REG - Jaywing PLC - Half-year Report

JaywingAnnouncement

10/12/2020 07:00

RNS Number : 1489I
  
Jaywing PLC
  
10 December 2020
  
 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
 
 
Jaywing plc
Interim Results 2020/2021
 
Jaywing plc (AIM: JWNG) the integrated agency powered by data science, today announces its interim results for the six months ended 30 September 2020 ("H1").
 
Financial highlights 
 
 




 


6 months to 30 September 2020 
£'000


6 months to 30 September 2019
 
£'000




 


 


 




Net Revenue*


9,342


11,996




Adjusted EBITDA**
Including IFRS 16
 
Excluding IFRS 16


 
1,389
 
1,034


 
(573)
 
(945)




Cash Generated from Operations 
Including IFRS 16
 
Excluding IFRS 16


 
1,914
 
1,559


 
380
 
8




Net Debt (excluding IFRS 16) ***


(5,131)


(5,748)




 
 
 
Reconciliation of Operating Profit / (Loss) with Adjusted EBITDA
 




 


6 months to 30 September 2020 £'000


6 months to 30 September 2019 £'000




 


 


 




Operating Profit / (Loss) 


72


(1,380)




Add Back:


 


 




Depreciation


126


187




Depreciation of right of use assets


332


333




Amortisation of intangibles


660


777




EBITDA


1,190


(83)




Impairment of other intangibles****


690


-




Restructuring charges


205


295




Share based payment charges / (credits)


(696)


(785)




Adjusted EBITDA


1,389


(573)




 
* Revenue less third-party direct costs of sale
** Adjusted EBITDA represents EBITDA before restructuring costs, impairment charges and share based payment charges / (credits)
*** Including accrued interest
**** Impairment of historic trademark assets following brand integration under Jaywing during the period
 
Operational Highlights
 
·    £2.0m improvement in adjusted EBITDA to £1.4m, compared with a £0.6m loss in the prior comparative period 
·      £1.9m cash generated from operations including IFRS 16 (£1.6m Excluding IFRS 16)
·      Reduction of net debt excluding IFRS 16 to (£5.1m)
·      Business now integrated with a sector-focused structure and a platform for growth
 
 
 
Commenting on the results, Andrew Fryatt, CEO of Jaywing plc, said:
 
"I'm delighted to report a significant turnaround in Jaywing's profitability, to deliver £1.4m of adjusted EBITDA for the half year period, compared with a loss of £0.6m for the prior year comparative period, despite a fall in revenue primarily brought about by the COVID pandemic. We have been able to stabilise the business and restore it to both profitability and strong cashflow generation.  We continue to operate successfully on a remote basis, and have taken measures to secure our financial position, including voluntary salary reductions, cost reductions, rent deferrals, use of Government grant income and deferral of certain HMRC payments. These actions have ensured that despite the revenue reduction, the impact on EBITDA was mitigated and we have been able to retain key employees so that we are now well positioned to benefit as revenues start to rebuild.
 
There was a strong improvement in cash generation in the half (£1.9m including IFRS16), enabling a reduction in net debt excluding IFRS 16 to (£5.1m). 
 
The restructuring plan that commenced last year continued into the current year, and in August we reorganised our UK businesses to focus on making our full range of services available to our entire client base, whilst reducing headcount by a further 20 heads. Our front office teams are now focused on three broad sectors: Retail, FMCG and Financial & Professional Services (the full make up of each sector is detailed in Note 5). They are supported by 4 operational divisions: Data Science, Performance & Media Science, Creative and Public Relations. Together, these enable our proposition of an "integrated agency powered by data science", which is proving ever more relevant in the current climate.
 
In Australia, just after the end of the first half of the year we completed the acquisition of the remaining 25% of the shares of Massive Group Pty Ltd, not already owned by Jaywing, a key step towards our two Australian businesses coming together as "Jaywing Australia", to deliver the same integrated approach.  Our Australian and UK teams are working increasingly closely to develop capabilities and deliver client projects, including some initial projects in the data science space.
 
Despite the COVID-related revenue reduction, net revenue per employee increased by 3.8% to £32.7k in the first half, with an adjusted EBITDA of £5.1k per employee.
 
Across the Group, Online Performance remains our biggest workstream, at 43% of net revenues, but we are focused on increasing the breadth of services delivered in each of our core sectors. In the first half, for example, we achieved a 7% increase in Brand Performance from Financial Services clients, as well as Data Science & Analysis based contracts increasing as a share of net revenues (now 27%).  We believe that our ability to bring together these disciplines to solve client challenges, whether in Marketing or Risk, gives us a fundamental advantage in the marketplace. 
  
Having just moved from the second lockdown into the new tiered structure, we remain cautious about the full year outlook.  We have continued to win new business with new clients including Ikano Bank, Starling Bank, Studio Retail and Costcutter, and also additional business with existing clients, including award-winning work for KCOM. However, whilst some clients are now spending at or above pre-pandemic levels, others have continued to defer expenditure in the face of the ongoing COVID impact on their business. We are nonetheless confident that the business is now on a secure footing with the foundations in place for recovery and future growth."
 
 
 
Enquiries: 




Jaywing plc 




Caroline Ackroyd (CFO / Company Secretary) 


Tel: 0114 281 1200




Cenkos Securities plc 




Nicholas Wells / Callum Davidson 


Tel: 020 7397 8900 




 
 
 
Consolidated statement of comprehensive income 
 




 


 


 
Unaudited
Six months ended 
30 Sept 2020


 
Unaudited
Six months ended 
30 Sept 2019


 
 
Audited year 
ended 
31 March 2020




 


Note


£'000


£'000


£'000




 


 


 


 


 




 


 


 


 


 




Revenue


  


11,319


13,815


29,723




Direct costs


 


(1,977)


(1,819)


(5,680)




Net Revenue


  5


9,342


11,996


24,043




Other operating income


  6


599


20


38




Amortisation


 


(660)


(777)


(1,547)




Operating expenses


 


(9,209)


(12,619)


(31,408)




Operating income / (loss)


 


72


(1,380)


(8,874)




Finance income


 


-


1


-




Finance costs


 


(323)


(157)


(518)




Net financing costs


 


(323)


(156)


(518)




Loss before tax 


 


(251)


(1,536)


(9,392)




Tax (charge) / credit


  


(136)


321


436




Loss after tax for the period


 


(387)


(1,215)


(8,956)




Loss for the period is attributable to:


 


 


 


 




Non-controlling interests


 


114


74


188




Owners of the parent


 


(501)


(1,289)


(9,144)




 


 


(387)


(1,215)


(8,956)




Other comprehensive income


 


 


 


 




 


 


 


 


 




Items that will be reclassified subsequently to profit or loss


 


 


 


 




Exchange differences on retranslation of foreign operations


 


181


(13)


(155)




Total comprehensive loss for the period


 


(206)


(1,228)


(9,111)




 


 


 


 


 




Total comprehensive loss is attributable to:


  
   


 


 


 




Non-controlling interests


 


114


74


188




Owners of the parent


 


(320)


(1,302)


(9,299)




 


 


(206)


(1,228)


(9,111)




 


 


 


 


 




Loss per share


7


 


 


 




Basic loss per share from continuing operations


 


(0.54p)


(1.38p)


(9.95p)




 


 


 


 


 




Diluted loss per share from continuing operations


 


(0.54p)


(1.38p)


(9.95p)




 
 
 
Consolidated balance sheet




 


 


 
Unaudited
30 Sept 2020


 
Unaudited
30 Sept 2019 #


 
Audited
31 March 2020




 


Note


£'000


£'000


£'000




Assets


 


 


 


 




Non-current assets


 


 


 


 




Property, plant and equipment


 


2,460


3,330


2,887




Goodwill


 


27,865


33,054


27,586




Other intangible assets


 


1,302


3,650


2,604




 


 


31,627


40,034


33,077




 


 


 


 


 




Current assets


 


 


 


 




Trade and other receivables


 


5,856


6,522


5,877




Tax receivable


 


421


285


391




Cash and cash equivalents


 


3,044


1


1,996




 


 


9,321


6,808


8,264




Total assets


 


40,948


46,842


41,341




 


 


 


 


 




Liabilities


 


 


 


 




Current liabilities


 


 


 


 




Bank overdraft


8


-


(549)


-




Other interest-bearing loans and borrowings


8


(8,175)


(1,800)


(7,939)




Trade and other payables


 


(9,141)


(8,154)


(8,447)




Current lease liabilities


 


(678)


(678)


(678)




Tax payable


 


-


-


(106)




Provisions


 


(42)


(42)


(42)




 


 


(18,036)


(11,223)


(17,212)




 


 


 


 


 




Non-current liabilities


 


 


 


 




Other interest-bearing loans and borrowings


8


-


(3,400)


-




Lease liability


 


(1,200)


(1,770)


(1,515)




Deferred tax liabilities


 


(422)


(552)


(422)




 


 


(1,622)


(5,722)


(1,937)




Total liabilities


 


(19,658)


(16,945)


(19,149)




 


 


 


 


 




Net assets


 


21,290


29,897


22,192




 


 


 


 


 




Equity


 


 


 


 




 
Capital and reserves attributable to equity holders of the company


 


 


 


 




Share capital


9


34,992


34,992


34,992




Share premium account


 


10,088


10,088


10,088




Capital redemption reserve


 


125


125


125




Shares purchased for treasury


 


(25)


(25)


(25)




Share option reserve


 


-


683


696




Foreign currency translation reserve


 


26


(13)


(155)




Retained earnings


 


(25,369)


(17,178)


(24,868)




Equity attributable to owners of the parent


 


19,837


28,672


20,853




 


 


 


 


 




Non-controlling interest


 


1,453


1,225


1,339




 


 


 


 


 




Total equity


 


21,290


29,897


22,192




 
 
# 2019 Interim balance sheet restated (see note 4)
 
 
Consolidated cash flow statement




 


 


Unaudited
Six months ended 
30 Sept 2020


Unaudited
Six months ended 
30 Sept 2019 #


 
Audited year
 ended 
31 March 2020




 


Note


£'000


£'000


£'000




Cash flow from operating activities


 


 


 


 




Loss for the period


 


(387)


(1,215)


(8,956)




Adjustment for:


 


 


 


 




Depreciation, amortisation and impairment


 


1,808


1,297


8,333




Foreign exchange


 


-


(15)


-




Finance income


 


-


(1)


-




Finance costs


 


323


157


518




Share based payment charge


 


(696)


(155)


(484)




Taxation


 


136


(321)


(436)




Operating cash flow before changes in working capital


 


1,184


(253)


(1,025)




 


 


 


 


 




(Increase) / Decrease in trade and other receivables


 


(20)


1,736


2,428




Increase / (Decrease) in trade and other payables


 


750


(1,103)


(450)




Cash (used in)/generated from operations


 


1,914


380


953




Interest received


 


-


1


-




Interest paid


 


(41)


(103)


(279)




Tax paid


 


(152)


(273)


(309)




Net cash flow from operating activities


 


1,721


5


365




Cash flows from investing activities


 


 


 


 




Payment of deferred consideration


 


(279)


(325)


(325)




Acquisition of intangible assets


 


(48)


(63)


(108)




Acquisition of property, plant and equipment


 


(31)


(33) 


(66)




Net cash outflow from investing activities


 


(358)


(421)


(499)




Cash flows from financing activities


 


 


 


 




Increase in borrowings


 


-


-


7,700




Repayment of borrowings


 


-


(450)


(5,650)




Repayment of lease liabilities


 


(315)


(372)


(610)




Acquisition of non-controlling interest


 


-


-


-




Net cash outflow from financing activities


 


(315)


(822)


1,440




Net increase / (decrease) in cash, cash equivalents and bank overdrafts


 


1,048


(1,238)


1,306




Cash and cash equivalents at beginning of period


 


1,996


690


690




Cash and cash equivalents at end of period


 


3,044


(548)


1,996




 


 


 


 


 




Cash and cash equivalents comprise:


 


 


 


 




Cash at bank and in hand


 


3,044


1


1,996




Bank overdrafts


8


-


(549)


-




Cash and cash equivalents at end of period


 


3,044


(548)


1,996




 


 


 


 


 




# 2019 Interim cashflow statement restated (see note 4)


 


 


 


 




 


 


 


 


 




 
 
 
Consolidated statement of changes in equity
 
 
 




 


Share capital


Share premium account


Capital redemption reserve


Treasury Shares


Share option reserve


Foreign currency translation reserve


Retained earnings


Equity attributable to parent


Non-controlling interest


Total  equity




 


£'000


£'000


£'000


£'000


£'000


£'000


£'000


£'000


£'000


£'000




Balance at 31 March 2019
(audited)


34,992


10,088


125


(25)


838


-


(15,889)


30,129


1,151


31,280




Charge in respect of share-based payments


 
-


 
-


 
-


 
-


 
(155)


 
-


 
-


(155)


 
-


 
(155)




Transactions with owners


-


-


-


-


(155)


-


-


(155)


-


(155)




Loss for the period


-


-


-


-


-


-


(1,289)


(1,289)


74


(1,215)




Retranslation of foreign currency


-


-


-


-


-


(13)


-


(13)


-


(13)




Total comprehensive income for the period


-


-


-


-


-


(13)


(1,289)


(1,302)


74


(1,228)




Balance at 30 September 2019 (unaudited)


34,992


10,088


125


(25)


683


(13)


(17,178)


28,672


1,225


29,897




 


 


 


 


 


 


 


 


 


 


 




Charge in respect of share-based payments


-


-


-


-


178


-


-


178


-


178




Transactions with owners


-


-


-


-


178


-


-


178


-


178




Loss for the period


-


-


-


-


-


-


(7,855)


(7,855)


114


(7,741)




Transfer in relation to lapsed share options


-


-


-


-


(165)


-


165


-


-


-




Retranslation of foreign currency


-


-


-


-


-


(142)


-


(142)


-


(142)




Total comprehensive income for the period


-


-


-


-


(165)


(142)


(7,690)


(7,997)


114


(7,883)




Balance at 31 March 2020 (audited)


34,992


10,088


125


(25)


696


(155)


(24,868)


20,853


1,339


22,192




 


 


 


 


 


 


 


 


 


 


 




Charge in respect of share-based payments


-


-


-


-


(696)


-


-


(696)


-


(696)




Transactions with owners


-


-


-


-


(696)


-


-


(696)


-


(696)




Loss for the period


-


-


-


-


-


-


(501)


(501)


114


(387)




Transfer in relation to lapsed share options


-


-


-


-


-


-


-


-


 


-




Retranslation of foreign currency


-


-


-


-


-


181


-


181


-


181




Total comprehensive income for the period


-


-


-


-


-


181


(501)


(320)


114


(206)




Balance at 30 September 2020 (unaudited)


34,992


10,088


125


(25)


-


26


(25,369)


19,837


1,453


21,290




 


 


 


 


 


 


 


 


 


 


 




 
 
 
 
 
 
 
 
 
 
 
1.     General Information
 
Jaywing plc (the "Company") is incorporated and domiciled in the United Kingdom. The Company is listed on the AIM market of the London Stock Exchange. The registered address is Albert Works, Sidney Street, Sheffield,

S1 4RG. 
 
The interim financial information was approved for issue on 10 December 2020. 
 
2.     Basis of preparation
 
The consolidated interim financial statements for the six months ended 30 September 2020, which are unaudited, have been prepared in accordance with applicable accounting standards and under the historical cost convention except for certain financial instruments that are carried at fair value.
 
The financial information for the year ended 31 March 2020 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the year ended 31 March 2020 have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain statements under Section 498 (2) or Section 498 (3) of the Companies Act 2006. The report of the auditor did however draw attention by way of emphasis, without qualifying the report, to the material uncertainty due to Covid-19 identified by the directors in relation to the going concern basis of preparation.
 
The consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2020, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
 
3.     Accounting policies
 
The principal accounting policies of Jaywing plc and its subsidiaries ("the Group") are consistent with those set out in the Group's 2020 annual report and financial statements.
 
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
 
4.     Comparative Restatement
 
The amounts in the prior year consolidated balance sheet and consolidated interim cash flow statement have been restated for misstatements relating to the presentation of IFRS 16 lease disclosures. These restatements have no effect on the Group's loss or net assets in the prior period.
 
5.     Segment information (unaudited)
 
Jaywing reports its business activities by net revenue in three areas: Brand Performance, Online Performance and Data Science & Analysis and by three main market facing sectors and groups. The 2019 results have been restated into the new segments.
 
Net Revenue by Segment
 




Six months ended 30 Sept 2020


Retail


FMCG


F&PS


Total
 




 


£'000


£'000


£'000


£'000




Brand Performance


643


1,488


661


2,792




Online Performance


2,478


902


682


4,062




Data Science & Analysis


333


276


1,879


2,488




Total


3,454


2,666


3,222


9,342




 
 




Six months ended 30 Sept 2019


Retail


FMCG


F&PS


Total
 




 


£'000


£'000


£'000


£'000




Brand Performance


871


2,052


616


3,539




Online Performance


2,978


1,603


918


5,499




Data Science & Analysis


449


415


2,094


2,958




Total


4,298


4,070


3,628


11,996




 
"Retail" includes:   Retail, Travel & Leisure, Hospitality, Property & Utilities
"FMCG" includes:  Consumer Goods, Industrial, Telecoms, Support Services, Healthcare, Education, Public Sector & Non-Profit
"F&PS" includes:   Financial & Professional Services

 
 
6.     Other Operating Income
 
The group has been in receipt of various Government funds in the period to 30 September 2020 relating to COVID-19 programs. The amounts in Other Operating Income reflect income relating to the UK Government's Coronavirus Job Retention Scheme, and the Australian Government's Job Keepers and Cash flow Boost schemes. 
 
7.     Loss per share (unaudited)
 




 


Six months ended 
30 Sept 2020


Six months ended 
30 Sept 2019


Audited year
 ended 
31 March 2020




 


Pence per share


Pence per share


Pence per 
Share




 


 


 


 




Basic loss per share 


(0.54p)


(1.38p)


(9.95p)




 


 


 


 




Diluted loss per share 


(0.54p)


(1.38p)


(9.95p)




 
 
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 period. The calculations of basic and diluted loss per share are:
 




 


 


Six months ended 
30 Sept 2020


Six months ended 
30 Sept 2019


Audited year
 ended 
31 March 2020




 


 


£'000


£'000


£'000




Loss for the period attributable to shareholders 


 


(501)


(1,289)


(9,299)




 


 


 


 


 




Weighted average number of ordinary shares in issue:


 


Number '000


Number '000


Number '000




 


 


 


 


 




Basic


 


93,432


93,432


93,432




Adjustment for share options, warrants and contingent shares


 


-


3,688


3,243




Diluted


 


93,432


97,120


96,675




 


 


 


 


 



 
 
 
 
 
 



 
 
 
8.     Bank overdraft, borrowings and loans (unaudited)




 


 


30 Sept 2020


30 Sept 2019


Audited
31 March 2020




Summary


 


£'000


£'000


£'000




Bank overdraft


 


-


549


-




Borrowings, undiscounted cash flows


 


8,175


5,200


7,939




 


 


8,175


5,749


7,939




 


 


 


 


 




Borrowings are repayable as follows:


 


 


 


 




Within 1 year


 


 


 


 




  Bank overdraft


 


-


549


-




  Borrowings


 


8,175


1,800


7,939




Total due within 1 year


 


8,175


2,349


7,939




 


 


 


 


 




In more than one year but less than two years


 


-


3,400


-




Total amount due


 


8,175


5,749


7,939




 


 


 


 


 




Average interest rates at the balance sheet date were:


 


%


%


%




  Overdraft


 


N/A


2.00


-




  Term loan


 


5.10


4.05


5.42




 
As the loans are at variable market rates their carrying amount is equivalent to their fair value.
 
A composite accounting system was set up with the Group's bankers in the period ending 30 September 2019, which allowed debit balances on overdraft to be offset across the Group with credit balances.
 




Reconciliation of net debt


Cash at bank and in hand


Overdraft


Borrowings


Net debt




 


£'000


£'000


£'000


£'000




30 September 2020


3,044


-


(8,175)


(5,131)




31 March 2020


1,996


-


(7,939)


(5,943)




30 September 2019


1


(549)


(5,200)


(5,748)




 
 
9.     Share capital (unaudited)
 
Authorised:




 


45p deferred shares


5p ordinary shares




 


£'000


£'000




Authorised share capital at 31 March 2020 and 30 September 2020


45,000


10,000




 


 


 




 
Allotted, issued and fully paid




 


45p deferred shares


5p ordinary shares


 




 


Number


Number


£'000




Issued share capital at 31 March 2020 and 30 September 2020


67,378,520


93,432,217


34,992




 


 


 


 


 



 
 
 
 
 
 



 
10.   Related party transactions (unaudited)
 
There were no significant changes in the nature and size of related party transactions for the period from those disclosed in the Annual Report for the year ended 31 March 2020.
 
11.   Post balance sheet event
 
On 21 October 2020, the business completed the acquisition of the remaining 25% of the shares in Massive Group PTY Ltd ("Massive Group") which were not already owned by Jaywing following the exercise of the put option in relation to that 25% stake by entities controlled by the two directors of Massive Group in Australia. Jaywing now owns 100% of the shares in Massive Group, which has traded as Jaywing Australia since 2017.
The 25% stake was acquired for $4.0m (£2.2m) and the total consideration for the purchase of the 100% interest was $9.6m (£5.4m).
 
On 8 October 2020, the Company's Performance Share Plan terminated.  

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