REG - Jaywing PLC - Final Results
07/09/2023 07:00
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RNS Number : 6468L Jaywing PLC 07 September 2023
This announcement contains inside information
Jaywing plc
07 September 2023
Jaywing plc
("Jaywing" or "the Company")
Final Results and Publication of Annual Report
Jaywing Plc (AIM: JWNG), the Data Science and Marketing business, with
operations in the UK and Australia, announces its audited results for the year
ended 31 March 2023 and that a General Meeting will be held on Thursday 28th
September 2023 at the offices of Jaywing plc, Albert Works, Sidney Street,
Sheffield, S1 4RG at 2:30pm. 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: Callum Davidson / Camilla Hume (Nominated Adviser) Tel:
0207 397 8920
Financial highlights
Restated*
2023 2022 Change
£'000 £'000 %
Revenue 22,062 23,324 (5.4%)
Adjusted EBITDA((1)) 2,410 2,206 9.2%
Operating Loss (11,340) (6,086)
Loss before Tax (12,535) (6,660)*
Cash Generated from Operations 1,293 1,587
Net Debt pre IFRS 16((2)) (10,346) (8,293)*
Loss per share (13.73p) (7.01p)*
Reconciliation of Operating Loss with Adjusted EBITDA
2023 2022
£'000 £'000
Operating Loss (11,340) (6,086)
Add Back:
Impairment of Goodwill 12,095 6,131
Depreciation of property, plant & equipment 245 327
Depreciation and impairment of right of use assets 641 752
Amortisation of intangibles 320 730
EBITDA 1,961 1,854
Acquisition & related costs 259 -
Restructuring costs 190 352
Adjusted EBITDA((1)) 2,410 2,206
Adjusted EBITDA((1)) margin 10.9% 9.5%
Revenue, Contribution and Adjusted EBITDA by operating segment
2023 2022 Change %
£'000 £'000
Revenue
United Kingdom 16,380 18,099 (9.5%)
Australia 5,682 5,225 8.8%
Group total 22,062 23,324 (5.4%)
Contribution((3))
United Kingdom 4,886 4,849 0.8%
Australia 2,142 2,057 4.1%
Group total 7,028 6,906 1.8%
Contribution margin 31.9% 29.6%
Adjusted EBITDA((1))
United Kingdom 1,882 1,680 12.0%
Australia 528 526 0.4%
Group total 2,410 2,206 9.2%
(1) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation
& Amortisation ('EBITDA') before restructuring costs and acquisition &
related costs
(2) Including accrued interest
(3) Contribution is defined as Revenue less Direct Costs comprise staff and
other costs directly attributable to the revenues of the respective operating
segments.
Operational Highlights
· Group contribution margin increased by 2.3ppt driven by UK cost
efficiencies.
· Group Adjusted EBITDA for FY23 up by 9.2% at £2,410k against
prior period, on 5.4% lower revenues.
· UK Adjusted EBITDA for FY23 up 12.0% at £1,882k, due to cost
management and efficiency improvements.
· FY23 Australian adjusted EBITDA has increased by 0.4% to £528k
and which reflects the impact of the cost of the integration activity at the
start of 2023.
· New business pipeline remains strong in both territories.
· Decision PPC management IP acquisition successfully completed
& encouraging new business growth.
· R&D function established during the year to help build
increased Decision IP functionality.
Chairman's Statement
Results
Revenues for the Group for FY23 of £22.1m (2022: £23.3 m), were 5.4% down on
FY22, following FY22's strong growth of 16% on FY21. The decrease in revenue
in FY23 comprises a fall of 9.5% in UK revenues (2022: increase of 13.3%) and
a rise of 8.8% in Australia revenues (2022: increase of 25%). The UK's
revenues were affected by weaker demand in FY23 whilst Australia continued to
grow although at a slower rate than the previous year. Recent significant new
business wins in Australia are expected to restore its return to strong growth
in FY24.
It is pleasing to note that the Group's contribution margin increased in FY23
by 2.3ppt to 31.9% driven by cost efficiency improvements in the UK. The UK
contribution margin was up by 3.0 % to 29.8%. Adjusted Group EBITDA for FY23,
was £2.4m (2022: £2.2m), an increase of 9.2%, reflecting margin improvements
on lower Group revenues. The adjusted EBITDA for the UK in FY23 was £1.9m, a
12% increase on FY22's £1.7m. Australia remained flat at £0.5m due to
business integration actions at the start of FY23 and increased staff costs.
Cash Generated from Operations for FY23 amounted to £1.3m (2022: £1.6m).
In the first quarter of FY24 the Group carried out a significant restructuring
of the UK division to improve margin efficiency through cost reduction, and
implemented a new organisational structure which is intended to help the Group
rebalance its strengths on its higher margin services. Recent new business
wins in data science led services, particularly in the Group's risk, fraud and
regulatory services, together with UK cost reductions are expected to help
raise UK margins in FY24.
Strategy
The Group's businesses in the UK and Australia plan to focus on organic growth
on the back of recent new business wins and a strong new business pipeline.
The Group will promote and further develop the recently acquired Decision
software as well as exploring opportunities for further investment in advanced
data analysis products as well as the application of technology to the
marketing challenges of our clients. Creative services will remain a key
component of our services mix, and the Group will continue to promote its
award-winning creative services to its clients as part of its comprehensive
marketing solution offerings.
It is pleasing to report that Jaywing Australia, which is led by a successful
and autonomous professional team, has continued to demonstrate a track record
of strong performance during the year with sales up by 8.8% and with some
significant business wins towards the end of FY23. The ongoing collaboration
with the UK business on clients and services, where required, now includes the
promotion of the Decision software in Australia, and we are continuing to 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 possible future restructuring of the debt. Details of this debt
are contained in Note 18 and Note 30.
Board and senior management
In April 2022 we announced that Caroline Ackroyd, the Company's Chief
Financial Officer and a board director had resigned to pursue other interests.
On 31 August 2022, the Company announced the appointment of Christopher Hughes
as the Company's Chief Financial Officer.
People
Our staff in the UK and Australia have continued to work 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.
Outlook
Whilst trading conditions in the UK remain challenging, the recent
restructuring of the UK division and recent new business wins as well as a
strong pipeline is expected to assist the UK division's ability to withstand
ongoing challenges in the macroeconomic environment as well as improving
margin run rates. Recent significant new business wins in Australia are
expected to provide strong revenue and profitability growth.
Ian Robinson
Non-Executive Chairman
Chief Executive's Report
Overview
The last year saw an increase in FY23 EBITDA of 9.2% at £2,410k against the
prior period, on 5.4% lower revenues. This growth was achieved despite
challenging economic conditions impacting clients' own performance, and hence
their budgets and spend, in both the UK and Australia. Australia's revenue
was up 8.8% on the previous year built on strong client wins. In the UK,
revenue was down 9.5%. Our Group revenue was therefore down 5.4% year-on-year
overall, but I am pleased to report that we have been able to manage our costs
well in response to trading conditions, delivering adjusted EBITDA of £2.4m,
just ahead of market expectations.
Performance varied across our operating divisions. Australia had a strong
end to the financial year, with a major contract win that will fully
crystallise in the current financial year. The UK saw revenues slowing
through the year, resulting in the 9.5% drop for the full year, but with a
significant improvement in profitability due to tight cost control.
Net cash from operating activities dropped to £1.3m (2022: £1.6m).
The client base for Decision, our AI driven automated Pay-Per-Click
advertising management tool, has started to build, and we now have 11 clients
live or onboarding, with a good pipeline of further opportunities. We have
also now signed our first client for Decision in Australia, which is already
live.
Higher interest rates, driven by the economic backdrop, has led to an increase
in our WACC, which was a significant factor in the impairment charge of
£12.1m to Goodwill in respect of the UK cash-generating-unit. Our outlook
remains consistent and the Group remains well positioned to drive revenues and
profitability in the future.
Jaywing UK
The dip in UK consumer confidence has put pressure on client budgets, and we
have experienced clients slowing new spend through the back end of last year
and the first 2 months of the current year. From June onwards we have started
to see an upturn in client spend and therefore in our revenues, along with a
growing pipeline of new client opportunities.
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. We have
continued to win some great work from new clients, most recently including
Subaru Europe and DUSK.com but the slowdown in existing client spend resulted
in a reduction in UK revenue of 9.5% year-on-year.
In anticipation of the tightening economic conditions, we took action to
reduce our cost base, and were able to deliver increased year-on-year EBITDA.
Although we have seen an encouraging revenue performance more recently, we
continue to manage costs tightly to ensure we have the right cost base for our
projected revenues.
Amongst our existing marketing clients, the biggest increases in spend came
from Castrol, Virgin Money, Rush Hair Group, and Verdant Leisure, and their
spend on performance marketing, in particular, has increased significantly.
Key new clients in the year to March 2023 included University of East Anglia,
LHV UK, Fair4All Finance and ROC Technologies. Since the start of the new
financial year in April 2023, in addition to Subaru Europe and DUSK.com
(Retail), we have also added Virgin Media O2, AO World, Superbike Factory, The
Entertainer, and Bettys And Taylors Group. We have recently overhauled our
Business Development and Marketing functions, and are seeing an increase in
the number and calibre of leads being generated.
Jaywing Australia
Our Australian business successfully completed the integration of Frank
Digital into Jaywing Australia at the start of 2022, and the fully integrated
business has resonated well in the market, with strong new client wins leading
to an 8.8% increase in revenues against prior year. The new business wins have
been particularly strong in Q4 FY23 and the full benefit of these will be
realised in the current financial year (FY24). Of particular note is a
contract with Online Education Services (OES) for creative services, which
commenced in February 2023. Notable other wins include CROCS Australia &
Singapore and CashRewards.
The increase did not fully flow through to EBITDA, as a result of the wage
inflation that began under the pandemic lockdowns. The annualization of this
impact resulted in EBITDA growing by just 0.4% year-on-year. This wage
inflation has now normalised, and FY24 has started strongly for both revenue
and EBITDA in Australia.
Decision and Research and Development
On 26(th) August 2022, 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 clients which enables them
to automate Pay-Per-Click advertising management.
We have now started to deliver new client wins for Decision, with the benefits
showing in FY24. These include Bettys, Superbikes, E-Buyer and the
Entertainer.
I am pleased with the level of expertise the team has quickly gained and
conversations with clients remain ongoing with plenty of opportunities.
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 in-house Research & Development unit within Jaywing is working to
deliver our technology road map. Focus has been on automation within reporting
to drive greater efficiency as well as further building of Decision
functionality to increase scope of delivery. Progress has been pleasing and we
can already see the benefits from this work. Future focus will continue on
increased automation to drive efficiency within delivery.
Employees
Given the pressure on revenues, we reduced our UK agency headcount both during
FY23 and in the first quarter of FY24. This is never an easy decision, but our
employees overall have been very supportive of the plan and the way we have
approached it. We believe this will underpin a significant uplift in UK
profitability in the current financial year.
We opened our new office in Leeds, located in the city centre, and which is
ideally suited to collaborative, integrated working. Our employees have
continued to adapt to working and collaborating in a hybrid model, and so we
have been able to reduce the required office footprint in Leeds, saving £0.2m
of costs per annum against the previous office.
We recognise that our people are our most important asset. We have embedded
our vision of making brands grow and talent thrive and have engaged with our
employees to get their input into how to further develop a great place to
work, increasing training expenditure and regularly tracking employee
satisfaction. Our most recent survey showed an overall employee satisfaction
score of 85%.
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 remained broadly flat at £77.4k in the year (2022:
£78.8k).
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
Although the UK environment remains tough, we are confident that we can build
profitability further in FY24. Australia has the benefit of a full year of the
new OES contracts, and has continued to win new business, with a strong first
quarter of FY24. In the UK, we have continued to win new clients for
Decision, delivering higher margin business. Our Risk & Data Consulting
arm has won significant new business and is close to full capacity. Our UK
agency (marketing) business had a tougher start to the new financial year in
April and May, but is now recovering and we are continuing to win new
business. Having reduced our UK headcount and cost base, we expect to
finish the first half with strong run rate profitability that is expected to
provide a step up in full year performance. We remain optimistic that the
Company will achieve revenue and adjusted EBITDA for FY24 in line with market
expectations.
Andrew Fryatt
Chief Executive Officer
Jaywing plc
6 September 2023
Strategic Report
Business review
Jaywing is a Data Science and Marketing business, with operations in the UK
and Australia. Our focus is providing an integrated marketing proposition,
enabled by data science, to our existing and potential clients. The parent
company acts as a holding company providing management services to its
subsidiaries.
On a Group basis the business review and future prospects for the business are
contained within the Chief Executive's Report.
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:
Restated
2023 2022*
£'000 £'000
Revenue 22,062 23,324
Adjusted EBITDA((1)) 2,410 2,206
Adjusted EBITDA % 10.9% 9.5%
Operating Loss (11,340) (6,086)
Loss before Tax (12,535) (6,660)*
Net Debt pre IFRS16((2)) (10,346) (8,293)*
Loss per share (13.73p) (7.01p)*
Average headcount 285 296
Revenue per head 77.4 78.8
Cash generated from operations 1,293 1,587
(1) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation
& Amortisation ('EBITDA') before restructuring costs and acquisition &
related costs
(2) Including accrued interest
Revenue for FY23 was £22.1m (2022: £23.3m), a drop of 5% on FY22, following
FY22's strong growth of 16% on FY21.
Adjusted EBITDA was £2,410k (2022: £2,206k), a £204k improvement in the
underlying Adjusted EBITDA. The result was achieved through strong cost
control.
The statutory operating loss was £11,340k (2022: loss of £6,086k) and the
statutory loss before taxation was £12,535k (2022: loss of £6,660k)
following an impairment to Goodwill of £12.1m (2022: £6.1m). This non-cash
charge has been recognised against the UK Cash Generating Unit ("CGU") largely
due to the increase in WACC in light of the current economic environment in
the UK. 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 are £1,293k (2022: £1,587k) due to tight cost
control across the group. The Cash Flow statement shows the movement in the
cash position of the business.
Net Debt
At 31 March 2023, Net Debt including accrued interest (pre IFRS16) was £10.3m
(2022: £8.3m), representing gross debt of £11.4m (2022: £9.0m) net of cash
of £1.1m (2022: £0.7m). The Company's gross debt is represented by an amount
of £9.2m (2022: £7.7m) drawn down from the secured debt funding provided by
the "Jaywing Facility" together with £1.8m (2022: £1.0m) of accrued and
unpaid interest on the Jaywing Facility and £0.4m of withholding tax on the
interest expense (2022: £0.3m). The Jaywing Facility is fully described in
Note 18 and Note 30 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, see Going
Concern in Principal Accounting Policies.
Impairment
As required by IAS 36, the Group 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 16.4% for Australia and 16.6% in the
UK (2022: 11.5% for Australia and 11.8% in the UK). 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 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 Revenue and Costs would have to the
outcome.
The Group has impaired former acquisition goodwill by £12.1m (2022: £6.1m).
This non-cash charge has been recognised against the UK Cash Generating Unit
("CGU") largely due to the increase in WACC in light of the current economic
environment in the UK. The acquisition goodwill relating to the Australia CGU
remains unimpaired.
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 to 31 March 2025.
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 31 March
2025. 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 they 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.
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. Economic Environment
From the start of March 2020 Jaywing has been impacted by the Covid-19 The directors monitor emerging news and trends and remain alert to any
pandemic, with disruption to client and staff. The long-term effects of this potential impact on the trading of the Company. Regular forecasting and review
on the UK economy are still being felt now with high inflation, interest rates of pricing are undertaken to ensure we are responding to changes in the
and economic uncertainty. economic environment. The directors also maintain a close control on costs,
reducing these to meet revenue where appropriate.
The situation in Ukraine is also having an impact on the world economy, yet
the impact on Jaywing directly has been negligible.
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,
diverse, inclusive and collaborative working environment and culture.
3. Loss of business from clients / adverse economic environment
Loss of business from clients, whether due to the adverse economic environment The Company aims to minimise such losses by continuing to focus on providing a
or other, could lead to a reduction in overall revenue and 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.
Adverse economic environment 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 due to an adverse economic environment, on
profitability, is mitigated by ensuring that the Company's cost base is
efficiently aligned with its revenues.
Inflation is monitored closely by the directors.
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.
Artificial intelligence continues to grow and the directors monitor the
opportunities that this creates as well as any potential changes required to
our business model.
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. See commentary included in the
Strategic Report.
6. Compliance with regulations and changes in legislation
Failure to comply with regulations such as GDPR and changes in legislation Jaywing engages advisers in relevant specialisations to assist with compliance
could lead to reputational damage for Jaywing and its clients as well as fines in areas such as GDPR. Experts in Jaywing's business areas can ensure client
and loss of business. initiatives are all compliant, alongside external input where appropriate.
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.
· the needs to act fairly as between members of the Group.
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;
https://www.jaywing.com/investors/governance/. 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 the
Directors 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.
By Order of the Board
Andrew Fryatt
Chief Executive Officer
Jaywing plc
6 September 2023
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 2023.
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.
Principal activity
The principal activity of the 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. The Company is a holding entity
for the Group.
Results and dividend
The Group's loss after taxation for the year ended 31 March 2023 was £12.8m
(2022: loss of £6.5m). The Directors do not propose to pay a dividend.
Net liabilities at 31 March 2023 were £1.2m (2022 Net assets £12.0m).
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 £3k (2022: £1k) 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 in the Directors' Report. 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 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 22 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.
Stakeholder engagement
Jaywing's stakeholders are an integral part of the business, they consist
---of customers, suppliers, employees, shareholders and advisors.
Details of how the Directors have engaged with these stakeholders are included
within the Corporate Governance Statement.
Streamlined Energy and Carbon Reporting (SECR)
We choose 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 2022 to 31
March 2023 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 2022/23 (tCO2e) 2021/22 (tCO2e)
Direct emissions (Scope 1) - natural gas and LPG 36,333 59,126
Indirect emissions (Scope 2) - from purchases electricity 41,739 63,396
Total tCO2e (Scope 1 & 2) 78,072 122,522
Other indirect emissions (Scope 3) - grey fleet travel 17,645 20,964
Gross Total Emissions 95,717 143,486
Intensity metric (Gross Emissions): Tonnes of CO2e per employee 336 586
Total energy consumption (kWh) 394,941 621,382
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.
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 to 31 March 2025.
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 31 March
2025. 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 they 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.
Major interests in shares
As at 31 March 2023, 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:
2023 2022
Number of voting rights % %
Lord Michael Ashcroft 27,919,737 29.9 25.6
Lombard Odier Investment Managers Group 17,600,709 18.9 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 3.6
Miton UK Microcap Trust plc 2,771,035 3.0 3.1
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
On 13 April 2023, post period end, the Company granted 1,152,000 LTIP (Long
Term Incentive Plan) share options to Andrew Fryatt (CEO) and 4,640,000
CSOP (Company Share Option Plan) options to certain senior employees of the
Group. The total number of Shares that can be acquired pursuant to options
granted under the LTIP and CSOP amounts to 5,782,000 Shares.
The LTIP Options granted to Andrew Fryatt are subject to a minimum vesting
price of 10.0 pence per Share and an exercise price of 5.0 pence per Share.
The performance period for LTIP Options granted under the LTIP will typically
be four years commencing from the date of grant of the relevant LTIP Option.
However, in the case of Andrew Fryatt, in recognition of his service to the
Company since March 2020, 50% of the LTIP Options will vest and be exercisable
on or after the second anniversary of the date of grant, subject to and to the
extent that the performance conditions are met.
Except in the event of a change of control of the Company and in certain 'good
leaver' scenarios, LTIP Options may only be exercised after the expiry of the
performance period and to the extent that the relevant performance criterion
is met. Shares acquired on exercise of LTIP Options shall be subject to a
two-year holding period, during which time they cannot be sold, except in
certain circumstances including, but not limited to, the sale of Shares to
meet any tax liabilities arising upon exercise of the LTIP Options.
The market value CSOP Options were granted over a total of 4,640,000 Shares
with an exercise price of 5.0 pence per Share. This total includes the
1,200,000 CSOP Options granted to each of Andrew Fryatt (CEO) and Christopher
Hughes (CFO) , and 2,240,000 CSOP Options granted to certain senior employees
of the Company. The vesting period of the CSOP Options shall be three years
from the date of grant. Except in the event of a change of control of the
Company and in certain 'good leaver' scenarios, no CSOP Options may be
exercised prior to the expiry of the vesting period. Shares acquired on
exercise of the CSOP Options shall be subject to a holding period of one year,
during which time they cannot be sold, except in certain circumstances
including, but not limited to, the sale of Shares to cover the exercise price
payable upon exercise of the CSOP Options. No performance conditions attach to
the exercise of the CSOP Options.
Auditor
The Directors 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 2023
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 six 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 2023 there was one Executive Director on the Board
as follows:
Andrew Fryatt (Chief Executive) - Appointed 21 April 2020
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 £75,000
(2022: £50,000) which is an increase from the previous year following a
review of the time commitment and benchmarking of the Chair role in similar
AIM listed businesses. 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) and Company Share Option Plan ( CSOP)
On 13 April 2023, post period end, the Company granted 1,152,000 LTIP (Long
Term Incentive Plan) share options to Andrew Fryatt (CEO) and 4,640,000
CSOP (Company Share Option Plan) options to certain senior employees of the
Group. The total number of Shares that can be acquired pursuant to options
granted under the LTIP and CSOP amounts to 5,782,000 Shares.
See further details in post balance sheet event note 35.
Directors' remuneration
The total amounts of the remuneration of the Directors of the Group for the
years ended 31 March 2023 and 2022 are shown below:
31 March 2023 2022
£ £
Aggregate emoluments 341,677 554,022
Sums paid to third parties for Directors' services 30,000 30,000
371,677 584,022
The emoluments of the Directors are shown below:
31 March 2023 2022 2023 2022
Fees and salary Fees and salary Pension contributions Pension contributions
£ £ £ £
Andrew Fryatt Appointed 21 April 2020 226,667 275,000 9,067 8,800
Caroline Ackroyd Appointed 21 April 2021 - 189,022 - 6,686
Resigned 14 March 2022
Ian Robinson 75,000 50,000 - -
Philip Hanson 40,000 40,000 - -
Mark Carrington* 30,000 30,000 - -
Total 371,667 584,022 9,067 15,486
* Fee paid to a third party for the Director's services
The salary of the highest paid Director was 4 times the average salary of all
Group employees excluding the Directors in the table above (2022: 5 times).
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 Date of appointment Notice period Company with whom contracted
Andrew Fryatt 26 March 2020 21 April 2020 6 months Jaywing plc
Caroline Ackroyd 7 September 2020 21 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 2023 2022
Number of shares Number of shares
Ian Robinson 470,267 470,267
Philip Hanson 109,462 109,462
Andrew Fryatt 120,993 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 2023
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 2023, 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 21 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, resigned effective on 14 March 2022
and was replaced by an Interim Chief Financial Officer (non-statutory
director), Ajay Handa, on the same date until the 31 August 2022 when the
Company announced the appointment of Christopher Hughes as the Company's Chief
Financial Officer.
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
2023. 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 two 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 Report. 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 2023:
Board Remuneration Audit & Risk Nomination
Total meetings held 12 6 2 1
Ian Robinson 12 6 2 1
Philip Hanson 12 6 2 1
Mark Carrington 12 6 2 1
Andrew Fryatt 12 6 2 1
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 reports from the external 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 2023
Directors' Responsibilities Statement
The directors are responsible for preparing the Strategic Report, Directors'
Report, the Directors' Remuneration 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 have to prepare the Group
financial statements in accordance with UK-adopted international accounting
standards and applicable law, and they have elected to prepare the parent
company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and
applicable law, including FRS 101 'Reduced Disclosure Framework'.
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;
· for the Group financial statement state whether applicable
UK-adopted international accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
· for the parent company state whether applicable UK 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 company's transactions and disclose with
reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors 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.
The directors are responsible for preparing the annual report in accordance
with applicable law and regulations.
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.
By Order of the Board
Andrew Fryatt
Dated: 6 September 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 March
2023 Restated
2022*
Note £'000 £'000
Revenue 1 22,062 23,324
Other operating income 2 507 40
Operating expenses 3 (33,909) (29,450)
Operating Loss (11,340) (6,086)
Finance costs 4 (1,195) (574)
(12,535) (6,660)
Loss before tax
Tax (expense)/credit 5 (291) 123
Loss for the year (12,826) (6,537)
Loss for the year is attributable to:
Non-controlling interests - 12
Owners of the parent (12,826) (6,549)
(12,826) (6,537)
Other comprehensive income
27 (368) 279
Items that will be reclassified subsequently to profit or loss
Exchange differences on retranslation of foreign operations
Total comprehensive loss for the period (13,194) (6,258)
Total comprehensive loss is attributable to:
Non-controlling interests 26 - 12
Owners of the Parent (13,194) (6,270)
(13,194) (6,258)
Basic and diluted loss per share
Loss per share 6 (13.73p) (7.01p)
The accompanying Notes form part of these Consolidated Financial Statements.
*The comparative information has been restated due to misstatements in the
prior period as discussed in note 34.
Consolidated Balance Sheet
As at 31 March 2023 Restated
2022*
Note £'000 £'000
Non-current assets
Property, plant and equipment 12 4,023 2,173
Goodwill 14 10,602 21,705
Deferred tax asset 20 620 644
Other intangible assets 15 2,125 69
17,370 24,591
Current assets
Trade and other receivables 16 4,418 6,415
Contract assets 17 352 453
Current tax asset - 32
Cash and cash equivalents 18 1,089 714
5,859 7,614
Total assets 23,229 32,205
Current liabilities
Borrowings 18 11,435 9,007
Trade and other payables 19 5,810 7,931
Contract Liabilities 17 983 1,408
Current lease liabilities 13 380 395
Current tax liabilities 20 -
Provisions 21 - 42
18,628 18,783
Non-current liabilities
Non-current lease liabilities 13 2,638 1,448
Provision 21 570 -
Deferred tax liability 20 592 -
Trade and other payables 19 2,021 -
5,821 1,448
Total liabilities 24,449 20,231
Net (liabilities) / assets (1,220) 11,974
Equity
Equity attributable to owners of the parent
Share capital 22 34,992 34,992
Share premium 23 10,088 10,088
Capital redemption reserve 25 125 125
Treasury shares 24 (25) (25)
Foreign currency translation reserve 27 (250) 118
Retained earnings 28 (46,150) (33,324)
Equity attributable to owners of the parent (1,220) 11,974
Non-controlling interest 26 - -
Total equity (1,220) 11,974
*The comparative information has been restated due to misstatements in the
prior period as discussed in note 34.
These Financial Statements were approved by the Board of Directors on 6
September 2023 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 2023 Restated
2022*
Note £'000 £'000
Cash flow from operating activities
Loss after tax (12,826) (6,537)
Adjustments for:
Impairment of Goodwill 3 12,095 6,131
Depreciation of property, plant & equipment 3 245 327
Depreciation and impairment of right of use assets 3 641 752
Amortisation of intangibles 3 320 730
Financial costs 4 1,195 574
Taxation expense/(credit) 5 291 (123)
Operating cash flow before changes in working capital 1,961 1,854
Decrease/(Increase) in trade and other receivables 1,986 (168)
(Decrease)/Increase in trade and other payables (2,654) (99)
Cash generated from operations 1,293 1,587
Interest paid - (58)
Net tax paid (21) (240)
Net cash flow from operating activities 1,272 1,289
Cash flow from investing activities
Payment of deferred consideration (818) (442)
Acquisition of subsidiaries 33 (400) -
Acquisition of property, plant and equipment 12 (483) (163)
Net cash outflow from investing activities (1,701) (605)
Cash flow from financing activities
Increase in borrowings 18 1,500 -
Repayment of Lease Liabilities (IFRS16) 18 (696) (722)
Net cash inflow/(outflow) from financing activities 804 (722)
Net increase/(decrease) in cash and cash equivalents 18 375 (38)
Cash and cash equivalents at beginning of year 714 752
Cash and cash equivalents at end of year 1,089 714
Cash and cash equivalents comprise:
Cash at bank and in hand 1,089 714
The accompanying Notes form part of these Consolidated Financial Statements.
*The comparative information has been restated due to misstatements in the
prior period as discussed in note 34.
Consolidated Statement of Changes in Equity
Share Capital Share Premium Account Capital Redemption Reserve Treasury Shares Foreign Currency Translation Reserve Retained Earnings Equity attributable to parent Non-controlling Interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2021 (as previously stated) 34,992 10,088 125 (25) (161) (26,332) 18,687 354 19,041
Prior year adjustment (see note 34) - - - - - (153) (153) - (153)
Restated 34,992 10,088 125 (25) (161) (26,485) 18,534 354 18,888
Balance at 31 March 2021*
Acquisition of subsidiaries NCI - - - - - (290) (290) (366) (656)
Transactions with owners - - - - - (290) (290) (366) (656)
Profit/(loss) for the period* - - - - - (6,549) (6,549) 12 (6,537)
Retranslation of foreign currency - - - - 279 - 279 - 279
Total comprehensive income for the period* - - - - 279 (6,839) (6,560) (354) (6,914)
Balance at 31 March 2022* 34,992 10,088 125 (25) 118 (33,324) 11,974 - 11,974
Loss for the period - - - - - (12,826) (12,826) - (12,826)
Retranslation of foreign currency - - - - (368) - (368) - (368)
Total comprehensive income for the period - - - - (368) (12,826) (13,194) - (13,194)
Balance at 31 March 2023 34,992 10,088 125 (25) (250) (46,150) (1,220) - (1,220)
The accompanying Notes form part of these Consolidated Financial Statements.
*The comparative information has been restated due to misstatements in the
prior period as discussed in note 34.
Principal Accounting Policies
The financial information set out above does not constitute the Group or the
Company's statutory accounts for the year ended 31 March 2023 or the financial
year ended 31 March 2022. Statutory accounts for the year ended 31 March 2022
have been delivered to the registrar of companies, and those for the year
ended 31 March 2023 will be delivered in due course. The auditor has reported
on those accounts; their reports were (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under s498 (2) or (3) of the Companies Act 2006.
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, except for the revaluation of any assets and liabilities
carried at fair value.
Items included in both the consolidated and company financial statements are
measured using the currency of the primary economic environment in which the
Group operates ('the functional currency'). The financial statements are
presented in 'Pounds Sterling' rounded to the nearest thousand (£'000), which
is also the company's functional currency.
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 31 March
2025. 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.
Foreign currency
Foreign currency transactions are translated into the functional currency of
the respective Group entity, using the exchange rates prevailing at the dates
of the transactions (spot exchange rate). Foreign exchange gains and losses
resulting from the settlement of such transactions and from the remeasurement
of monetary items denominated in foreign currency at period-end exchange rates
are recognised in profit or loss.
Non-monetary items are not retranslated at the period-end. They 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.
Dilapidations provision
Provision is made for expected future dilapidations costs in respect of
property held under leases. The estimated costs are capitalised within the
right of use asset 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.
Intellectual property acquired in a business combination that qualifies for
separate recognition are recognised as
intangible assets at their fair values.
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
Intellectual
property
- 5 years
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 prior year the put/call option was executed
and settled.
Fair value measurement
Management uses valuation techniques to determine the fair value of financial
instruments and non-financial assets, including contingent consideration. 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 contingent consideration accounting
policy).
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 three 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, and withholding tax on borrowings interest expense. 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.
Business combinations
The Group applies the acquisition method in accounting for business
combinations. The consideration transferred by the Group to obtain control of
a subsidiary is calculated as the sum of the acquisition-date fair values of
assets transferred, liabilities incurred and the equity interests issued by
the Group, which includes the fair value of any asset or liability arising
from a contingent consideration arrangement. Acquisition costs are expensed as
incurred.
Assets acquired and liabilities assumed are measured at their acquisition-date
fair values. See separate deferred and contingent consideration accounting
policy.
Intellectual property acquired in a business combination that qualifies for
separate recognition are recognised as intangible assets at their fair values.
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.
Other intangible assets are amortised from the date they are available for
use.
The estimated useful life for intellectual property is 5 years.
Financial assets
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
Trade and other receivables and contract assets
Trade and other receivables and contract assets 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.
Deferred and contingent consideration
Deferred consideration is recorded at fair value and is estimated using a
present value technique, discounted at 3.5%, which is the risk free rate.
Contingent consideration is recorded at fair value using the
probability-weighted estimated future cash flows using a present value
technique. The consideration is discounted at 11.5% Weighted Average Cost of
Capital. The effects on the fair value of risk and uncertainty in the future
cash flows are dealt with by adjusting the estimated cash flows rather than
adjusting the discount rate.
Contingent consideration is a level 3 financial instrument, and is measured at
fair value through profit and loss. As such, at each reporting date the
contingent consideration is fair valued, with movement in the fair value taken
to the statement of comprehensive income
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
Internal reporting and monitoring by the Chief Operating Decision Maker (CODM)
is based on the location of the business, as such under IFRS 8 the two
operating segments of the business are deemed to be the results in respect of
the United Kingdom and Australia.
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.
Foreign Currency Translation Reserve
Represents the exchange differences on retranslation of foreign operations.
Earnings per Share
Earnings per share is calculated by taking the loss attributable to ordinary
equity holders by the weighted average number of ordinary shares outstanding
where loss making diluted earnings per share is equal to basic.
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 below.
Accounting estimates
Impairment of goodwill and other intangible assets
The carrying amount of goodwill is £10,602k (2022: £21,705k) and the
carrying amount of other intangible assets is £2,125k (2022: £69k). 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.
Business combinations and Contingent Consideration
Management uses valuation techniques when determining the fair values of
certain assets and liabilities acquired in a business combination (see Note
33). In particular, the fair value of contingent consideration which is a
Level 3 Fair Value asset with movements through the P&L and is dependent
on the outcome of the acquirees' future revenues. The key judgement relates to
the 30% of estimated revenues in future periods and the 11.5% discount rate
used for which management undertake regular reviews of forecasts and obtain
external support for the WACC calculation (see Note 33). The present value of
the maximum consideration not booked is £1.5m.
Accounting judgements
Revenue
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. This decision over the stage of
completion, includes judgements made by management.
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.
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.
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.
Notes to the Consolidated Financial Statements
1. Segmental analysis
The Group reported its operations based on location of the business (United
Kingdom & Australia).
The Group's Chief Operating Decision Maker (CODM) is its chief executive and
they monitor the performance of these operating segments as well as deciding
on the allocation of resources to them. Segmental performance is monitored
using adjusted segment operating results.
During the year, no customer accounted for greater than 10% of the Group's
revenue (2022: None).
Revenue, Contribution and Adjusted EBITDA by Operating Segments
2023 2022
Revenue: £'000 £'000
United Kingdom 16,380 18,099
Australia 5,682 5,225
Total 22,062 23,324
2023 2022
Contribution (1): £'000 £'000
United Kingdom 4,886 4,849
Australia 2,142 2,057
Total 7,028 6,906
2023 2022
Adjusted EBITDA (2): £'000 £'000
United Kingdom 1,882 1,680
Australia 528 526
Total 2,410 2,206
All revenue is recognised over time.
(1) Contribution is defined as Revenue less Direct Costs comprise staff and
other costs directly attributable to the revenues of the respective
operating segments.
(2) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation
& Amortisation ('EBITDA') before restructuring costs and acquisition &
related costs
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:
2023 2022
£'000 £'000
United Kingdom 13,859 21,576
Australia 3,511 3,015
17,370 24,591
2. Other operating income
2023 2022
£'000 £'000
Covid-19 government support - 40
Other income 507 -
507 40
Within other income this period is a settlement of £502k from the claimant,
in relation to the reimbursement of previously incurred legal costs following
the dismissal of the claimants' case in April 2022, associated with the 2016
acquisition of Bloom Media (UK) Limited. The remaining £5k relates to sundry
income.
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. In the period to September 2021 the Group received funds from
the UK Government under the Covid-19 Job Retention Scheme of £37k, and £3k
under the corresponding scheme in Australia, Cashflow boost and Job Keepers.
There were no receipts of support after September 2021.
3. Operating expenses
2023 2022
Continuing operations: £'000 £'000
Wages and salaries 14,210 14,865
Social Security Costs 1,306 1,724
Other Pension Costs 905 915
Impairment of Goodwill 12,095 6,131
Depreciation of property, plant & equipment 245 327
Depreciation and impairment of right of use assets 641 752
Amortisation 320 730
Release of deferred consideration - (882)
Court legal fees - 774
Restructuring costs 190 352
Acquisition and related costs 259 -
Other operating expenses 3,738 3,762
Total operating expenses 33,909 29,450
4. Finance costs
2023 Restated
2022*
£'000 £'000
Interest expense on borrowings 748 416
Withholding tax on borrowings interest expense 180 100
Interest on lease liabilities (see note 13) 142 58
Interest on deferred and contingent consideration 125 -
Total 1,195 574
5. Tax credit
2023 Restated
The tax charge / (credit) is based on the loss for the year and represents: 2022*
£'000 £'000
UK corporation tax at 19% (2022: 19%) 152 48
Adjustment for prior year 198 -
Total current tax 350 48
Deferred tax:
Origination and reversal of timing differences (59) (171)
Total tax charge / (credit) 291 (123)
2023 Restated
2022*
The tax charge / (credit) can be explained as follows:
£'000 £'000
Loss before tax (12,535) (6,660)
Tax using the UK corporation tax rate of 19% (2022: 19%) (2,382) (1,265)
Effect of:
Recognition of previously unrecognised losses (129) (125)
Goodwill impairment 2,298 1,164
Adjustment for prior year 198 -
Non-deductible expenses 306 103
Current year charge / (credit) 291 (123)
6. Loss per share
2023 Restated
2022*
Pence per Pence per
Share Share
Basic loss per share (13.73p) (7.01p)
Diluted loss per share (13.73p) (7.01p)
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:
2023 Restated
2022*
£'000 £'000
Loss for the year attributable to shareholders (12,826) (6,549)
Weighted average number of ordinary shares in issue:
2023 2022
Number Number
Basic and diluted 93,432,217 93,432,217
7. Auditor's remuneration
2023 2022
£'000 £'000
Auditor's remuneration:
Audit of Company Financial Statements 48 45
Other amounts payable to the auditor and its associates in respect of:
Audit of Subsidiary Company Financial Statements 118 111
Audit related assurance services 5 5
Taxation compliance services 30 30
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.
8. Key management personnel compensation
Key management of the Group is considered to be the Board of Directors and the
Senior Leadership Team.
2023 2022
£'000 £'000
Short-term benefits:
Salaries including bonuses 1,513 1,703
Social security costs 190 235
Total short-term benefits 1,703 1,938
Defined contribution pension plan costs 53 68
Key management compensation 1,756 2,006
Further information in respect of Directors is given in the Directors'
Remuneration Report.
Remuneration in respect of Directors was as follows:
2023 2022
£'000 £'000
Emoluments receivable 342 555
Fees paid to third parties for Directors' services 30 30
Company pension contributions to money purchase pension schemes 9 15
381 600
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 £236k (2022: £284,000).
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:
2023 2022
Number Number
Management and administration 34 35
Client Service Staff 251 261
285 296
The aggregate payroll costs of these persons were as follows:
2023 2022
£'000 £'000
Wages and salaries 14,210 14,865
Social security costs 1,306 1,724
Other pension costs 905 915
Total 16,421 17,504
10. Employee benefits
There were no share options outstanding at the year-end. Refer to note 35 for
details of employee benefits issues post year end.
11. Non-controlling interests
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 the Group includes no subsidiaries with
non-controlling interests (NCI):
Name Proportion of ownership interests and voting rights held by NCI Total comprehensive income allocated to NCI
Accumulated NCI
2023 2022 2023 2022 2023 2022
% % £'000 £'000 £'000 £'000
Frank Digital PTY - - - 12 - -
- 12 - -
No dividends were paid to the NCI during the financial years 2023 and 2022.
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.
12. Property, plant and equipment
Buildings Leasehold Total
improvements Office
equipment
£'000 £'000 £'000 £'000
Cost
At 31 March 2021 2,673 1,438 594 4,705
Additions - - 163 163
Right of use asset additions 985 - 44 1,029
At 31 March 2022 3,658 1,438 801 5,897
Additions - - 483 483
Right of use asset additions 2,253 - - 2,253
Disposals - - (283) (283)
At 31 March 2023 5,911 1,438 1,001 8,350
Depreciation
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
At 31 March 2022 1,998 1,227 499 3,724
Depreciation charge for the year - 64 181 245
Depreciation of right of use asset 588 - 53 641
Depreciation on disposals - - (283) (283)
At 31 March 2023 2,586 1,291 450 4,327
Net book value
At 31 March 2023 3,325 147 551 4,023
At 31 March 2022 1,660 211 302 2,173
At 31 March 2021 1,393 313 354 2,060
The assets, excluding the right of use 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:
2023 2022
£'000 £'000
Right of use assets
Buildings 3,325 1,660
Office equipment 74 90
3,399 1,750
Lease liabilities
Current 380 395
Non-current 2,638 1,448
3,018 1,843
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
2023 2022
£'000 £'000
Depreciation and impairment charge of right of use assets
Buildings 588 718
Office equipment 53 34
641 752
Interest expense (included in finance cost) 142 58
There are no other amounts relating to low value or short term leases excluded
from the above amounts.
14. Goodwill
Goodwill
£'000
Cost
At 31 March 2021 27,581
Foreign Exchange 255
At 31 March 2022 27,836
Recognition on acquisition 1,279
Foreign Exchange (287)
At 31 March 2023 28,828
Impairment
At 31 March 2021 and 31 March 2022 -
Impairment charge (6,131)
At 31 March 2022 (6,131)
Impairment charge (12,095)
At 31 March 2023 (18,226)
Net book value
At 31 March 2022 27,581
At 31 March 2022 21,705
At 31 March 2023 10,602
2023 2022
Goodwill by CGU
£'000 £'000
United Kingdom 7,926 18,742
Australia 2,676 2,963
10,602 21,705
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 2023/24
were haircut by applying a reduction in EBITDA, 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
2023/24 to 2024/25 8.0% 6.0%
2024/25 to 2025/26 7.0% 6.0%
2025/26 to 2026/27 7.0% 6.0%
2026/27 to Perpetuity 1.0% 1.0%
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 16.6% for the UK and
16.4% for Australia (2022: 11.8% for the UK and 11.5% for Australia).
As a result of these tests, that there was no impairment necessary in
Australia. Budgeted cash flows for 2023/24 were haircut by applying a
reduction in EBITDA in respect of the UK results and future cash flows,
management believes that an impairment is required for the goodwill in
relation to the UK CGU of £12.1m (2022: £6.1m). This is predominantly due to
the increase in WACC as a result of the currently economic climate in the UK.
If the WACC was the same as the previous year then a reduced impairment charge
of £5.6m would have been recognised.
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 there was no Revenue growth from FY25, and
costs remained static, there would be an additional
impairment of £2.3m
• If revenues and costs increase by 5% but
indirect costs stay the same, this would result in an additional
impairment of £1.5m
Due to the significance of the headroom in the Australian CGU, detailed
sensitivity analysis was not undertaken.
15. Other intangible assets
Customer Intellectual property Development Total
relationships Order books Trademarks costs
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 31 March 2021 21,305 1,457 1,080 - 1,421 25,263
Additions during the year - - - - - -
At 31 March 2022 21,305 1,457 1,080 - 1,421 25,263
Additions during the year (note 33) - - - 2,376 - 2,376
At 31 March 2023 21,305 1,457 1,080 2,376 1,421 27,639
Amortisation
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
Amortisation charge for the year - - - 277 43 320
At 31 March 2023 21,305 1,457 1,080 277 1,395 25,514
Net book amount
At 31 March 2023 - - - 2,099 26 2,125
At 31 March 2022 - - - - 69 69
At 1 April 2021 591 - - - 208 799
Development costs relate to internally developed products that are either sold
to clients standalone or used to provide services to them.
16. Trade and other receivables
2023 2022
£'000 £'000
Trade receivables 3,723 5,629
Prepayments 508 589
Other receivables 187 197
4,418 6,415
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
2023 2022
£'000 £'000
Accrued income 352 453
£'000
Contract assets as at 31 March 2022 453
Amounts billed on contract assets as at 31 March 2022 (437)
New contract assets recognised 336
Contract assets as at 31 March 2023 352
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. There is a credit risk
associated with these assets.
Contract Liabilities
2023 2022
£'000 £'000
Deferred income 983 1,408
£'000
Contract liabilities as at 31 March 2022 1,408
Revenue recognised in the year on contract liabilities as at 31 March 2022 (1,314)
New contract liabilities net of revenue recognised against these 889
Contract liabilities as at 31 March 2023 983
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.
Of the existing contracts that were unsatisfied or partially satisfied at 31
March 2023, revenue is expected to be recognised in the financial year to 31
March 2024.
18. Borrowings and Net Debt
2023 Restated*
2022
£'000 £'000
Borrowings 11,435 9,007
% %
Average interest rates at the balance sheet date were: 8.57 4.75
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, Jaywing Pty Limited, Frank Digital Pty Limited).
Reconciliation of Net debt excluding lease liability and deferred
consideration
Restated* Cash flow Draw down Accrual recognised 31 March 2023
1 April 2022
£'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 714 375 - - 1,089
Borrowings (9,007) - (1,500) (928) (11,435)
Net Debt excluding lease expense and deferred consideration (8,293) 375 (1,500) (928) (10,346)
Reconciliation of Net debt
Restated* Cash flows Draw down Accrual recognised 31 March 2023
1 April 2022
£'000 £'000 £'000 £'000 £'000
Borrowings (9,007) - (1,500) (928) (11,435)
Lease liability (1,843) 696 - (1,871) (3,018)
Deferred and Contingent Consideration (626) 776 - (2,694) (2,544)
Financial liabilities (11,476) 1,472 (1,500) (5,493) (16,997)
Cash and cash equivalents 714 375 - - 1,089
Net debt (10,762) 1,847 (1,500) (5,493) (15,908)
19. Trade and other payables
2023 Restated
2022*
£'000 £'000
Trade payables 2,169 3,686
Tax and social security 1,519 1,125
Accruals 946 1,678*
Deferred consideration payable on acquisition of subsidiary undertakings 414 626
Contingent consideration payable on acquisition of subsidiary undertakings 109 -
Other payables 653 816*
Trade and other payables due in less than one year 5,810 7,931
Deferred consideration payable on acquisition of subsidiary undertakings 770 -
Contingent consideration payable on acquisition of subsidiary undertakings 1,251 -
Trade and other payables due in greater than one year 2,021 -
The carrying amount of trade and other payables approximates to their fair
values. All amounts are short term.
* Included in other payables is £539k (2022: £719k) for media spend not yet
purchased, but paid for by the customer. In the prior year these amounts were
included within accruals, and as such the prior year accruals balance has been
restated to reclassify this amount out of accruals and into other payables, to
more closely reflect the nature of the balance.
20. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities:
2023 2022
£'000 £'000
Accelerated capital allowances on property, plant and equipment:
At start of year 10 (48)
Deferred tax on acquisition 661 -
Unwind of deferred tax on acquisition (69) -
Origination and reversal of temporary differences 28 58
At end of year 630 10
Other temporary differences:
At start of year (654) (425)
Origination and reversal of temporary differences 80 (104)
Utilisation/(Recognition) of previously unrecognised losses (129) (125)
At end of year (703) (654)
Total deferred tax:
At start of year (644) (473)
Deferred tax on acquisition 592 -
Origination and reversal of temporary differences 24 (171)
At end of year (28) (644)
Origination on acquisition
Deferred tax is included within:
Deferred tax liability 592 -
Deferred tax asset (620) (644)
(28) (644)
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 2023 has been provided at
a rate of 25% (2022: blended rate or 19% and 25%) 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. Provisions
The carrying amounts and the movement in the provision account are as follows:
Dilapidations
£'000
At 1 April 2022 42
Additional provisions 570
Amounts utilised (42)
At 31 March 2023 570
The dilapidations provision of £570k (2022: £42k) has been recognised across
the three offices in the UK and Australia.
The dilapidations provision will be settled at the end of the lease period for
the three offices, which is greater than one year for all.
22. Share capital
Authorised:
45p deferred shares 5p ordinary shares
Authorised Share Capital at 31 March 2022 and at 31 March 2023 45,000 10,000
Allotted, issued and fully paid
45p deferred shares 5p ordinary shares
Number Number £'000
At 31 March 2022 67,378,520 93,432,217 34,992
At 31 March 2023 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.
23. Share premium
2023 2022
£'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.
24. Treasury shares
2023 2022
£'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.
25. Capital redemption reserve
2023 2022
£'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.
26. Non-controlling interest
2023 2022
£'000 £'000
At start of year - 354
Acquisition of non-controlling interest (note 11) - (366)
Share of profit for the year - 12
At end of year - -
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
2023 2022
£'000 £'000
At start of year 118 (161)
Exchange differences on translation of foreign operations (368) 279
At end of year (250) 118
Foreign currency translation reserve represents the exchange differences on
retranslation of foreign operations.
28. Retained earnings
2023 Restated
2022*
£'000 £'000
At start of year (33,324) (26,485)
Acquisition of subsidiaries NCI - (290)
Retained loss for the year (12,826) (6,549)
At end of year (46,150) (33,324)
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 2023 or at 31 March 2022.
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 (2022:
£30,000). At the year end, £52,500 (2022: £22,500) 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. Gusbourne Estate Limited were invoiced £498k (2022: £128k) in the
year, of which £360k was for third party digital advertising. As at 31 March
2023 there was a debtor's balance of £49k (2022: £46k).
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. An
additional £500,000 and £1,000,000 was drawn down on the facility in FY23.
The Jaywing Facility has been provided to the Company on the same terms as
those provided by the previous lender. At the year-end £11,435k (2022:
£9,007k) was outstanding. Further details of these borrowings are provided in
Note 18.
31. Standards and interpretations in issue at 31 March 2023 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 cash, working capital
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.
2023 2022
£'000 £'000
Financial assets:
Floating interest rate:
Cash 1,089 714
Zero interest rate:
Trade receivables 3,723 5,629
4,812 6,343
Financial liabilities:
Floating interest rate:
Bank loans/revolving facility 11,435 9,007
Zero interest rate:
Trade payables 2,169 3,686
13,604 12,693
As at 31 March 2023, the Group's non-derivative financial liabilities have
contractual maturities (including interest payments where applicable) as
summarised below:
31 March 2023 Current Non-current
Within 6 months 6 to 12 months 1 to 5 years later than 5 years
£'000 £'000 £'000 £'000
Bank borrowings 11,435 - - -
Lease liabilities 190 190 1,980 658
Deferred consideration payable on acquisition of subsidiary undertakings 231 183 770 -
Contingent consideration payable on acquisition of subsidiary undertakings 34 75 1,251 -
Trade and other payables 6,270 - - -
Total amount due 18,160 448 4,001 658
This compares to the maturity of the Group's non-derivative financial
liabilities in the previous reporting period as follows:
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 9,007 - - -
Lease liabilities 197 198 1,448 -
Deferred consideration payable on acquisition of subsidiary undertakings 626 - - -
Trade and other payables 8,713 - - -
Total amount due 18,543 198 1,448 -
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 loss
before tax would have been £104k (2022: £85k) lower, and if the interest
rate on these liabilities had been 1% lower, loss before tax would have
improved by £104k (2022: £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 2020 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 2023 of £82,000 (2022:
£22,000) 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:
2023 Restated
2022*
£'000 £'000
Financial assets
Financial assets measured at amortised cost
Trade and other receivables 3,910 5,826
Cash and cash equivalents 1,089 714
4,999 6,540
Financial liabilities:
Financial liabilities measured at amortised cost
Borrowings (11,435) (9,007)
Lease liabilities (3,018) (1,843)
Deferred consideration payable on acquisition of subsidiary undertakings (1,184) (626)
Trade and other payables (6,270) (8,713)
Provisions for liabilities (570) (42)
Financial liabilities measured at fair value
Contingent consideration payable on acquisition of subsidiary undertakings (1,360) -
(23,837) (20,231)
Net financial assets and liabilities (18,838) (13,691)
Plant, property and equipment 4,023 2,173
Goodwill 10,602 21,705
Other intangible assets 2,125 69
Contract assets 352 453
Prepayments 508 589
Deferred tax asset 620 644
Deferred tax liability (592) -
Taxation (payable)/receivable (20) 32
17,618 25,665
Total equity (1,220) 11,974
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:
2023 2022
£'000 £'000
Total equity (1,220) 11,974
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.
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
Contingent Consideration Probability of meeting target 100% Sensitive to a fluctuation in expected revenues
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 Contingent Consideration
£'000 £'000
Balance at 31 March 2021 49 -
Amount recognised through retained earnings (49) -
Balance at 31 March 2022 - -
Amount recognised through acquisition - 1,262
Interest expenses - 98
Balance at 31 March 2023 - 1,360
33. Business combination
On 26 August 2022 the group purchased 100% of the ordinary share capital of
Midisi Limited for consideration of £3.3m, before discounting..
The amounts below recognised in respect of the identifiable assets and
liabilities acquired are as set out in the table below:
Fair value on acquisition
£'000
Assets
Goodwill 1,279
Intangible assets (note 15) 2,376
3,655
Liabilities
Deferred tax (661)
Accruals (3)
Social security and other taxes (22)
(686)
Total identifiable net assets at fair value 2,969
Purchase consideration
Satisfied by:
Cash 400
Deferred consideration 1,307
Contingent consideration 1,262
Total consideration 2,969
The initial consideration for the acquisition was £0.4m which was paid from
Jaywing's existing cash resources. 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. The discounted deferred consideration outstanding at the year end is
£1.2m.
The earn-out relates to revenues generated from Midisi, and the maximum
earn-out payment is capped at £3.0m. Following the acquisition, the
incremental revenue contributions delivered by Midisi are estimated to be at
least £5.7m over 42 months, based on planned growth in the client base and
enhancements to other existing Jaywing services. This would generate earn-out
payments totalling £1.7m. The figures included in the table above are
recorded at present value.
34. Prior year restatement
Withholding tax
Borrowings are in respect of lenders in low tax jurisdictions and as a result
withholding tax is payable. Recognition of withholding tax within the interest
expense and borrowing costs lines is required as this was omitted from the
previous financial years results. For the year end 31 March 2021, the closing
retained earnings was adjusted by £153k to recognise the withholding tax
liability at 31 March 2021.
The following table summarises the impact of the prior period restatement in
relation to the financial statements of the Group:
2022
£000
Loss for the year as previously stated (6,437)
Adjustment 1 - Recognition of withholding tax expense (100)
Loss for the year as restated (6,537)
2022
£000
Total equity for the year as previously stated 12,227
Adjustment 2 - Recognition of withholding tax expense (253)
Total equity for the year as restated 11,974
Statement of Comprehensive Income
For the year ended 31 March 2022 Adjustment 1 Restated
2022
£'000 £'000
Revenue 23,324 - 23,324
Other operating income 40 - 40
Operating expenses (29,450) - (29,450)
Operating Loss (6,086) - (6,086)
Finance costs (474) (100) (574)
Loss before tax (6,560) (100) (6,660)
Tax (expense)/credit 123 - 123
Loss for the year (6,437) (100) (6,537)
Loss for the year is attributable to:
Non-controlling interests 12 - 12
Owners of the parent (6,449) (100) (6,549)
(6,437) (100) (6,537)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
Exchange differences on retranslation of foreign operations 279 - 279
Total comprehensive loss for the period (6,158) (100) (6,258)
Total comprehensive loss is attributable to:
Non-controlling interests 12 - 12
Owners of the Parent (6,170) (100) (6,270)
(6,158) (100) (6,258)
Basic and diluted loss per share
Loss per share (6.90p) (0.11p) (7.01p)
Statement of Financial Position
As at 31 March 2022 Adjustment 2 Restated
2022
£'000 £'000
Non-current assets
Property, plant and equipment 2,173 - 2,173
Goodwill 21,705 - 21,705
Deferred tax asset 644 - 644
Other intangible assets 69 - 69
24,591 - 24,591
Current assets
Trade and other receivables 6,415 - 6,415
Contract assets 453 - 453
Current tax asset 32 - 32
Cash and cash equivalents 714 - 714
7,614 - 7,614
Total assets 32,205 - 32,205
Current liabilities
Borrowings 8,754 253 9,007
Trade and other payables 7,931 - 7,931
Contract Liabilities 1,408 - 1,408
Current lease liabilities 395 - 395
Current tax liabilities - - -
Provisions 42 - 42
18,530 253 18,783
Non-current liabilities
Non-current lease liabilities 1,448 - 1,448
1,448 - 1,448
Total liabilities 19,978 253 20,231
Net (liabilities) / assets 12,227 (253) 11,974
Equity
Equity attributable to owners of the parent
Share capital 34,992 - 34,992
Share premium 10,088 - 10,088
Capital redemption reserve 125 - 125
Treasury shares (25) - (25)
Foreign currency translation reserve 118 - 118
Retained earnings (33,071) (253) (33,324)
Equity attributable to owners of the parent 12,227 (253) 11,974
Non-controlling interest - - -
Total equity 12,227 (253) 11,974
Statement of Cash Flows
As at 31 March 2022 Adjustment 1 Restated
2022
£'000 £'000
Cash flow from operating activities
Loss after tax (6,437) (100) (6,537)
Adjustments for:
Impairment of Goodwill 6,131 - 6,131
Depreciation of property, plant & equipment 327 - 327
Depreciation and impairment of right of use assets 752 - 752
Amortisation of intangibles 730 - 730
Financial costs 474 100 574
Taxation expense/(credit) (123) - (123)
Operating cash flow before changes in working capital 1,854 - 1,854
Decrease/(Increase) in trade and other receivables (168) - (168)
(Decrease)/Increase in trade and other payables (99) - (99)
Cash generated from operations 1,587 - 1,587
Interest paid (58) - (58)
Net tax paid (240) - (240)
Net cash flow from operating activities 1,289 - 1,289
Cash flow from investing activities
Payment of deferred consideration (442) - (442)
Acquisition of subsidiaries - - -
Acquisition of property, plant and equipment (163) - (163)
Net cash outflow from investing activities (605) - (605)
Cash flow from financing activities
Increase in borrowings - - -
Repayment of Lease Liabilities (IFRS16) (722) - (722)
Net cash inflow/(outflow) from financing activities (722) - (722)
Net increase/(decrease) in cash and cash equivalents (38) - (38)
Cash and cash equivalents at beginning of year 752 - 752
Cash and cash equivalents at end of year 714 - 714
Cash and cash equivalents comprise:
Cash at bank and in hand 714 - 714
35. Post balance sheet events
On 13 April 2023, post period end, the Company granted 1,152,000 LTIP (Long
Term Incentive Plan) share options to Andrew Fryatt (CEO) and 4,640,000
CSOP (Company Share Option Plan) options to certain senior employees of the
Group. The total number of Shares that can be acquired pursuant to options
granted under the LTIP and CSOP amounts to 5,782,000 Shares.
The LTIP Options granted to Andrew Fryatt are subject to a minimum vesting
price of 10.0 pence per Share and an exercise price of 5.0 pence per Share.
The performance period for LTIP Options granted under the LTIP will typically
be four years commencing from the date of grant of the relevant LTIP Option.
However, in the case of Andrew Fryatt, in recognition of his service to the
Company since March 2020, 50% of the LTIP Options will vest and be exercisable
on or after the second anniversary of the date of grant, subject to and to the
extent that the performance conditions are met.
Except in the event of a change of control of the Company and in certain 'good
leaver' scenarios, LTIP Options may only be exercised after the expiry of the
performance period and to the extent that the relevant performance criterion
is met. Shares acquired on exercise of LTIP Options shall be subject to a
two-year holding period, during which time they cannot be sold, except in
certain circumstances including, but not limited to, the sale of Shares to
meet any tax liabilities arising upon exercise of the LTIP Options.
The market value CSOP Options were granted over a total of 4,640,000 Shares
with an exercise price of 5.0 pence per Share. This total includes the
1,200,000 CSOP Options granted to each of Andrew Fryatt (CEO) and Christopher
Hughes (CFO) , and 2,240,000 CSOP Options granted to certain senior employees
of the Company. The vesting period of the CSOP Options shall be three years
from the date of grant. Except in the event of a change of control of the
Company and in certain 'good leaver' scenarios, no CSOP Options may be
exercised prior to the expiry of the vesting period. Shares acquired on
exercise of the CSOP Options shall be subject to a holding period of one year,
during which time they cannot be sold, except in certain circumstances
including, but not limited to, the sale of Shares to cover the exercise price
payable upon exercise of the CSOP Options. No performance conditions attach to
the exercise of the CSOP Options.
Company Financial Statements
Company Profit and Loss account
Restated
2023 2022*
Note £'000 £'000
Turnover - -
Administrative expenses 2 (10,275) (10,743)
Operating loss 3 (10,275) (10,743)
Income from fixed asset investment 4 - 418
Other income 4 505 -
Finance Costs 5 (1,100) (560)
Loss on ordinary activities before taxation (10,870) (10,885)
Taxation on ordinary activities 6 125 573
Loss and total comprehensive loss on ordinary activities after taxation (10,745) (10,312)
The accompanying Notes to the Parent Company Financial Statements form an
integral part of these Financial Statements.
*The comparative information has been restated in the prior period as
discussed in note 27.
Company Balance Sheet
2023 Restated
2022*
Note £'000 £'000
Non-current assets
Tangible assets 10 1,154 1,040
Deferred tax 21 717 605
Investments 12 20,457 26,235
22,328 27,880
Current assets
Cash at bank 1 2
Debtors due within one year 13 442 575
443 577
Current liabilities
Borrowings 17 (11,435) (9,007)
Creditors: amounts falling due within one year 14 (14,757) (14,351)
Total assets less current liabilities (3,421) 5,099
Non-current liabilities
Creditors: amounts falling due after more than one year 15 (2,625) (690)
Provisions 16 (290) -
Net (liabilities)/assets (6,336) 4,409
Equity
Called up share capital 18 34,992 34,992
Share premium account 19 10,088 10,088
Treasury shares 20 (25) (25)
Capital redemption reserve 19 125 125
Profit and loss account 19 (51,516) (40,771)
Total equity (6,336) 4,409
The Financial Statements were approved by the Board of Directors and
authorised for issue on 6 September 2023.
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.
*The comparative information has been restated in the prior period as
discussed in note 27.
Company Statement of Changes in Equity
Called-up Share Premium account Treasury Shares Capital Redemption Reserve Profit
Share and loss
Capital account Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2021 (as previously stated) 34,992 10,088 (25) 125 (30,355) 14,825
Prior year adjustment (see note 26) - - - - (153) (153)
At 1 April 2021 (restated*) 34,992 10,088 (25) 125 (30,508) 14,672
Release of Put / Call Option - - - - 49 49
Loss for the year and total other comprehensive income* - - - - (10,312) (10,312)
Total comprehensive income - - - - (10,263) (10,263)
At 31 March 2022* 34,992 10,088 (25) 125 (40,771) 4,409
At 1 April 2022* 34,992 10,088 (25) 125 (40,771) 4,409
Loss for the year and total other comprehensive income - - - - (10,745) (10,745)
Total comprehensive income - - - - (10,745) (10,745)
At 31 March 2023 34,992 10,088 (25) 125 (51,516) (6,336)
The accompanying Notes to the Parent Company Financial Statements form an
integral part of these Financial Statements.
*The comparative information has been restated in the prior period as
discussed in note 27.
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 31
March 2025. 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 in the consolidated financial statements.
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 are stated at cost less any applicable
provision for impairment.
In the previous 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
- Office 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.
Deferred and contingent consideration
Deferred consideration is recorded at amortised costs and is estimated using a
present value technique, discounted at 3.5%, which is the risk free rate.
Contingent consideration is recorded at fair value using the
probability-weighted estimated future cash flows using a present value
technique. The consideration is discounted at 11.5% which is the prior year
Weighted Average Cost of Capital. The effects on the fair value of risk and
uncertainty in the future cash flows are dealt with by adjusting the estimated
cash flows rather than adjusting the discount rate.
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.
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.
Business combinations
Management uses valuation techniques when determining the fair values of
certain assets and liabilities acquired in a business combination (see Note 33
of the consolidated accounts). In particular, the fair value of contingent
consideration is dependent on the outcome of the acquirees' future revenues
(see Note 33 of the consolidated accounts).
2. Other operating charges
2023 2022
£'000 £'000
Impairment of investment (note 12) 8,747 9,185
Administrative expenses 1,528 1,558
Total administrative expenses 10,275 10,743
3. Operating loss
2023 2022
£'000 £'000
Operating loss is stated after charging:
Impairment of investment (note 12) 8,747 9,185
Depreciation of owned fixed assets 67 73
Depreciation of right of use assets 246 241
4. Income from fixed asset investments and other income
2023 2022
£'000 £'000
Other income 505 -
Dividends received from subsidiary companies - 418
Within other income this period is a settlement of £505k in relation to
previously incurred legal costs following the dismissal of the claimant's case
in April 2022, associated with the 2016 acquisition of Bloom Media (UK)
Limited.
5. Finance costs
2023 Restated
2022*
£'000 £'000
Bank interest payable 748 416
Withholding tax on borrowings interest expense 180 100
Interest on lease liability (note 11) 47 44
Interest on deferred and contingent consideration 125 -
Total 1,100 560
6. Tax on ordinary activities
2023 2022
The tax credit/(charge) is based on the loss for the year and represents:
£'000 £'000
UK corporation tax at 19% (2022: 19%) - (2)
Total current tax - (2)
Deferred tax:
Origination and reversal of timing differences (125) (571)
Total tax credit (125) (573)
2023
The tax credit can be explained as follows: Restated
2022*
£'000 £'000
Loss before tax (10,870) (10,885)
Tax using the UK corporation tax rate of 19% (2022: 19%) (2,065) (2,068)
Effect of:
Non-taxable income (505) -
Recognition of unused losses 330 (240)
Impairment of investments 1,662 1,745
Non-deductible expenses / (credits) 453 (10)
Current year credit (125) (573)
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
2023 2022
Average number of staff employed by the Company 5 5
2023 2022
Aggregate emoluments (including those of Directors): £'000 £'000
Wages and salaries 453 584
Social security costs 53 73
Pension contribution 12 15
Total emoluments 518 672
Further information in respect of Directors is given in the Directors'
Remuneration Report.
Remuneration in respect of Directors was as follows:
2023 2022
£'000 £'000
Emoluments receivable 342 554
Fees paid to third parties for Directors' services 30 30
Company pension contributions to money purchase pension schemes 9 15
381 599
The highest paid Director received remuneration of £236k (2022: £284k).
9. Dividends
The Directors do not recommend the payment of a dividend for the current year
(2022: £Nil).
10. Tangible fixed assets
Buildings Leasehold Improvements Office equipment Total
£'000 £'000 £'000 £'000
Cost at 31 March 2022 1,147 389 416 1,952
Right of use asset additions 427 - - 427
Disposals - - (5) (5)
Cost at 31 March 2023 1,574 389 411 2,374
Depreciation at 31 March 2022 438 203 271 912
Charge for the year on owned assets - 39 28 67
Disposals - - - (5) (5)
Charge on right of use assets 223 - 23 246
Depreciation at 31 March 2023 661 242 317 1,220
Net book value at 31 March 2023 913 147 94 1,154
Net book value at 31 March 2022 709 186 145 1,040
11. Leases
The company has lease contracts for the offices 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:
2023 2022
£'000 £'000
Right of use assets
Buildings 913 709
Office equipment 73 97
986 806
Lease liabilities
Current 135 170
Non-current 604 690
739 860
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
2023 2022
£'000 £'000
Depreciation charge of right of use assets
Buildings 223 152
Office equipment 23 89
246 241
Interest expense (included in finance cost) 47 44
12. Investments
Subsidiaries
£'000
Cost at 31 March 2022 61,824
Additions 2,969
Cost at 31 March 2023 64,793
Impairment at 31 March 2022 35,589
Impairment in year 8,747
Impairment at 31 March 2023 44,336
Net book value at 31 March 2023 20,457
Net book value at 31 March 2022 26,235
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 £8.7m (2022: £9.2m) based upon sensitivities
applied to forecast EBITDA.
On 14 April 2022 the following companies which were 100% owned by the group
were dissolved; Alphanumeric Group Holdings Limited, Alphanumeric (Holdings)
Limited, Dig for Fire Limited, Digital Marketing Network Limited, Digital
Media and Analytics Limited, DMG London Limited, Hyperlaunch New Media
Limited, Inbox Media Limited, Iris Associates Limited, Jaywing Information
Limited, Jaywing North Limited, Shackleton PR Limited, The Comms Department
Limited, Woken Limited.
On 26 August 2022 the group purchased 100% of the ordinary share capital of
Midisi Limited for consideration of £3.3m, before discounting. Details of the
business combination can be found in Note 33 of the consolidated financial
statements.
At 31 March 2023 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 Limited Ordinary 100% 100% Non-trading
Bloom Media (UK) Limited Ordinary 100% 100% Dormant
Epiphany Solutions Limited Ordinary 100% 100% Non-trading
Frank Digital PTY Limited Ordinary 100% 100% Website design and build
Gasbox Limited Ordinary 100% 100% Non-trading
Jaywing Central Limited Ordinary 100% 100% Non-trading
Jaywing Innovation Limited Ordinary 100% 100% Non-trading
Jaywing Australia PTY Limited Ordinary 100% 100% Search Engine Optimisation
Jaywing UK Limited Ordinary 100% 100% Direct marketing
Midisi Limited Ordinary 100% 100% Non-trading
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 36 Hickson Road, Millers Point, NSW 2000
Jaywing Australia PTY Limited Australia 36 Hickson Road, Millers Point, NSW 2000
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 36 Hickson Road,
Millers Point, NSW 2000.
13. Debtors due within one year
2023 2022
£'000 £'000
Amounts due from Group undertakings 192 58
Prepayments 128 173
Other taxation and social security 122 344
442 575
Amounts due from Group undertakings attract no interest and are repayable on
demand.
14. Creditors: amounts falling due within one year
2023 2022
£'000 £'000
Trade creditors 352 449
Amounts owed to Group undertakings 13,509 12,593
Other taxation and social security 60 19
Other creditors 6 -
Accruals 172 494
Lease liability 135 170
Deferred consideration payable on acquisition of subsidiary undertakings 414 626
Contingent consideration payable on acquisition of subsidiary undertakings 109 -
14,757 14,351
Amounts owed to Group undertakings attract no interest and are repayable on
demand.
15. Creditors: amounts falling due in more than one year
2023 2022
£'000 £'000
Lease liability 604 690
Deferred consideration payable on acquisition of subsidiary undertakings 770 -
Contingent consideration payable on acquisition of subsidiary undertakings 1,251 -
2,625 690
16. Provisions
The carrying amounts and the movement in the provision account are as follows:
Dilapidations
£'000
At 1 April 2022 -
Additional provisions 290
Amounts utilised -
At 31 March 2023 290
The dilapidations provision of £290k (2022: £nil) has been recognised for
the head office held within Jaywing Plc.
The dilapidations provision will be settled at the end of the lease period,
which is greater than one year.
17. Borrowings
2023 Restated
2022*
£'000 £'000
Summary:
Borrowings 11,435 9,007
2023 Restated
2022*
Borrowings are repayable as follows:
£'000 £'000
Within one year:
Borrowings 11,435 9,007
Total due within one year 11,435 9,007
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.
18. Share capital
Allotted, issued and fully paid:
45p deferred shares 5p ordinary shares
Number Number £'000
At 31 March 2022 67,378,520 93,432,217 34,992
At 31 March 2023 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.
19. 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.
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.
20. Treasury shares
2023 2022
£'000 £'000
At 31 March 2023 and 31 March 2022 25 25
21. Deferred tax asset
A deferred tax asset is provided for in the financial statements and consists
of the following:
2023 2022
£'000 £'000
Accelerated capital allowances 68 52
Unused losses 649 553
Deferred tax asset 717 605
The amount of deferred tax recognised in profit or loss was as follows:
2023 2022
£'000 £'000
Accelerated capital allowances (16) 18
Unused losses 141 553
Total 125 571
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 2023 has been provided at
a rate of 25% (2022: blended rate of 19% and 25%) 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 2023 the amount thus guaranteed by the company was £9,200,000 (2022:
£8,200,000).
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. Ultimate controlling related party
At the year end, the Directors considered that the Company had no ultimate
controlling party.
25. Financial risk management objectives and policies
Details of Group policies are set out in Note 32 to the Consolidated Financial
Statements.
26. 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 £12,000 (2022: £32,000) with the
financial year end pension creditor being £3,000 (2022: £2,000).
27. Prior year restatement
Withholding tax
Borrowings are in respect of lenders in low tax jurisdictions and as a result
withholding tax is payable. Recognition of withholding tax within the interest
expense and borrowing costs lines is required as this was omitted from the
previous financial years results.
The following table summarises the impact of the prior period restatement in
relation to the financial statements of the parent company.
2022
£000
Loss for the year as previously stated (10,212)
Adjustment 1 - Recognition of withholding tax expense (100)
Loss for the year as restated (10,312)
2022
£000
Total equity for the year as previously stated 4,662
Adjustment 2 - Recognition of withholding tax expense (253)
Total equity for the year as restated 4,409
Statement of Comprehensive Income
For the year ended 31 March 2022 Adjustment 1 Restated
2022
£'000 £'000
Turnover - - -
Administrative expenses (10,743) - (10,743)
Operating loss (10,743) - (10,743)
Income from fixed asset investment 418 - 418
Other income - - -
Finance Costs (460) (100) (560)
Loss on ordinary activities before taxation (10,785) (100) (10,885)
Taxation on ordinary activities 573 - 573
Loss and total comprehensive loss on ordinary activities after taxation (10,212) (100) (10,312)
Statement of Financial Position
As at 31 March 2022 Adjustment 2 Restated
2022
£'000 £'000
Non-current assets
Tangible assets 1,040 - 1,040
Deferred tax 605 - 605
Investments 26,235 - 26,235
27,880 - 27,880
Current assets
Cash at bank 2 - 2
Debtors due within one year 575 - 575
577 - 577
Current liabilities
Borrowings (8,754) (253) (9,007)
Creditors: amounts falling due within one year (14,351) - (14,351)
Total assets less current liabilities 5,352 (253) 5,099
Non-current liabilities
Creditors: amounts falling due after more than one year (690) - (690)
Net (liabilities) / assets 4,662 (253) 4,409
Equity
Called up share capital 34,992 - 34,992
Share premium account 10,088 - 10,088
Treasury shares (25) - (25)
Capital redemption reserve 125 - 125
Profit and loss account (40,518) (253) (40,771)
Total equity 4,662 (253) 4,409
27. Post balance sheet events
On 13 April 2023, post period end, the Company granted 1,152,000 LTIP (Long
Term Incentive Plan) share options to Andrew Fryatt (CEO) and 4,640,000
CSOP (Company Share Option Plan) options to certain senior employees of the
Group. The total number of Shares that can be acquired pursuant to options
granted under the LTIP and CSOP amounts to 5,782,000 Shares.
The LTIP Options granted to Andrew Fryatt are subject to a minimum vesting
price of 10.0 pence per Share and an exercise price of 5.0 pence per Share.
The performance period for LTIP Options granted under the LTIP will typically
be four years commencing from the date of grant of the relevant LTIP Option.
However, in the case of Andrew Fryatt, in recognition of his service to the
Company since March 2020, 50% of the LTIP Options will vest and be exercisable
on or after the second anniversary of the date of grant, subject to and to the
extent that the performance conditions are met.
Except in the event of a change of control of the Company and in certain 'good
leaver' scenarios, LTIP Options may only be exercised after the expiry of the
performance period and to the extent that the relevant performance criterion
is met. Shares acquired on exercise of LTIP Options shall be subject to a
two-year holding period, during which time they cannot be sold, except in
certain circumstances including, but not limited to, the sale of Shares to
meet any tax liabilities arising upon exercise of the LTIP Options.
The market value CSOP Options were granted over a total of 4,640,000 Shares
with an exercise price of 5.0 pence per Share. This total includes the
1,200,000 CSOP Options granted to each of Andrew Fryatt (CEO) and Christopher
Hughes (CFO) , and 2,240,000 CSOP Options granted to certain senior employees
of the Company. The vesting period of the CSOP Options shall be three years
from the date of grant. Except in the event of a change of control of the
Company and in certain 'good leaver' scenarios, no CSOP Options may be
exercised prior to the expiry of the vesting period. Shares acquired on
exercise of the CSOP Options shall be subject to a holding period of one year,
during which time they cannot be sold, except in certain circumstances
including, but not limited to, the sale of Shares to cover the exercise price
payable upon exercise of the CSOP Options. No performance conditions attach to
the exercise of the CSOP Options.
Shareholder Information
General Meeting
A General Meeting will be held on 28 September 2023 at the offices of Jaywing
plc, Albert Works, Sidney Street, Sheffield, S1 4RG at 2:30pm.
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
Neville Registrars 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 2023.
Issued Share Capital
As at 31 August 2023 (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 2023 the total voting rights in the Company were 93,332,595.
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
No.1 Whitehall Riverside
Whitehall Road
Leeds
LS1 4BN
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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
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. END FR FFFLVAAIRIIVRecent news on Jaywing
See all newsREG - AIM Jaywing PLC - Cancellation - Jaywing Plc
AnnouncementREG - Jaywing PLC - Result of GM, Cancellation of Admission to Trading
AnnouncementREG - Jaywing PLC - Circular Amendment
AnnouncementREG - Jaywing PLC - Holding(s) in Company
AnnouncementREG - Jaywing PLC - Publication of Circular and Notice of GM
Announcement