported audit figures an
amount was agreed and paid to cover over-runs, making the total payable in
relation to the audit £197,000.
8. Key management personnel compensation
Key management of the Group is considered to be the Board of Directors and the
Senior Leadership Team.
2022 Restated*
2021
£'000 £'000
Short-term benefits:
Salaries including bonuses 1,703 1,429
Social security costs 235 182
Total short-term benefits 1,938 1,611
Defined contribution pension plan costs 68 103
Key management compensation 2,006 1,714
*See note 33.
Further information in respect of Directors is given in the Directors'
Remuneration Report.
Remuneration in respect of Directors was as follows:
2022 2021
£'000 £'000
Emoluments receivable 557 276
Fees paid to third parties for Directors' services 28 28
Company pension contributions to money purchase pension schemes 15 14
600 318
During the current period and the prior year, there were no benefits accruing
to Directors in respect of the defined contribution pension scheme.
The highest paid Director received remuneration of £284,000 (2021:
£208,000).
9. Staff numbers and costs
The average number of persons employed by the Group (including Directors)
during the year, analysed by category, was as follows:
2022 2021
Number Number
Management and administration 35 44
Client Service Staff 261 245
296 289
The aggregate payroll costs of these persons were as follows:
2022 2021
£'000 £'000
Wages and salaries 14,865 13,135
Social security costs 1,724 1,267
Other pension costs 915 707
Total 17,504 15,109
10. Employee benefits
The Group had granted share options under the Jaywing plc Performance Share
Plan.
The share option schemes terminated in October 2020. Details are as follows:
2022 2021
Number of Weighted Number of Weighted
share options average share options average
exercise exercise
price price
At start of the year - - 3,301,200 5.0p
Lapsed during the year - - (3,301,200) 5.0p
At end of the year - - - 5.0p
Exercisable at end of year - - - 5.0p
There were no share options outstanding at the year-end.
Credit to the statement of comprehensive income
Under IFRS 2, the Group is required to recognise an expense in the relevant
Company's Financial Statements. The expense is apportioned over the vesting
period based upon the number of options which are expected to vest and the
fair value of those options at the date of grant. In the year to March 2022
this was nil (March 2021 credit to the P&L of £696k which was
subsequently restated, see note 33).
11. Interests in Subsidiaries
The details of subsidiaries held directly by the Group are set out in Note 12
of the plc Parent Company accounts. After the acquisition of the remaining 25%
of Frank Digital PTY in November 2021 and of the remaining 25% of Massive
Group Pty in October 2020, the Group includes no subsidiary (2021: one) with
non-controlling interests (NCI):
Name Proportion of ownership interests and voting rights held by NCI Total comprehensive income allocated to NCI
Accumulated NCI
2022 2021 2022 2021 2022 2021
% % £'000 £'000 £'000 £'000
Frank Digital PTY - 25 12 71 - 354
12 71 - 354
No dividends were paid to the NCI during the financial years 2022 and 2021.
Jaywing plc acquired the remaining 25% of Frank Digital PTY on 2 November 2021
after the remaining shareholders exercised their put option. The 25% stake was
acquired for $1.2m (£0.7m), the total consideration for the purchase of the
100% interest was $3.0m (£1.7m). At 31 March 2022 an amount of £0.7m was
still outstanding to the original shareholders, this was fully paid by 31 July
2022.
Jaywing plc acquired the remaining 25% of Massive Group PTY on 21 October 2020
after the remaining shareholders exercised their put option. The 25% stake was
acquired for $4.0m (£2.2m), the total consideration for the purchase of the
100% interest was $9.6m (£5.4m). At 31 March 2021 an amount of £0.3m was
still outstanding to the original shareholders, this was fully paid by 30 June
2021. See also note 33 re restatement.
12. Property, plant and equipment
Buildings Leasehold Total
improvements Office
equipment
£'000 £'000 £'000 £'000
Cost
At 31 March 2020 2,673 1,438 1,175 5,286
Additions - - 98 98
Disposals - - (679) (679)
At 31 March 2021 2,673 1,438 594 4,705
Additions - - 163 163
Right of use asset additions 985 - 44 1,029
Disposals - - - -
At 31 March 2022 3,658 1,438 801 5,897
Depreciation
At 31 March 2020 640 1,058 701 2,399
Depreciation charge for the year - 67 192 259
Depreciation of right of use asset 640 - 26 666
Depreciation on disposals - - (679) (679)
At 31 March 2021 1,280 1,125 240 2,645
Depreciation charge for the year - 102 225 327
Impairment of right of use asset 44 - - 44
Depreciation of right of use asset 674 - 34 708
Depreciation on disposals - - - -
At 31 March 2022 1,998 1,227 499 3,724
Net book value
At 31 March 2022 1,660 211 302 2,173
At 31 March 2021 1,393 313 354 2,060
At 31 March 2020 2,033 380 474 2,887
The assets are covered by a fixed charge in favour of the Group's lenders.
13. Leases
The company has lease contracts for offices occupied and printers. The amounts
recognised in the financial statements in relation to the leases are as
follows:
(i) Amounts recognised in the consolidated balance sheet
The balance sheet shows the following amounts relating to leases:
2022 2021
£'000 £'000
Right of use assets
Buildings 1,660 1,393
Office equipment 90 78
1,750 1,471
Lease liabilities
Current 395 666
Non-current 1,448 877
1,843 1,543
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
2022 2021
£'000 £'000
Depreciation and impairment charge of right of use assets
Buildings 718 640
Plant and machinery 34 26
752 666
Interest expense (included in finance cost) 58 74
There are no other amounts relating to low value or short term leases excluded
from the above amounts. The Australian business entered into a new lease
within the year ended 31 March 2022.
14. Goodwill
Goodwill
£'000
Cost and net book value
At 31 March 2020 and 31 March 2021 (Restated*) 27,581
Impairment (6,131)
Foreign Exchange 255
At 31 March 2022 21,705
2022 2021
Goodwill by CGU
£'000 £'000
United Kingdom 18,742 24,873
Australia 2,963 2,708
21,705 27,581
*See note 33. Goodwill and other intangible assets have been tested for
impairment by assessing the value in use of the relevant cash generating units
("CGU"), the cash generating units are measured at UK and Australia level as
this is how the Board review the trading positions. The value in use
calculations were based on projected cash flows into perpetuity. Budgeted cash
flows for 2022/23 were haircut and used and extrapolated based on the
assumptions below.
The budget has been approved by management and the Board of Directors and is
based on a bottom-up assessment of costs and uses the known and estimated
revenue pipeline.
The key assumptions are revenue growth, cost growth (and by implication
EBITDA) and the WACC. The average year-on-year growth that has been used as
the basis for forecasting cash flows for each of the cash generating units
when testing for impairment were:
Year-on-year growth
Revenue Costs
2022/23 to 2023/24 7.0% 5.0%
2023/24 to 2024/25 7.0% 5.0%
2024/25 to 2025/26 7.0% 5.0%
2025/26 to Perpetuity 2.0% 2.0%
The growth rates shown are the average applied to the cash flows of the
individual cash generating units and do not form a basis for estimating the
consolidated profits of the Group in the future. The growth rates used and the
periods they cover are based on an ability to deliver additional revenue
efficiently.
The discount rate used to test the cash generating units was the Group's
post-tax Weighted Average Cost of Capital ("WACC") of 11.8% for the UK and
11.5% for Australia (2021: both 11.5%).
As a result of these tests, that there was no impairment necessary in
Australia. After applying sensitivity analysis in respect of the UK results
and future cash flows, for presumed revenue growth rates, management believes
that a partial impairment is required for the goodwill in relation to the UK
CGU of £6.1m (2021: Nil). The key sensitivity was reducing revenue forecast
by c.5% to reflect the uncertain economic outlook. Cost growth has not been
sensitised from the above growth rates nor has the WACC as taking the current
environment into consideration, the impact of sensitising these inputs
effectively cancelled out each other.
As part of the impairment review, several scenarios affecting the UK CGU were
calculated, using the impairment model and applying sensitivities to the key
assumptions. These looked at what effect changes in the WACC rates and
movements in EBITDA would have on the outcome.
• If revenue growth was 3% below forecast /
£500k per year, with no mitigation taken, there would be an
additional impairment of £1.8m
• A reduction of EBITDA by 10% would create an
additional impairment of £2.0m
• The final test was an increase in WACC of 1%
to 12.5% and a reduction in EBITDA by 10%, which would give rise to an
additional impairment of £3.7m
Due to the significance of the headroom in the Australian CGU, detailed
sensitivity analysis was not undertaken.
15. Other intangible assets
Customer Development Total
relationships Order books Trademarks costs
£'000 £'000 £'000 £'000 £'000
Cost
At 31 March 2020 21,305 1,457 1,080 1,579 25,421
Additions during the year - - - 3 3
Disposals during the year - - - (161) (161)
At 31 March 2021 21,305 1,457 1,080 1,421 25,263
Additions during the year - - - - -
Disposals during the year - - - - -
At 31 March 2022 21,305 1,457 1,080 1,421 25,263
Amortisation
At 31 March 2020 20,227 1,457 364 769 22,817
Amortisation charge for the year (restated - see below) 487 - 26 605 1,118
Disposal - - - (161) (161)
Intangible impairment - - 690 - 690
At 31 March 2021 20,714 1,457 1,080 1,213 24,464
Amortisation charge for the year 591 - - 139 730
At 31 March 2022 21,305 1,457 1,080 1,352 25,194
Net book amount
At 31 March 2022 - - - 69 69
At 31 March 2021 203 - - 596 799
At 1 April 2020 1,078 - 716 810 2,604
Development costs relate to internally developed products that are either sold
to clients standalone or used to provide services to them. Amortisation in the
prior year was misallocated to the class of assets to which it related and
hence has been reclassified.
16. Trade and other receivables
2022 Restated*
2021
£'000 £'000
Trade receivables 5,629 5,536
Prepayments 589 426
Other receivables 197 94
6,415 6,056
The carrying amount of trade and other receivables approximates to their fair
value. Detailed disclosures relating to credit risk exposures and analysis
relating to the allowance for expected credit losses are in Note 32.
17. Contract assets and liabilities
Contract assets
2022 2021
£'000 £'000
Accrued income 453 619
Contract assets related to the portion of performance obligations already
fulfilled by the Group and for which the definitive right to receive cash was
subject to completing further work under the relevant contract. Contract
assets are converted into trade receivables at the point that work delivered
to the client is invoiced resulting in the Group's unconditional right to
receive cash. Contract assets therefore represent a portion of future payments
receivable by the Group under existing contracts.
Contract Liabilities
2022 2021
£'000 £'000
Deferred income 1,408 1,163
Contract liabilities consist of cash advances received from customers on
account of work orders received and the remaining liabilities relate to the
amount of performance obligations still to be fulfilled and for which payment
has already been received from the client.
18. Borrowings and Net Debt
2022 2021
£'000 £'000
Borrowings 8,754 8,338
% %
Average interest rates at the balance sheet date were: 4.75 4.82
As the loans are at variable market rates their carrying amount is equivalent
to their fair value.
The borrowings are repayable on demand and interest is calculated at 3 month
LIBOR plus a margin.
The borrowings are secured by charges over all the assets of Jaywing plc and
guarantees and charges over all of the assets of the various subsidiaries
(Jaywing UK Limited, Alphanumeric Limited, Gasbox Limited, Jaywing Central
Limited, Jaywing Innovation limited, Bloom Media (UK) Limited, Epiphany
Solutions limited).
Reconciliation of Net debt
1 April 2021 Cash flow Accrued Interest not paid 31 March 2022
£'000 £'000 £'000 £'000
Cash and cash equivalents 752 (38) - 714
Borrowings (8,338) - (416) (8,754)
Net Debt (7,586) (38) (416) (8,040)
Reconciliation of Net debt including lease expense and deferred consideration
1 April 2021 Cash flow Non-cash release of deferred consideration Accrual recognised 31 March 2022
£'000 £'000 £'000 £'000 £'000
Borrowings (8,338) - - (416) (8,754)
Lease liability (1,543) 722 - (1,022) (1,843)
Deferred Consideration (1,236) 442 882 (714) (626)
Financial liabilities (11,117) 1,164 882 (2,152) (11,223)
Cash and cash equivalents 752 (38) - - 714
Net debt including lease expense and deferred consideration (10,365) 1,126 882 (2,152) (10,509)
19. Trade and other payables
2022 2021
£'000 £'000
Trade payables 3,686 2,145
Tax and social security 1,125 2,161
Accruals 2,397 2,402
Deferred consideration 626 1,236
Other payables 97 121
7,931 8,065
The carrying amount of trade and other payables approximates to their fair
values. All amounts are short term.
Provisions
2022 2021
£'000 £'000
At 1 April 2021 and 31 March 2022 42 42
Total provisions are analysed as follows:
Current 42 42
At 31 March 2022 a provision of £42,000 (2021: £42,000) was recognised for
dilapidations costs expected to be incurred on exit of property. The provision
has been estimated based on the costs already incurred to bring the property
to its current condition. The estimated costs have not been discounted as the
impact is not considered to be significant. There are no significant
uncertainties about the amount or timing.
20. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities:
2022 Restated*
2021
£'000 £'000
Accelerated capital allowances on property, plant and equipment:
At start of year (48) (27)
Prior year adjustment - (1)
Origination and reversal of temporary differences 58 (20)
At end of year 10 (48)
Other temporary differences:
At start of year (425) 345
Prior year adjustment - (41)
Origination and reversal of temporary differences (104) (301)
Recognition of previously unrecognised losses (125) -
Reclassification from current tax* - (428)
At end of year (654) (425)
Total deferred tax:
At start of year (473) 318
Origination and reversal of temporary differences (171) (363)
Reclassification from current tax asset* - (428)
At end of year (644) (473)
Origination on acquisition
Deferred tax is included within:
Deferred tax liability - 113
Deferred tax asset (644) (586)
(644) (473)
*See note 33
There are no deductible differences or losses carried forward for which no
deferred tax asset is recognised.
The March 2021 Budget announced an increase in the UK standard rate of
corporation tax to 25% from 1 April 2023 with the legislation receiving Royal
Assent on 10 June 2021. Deferred tax as at 31 March 2022 has been provided at
a blended rate of 19% and 25% (2021: 19%) which is based on when the deferred
taxation is expected to crystalise.
Deferred tax assets are recognised to the extent that it is probable that the
underlying tax loss or deductible temporary difference will be utilised
against future taxable income. This is assessed based on the Group's forecast
of future operating results, adjusted for significant non-taxable income and
expenses and specific limits on the use of any unused tax loss or credit.
21. Share capital
Authorised:
45p deferred shares 5p ordinary shares
Authorised Share Capital at 31 March 2021 and at 31 March 2022 45,000 10,000
Allotted, issued and fully paid
45p deferred shares 5p ordinary shares
Number Number £'000
At 31 March 2021 67,378,520 93,432,217 34,992
At 31 March 2022 67,378,520 93,432,217 34,992
The 5 pence ordinary shares have the same rights (including voting and
dividend rights and rights on a return of capital) as the previous 50 pence
ordinary shares. Holders of the 45 pence deferred shares do not have any right
to receive notice of any General Meeting of the Company or any right to
attend, speak or vote at any such meeting. The deferred shareholders are not
entitled to receive any dividend or other distribution and shall, on a return
of assets in a winding up of the Company, entitle the holders only to the
repayment of the amounts paid up on the shares, after the amount paid to the
holders of the new ordinary shares exceeds £1,000,000 per new ordinary share.
The deferred shares are also incapable of transfer and no share certificates
have been issued in respect of them.
22. Share premium
2022 2021
£'000 £'000
At start and end of year 10,088 10,088
Share Premium includes any premiums received on issue of Share Capital. Any
transaction costs associated with the issuing of shares are deducted from
Share Premium, net of any related income tax benefits.
23. Treasury shares
2022 2021
£'000 £'000
At start and end of year (99,622 shares) (25) (25)
Treasury shares represent the nominal value of the shares purchased by the
Company.
24. Capital redemption reserve
2022 2021
£'000 £'000
At start and end of year 125 125
Capital redemption reserve represents the amount by which the nominal value of
the shares purchased or redeemed is greater than proceeds of a fresh issue of
shares.
25. Share option reserve
2022 Restated*
2021
£'000 £'000
At start of year - 696
Share option charge - -
Transfer in relation to lapsed share options - (696)
At end of year - -
*See note 33.
Share option reserve represents the fair value charge of share options in
issue. The Board of Directors approved the original transfer of reserves from
Retained Earnings to a designated share option reserve.
26. Non-controlling interest
2022 Restated*
2021
£'000 £'000
At start of year 354 1,339
Acquisition of non-controlling interest (note 11) (366) (1,056)
Share of profit for the year 12 71
At end of year - 354
*See note 33.
The profit or loss attributable to the non-controlling ownership stakes in
subsidiary companies is transferred from retained earnings to non-controlling
interests each year*.
27. Foreign currency translation reserve
2022 2021
£'000 £'000
At start of year (161) (155)
Exchange differences on translation of foreign operations 279 (6)
At end of year 118 (161)
Foreign currency translation reserve represents the exchange differences on
retranslation of foreign operations.
28. Retained earnings
2022 2021
£'000 £'000
At start of year (26,332) (24,868)
Acquisition of subsidiaries NCI* (290) (717)
Transfer in relation to lapsed share options* - 696
Retained loss for the year (6,449) (1,443)
At end of year (33,071) (26,332)
*See note 33. Retained Earnings includes all current and prior period retained
profits and share-based employee remuneration.
29. Capital commitments
The Group had no commitments to purchase property, plant and equipment at 31
March 2022 or at 31 March 2021.
30. Related parties
The services of Mark Carrington as Non-Executive Director of the Company were
purchased from Deacon Street Partners Limited for a fee of £30,000 (2021:
£30,000). At the year end, £22,500 (2021: £7,500) was outstanding to Deacon
Street Partners Limited.
Ian Robinson (Non-Executive Chairman) is a Director of Gusbourne Estate
Limited, with which Jaywing commenced trading on an arm's length basis in H1
FY22. Revenue from Gusbourne Estate Limited amounted to £128k in the year
with a debtor's balance of £46k as at 31 March 2022.
On 2 October 2019 entities associated with two of its major shareholders (the
"Lenders") acquired the Company's existing secured loan facility of
£5,200,000 ("Jaywing Facility") The Lenders immediately provided the Company
with additional secured facilities by increasing the Jaywing Facility by
£3,000,000 to £8,200,000, which enabled the Company to repay its existing
outstanding overdraft and provide it with additional working capital. The
Jaywing Facility has been provided to the Company on the same terms as those
provided by the previous lender. At the year end £8,754k (2021: £8,338k) was
outstanding. Further details of these borrowings are provided in Note 18.
On 11 August 2022, post year end, Company increased its existing short-term
finance facility of £8.2m by £1m to £9.2m , through a variation of the
existing debt agreement with the Lenders.
31. Standards and interpretations in issue at 31 March 2022 but not yet
effective
At the date of authorisation of these financial statements, several new, but
not yet effective, Standards and amendments to existing Standards, and
Interpretations have been published by the IASB. None of these Standards or
amendments to existing Standards have been adopted early by the Group. No new
standards have been adopted in the current year.
Management anticipates that all relevant pronouncements will be adopted for
the first period beginning on or after the effective date of the
pronouncement. New Standards, amendments and Interpretations not adopted in
the current year have not been disclosed as they are not expected to have a
material impact on the Group's financial statements.
32. Financial risk management
The Group uses various financial instruments. These include loans, cash,
issued equity investments and various items, such as trade receivables and
trade payables that arise directly from its operations. The main purpose of
these financial instruments is to raise finance for the Company's operations.
The existence of these financial instruments exposes the Group to several
financial risks, which are described in more detail below. The main risks
arising from the Group's financial instruments are market risk, cash flow
interest rate risk, credit risk and liquidity risk. The Directors review and
agree policies for managing each of these risks and they are summarised below.
Market risk
Market risk encompasses three types of risk, being currency risk, fair value
interest rate risk and price risk. In this instance, price risk has been
ignored as it is not considered a material risk to the business. The Group's
policies for managing fair value interest rate risk are considered along with
those for managing cash flow interest rate risk and are set out in the
subsection entitled "interest rate risk" below.
Currency risk
The Group is only minimally exposed to translation and transaction foreign
exchange risk.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is
available to meet foreseeable needs by closely managing the cash balance and
by investing cash assets safely and profitably.
The Group policy throughout the period has been to ensure continuity of
funding.
Borrowings are repayable on demand.
Interest rate risk
The Group finances its operations through a mixture of retained profits and
borrowings. The Directors' policy to manage interest rate fluctuations is to
regularly review the costs of capital and the risks associated with each class
of capital, and to maintain an appropriate mix between fixed and floating rate
borrowings.
The interest rate exposure of the financial assets and liabilities of the
Group is shown in the table below. The table includes trade receivables and
payables as these do not attract interest and are therefore subject to fair
value interest rate risk.
2022 2021
£'000 £'000
Financial assets:
Floating interest rate:
Cash 714 752
Zero interest rate:
Trade receivables 5,629 5,536
6,343 6,288
Financial liabilities:
Floating interest rate:
Bank loans/revolving facility 8,754 8,338
Zero interest rate:
Trade payables 3,686 2,145
12,440 10,483
As at 31 March 2022, the Group's non-derivative financial liabilities have
contractual maturities (including interest payments where applicable) as
summarised below:
31 March 2022 Current Non-current
Within 6 months 6 to 12 months 1 to 5 years later than 5 years
£'000 £'000 £'000 £'000
Bank borrowings 8,754 - - -
Trade and other payables 11,182 - - -
Total amount due 19,936 - - -
This compares to the maturity of the Group's non-derivative financial
liabilities in the previous reporting period as follows:
31 March 2021 Current Non-current
Within 6 months 6 to 12 months 1 to 5 years later than 5 years
£'000 £'000 £'000 £'000
Bank borrowings 8,338 - - -
Trade and other payables 10,965 - - -
Total amount due 19,303 - - -
The above amounts reflect the contractual undiscounted cash flows, which may
differ from the carrying values of the liabilities at the reporting date.
Sensitivity to interest rate fluctuations
If the average interest rate payable on the net financial asset/net financial
liabilities, subject to a floating interest rate during the year, had been 1%
higher than reported on the average borrowings during the year, then profit
before tax would have been £85k lower, and if the interest rate on these
liabilities had been 1% lower, profit before tax would have improved by £85k.
Credit risk
The Group applies the IFRS 9 simplified model of recognising lifetime expected
credit losses for all trade receivables as these items do not have a
significant financing component.
In measuring the expected credit losses, the trade receivables have been
assessed on a collective basis as they possess shared credit risk
characteristics. They have been grouped based on the days past due and also
according to the geographical location of customers.
The expected loss rates are based on the payment profile for sales over the
past 48 months before 31 March 2019 and 1 January respectively, as well as the
corresponding historical credit losses during that period. The historical
rates are adjusted to reflect current and forward-looking macroeconomic
factors affecting the customer's ability to settle the amount outstanding. The
Group has identified gross domestic product (GDP) and unemployment rates of
the countries in which the customers are domiciled to be the most relevant
factors, and accordingly adjusts historical loss rates for expected changes in
these factors. However, given the short period exposed to credit risk, the
impact of these macroeconomic factors has not been considered significant
within the reporting period.
Trade receivables are written off (i.e. derecognised) when there is no
reasonable expectation of recovery. Failure to make payments within 180 days
from the invoice date and failure to engage with the Group on alternative
payment arrangement, amongst other things, are considered indicators of no
reasonable expectation of recovery.
The Directors consider that after review the Group's trade receivables require
an impairment for the year ended 31 March 2022 of £22,000 (2021: £53,000)
which has been provided accordingly.
Summary of financial assets and liabilities by category
The carrying amount of financial assets and liabilities recognised at the
balance sheet date of the reporting periods under review may also be
categorised as follows:
2022 2021
£'000 £'000
Financial assets
Financial assets measured at amortised cost
Trade and other receivables 5,826 5,630
Cash and cash equivalents 714 752
6,540 6,382
Financial liabilities:
Financial liabilities measured at amortised cost
Borrowings (8,754) (8,338)
Lease liabilities (1,843) (1,543)
Trade and other payables (9,339) (9,422)
Provisions for liabilities (42) (42)
(19,978) (19,345)
Net financial assets and liabilities (13,438) (12,963)
Plant, property and equipment 2,173 2,060
Goodwill 21,705 27,581
Other intangible assets 69 799
Contract assets 453 619
Prepayments 589 426
Deferred tax 644 158
Taxation payable 32 474
Provisions for deferred tax - (113)
25,665 32,004
Total equity 12,227 19,041
Capital management policies and procedures
The Group's capital management objectives are:
§ to ensure the Group's ability to continue as a going concern; and
§ to provide an adequate return to shareholders by pricing products
and services commensurately with the level of risk.
This is achieved through close management of working capital and regular
reviews of pricing. Decisions on whether to raise funding using debt or equity
are made by the Board based on the requirements of the business.
Capital for the reporting period under review is summarised as follows:
2022 2021
£'000 £'000
Total equity 12,227 19,041
Financial assets and financial liabilities measured at fair value in the
statement of financial position are grouped into three levels of a fair value
hierarchy. The three levels are defined based on the observability of
significant inputs to the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
• Level 3: unobservable inputs for the asset or liability.
Financial assets and liabilities measured at fair value are not material.
Measurement of fair value of financial instruments
The Group's finance team performs valuations of financial items for financial
reporting purposes, including Level 3 fair values, in consultation with third
party valuation specialists for complex valuations. Valuation techniques are
selected based on the characteristics of each instrument, with the overall
objective of maximising the use of market-based information. The finance team
reports directly to the chief financial officer (CFO) and to the audit
committee. Valuation processes and fair value changes are discussed among the
audit committee and the valuation team at least every year, in line with the
Group's reporting dates.
The following table provides information about the sensitivity of the fair
value measurement to changes in the most significant inputs:
Description Significant unobservable input Estimate of the input Sensitivity of the fair value measurement to input
Put and call options and other deferred consideration Probability of meeting target 100% Not applicable
There are no significant interrelationships between the inputs and the
unobservable inputs.
Level 3 fair value measurements
The reconciliation of the carrying amounts of financial instruments classified
within Level 3 is as follows:
Put/call options
£'000
Balance at 31 March 2020 484
Amount recognised through retained earnings (435)
Balance at 31 March 2021 49
Amount recognised through retained earnings (49)
Balance at 31 March 2022 -
33. Prior period restatement
There have been 2 prior year restatements, neither impacted Adjusted EBITDA or
are directly related to the Group's day to day trading:
1) Recognition of deferred consideration in relation to acquisitions
In the financial statements for the year ended 31 March 2021 the fair value
adjustments in respect of deferred consideration and associated Put / Call
options, recognised on the acquisition of both Massive Group PTY and Frank
Digital PTY and subsequent acquisitions of the Group, had been incorrectly
recognised as goodwill or released through the Profit and Loss rather than
through retained earnings. As a result, a prior year restatement of £435k has
been recognised in the profit and loss and £2,208k through retained earnings,
to reflect the true position as at 31 March 2021. Additionally, the
consolidated Cashflow Statement has been restated to reclassify the
acquisition of non-controlling interest from investing activities to financing
activities.
2) Release of closed share option scheme
In the financial statements for the year ended 31 March 2021 the fair value
release of the share options in relation to the scheme that has closed were
released through the profit and loss rather than through retained earnings. As
a result, a prior year restatement of £696k has been recognised to reflect
the true position as at 31 March 2021.
3) Reclassification of deferred tax
Deferred tax was reclassified from current to non-current to better represent
the likely timing of recovery, that had no impact of profit / loss or net
assets.
The following table summarises the impact of the prior period restatement in
relation to the financial statements of the Group:
2021
£000
Loss for the year as previously stated (241)
Restatement 1 - Recognition of deferred consideration in relation to (435)
acquisitions
Restatement 2 - Release of closed share option scheme (696)
Loss for the year as restated (1,372)
2021
£000
Total equity for the year as previously stated 21,249
Restatement 1 - Recognition of deferred consideration in relation to (2,208)
acquisitions
Total equity for the year as restated 19,041
Impact on the Consolidated Statement of Comprehensive Income
For the year ended 31 March 2021 2021 2021
£'000 £'000 £'000
Original Adjustment Restated
Gross revenue 25,957 - 25,957
Direct Costs (5,792) - (5,792)
Revenue 20,165 - 20,165
Other operating income 793 - 793
Operating expenses (20,867) (1,131) (21,998)
Operating Profit / (loss) 91 (1,131) (1,040)
Finance costs (451) - (451)
(360) (1,131) (1,491)
Loss before tax
Tax credit 119 - 119
Loss for the year (241) (1,131) (1,372)
Loss for the year is attributable to:
Non-controlling interests 71 - 71
Owners of the parent (312) (1,131) (1,443)
(241) (1,131) (1,372)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
Exchange differences on retranslation of foreign operations (6) - (6)
Total comprehensive loss for the period (247) (1,131) (1,378)
Total comprehensive loss is attributable to:
Non-controlling interests 71 - 71
Owners of the Parent (318) (1,131) (1,449)
(247) (1,131) (1,378)
Basic and diluted loss per share
Loss per share (6.90p) (153.66p) (1.54p)
Impact on the Consolidated Balance Sheet
2021 2021 2021
As at 31 March £'000 £'000 £'000
Non-current assets Original Adjustment Restated
Property, plant and equipment 2,060 - 2,060
Goodwill 29,789 (2,208) 27,581
Deferred tax - 586 586
Other intangible assets 799 - 799
32,648 (1,622) 31,026
Current assets
Trade and other receivables 6,214 (158) 6,056
Contract assets 619 - 619
Current tax asset 474 (428) 46
Cash and cash equivalents 752 - 752
8,059 - 7,473
Total assets 40,707 (2,208) 38,499
Current liabilities
Borrowings 8,338 - 8,338
Trade and other payables 8,065 - 8,065
Contract Liabilities 1,163 - 1,163
Current lease liabilities 666 - 666
Current tax liabilities 194 - 194
Provisions 42 - 42
18,468 - 18,468
Non-current liabilities
Non-current lease liabilities 877 - 877
Deferred tax liabilities 113 - 113
990 - 990
Total liabilities 19,458 - 19,458
Net assets 21,249 (2,208) 19,041
Equity
Share capital 34,992 - 34,992
Share premium 10,088 - 10,088
Capital redemption reserve 125 - 125
Treasury shares (25) - (25)
Share option reserve - - -
Foreign currency translation reserve (161) - (161)
Retained earnings (24,124) (2,208) (26,332)
Equity attributable to owners of the parent 20,895 (2,208) 18,687
Non-controlling interest 354 - 354
Total equity 21,249 (2,208) 19,041
34. Post balance sheet events
Bloom legal case
On 12 April 2022 there was a high court judgment in the case of "Others vs
Jaywing" where the judge found that the Claimants' claim must be dismissed in
its entirety and awarded costs, of which £419k has so far been recovered post
year end.
Acquisition of Midisi Limited
On 26th August 2022, post period end, the Company completed the acquisition
of Midisi Limited, a marketing software development business, which owns the
intellectual property rights for the 'Decision' software. ( the Acquisition)
The Directors believe that the Acquisition will be immediately
earnings-enhancing from the retention of 100% of revenues, and that both the
revenue and profit will increase over time as Jaywing focuses on adding new
clients and developing the proposition further.
The initial consideration for the Acquisition is £400,000, to be paid from
Jaywing's existing cash resources, plus excess cash of £845,230. Further
fixed payments totalling £1.4m will be paid at 6-monthly intervals over 42
months, plus an additional performance-related earn-out payable at 6-monthly
intervals between months 13 and 49, funded out of planned cashflows generated
from Decision revenues. The earn-out relates to revenues generated from
Decision, and the maximum earn-out payment is capped at £3.2m.
Connected to the acquisition, and to provide further working capital to the
Group, the Company has increased the headroom in its existing short-term
finance facility by £1m, through a variation of the existing debt agreement
with its lenders, DSC Investment Holdings Ltd and 1798 Volantis Fund Ltd. This
would cover the initial transaction costs, with subsequent payments funded out
of the Company's cashflows.
Increase in debt facility
On 11 August 2022, post year end, the Company increased its existing
short-term finance facility of £8.2m by £1m to £9.2m , through a variation
of the existing debt agreement with its Lenders. Further details are provided
in Notes 30 and 18 to the Consolidated Financial Statements
Company Financial Statements
Company Profit and Loss account
Restated*
2022 2021
Note £'000 £'000
Turnover - -
Administrative expenses* 2 (10,743) (2,454)
Operating loss 3 (10,743) (2,454)
Income from fixed asset investment 4 418 1,717
Other income 4 - 20
Finance Costs 5 (460) (421)
Loss on ordinary activities before taxation (10,785) (1,138)
Taxation on ordinary activities 6 573 331
Loss and total comprehensive loss on ordinary activities after taxation (10,212) (807)
*The comparative information has been restated due to fair value adjustments
misstated in the prior period as discussed in note 27.
The accompanying Notes to the Parent Company Financial Statements form an
integral part of these Financial Statements.
Company Balance Sheet
2022 Restated*
2021
Note £'000 £'000
Fixed assets
Tangible assets 10 1,040 1,242
Deferred tax 21 605 -
Investments 12 26,235 34,714
27,880 35,956
Current assets
Cash at bank 2 12
Debtors due within one year 13 575 1,237
577 1,249
Current liabilities
Creditors: amounts falling due within one year 14 (23,105) (21,540)
Total assets less current liabilities 5,352 15,665
Non-current liabilities
Creditors: amounts falling due after more than one year 15 (690) (840)
Net assets 4,662 14,825
Capital and reserves
Called up share capital 17 34,992 34,992
Share premium account 18 10,088 10,088
Treasury shares 19 (25) (25)
Share option reserve 18 - -
Capital redemption reserve 18 125 125
Profit and loss account 18 (40,518) (30,355)
Equity shareholders' funds 4,662 14,825
* See note 27 for information regarding the restatement.
The Financial Statements were approved by the Board of Directors and
authorised for issue on 6 September 2022.
Signed on behalf of the Board of Directors:
Andrew Fryatt
Director
The accompanying Notes to the Parent Company Financial Statements form an
integral part of these Financial Statements.
Company Statement of Changes in Equity
Called-up Share Premium account Treasury Shares Share Option Reserve Capital Redemption Reserve Profit
Share and loss
Capital account Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2020 34,992 10,088 (25) 696 125 (30,364) 15,512
Loss for the year and total other comprehensive income as previously stated - - - (696) - 9 (687)
At 31 March 2021 as previously stated 34,992 10,088 (25) - 125 (30,355) 14,825
Prior year adjustment (see note 27) - - - 696 - (816) (120)
Loss for the year and total other comprehensive income as restated (see note - - - - - (807) (807)
27)
Release of Put / Call Option - - - - - 120 120
Transfer in relation to lapsed share options - - - (696) - 696 -
Total comprehensive income - - - (696) - 9 (687)
At 31 March 2021 as restated 34,992 10,088 (25) - 125 (30,355) 14,825
At 1 April 2021 34,992 10,088 (25) - 125 (30,355) 14,825
Release of Put / Call Option* - - - - - 49 49
Loss for the year and total other comprehensive income - - - - - (10,212) (10,212)
Total comprehensive income - - - - - (10,163) (10,163)
At 31 March 2022 34,992 10,088 (25) - 125 (40,518) 4,662
*The comparative information has been restated due to fair value adjustments
misstated in the prior period as discussed in note 27.
The accompanying Notes to the Parent Company Financial Statements form an
integral part of these Financial Statements.
Notes to the Parent Company Financial Statements
1. Accounting policies
Jaywing plc is incorporated in England and Wales.
Statement of compliance
These Financial Statements have been prepared in accordance with applicable
accounting standards and in accordance with Financial Reporting Standard 101 -
'The Reduced Disclosure Framework' (FRS 101). The principal accounting
policies adopted in the preparation of these Financial Statements are set out
below. These policies have all been applied consistently throughout the year
unless otherwise stated.
The Financial Statements have been prepared on a historical cost basis.
The Financial Statements are presented in Sterling (£) and have been
presented in round thousands (£'000).
Going concern
In determining the appropriate basis of preparation of the financial
statements, the Directors are required to consider whether the Group can
continue in operational existence for the foreseeable future.
In addition to the normal process of preparing forecasts for the Group, the
Board has also considered downside risks and the potential impact of Covid-19
and the economic environment on the cash flows of the Group for a period to 30
September 2024. This has been done by looking at various scenarios within the
forecasts for the potential effect of changes in the market during the
forecast period.
The outcome for the year and the forecasts prepared by the business show that
we do not consider there to be same level of uncertainty now as there was 12
months ago.
In considering their position the Directors have also had regard to letters of
support in respect of the secured debt which have received from each of the
holders of that debt confirming that the debt will not be called in and
support will be provided for the foreseeable future. Details of this debt are
contained in Note 18 and Note 30.
The Group financial statements do not include the adjustments that would
result if the Group were unable to continue as a going concern. The Directors
have a reasonable expectation that the Group has adequate resources to
continue in existence for the foreseeable future and have concluded it is
appropriate to adopt the going concern basis of accounting in the preparation
of the financial statements.
Disclosure exemptions adopted
In preparing these Financial Statements, the Company has taken advantage of
all disclosure exemptions conferred by FRS 101. Therefore, these Financial
Statements do not include:
1 A statement of cash flows and related notes
2 The requirement to produce a balance sheet at the
beginning of the earliest comparative period
3 The requirements of IAS 24 related party
disclosures to disclose related party transactions entered in to between
two or more members of the Group as they are
wholly owned within the Group
4 Presentation of comparative reconciliations for
property, plant and equipment, intangible assets
5 Capital management disclosures
6 Presentation of comparative reconciliation of the
number of shares outstanding at the beginning and at the end of the period
7 The effect of future accounting standards not
adopted
8 Certain share-based payment disclosures
9 Disclosures in relation to impairment of assets
10 Disclosures in respect of financial instruments
(other than disclosures required as a result of recording financial
instruments at fair value)
11 IFRS 9 disclosures in respect of allowances for
expected credit losses reconciliations and credit risk and hedge accounting
12. IFRS 15 disclosures in respect of disaggregation of
revenue, contract assets reconciliations and contract liabilities
reconciliation and unsatisfied performance obligations
Investments in Subsidiaries, Associates and Joint Ventures
Investments in Subsidiary undertakings, Associates and Joint Ventures are
stated at cost less any applicable provision for impairment.
Within the year the trade and assets of subsidiary entities were transferred
within the Group. As the economic substance of the transaction did not result
in a loss of value, investments in subsidiaries have continued to be held at
their carrying value. An impairment review is performed annually in line with
IAS36. See valuation of investments in significant judgement and estimates.
Tangible assets
Property, plant and equipment (PPE) is initially recognised at acquisition
cost or manufacturing cost, including any costs directly attributable to
bringing the assets to the location and condition necessary for them to be
capable of operating in the manner intended by the Company's management.
PPE is subsequently measured at cost less accumulated depreciation and
impairment losses.
Depreciation is recognised on a straight-line basis (unless otherwise stated)
to write down the cost less estimated residual value of PPE. The following
useful lives are applied:
- Leasehold improvements: 5-10 years
- Fixtures, fittings and equipment: 2-5 years
- Buildings: period of the lease
Material residual value estimates and estimates of useful life are updated as
required, but at least annually.
Gains or losses arising on the disposal of property, plant and equipment are
determined as the difference between the disposal proceeds and the carrying
amount of the assets, and are recognised in profit or loss within other income
or other expenses.
Financial Instruments - Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Company
becomes a party to the contractual provisions of the financial instrument and
are measured initially at fair value adjusted for transaction costs, except
for those carried at fair value through profit or loss, which are measured
initially at fair value. Subsequent measurement of financial assets and
financial liabilities is described below.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability
is derecognised when it is extinguished, discharged, cancelled or expires.
Financial Instruments - Classification and subsequent measurement of financial
assets
For the purpose of subsequent measurement, financial assets, other than those
designated and effective as hedging instruments, are classified into the
following categories upon initial recognition:
• financial assets subsequently measured at
amortised costs
There are no financial assets that have been designated as fair value through
other comprehensive income, or fair value through profit or loss.
All financial assets are reviewed for impairment at least at each reporting
date, to identify whether there is any objective evidence that a financial
asset or a group of financial assets is impaired. Different criteria to
determine impairment are applied for each category of financial assets, which
are described below.
All income and expenses relating to financial assets that are recognised in
profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented
within other expenses.
IFRS 9's impairment requirements use more forward-looking information to
recognise expected credit losses - the 'expected credit loss (ECL) model'.
Recognition of credit losses is no longer dependent on the Company first
identifying a credit loss event. Instead the Company considers a broader range
of information when assessing credit risk and measuring expected credit
losses, including past events, current conditions, reasonable and supportable
forecasts that affect the expected collectability of the future cash flows of
the instrument.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial instrument.
Financial instruments - classification and subsequent measurement of financial
liabilities
The Company's financial liabilities include borrowings, trade creditors and
other creditors.
Financial liabilities are measured subsequently at amortised cost using the
effective interest method.
Cash and cash equivalents
Cash comprises cash on hand and demand deposits, which is presented as cash at
bank and in hand in the Balance Sheet.
Cash equivalents comprise short-term, highly liquid investments with
maturities of three months or less from inception, that are readily
convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value. Cash equivalents are presented as part
of current asset investments in the Balance Sheet.
Leases
The Company reports using IFRS 16, whereby the Company now recognises a lease
liability and a right of use asset.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any lease
incentives receivable;
• variable lease payment that are based on an index or a rate, initially
measured using the index or rate as at the commencement date;
• amounts expected to be payable by the group under residual value
guarantees;
• the exercise price of a purchase option if the group is reasonably certain
to exercise that option; and
• payments of penalties for terminating the lease, if the lease term
reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability. The lease payments are
discounted using the interest rate implicit in the lease. If that rate cannot
be readily determined, which is generally the case for leases in the group,
the lessee's incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value to the right of use asset in a similar economic
environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Company, where possible, uses
recent third-party financing received by the individual lessee as a starting
point, adjusted to reflect changes in financing conditions since third party
financing was received.
If the Company is exposed to potential future increases in variable lease
payments based on an index or rate, which are not included in the lease
liability until they take effect, then when adjustments to lease payments
based on an index or rate take effect, the lease liability is reassessed and
adjusted against the right of use asset.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period.
Right of use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease
incentives received;
• any initial direct costs; and
• restoration costs.
Right of use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Company is
reasonably certain to exercise a purchase option, the right of use asset is
depreciated over the underlying asset's useful life.
Payments associated with short-term leases of equipment and all leases of
low-value assets are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of 12 months or
less.
See note 11.
Financial guarantees
Financial guarantees in respect of the borrowings of fellow Group companies
are not regarded as insurance contracts. They are recognised at fair value and
are subsequently measured at the higher of:
• the amount that would be required to be
provided under IAS 37 (see policy on provisions below); and
• the amount of any proceeds received net of
amortisation recognised as income.
Provisions, contingent assets and contingent liabilities
Provisions for product warranties, legal disputes, onerous contracts or other
claims are recognised when the Company has a present legal or constructive
obligation as a result of a past event, it is probable that an outflow of
economic resources will be required, and amounts can be estimated reliably.
The timing or amount of the outflow may still be uncertain.
Restructuring provisions are recognised only if a detailed formal plan for the
restructuring exists and management has either communicated the plan's main
features to those affected or started implementation. Provisions are not
recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the
present obligation, based on the most reliable evidence available at the
reporting date, including the risks and uncertainties associated with the
present obligation. Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. Where the time value of money
is material, provisions are discounted to their present values using a pre-tax
discount rate that reflects the current market assessment of the time value of
money and the risks specific to the liability.
Any reimbursement that is virtually certain to be collected from a third party
with respect to the obligation is recognised as a separate asset. However,
this asset may not exceed the amount of the related provision.
No liability is recognised if an outflow of economic resources as a result of
present obligations is not probable. Such situations are disclosed as
contingent liabilities unless the outflow of resources is remote.
Equity, reserves and dividend payments
Financial instruments issued by the Company are classified as equity only to
the extent that they do not meet the definition of a financial liability or
financial asset.
The Company's ordinary shares are classified as equity. Transaction costs on
the issue of shares are deducted from the Share Premium Account arising on
that issue. Dividends on the Company's ordinary shares are recognised directly
in equity.
Income
Interest receivable
Interest receivable is reported on an accrual basis using the effective
interest method.
Dividends receivable
Dividends are recognised at the time the right to receive payment is
established.
Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the
service or as incurred.
Foreign currency translation
Foreign currency transactions are translated into the Company's functional
currency using the exchange rates prevailing at the dates of the transactions
(spot exchange rate).
Foreign exchange gains and losses resulting from the re-measurement of
monetary items denominated in foreign currency at year-end exchange rates are
recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are measured at
historical cost (translated using the exchange rates at the transaction date),
except for non-monetary items measured at fair value, which are translated
using the exchange rates at the date when fair value was determined. Where a
gain or loss on a non-monetary item is recognised in other comprehensive
income, the foreign exchange component of that gain or loss is also recognised
in other comprehensive income.
Income taxes
Tax expense recognised in profit or loss comprises the sum of deferred tax and
current tax not recognised in other comprehensive income or directly in
equity.
Calculation of current tax is based on tax rates and laws that have been
enacted or substantively enacted by the end of the reporting period. Deferred
income taxes are calculated using the liability method.
Calculation of deferred tax is based on tax rates and laws that have been
enacted or substantively enacted by the end of the reporting period, that are
expected to apply when the asset is realised, or the liability is settled.
The measurement of deferred tax reflects the tax consequences that would
follow from the manner in which the entity expects to recover the related
asset or settle the related obligation.
Deferred tax assets are recognised to the extent that it is probable that the
underlying tax loss or deductible temporary difference will be utilised
against future taxable income. This is assessed based on the Company's
forecast of future operating results, adjusted for significant non-taxable
income and expenses, and specific limits on the use of any unused tax loss or
credit. Deferred tax assets are not discounted.
Deferred tax liabilities are generally recognised in full, with the exception
of the following:
• on the initial recognition of goodwill on
investments in Subsidiaries, where the Company is able to control the timing
of the reversal of the difference, and it is probable that the difference will
not reverse in the foreseeable future, on the initial recognition of a
transaction that is not a business combination and at the time of the
transaction affects neither accounting nor taxable profit.
Deferred tax liabilities are not discounted.
Post-employment benefits and short-term employee benefits
Short-term employee benefits
Short-term employee benefits, including holiday entitlement, are current
liabilities included in pension and other employee obligations, measured at
the undiscounted amount that the Company expects to pay as a result of unused
entitlement.
Post-employment benefit plans
Contributions to defined contribution pension schemes are charged to profit or
loss in the year to which they relate. Prepaid contributions are recognised as
an asset. Unpaid contributions are reflected as a liability.
Profit from operations
Profit from operations comprises the results of the Company before interest
receivable and similar income, interest payable and similar charges,
corporation tax and deferred tax.
Put/call options
In the previous year the put/call option in Frank Digital PTY had been valued
by an independent assessor and was recognised with both a service and
non-service element in the accounts. The non-service element was fully
recognised as at the date of acquisition and the fair value reviewed annually.
The service element was treated as a cash-settled share-based payment with the
share-based payment valued at the point of inception and the cost being spread
over the life of the asset. In the year the put/call option has been
completed.
Fair value measurement
Management uses valuation techniques to determine the fair value of financial
instruments and non-financial assets. This involves developing estimates and
assumptions consistent with how market participants would price the
instrument. Management bases its assumptions on observable data as far as
possible, but this is not always available. In that case, management uses the
best information available. Estimated fair values may vary from the actual
prices that would be achieved in an arm's length transaction at the reporting
date.
Significant judgement in applying accounting policies and key estimation
uncertainty
When preparing the Financial Statements, management makes a number of
judgements, estimates and assumptions about the recognition and measurement of
assets, liabilities, income and expenses.
The following are significant management judgements in applying the accounting
policies of the Company that have the most significant effect on the Financial
Statements.
Useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at
each reporting date, based on the expected utility of the assets.
Uncertainties in these estimates relate to technological obsolescence that may
change the utility of certain software and IT equipment.
Valuation of investments
Management reviews the carrying value of investments at each reporting date,
based on the future cash flows of those investments.
IFRS 16
Under IFRS 16 the Company is required to make a judgement in determining the
discount rate to be used in calculating the present value of lease payments
when recognising the lease liabilities and right of use asset. For the
discount rate the Company has used the lessee's incremental borrowing rate,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right of use asset
in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Company, where possible, uses
recent third-party financing received by the individual lessee as a starting
point, adjusted to reflect changes in financing conditions since third party
financing was received. The right of use asset is depreciated over the term of
the lease. The term has been determined with reference to the lease agreements
and any expected extension beyond the end of the lease end date specified in
the lease agreement.
2. Other operating charges
2022 2021
£'000 £'000
Impairment of investment, see note 12 9,185 -
Administrative expenses 1,558 2,454
Total administrative expenses 10,743 2,454
3. Operating loss
2022 2021
£'000 £'000
Operating loss is stated after charging:
Impairment of investment, see note 12 9,185 -
Depreciation of owned fixed assets 73 58
Depreciation of right of use assets 241 169
4. Income from fixed asset investments and other income
2022 2021
£'000 £'000
Dividends received from subsidiary companies 418 1,717
5. Finance costs
2022 2021
£'000 £'000
Bank interest payable 416 403
Interest on lease liability 44 44
Finance charge on acquisition - (26)
Total 460 421
6. Tax on ordinary activities
2022 2021
The tax credit / (charge) is based on the loss for the year and represents:
£'000 £'000
UK corporation tax at 19% (2021: 19%) 2 (408)
Adjustment in respect of prior period - 55
Total current tax 2 (353)
Deferred tax:
Origination and reversal of timing differences 571 22
Total tax charge / (credit) 573 (331)
2022 2021
The tax credit can be explained as follows:
£'000 £'000
Loss before tax (10,785) (1,138)
Tax using the UK corporation tax rate of 19% (2021: 19%) (2,049) (216)
Effect of:
Non-taxable income - 343
Recognition of unused losses (240) -
Impairment of investments 1,745 -
Non-deductible expenses / credit (29) (513)
Prior year adjustment - 55
Current year credit (573) (331)
7. Auditor's remuneration
Details of remuneration paid to the auditor by the Company are shown in Note 7
to the Consolidated Financial Statements.
8. Directors and employees
2022 2021
Average number of staff employed by the Company 5 17
2022 2021
Aggregate emoluments (including those of Directors): £'000 £'000
Wages and salaries 584 788
Social security costs 73 101
Pension contribution 15 52
Share-based payment credit - (696)
Total emoluments 672 245
Further information in respect of Directors is given in the Directors'
Remuneration Report.
Remuneration in respect of Directors was as follows:
2022 2021
£'000 £'000
Emoluments receivable 554 277
Fees paid to third parties for Directors' services 30 27
Company pension contributions to money purchase pension schemes 15 13
599 317
The highest paid Director received remuneration of £284k (2021: £203k).
9. Dividends
The Directors do not recommend the payment of a dividend for the current year
(2021: £Nil).
10. Tangible fixed assets
Buildings Leasehold Improvements Fixtures & Total
fittings
£'000 £'000 £'000 £'000
Cost at 31 March 2021 1,147 389 359 1,895
Additions - - 11 11
Right of use asset additions - - 105 105
Disposals - - (59) (59)
Cost at 31 March 2022 1,147 389 416 1,952
Depreciation at 31 March 2021 286 161 206 653
Charge for the year on owned assets - 42 31 73
Disposals - - - (55) (55)
Charge on right of use assets 152 - 89 241
Depreciation at 31 March 2022 438 203 271 912
Net book value at 31 March 2022 709 186 145 1,040
Net book value at 31 March 2021 861 228 153 1,242
11. Leases
The company has lease contracts for the office occupied in Sheffield and
printers. The amounts recognised in the financial statements in relation to
the leases are as follows:
(i) Amounts recognised in the statement of financial position
The balance sheet shows the following amounts relating to leases:
2022 2021
£'000 £'000
Right of use assets
Buildings 709 861
Plant and machinery 97 78
806 939
Lease liabilities
Current 170 169
Non-current 690 840
860 1,009
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
2022 2021
£'000 £'000
Depreciation charge of right of use assets
Buildings 152 143
Plant and machinery 89 26
241 169
Interest expense (included in finance cost) 44 44
12. Investments
Subsidiaries
£'000
Cost at 31 March 2021 61,118
Additions 706
Cost at 31 March 2022 61,824
Impairment at 31 March 2021 26,404
Impairment in year 9,185
Impairment at 31 March 2022 35,589
Net book value at 31 March 2022 26,235
Net book value at 31 March 2021 34,714
The Company has carried out an impairment review of the carrying amount of the
investments in Subsidiaries. The impairment review of investments was
performed using the same cash flows and assumptions as were used in the
Group's Financial Statements for the impairment review of goodwill, details of
which can be found in Note 14 in the Group's Financial Statements. This review
has concluded that an impairment was required to the carrying value of the
Company's UK investments of £9.2m (2021: £Nil) based upon sensitivities
applied to forecast EBITDA.
Jaywing plc acquired the remaining 25% of Massive Group PTY on 21 October 2020
after the remaining shareholders exercised their put option. The 25% stake was
acquired for $4.0m (£2.2m), the total consideration for the purchase of the
100% interest was $9.6m (£5.4m). At 31 March 2021 an amount of £0.3m was
outstanding to the original shareholders. This amount was fully paid by 30
June 2021.
On 2 November 2021 Jaywing plc agreed with Matt Barbelli as the sole director
of Frank Digital Pty Ltd ("Frank Digital") in Australia to accelerate the
exercise of the Put and Call Option in relation to the 25% of the shares in
Frank Digital held by Barbelli Enterprises Pty Ltd ATF Barbelli Holdings Trust
("BEP"). The remaining 25% stake was acquired for a consideration of $1.2m
(£0.7m) and Jaywing plc now owns 100% of the shares in Frank Digital.
At 31 March 2022 the Company held either directly or indirectly, 20% or more
of the allotted Share Capital of the following companies:
Proportion held
Class of share By parent By the Nature of
capital held Company Group Business
Alphanumeric Group Holdings Limited Ordinary 100% 100% Dormant
Alphanumeric Holdings Limited Ordinary - 100% Dormant
Alphanumeric Limited Ordinary 100% 100% Data services & consultancy
Bloom Media (UK) Limited Ordinary 100% 100% Dormant
Dig for Fire Limited Ordinary - 100% Dormant
Digital Marketing Network Limited Ordinary 100% 100% Dormant
Digital Media and Analytics Limited Ordinary 100% 100% Dormant
DMG London Limited Ordinary 100% 100% Dormant
Epiphany Solutions Limited Ordinary 100% 100% Search Engine Optimisation
Frank Digital PTY Limited Ordinary 100% 100% Website design and build
Gasbox Limited Ordinary 100% 100% Non-trading
Hyperlaunch New Media Limited Ordinary 100% 100% Dormant
Inbox Media Limited Ordinary - 100% Dormant
Iris Associates Limited Ordinary - 100% Dormant
Jaywing Central Limited Ordinary 100% 100% Online marketing & media
Jaywing Information Limited Ordinary 100% 100% Dormant
Jaywing Innovation Limited Ordinary 100% 100% Product development
Jaywing North Limited Ordinary 100% 100% Dormant
Jaywing Australia PTY Limited (formerly Massive Group PTY Limited) Ordinary 100% 100% Search Engine Optimisation
Jaywing UK Limited (formerly Scope Creative Marketing Limited) Ordinary 100% 100% Direct marketing
Shackleton PR Limited Ordinary - 100% Dormant
The Comms Department Limited Ordinary - 100% Dormant
Woken Limited Ordinary - 100% Dormant
All the companies listed above have been consolidated.
All the companies listed above are incorporated in England and Wales with the
following exceptions:
Company Country of Incorporation Address
Frank Digital PTY Limited Australia 2 Elizabeth Plaza, North Sidney, NSW 2060
Jaywing Australia PTY Limited (formerly Massive Group PTY Limited) Australia 2 Elizabeth Plaza, North Sidney, NSW 2060
The companies incorporated in England and Wales all have their registered
office at Albert Works, Sidney Street, Sheffield, S1 4RG. The companies
incorporate in Australia all have their registered office at 2 Elizabeth
Plaza, North Sydney, NSW 2060.
13. Debtors due within one year
2022 2021
£'000 £'000
Amounts due from Group undertakings 58 58
Prepayments 173 262
Other taxation and social security 344 -
Deferred tax asset (Note 21) - 34
Corporation tax - 883
575 1,237
Amounts due from Group undertakings attract no interest and are repayable on
demand.
14. Creditors: amounts falling due within one year
2022 2021
£'000 £'000
Borrowings (Note 16) 8,754 8,338
Trade creditors 449 335
Amounts owed to Group undertakings 12,593 10,270
Other taxation and social security 19 913
Other creditors - 13
Accruals 494 266
Lease liability 170 169
Deferred consideration payable on acquisition of subsidiary undertakings 626 1,236
23,105 21,540
Amounts owed to Group undertakings attract no interest and are repayable on
demand.
15. Creditors: amounts falling due in more than one year
2022 2021
£'000 £'000
Lease liability 690 840
16. Borrowings
2022 2021
£'000 £'000
Summary:
Borrowings 8,754 8,338
2022 2021
Borrowings are repayable as follows:
£'000 £'000
Within one year:
Borrowings 8,754 8,338
Total due within one year 8,754 8,338
As the loans are at variable market rates their carrying amount is equivalent
to their fair value.
Interest is calculated at 3 month LIBOR plus a margin.
17. Share capital
Allotted, issued and fully paid:
45p deferred shares 5p ordinary shares
Number Number £'000
At 31 March 2021 67,378,520 93,432,217 34,992
At 31 March 2022 67,378,520 93,432,217 34,992
The 5 pence ordinary shares have the same rights (including voting and
dividend rights and rights on a return of capital) as the previous 50 pence
ordinary shares. Holders of the 45 pence deferred shares do not have any right
to receive notice of any General Meeting of the Company or any right to
attend, speak or vote at any such meeting. The deferred shareholders are not
entitled to receive any dividend or other distribution and shall, on a return
of assets in a winding up of the Company, entitle the holders only to the
repayment of the amounts paid up on the shares, after the amount paid to the
holders of the new ordinary shares exceeds £1,000,000 per new ordinary share.
The deferred shares are also incapable of transfer and no share certificates
have been issued in respect of them.
18. Reserves
Called-up Share Capital - represents the nominal value of shares that have
been issued.
Share Premium Account - includes any premiums received on issue of Share
Capital. Any transaction costs associated with the issuing of shares are
deducted from Share Premium.
Profit and Loss Account - includes all current and prior period retained
profits and losses.
Share Option Reserve - fair value charge for share options in issue.
Treasury Shares - shares in the company that have been acquired by the
company.
Capital Redemption Reserve - represents amounts transferred from Share Capital
on redemption of issued shares.
19. Treasury shares
2022 2021
£'000 £'000
At 31 March 2022 and 31 March 2021 25 25
20. Share-based payments
Share-based payment credit is as follows:
2022 Restated*
2021
£'000 £'000
Share-based payment - (587)
Related National Insurance costs - (109)
- (696)
*See note 27
21. Deferred tax asset
A deferred tax asset is provided for in the financial statements and consists
of the following:
2022 2021
£'000 £'000
Accelerated capital allowances 52 34
Recognition of unused losses 553 -
Deferred tax asset 605 34
The amount of deferred tax recognised in profit or loss was as follows:
2022 2021
£'000 £'000
Accelerated capital allowances 18 22
Recognition of unused losses 553 -
Total 571 22
The March 2021 Budget announced an increase in the UK standard rate of
corporation tax to 25% from 1 April 2023 with the legislation receiving Royal
Assent on 10 June 2021. Deferred tax as at 31 March 2022 has been provided at
a blended rate of 19% and 25% (2021: 19%) which is based on when the deferred
taxation is expected to crystalise.
Deferred tax assets are recognised to the extent that it is probable that the
underlying tax loss or deductible temporary difference will be utilised
against future taxable income. This is assessed based on the Group's forecast
of future operating results, adjusted for significant non-taxable income and
expenses and specific limits on the use of any unused tax loss or credit.
22. Contingent liabilities
There is a cross guarantee between members of the Jaywing plc group of
companies on all overdrafts and borrowings with the group's lenders. At 31
March 2022 the amount thus guaranteed by the company was £nil (2021: £nil).
23. Related parties
The Company is exempt from the requirements of FRS 101 to disclose
transactions with other 100% members of the Jaywing plc group of companies.
Transactions with other related parties are disclosed in Note 30 to the
Consolidated Financial Statements.
24. Financial risk management objectives and policies
Details of Group policies are set out in Note 32 to the Consolidated Financial
Statements.
25. Retirement benefits
Defined Contribution Schemes
The Company operates a defined contribution pension scheme. The assets of
the scheme are held separately from those of the Company in an independently
administered fund. The pension cost charge represents contributions payable by
the Company to the fund and amounted to £32k (2021: £52k).
26. Share-based payments
Employees of the Company were entitled to participate in an equity and
cash-settled share option scheme in the financial year to March 2021. The
scheme was terminated in October 2020, at which point all outstanding options
lapsed.
The options were granted with a fixed exercise price and had a vesting period
of up to two years. The vesting conditions related to the performance of the
overall Jaywing plc Group and continued employment during the vesting period.
There were no other market conditions attached to the share options. The
number of options outstanding at the end of the year in respect of Company
employees was nil (2021: nil).
27. Prior period restatement
There have been 2 prior year restatements, neither impacted Adjusted EBITDA or
are directly related to the Company' day to day trading:
1) Recognition of deferred consideration in relation to acquisitions
In the financial statements for the year ended 31 March 2021 the fair value
adjustments in respect of deferred consideration and associated Put / Call
options, recognised on the acquisition of both Massive Group PTY and Frank
Digital PTY and subsequent acquisitions of the Group, had been incorrectly
released through the Profit and Loss rather than through retained earnings. As
a result, a prior year restatement of £120k has been recognised to reflect
the true position as at 31 March 2021.
2) Release of closed share option scheme
In the financial statements for the year ended 31 March 2021 the fair value
release of the share options in relation to the scheme that has closed were
released through the profit and loss rather than through retained earnings. As
a result, a prior year restatement of £696k has been recognised to reflect
the true position as at 31 March 2021.
The following table summarises the impact of the prior period restatement in
relation to the financial statements of the Company:
2021
£000
Profit for the year as previously stated 9
Restatement 1 - Recognition of deferred consideration in relation to (120)
acquisitions
Restatement 2 - Release of closed share option scheme (696)
Loss for the year as restated (807)
Impact on the Consolidated Statement of Comprehensive Income For the year 2021 2021 2021
ended 31 March
£'000 £'000 £'000
Original Adjustment Restated
Turnover - - -
Administrative expenses (1,638) (816) (2,454)
Operating loss (1,638) (816) (2,454)
Income from fixed asset investment 1,717 - 1,717
Other income 20 - 20
Finance costs (421) - (421)
Loss on ordinary activities before taxation (322) (816) (1,138)
Taxation on ordinary activities 331 - 331
Profit / (loss) and total comprehensive income on ordinary activities after 9 (816) (807)
taxation
Impact on the Consolidated Balance Sheet
2021 2021
£'000 £'000
Original Restated
Fixed assets
Tangible assets 1,242 1,242
Deferred tax - -
Investments 34,714 34,714
35,956 35,956
Current assets
Cash at bank 12 12
Debtors due within one year 1,237 1,237
1,249 1,249
Current liabilities
Creditors: amounts falling due within one year (21,540) (21,540)
Total assets less current liabilities 15,665 15,665
Non-current liabilities
Creditors: amounts falling due after more than one year (840) (840)
Net assets 14,825 14,825
Capital and reserves
Called up share capital 34,992 34,992
Share premium account 10,088 10,088
Treasury shares (25) (25)
Share option reserve - -
Capital redemption reserve 125 125
Profit and loss account (30,355) (30,355)
Equity shareholders' funds 14,825 14,825
28. Post balance sheet events
On 26th August 2022, post period end, the acquisition of Midisi Limited, a
marketing software development business, which owns the intellectual property
rights for the 'Decision' was completed.
The Directors believe that the Acquisition will be immediately
earnings-enhancing from the retention of 100% of revenues, and that both the
revenue and profit will increase over time as Jaywing focuses on adding new
clients and developing the proposition further.
The initial consideration for the Acquisition is £400,000, to be paid from
Jaywing's existing cash resources, plus excess cash of £845,230. Further
fixed payments totalling £1.4m will be paid at 6-monthly intervals over 42
months, plus an additional performance-related earn-out payable at 6-monthly
intervals between months 13 and 49, funded out of planned cashflows generated
from Decision revenues. The earn-out relates to revenues generated from
Decision, and the maximum earn-out payment is capped at £3.2m.
Connected to the acquisition, and to provide further working capital to the
Group, the Company has increased the headroom in its existing short-term
finance facility by £1m, through a variation of the existing debt agreement
with its lenders, DSC Investment Holdings Ltd and 1798 Volantis Fund Ltd. This
would cover the initial transaction costs, with subsequent payments funded out
of the Company's cashflows.
Shareholder Information
General Meeting
A General Meeting will be held on Thursday 29(th) September 2022 at the
offices of Jaywing plc, Albert Works, Sidney Street, Sheffield, S1 4RG at
12:00pm.
Dividend
There is no dividend payable.
Multiple accounts on the shareholder register
If you have received two or more copies of or notifications about this
document, this means that there is more than one account in your name on the
Shareholders Register. This may be caused by your name or address appearing on
each account in a slightly different way. For security reasons, the Registrars
will not amalgamate the account without your written consent, so if you would
like any multiple accounts to be combined into one account, please write to
Link Asset Services at the address given below.
Documents
The following documents, which are available for inspection during normal
business hours at the registered office of the Company on any weekday
(Saturdays, Sundays and public holidays excluded), will also be available for
inspection at the place of the General Meeting from at least 15 minutes prior
to the meeting until its conclusion.
§ Copies of the Executive Directors' service agreements and the
Non-Executive Directors' letters of appointment;
§ The memorandum and articles of association of the Company; and
§ Register of Directors' interests in the Share Capital of the
Company maintained under Section 809 of the Companies Act 2006.
Particulars of the Directors' interest in shares are given in the Remuneration
Report, which is contained in the Report and Accounts for the year ended 31
March 2022.
Issued Share Capital
As at 31 August 2022 (being the last practicable date before the publication
of this document), the Company's issued Share Capital comprised 93,432,217
ordinary shares of 5p each, of which 99,622 are held in Treasury. Therefore,
as at 31 August 2022 the total voting rights in the Company were 93,432,217.
On a vote by show of hands, every member who is present in person or by proxy
has one vote. On a poll, every member who is present in person or by proxy has
one vote for every ordinary share of which he or she is a holder.
Shareholder enquiries
Neville Registrars Limited maintain the register of members of the Company. If
you have any queries concerning your shareholding, or if any of your details
change, please contact the Registrars:
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen, B62 8HD
Shareholder Helpline: 0121 5851131, fax: 0121 5851132.
Website address www.nevilleregistrars.co.uk
Website
Information on the Group is available at https://investors.jaywing.com
(https://investors.jaywing.com) .
Company Information
Registered Office
Albert Works
71 Sidney Street
Sheffield
S1 4RG
Registered Number: 05935923
Country of incorporation: England
Auditor
Grant Thornton UK LLP
1 Holly
Street
Sheffield
S1
2GT
Nominated adviser and broker
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Solicitors
Fieldfisher LLP
No 1 Spinningfields
Hardman Street
Manchester
M3 3EB
Company Secretary
Chris Hughes
Albert Works
71 Sydney Street
Sheffield
S1 4RG
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