REG - Jaywing PLC - Half-year Report
07/12/2021 07:00
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RNS Number : 7499U Jaywing PLC 07 December 2021
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 September 2021
Jaywing plc (AIM: JWNG), the integrated agency powered by data science, today
announces its interim results for the six months ended 30 September 2021
("H1").
Financial highlights
6 months to 6 months to
30 September 2021 30 September 2020
£'000 £'000
Net Revenue* 11,606 9,342
Loss after tax for the period (289) (387)
Adjusted EBITDA** 1,026 1,389
Adjusted EBITDA excluding salary sacrifice and Covid-19 government support 986 41
Cash Generated from Operations 681 1,914
Cash Generated from Operations excluding salary sacrifice and Covid-19 641 566
government support income
Net Debt (excluding IFRS 16) *** (8,138) (5,131)
Reconciliation of Operating Profit with Adjusted EBITDA
6 months to 6 months to
30 September 2021 30 September 2020
£'000 £'000
Operating Profit 205 72
Add Back:
Depreciation 140 125
Depreciation of right of use assets 333 333
Amortisation of intangibles 348 660
EBITDA 1,026 1,190
Impairment of intangibles**** - 690
Restructuring charges - 205
Share based payment credits - (696)
Adjusted EBITDA 1,026 1,389
Salary sacrifice***** - (749)
Covid-19 Government support income (40) (599)
Adjusted EBITDA excluding salary sacrifice and Covid-19 government support 986 41
* Revenue less third-party direct costs of sale
** Adjusted EBITDA represents EBITDA before restructuring charges, impairment
charges and share based payment credits
*** Including accrued interest
**** Impairment of historic trademark assets following brand integration under
Jaywing during the period
*****In response to the Covid-19 pandemic there was a voluntary salary
sacrifice scheme in the UK companies between April 2020 and August 2020 which
reduced payroll costs by £749k
Operational Highlights
· 24% growth in Net Revenue vs prior period, with significant new
business wins
· £0.9m underlying improvement in Adjusted EBITDA excluding salary
sacrifice and Covid-19 government support income
· £641k Cash Generated from Operations excluding salary sacrifice
and Covid-19 government support income against a comparative of £566k
Commenting on the results, Andrew Fryatt, CEO of Jaywing plc, said:
We are pleased to report Net Revenue growth of 24% in H1, returning to
pre-pandemic levels, despite what continues to be a challenging market. Net
Revenue per head increased by 22% year on year to £40k. The business also
achieved a significant improvement in underlying profitability, which has been
somewhat masked by the impact of Covid-related support and salary sacrifice
during 2020. Excluding these, EBITDA improved from £0.041m to £0.986m.
A highlight of the first half was taking on the marketing for Skipton Building
Society, in addition to our existing relationship in Risk Consulting. We have
also won new business in the UK from Cox Automotive, Rush Hair & Beauty,
CityFibre, HSBC, Vive, and Avant Homes, along with contract extensions with
major clients, including Secure Trust. In Australia, new business wins
included AMP Capital, Perpetual and Narellan Pools.
The total number of clients generating revenue in the half increased from 200
to 211, led by growth in Retail and in Financial Services.
All three of our market facing sectors saw revenue growth (note 4), with
Financial and Professional Services delivering our strongest year-on-year
growth, at 41%, driven by additional client spend in the UK on Risk and
Regulatory Consulting.
Within the UK, we have significantly increased the cross selling of services
to clients across our two established business streams - Risk Consulting and
Integrated Marketing, which overlap in the underlying role of Data Science.
The application of Data Science techniques and technologies to marketing
challenges is resonating strongly with both new and existing clients,
supporting Jaywing's distinctive positioning in our markets. With global
marketing spend expected to exceed 2019 this year, and digital spend now
greater than all other channels combined, we are enabling our clients to move
up the digital marketing maturity curve towards market leading positions.
In Australia, where the pandemic impact has mainly affected the labour market,
Net Revenue grew by 55% year on year, with multiple new business wins. With
the borders having been closed, wage inflation has been well above normal in
the last 12 months, but this is expected to stabilise as the borders reopen.
Through the half year we completed the final payments for the acquisition of
the remaining 25% of Massive Group in Australia. On 2 November 2021 we
announced that we have now taken full ownership of Frank Digital Pty Ltd for a
final payment of AUS $1.2m (£0.7m), which will be paid in a series of monthly
payments between now and 30 April 2022 from the surplus cash flows of the
combined Australian businesses. We are moving ahead with integrating our two
Australian companies as Jaywing Australia, focusing on continued revenue
growth in a more efficient structure.
The integration of the two Australian businesses will also enable us to
present an integrated marketing proposition there, supported with Data Science
from the UK.
Within the UK, we have consolidated all trading activities into Jaywing UK
Limited to enable us to continue to focus on improving operating efficiencies.
Our steady stream of new business wins gives us confidence that we can
continue to drive further growth in both the UK and Australia, and we believe
our integrated operating structures can now support much of that growth with
existing resources. We continue to look for appropriate opportunities to
improve our operating efficiency including reviewing our premises footprint in
2022 and consolidation of teams where possible.
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 Unaudited Audited
Six months ended Six months ended year ended
30 Sept 2021 30 Sept 2020 31 March 2021
Note £'000 £'000 £'000
Revenue 15,065 11,319 25,957
Direct costs (3,459) (1,977) (5,792)
Net Revenue 4 11,606 9,342 20,165
Other operating income 5 40 599 793
Operating expenses (11,441) (9,869) (20,867)
Operating Profit 205 72 91
Finance costs (249) (323) (451)
Loss before tax (44) (251) (360)
Tax (charge) / credit (245) (136) 119
Loss after tax for the period (289) (387) (241)
Loss for the period is attributable to:
Non-controlling interests 14 114 71
Owners of the parent (303) (501) (312)
(289) (387) (241)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
Exchange differences on retranslation of foreign operations 60 181 (6)
Total comprehensive loss for the period (229) (206) (247)
Total comprehensive loss is attributable to:
Non-controlling interests 14 114 71
Owners of the parent (243) (320) (318)
(229) (206) (247)
Loss per share 6
Basic loss per share (0.26p) (0.54p) (0.34p)
Diluted loss per share (0.26p) (0.54p) (0.34p)
Consolidated balance sheet
Unaudited Unaudited Audited
30 Sept 2021 30 Sept 2020 31 March 2021
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 1,701 2,460 2,060
Goodwill 29,789 27,865 29,789
Other intangible assets 456 1,302 799
31,946 31,627 32,648
Current assets
Trade and other receivables 6,550 5,154 6,214
Contract assets 1,180 702 619
Tax receivable 329 421 474
Cash and cash equivalents 402 3,044 752
8,461 9,321 8,059
Total assets 40,407 40,948 40,707
Liabilities
Current liabilities
Borrowings 7 8,540 8,175 8,338
Trade and other payables 8,458 8,465 8,065
Contract liabilities 1,046 676 1,163
Current lease liabilities 353 678 666
Current tax liabilities 161 - 194
Provisions 42 42 42
18,600 18,036 18,468
Non-current liabilities
Non-current lease liabilities 731 1,200 877
Deferred tax liabilities 56 422 113
787 1,622 990
Total liabilities 19,387 19,658 19,458
Net assets 21,020 21,290 21,249
Equity
Capital and reserves attributable to equity holders of the company
Share capital 8 34,992 34,992 34,992
Share premium 10,088 10,088 10,088
Capital redemption reserve 125 125 125
Shares purchased for treasury (25) (25) (25)
Foreign currency translation reserve (101) 26 (161)
Retained earnings (24,427) (25,369) (24,124)
Equity attributable to owners of the parent 20,652 19,837 20,895
Non-controlling interest 368 1,453 354
Total equity 21,020 21,290 21,249
Consolidated cash flow statement
Unaudited Unaudited Audited
Six months ended Six months ended year ended
30 Sept 2021 30 Sept 2020 31 March 2021
£'000 £'000 £'000
Cash flow from operating activities
Loss after tax for the period (289) (387) (241)
Adjustment for:
Depreciation of property, plant, and equipment 140 125 259
Depreciation of right of use assets 333 333 666
Amortisation of intangibles 348 660 1,118
Impairment of intangibles - 690 690
Financial expenses 249 323 451
Fair value movement of put / call option - - (435)
Share based payment credit - (696) (696)
Taxation charge 245 136 (119)
Operating cash flow before changes in working capital 1,026 1,184 1,693
Operating cash flow before changes in working capital
Increase in trade and other receivables (990) (20) (901)
Increase in trade and other payables 645 750 1,466
Cash generated from operations 681 1,914 2,258
Interest paid (27) (41) (74)
Tax paid (98) (152) (376)
Net cash flow from operating activities 556 1,721 1,808
Cash flows from investing activities
Payment of deferred consideration (442) (279) (377)
Acquisition of intangible assets (4) (48) (3)
Acquisition of non-controlling interest - - (1,925)
Acquisition of property, plant, and equipment (115) (31) (98)
Net cash outflow from investing activities (561) (358) (2,403)
Cash flows from financing activities
Repayment of Lease Liabilities (IFRS 16) (345) (315) (649)
Net cash outflow from financing activities (345) (315) (649)
Net increase / (decrease) in cash, cash equivalents and bank overdrafts (350) 1,048 (1,244)
Cash and cash equivalents at beginning of period 752 1,996 1,996
Cash and cash equivalents at end of period 402 3,044 752
Cash and cash equivalents comprise:
Cash at bank and in hand 402 3,044 752
Consolidated statement of changes in equity
Share capital Share premium account Capital redemption reserve Treasury Shares Share option reserve Foreign currency translation reserve Retained earnings Equity attributable to parent Non-controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2020 34,992 10,088 125 (25) 696 (155) (24,868) 20,853 1,339 22,192
(audited)
Charge in respect of share-based payments - - - - (696) - - (696) - (696)
Transactions with owners - - - - (696) - - (696) - (696)
Loss for the period - - - - - - (501) (501) 114 (387)
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
Acquisition of subsidiaries - - - - - - 1,056 1,056 (1,056) -
Loss for the period - - - - - - 189 189 (43) 146
Retranslation of foreign currency - - - - - (187) - (187) - (187)
Total comprehensive income for the period - - - - - (187) 1,245 1,058 (1,099) (41)
Balance at 31 March 2021 (audited) 34,992 10,088 125 (25) - (161) (24,124) 20,895 354 21,249
Loss for the period - - - - - - (303) (303) 14 (289)
Retranslation of foreign currency - - - - - 60 - 60 - 60
Total comprehensive income for the period - - - - - 60 (303) (243) 14 (229)
Balance at 30 September 2021 (unaudited) 34,992 10,088 125 (25) - (101) (24,427) 20,652 368 21,020
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 7 December 2021.
2. Basis of preparation
The consolidated interim financial statements for the six months ended 30
September 2021, 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 2021 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 2021 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 consolidated interim financial information should be read in conjunction
with the annual financial statements for the year ended 31 March 2021, which
have been prepared and approved by the Directors in accordance with
International accounting standards in conformity with the Companies Act 2006.
The Consolidated Financial Statements have been prepared under the historical
cost convention.
The Board continually assesses and monitors the key risks of the business. The
Board continues to consider the Group's profit and cash flow plans for at
least the next 12 months and runs forecasts and downside stress test
scenarios. These risks have not significantly changed from those set out in
the Company's Annual Report for the period ended 31 March 2021.
Based on the Group's cash flow forecasts and projections, the Directors are
satisfied that the Group has adequate resources to continue in operational
existence for the foreseeable future. While the Group has seen some disruption
from COVID-19, the impact has been manageable and the business model has
demonstrated resilience The Directors are confident that operating cost
reductions and cash preservation measures could be utilised to reduce costs
and preserve cash. In considering their position the Directors have also had
regard to letters of support in respect of the secured debt received from each
of the holders of that debt. The Group has continued to adopt the going
concern basis of accounting in preparing these interim financial statements.
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 2021 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. Segment information
The Group reported its operations by client-facing market segments (Retail,
FMCG, Financial & Professional Services), reflecting the operating
divisions of the Group.
Group Net Revenue by client facing operating segments
Unaudited six months ended 30 Sept 2021 Unaudited six months ended
30 Sept 2020
£'000 £'000
Retail 4,012 3,454
FMCG 3,057 2,666
Financial & Professional Services 4,537 3,222
11,606 9,342
"Retail" includes:
Retail, Travel & Leisure, Hospitality, Property & Utilities
"FMCG" includes:
Consumer Goods, Industrial, Telecoms, Support Services, Healthcare,
Education, Public Sector & Non-Profit
"Financial & Professional Services " includes: Financial
& Professional Services
4. Segment information (continued)
Net Revenue by Geographic Markets
Unaudited six months ended 30 Sept 2021 Unaudited six months ended
30 Sept 2020
£'000 £'000
United Kingdom 8,956 7,629
Australia 2,650 1,713
11,606 9,342
Net Revenue is defined as revenue less third-party direct costs of sale.
Revenue before third- party direct costs in the UK was £12,366k (2020:
£9,524k), and in Australia £2,699k (2020: £1,795k).
5. Other operating income (unaudited)
The Group has taken the option to present income received from Government
sources in relation to Covid-19 as other operating income, rather than netted
against costs. The Group received funds from the UK Government under the
Covid-19 Job Retention Scheme of £37k (2020: £492k). Under the corresponding
scheme in Australia, Cashflow boost and Job Keepers, the Group received £3k
(2020: £107k). Of the £781k received in the year ended March 2021, £599k
was received in the six-month period to September 2020.
6. Loss per share
Unaudited Six months ended Unaudited Six months ended Audited year
30 Sept 2021 30 Sept 2020 ended
31 March 2021
Pence per share Pence per share Pence per
Share
Basic loss per share (0.26p) (0.54p) (0.34p)
Diluted loss per share (0.26p) (0.54p) (0.34p)
7. Borrowings
Unaudited Unaudited Audited
30 Sept 2021 30 Sept 2020 31 March 2021
Summary £'000 £'000 £'000
Borrowings 8,540 8,175 8,338
8,540 8,175 8,338
Borrowings are repayable as follows:
Within 1 year
Borrowings 8,540 8,175 8,338
Total due within 1 year 8,540 8,175 8,338
In more than one year but less than two years - - -
Total amount due 8,540 8,175 8,338
Average interest rates at the balance sheet date were: % % %
Term loan 4.81 5.10 4.82
As the loans are at variable market rates their carrying amount is equivalent
to their fair value.
The borrowings are repayable on demand and interest is calculated at 3-month
LIBOR plus a margin. Borrowings includes accrued interest.
The borrowings are secured by charges over all the assets of Jaywing and
guarantees and charges over all of the assets of the various subsidiaries
(Jaywing UK Limited (formerly known as Scope Creative Marketing Limited),
Alphanumeric Limited, Gasbox Limited, Jaywing Central Limited, Jaywing
Innovation limited, Bloom Media (UK) Limited, Epiphany Solutions limited and
Massive Group Pty Limited).
7. Borrowings (continued)
Reconciliation of net debt Cash and cash equivalents Borrowings Net debt
£'000 £'000 £'000
30 September 2021 (Unaudited) 402 (8,540) (8,138)
31 March 2021 (Audited) 752 (8,338) (7,586)
30 September 2020 (Unaudited) 3,044 (8,175) (5,131)
8. Share capital (unaudited)
Allotted, issued and fully paid
45p deferred shares 5p ordinary shares
Number Number £'000
Issued share capital at 31 March 2021 and 30 September 2021 and 30 September 67,378,520 93,432,217 34,992
2020
9. Related party transactions (unaudited)
The new related party transactions were:
· The exercise of the Put and Call Option in relation to Frank
Digital Pty Ltd described in note 10
· 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. Net Revenue from Gusbourne Estate Limited amounted to £54k in
the 6 months to 30 September 2021 with a debtor's balance of £13k as at 30
September 2021
There were no other 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 2021.
10. Post balance sheet event (unaudited)
On 2 November 2021 Jaywing Plc agreed with Matt Barbelli as the sole director
of Frank Digital Pty Ltd ("Frank Digital") in Australia to accelerate the
exercise of the Put and Call Option in relation to the 25% of the shares in
Frank Digital held by Barbelli Enterprises Pty Ltd ATF Barbelli Holdings Trust
("BEP") an entity controlled by Matt Barbelli, and which were not already
owned by Jaywing. Jaywing now owns 100% of the shares in Frank Digital . The
acceleration of this payment has been agreed to facilitate Jaywing's strategy,
specifically the timely integration of its two Australian businesses.
Jaywing and Frank Digital entered into an agreement on 27 February 2018,
whereby Jaywing acquired 75% of the shares of Frank Digital, with the
remaining 25% subject to a Put and Call Option, exercisable from February
2022. A variation agreement has now been agreed between Jaywing, BEP, Matt
Barbelli and Massive Group Pty Ltd to acquire this 25% stake immediately for a
consideration of AUS $1.2m (c.£0.7m), which will be paid in a series of
monthly payments between now and 30 April 2022 from the surplus cash flows of
the combined Australian businesses (the "Deferred Consideration"). This will
bring the total consideration for the purchase of the 100% interest in Frank
Digital to AUS $3.0m (£1.7m).
This variation Agreement will enable Jaywing's two Australian businesses
(Frank Digital and Massive Group) to achieve the benefits of a fully
integrated operation. Whilst the calculation methodology has not been changed
by the variation agreement, the Deferred Consideration of $1.2m remains
subject to a final independent audit confirmation in November 2021 of the
results of Frank Digital to 30 June 2021, and any resulting adjustments will
be made against the Deferred Consideration.
The variation agreement, which has enabled early repayment of the Deferred
Consideration to the vendor of Frank Digital, is considered a related party
transaction in accordance with Rule 13 of the AIM Rules for Companies. The
Company's directors consider, having consulted with the Company's nominated
adviser, that the terms of the transaction are fair and reasonable insofar as
shareholders are concerned.
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