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RNS Number : 5289X Jaywing PLC 21 December 2023
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.
21 December 2023
Jaywing plc
("Jaywing" or "the Company")
Interim Results September 2023
Jaywing plc (AIM: JWNG), the Data Science and Marketing business, with
operations in the UK and Australia, today announces its interim results for
the six months ended 30 September 2023 ("H1").
Financial highlights
6 months to 6 months to Change
30 September 2023 30 September 2022
£'000 £'000 %
Revenue 11,107 11,161 (0.5%)
Underlying Adjusted EBITDA((1)) 1,311 942 39.2%
Loss after tax for the period (1,688) (208)
Cash Generated from Operations (123) (134)
Net Debt (excluding IFRS 16) ((2)) (11,925) (10,381)
Reconciliation of Operating Profit with Adjusted EBITDA
6 months to 6 months to
30 September 2023 30 September 2022
£'000 £'000
Operating (Loss)/Profit (537) 580
Add Back:
Depreciation 119 117
Depreciation of right of use assets 313 310
Amortisation of intangibles 227 30
EBITDA 122 1,037
Restructuring charges 1,189 131
Acquisition & related costs - 192
Legal income - (418)
Underlying Adjusted EBITDA((1)) 1,311 942
Underlying Adjusted EBITDA margin 11.8% 8.4%
( )
( )
6 months to 6 months to Change Change % at constant exchange rates*
30 September 2023 30 September 2022 % %
£'000 £'000
Revenue
United Kingdom 7,690 8,426 (8.7%) (8.7%)
Australia 3,417 2,735 24.9% 36.7%
Group total 11,107 11,161 (0.5%) 2.4 %
Underlying Adjusted EBITDA((1))
United Kingdom 810 801 1.1% 1.1%
Australia 501 141 255.3% 288.3 %
Group total 1,311 942 39.2% 44.1 %
((1)) Underlying Adjusted EBITDA represents EBITDA before restructuring
charges arising from headcount reduction and other cost saving actions taken
in Q1 of FY24, acquisition and related costs in FY23 and legal recoveries in
FY23
((2)) Including accrued interest
* At constant exchange rates applicable to the 6 months ended 30 September
2022
Operational Highlights
· Underlying Adjusted Group EBITDA up by 39.2% at £1,311k, on 0.5%
lower revenues
· Australia ("AUS") underlying profitability improved with Adjusted
EBITDA up 255.3% due to strong AUS revenue growth.
· AUD:GBP FX rate adversely impacted results. Under constant
exchange rates Group revenues were up by 2.4% and Group Adjusted EBITDA up by
44.1%.
· UK cost and efficiency improvements resulted in a 1.1% increase
in Adjusted EBITDA on an 8.7% reduction in revenue.
· Encouraging new business pipeline
· UK Marketing sector continues to be affected by current economic
conditions.
· Decision (our AI-based PPC automation tool) is performing well
with 12 clients now on Decision, including our first client in Australia.
Commenting on the results, Andrew Fryatt, CEO of Jaywing plc, said:
I am pleased to report a strong improvement in our profitability, with Group
underlying Adjusted EBITDA up 39% to £1,311k on net revenues which were down
by 0.5%. I am especially pleased as we have found ourselves operating against
a backdrop of continuing challenging economic conditions and in a marketing
sector impacted by a widespread slowdown in client spend.
In the first quarter of this financial year we could see the risk of a
slowdown in UK revenues, and we took early action to reduce our cost base to
ensure that we were in the right shape for the balance of the year. With the
support of our employees we were able to remove around 14% of UK headcount,
resulting in a significant improvement in UK profitability in the second
quarter of this financial year (July 23 to September 23). Following this
exercise, Group headcount is 245 across the UK and Australia.
Australia
Jaywing Australia has seen accelerating revenue growth since the integration
of our two businesses in Sydney. Revenue was up by 25% in the first half (up
by 37% at constant exchange rates), supported by continuing new client wins.
Additional business has been won with OES and New Balance and we have recently
opened a new notable account with Crocs .
Jaywing Australia's' heritage was previously focused on performance marketing
and website design & build. Now, the expanded proposition includes
Creative and Data Science components, partially supported out of the UK,
building a more integrated proposition for our clients.
Revenue gains have been delivered whilst maintaining tight control of costs,
and the momentum is expected to continue into the second half of the financial
year.
UK Risk Consulting sector
Early in the year we won a significant new contract for modelling work with
Virgin Media O2, and more recent wins include model validation contracts with
Hampshire Trust Bank and also with ITV. Together these have driven a 23%
growth in half year Risk Consulting revenues and a 77% growth at
contribution level.
The strength of our performance in Risk Consulting has sustained profitability
despite the slowdown in Marketing revenues in the UK, and we have an
encouraging pipeline of further Consulting opportunities. Our risk consultants
and analysts continue to provide a fast-paced, flexible and high-quality
service that competes strongly in this sector.
UK Agency sector
The weakness of the UK marketing sector has been widely reported, and we saw a
delay in client commitments from April 2023 onwards. As mentioned above, we
took decisive action in May 2023 to ensure our UK Agency cost base was
"right-sized" for subdued revenues, and refocused our efforts on the growth
areas of the sector. We have reaped the benefits of this from July onwards,
with Q2 contribution stepping up markedly compared to a slow Q1, a result of
the restructuring, and currently building a promising pipeline of new client
opportunities.
Our focus on an integrated marketing proposition, using our data science and
creative resources to deliver demonstrably superior results, continues to
resonate with existing and potential clients. The continued acceleration of
the move towards digital has reinforced the need to understand marketing
effectiveness, and we have been able to deliver both outstanding results and
insight to our clients. We have had 10 new clients commence billing in the
first half, including DUSK.com, Subaru Europe, and Lowell Financial, and we
have seen some clients returning and restarting spend, including, for example
HSBC.
Following the headcount reductions, UK Agency revenue per head in the first
half was up 9% to £42k.
We are continuing to build the client base for our suite of award-winning
AI-based tools, including Decision (our AI-based PPC automation tool) and
Archetype (our AI modelling tool that helps to predict customer behaviour). In
our Risk Consulting business, we also have Echelon (our commercial scoring
tool) and Horizon (AI-based modelling software we use with our IFRS 9
clients).
Decision is used both as a standalone application and also as part of an
integrated solution, and monthly billings are now up 60% year-on-year.
We continue to develop our automation and AI capabilities across both our
Agency and Risk Consulting divisions to enhance the effectiveness of our
client-focused solutions.
Net Debt and Cash Flow
Net debt increased by £1,544k to £11,925k as at 30 September 2023, due to
the impact of the restructuring exercise, the funding of the Midisi
acquisition in 2022, and interest charges now accruing at a higher rate.
Working capital continues to be closely managed with debtor days for the Group
dropping from 51 days at the year end, to 47 days.
People
Jaywing has an extraordinarily committed and collaborative group of employees
in both the UK and Australia, which is a key factor in enabling us to work
through this challenging period. I would like to thank all our employees for
their continuing contribution and support.
Outlook
The actions taken to optimise our cost base, coupled with the strong growth of
Australia and our Risk Consulting business in the UK, have helped us to offset
the impact of the weaker UK Agency sector in H1. Our new business pipeline and
strengthened integrated marketing proposition give us confidence for the
second half, although we remain cautious given the backdrop of ongoing
economic and geopolitical uncertainty.
Enquiries:
Jaywing plc
Christopher Hughes (CFO/Company Secretary) Tel: 0333 370 6500
Spark Advisory Partners Limited
Matt Davis / James Keeshan Tel: 020 3368 3552
Consolidated statement of comprehensive income
Unaudited Unaudited Audited
Six months ended Six months ended year ended
30 Sept 2023 30 Sept 2022 31 March 2023
Note £'000 £'000 £'000
Revenue 4 11,107 11,161 22,062
Other operating income 9 423 507
Operating expenses (11,653) (11,004) (33,909)
Operating (Loss) / Profit (537) 580 (11,340)
Finance costs (859) (372) (1,195)
(Loss) / Profit before tax (1,396) 208 (12,535)
Tax charge (292) (416) (291)
Loss after tax for the period (1,688) (208) (12,826)
Loss for the period is attributable to:
Owners of the parent (1,688) (208) (12,826)
(1,688) (208) (12,826)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
Exchange differences on retranslation of foreign operations 16 (68) (368)
Total comprehensive loss for the period (1,672) (276) (13,194)
Total comprehensive loss is attributable to:
Owners of the parent (1,672) (276) (13,194)
(1,672) (276) (13,194)
Loss per share 5
Basic loss per share (1.81p) (0.22p) (13.73p)
Diluted loss per share (1.81p) (0.22p) (13.73p)
Consolidated balance sheet
Unaudited Unaudited Audited
30 Sept 2023 30 Sept 2022* 31 March 2023
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 6 3,647 4,010 4,023
Goodwill 10,602 21,705 10,602
Deferred tax asset 620 557 620
Other intangible assets 7 1,983 3,331 2,125
16,852 29,603 17,370
Current assets
Trade and other receivables 5,013 5,246 4,418
Contract assets 826 887 352
Cash and cash equivalents 211 490 1,089
6,050 6,623 5,859
Total assets 22,902 36,226 23,229
Liabilities
Current liabilities
Borrowings 8 12,136 10,871 11,435
Trade and other payables 6,321 6,839 5,810
Contract liabilities 959 788 983
Lease liabilities 394 486 380
Tax liabilities 185 25 20
Provisions 9 552 - -
20,547 19,009 18,628
Non-current liabilities
Lease liabilities 2,379 3,206 2,638
Provisions 9 570 - 570
Deferred tax liability 592 - 592
Trade and other payables 1,706 2,373 2,021
5,247 5,579 5,821
Total liabilities 25,794 24,588 24,449
Net (liabilities) / assets (2,892) 11,638 (1,220)
Equity
Capital and reserves attributable to equity holders of the company
Share capital 10 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 (234) 50 (250)
Retained earnings (47,838) (33,592) (46,150)
Total equity (2,892) 11,638 (1,220)
*The comparative information has been restated due to misstatements in the
prior period as discussed in the Annual Report and Accounts for the year ended
31 March 2023
Consolidated cash flow statement
Unaudited Unaudited Audited
Six months ended Six months ended year ended
30 Sept 2023 30 Sept 2022 31 March 2023
£'000 £'000 £'000
Cash flow from operating activities
Loss after tax for the period (1,688) (208) (12,826)
Adjustment for:
Impairment of goodwill - - 12,095
Depreciation of property, plant, and equipment 119 117 245
Depreciation and impairment of right of use assets 313 310 641
Amortisation of intangibles 227 30 320
Financial costs 859 372 1,195
Taxation expense 292 416 291
Operating cash flow before changes in working capital 122 1,037 1,961
Operating cash flow before changes in working capital
(Increase)/Decrease in trade and other receivables (1,139) 735 1,986
Increase/(Decrease) in trade and other payables 894 (1,906) (2,654)
Cash generated from operations (123) (134) 1,293
Interest paid - (15) -
Tax paid (101) (44) (21)
Net cash flow from operating activities (224) (193) 1,272
Cash flows from investing activities
Payment of deferred and contingent consideration (187) (668) (818)
Acquisition of subsidiary - (400) (400)
Capitalised development costs (85) - -
Acquisition of property, plant, and equipment (56) (150) (483)
Net cash outflow from investing activities (328) (1,218) (1,701)
Cash flows from financing activities
Increase in borrowings - 1,500 1,500
Repayment of Lease Liabilities (IFRS 16) (326) (313) (696)
Net cash (outflow)/inflow from financing activities (326) 1,187 804
Net decrease in cash, cash equivalents and bank overdrafts (878) (224) 375
Cash and cash equivalents at beginning of period 1,089 714 714
Cash and cash equivalents at end of period 211 490 1,089
Cash and cash equivalents comprise:
Cash at bank and in hand 211 490 1,089
Consolidated statement of changes in equity
Share capital Share premium account Capital redemption reserve Treasury Shares Foreign Retained earnings* Total equity
currency translation reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2022 34,992 10,088 125 (25) 118 (33,071) 12,227
(audited)
Prior year adjustment (audited) - - - - - (253) (253)
Restated balance at 31 March 2022 (audited) 34,992 10,088 125 (25) 118 (33,324) 11,974
Loss for the period - - - - - (12,826) (12,826)
Retranslation of foreign currency - - - - (368) - (368)
Total comprehensive income for the period - - - - (368) (12,826) (13,194)
Balance at 31 March 2023 (audited) 34,992 10,088 125 (25) (250) (46,150) (1,220)
Loss for the period - - - - - (1,688) (1,688)
Retranslation of foreign currency - - - - 16 - 16
Total comprehensive income for the period - - - - 16 (1,688) (1,672)
Balance at 30 September 2023 (unaudited) 34,992 10,088 125 (25) (234) (47,838) (2,892)
*The comparative information has been restated due to misstatements in the
prior period as discussed in the Annual Report and Accounts for the year ended
31 March 2023
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 30 November 2023.
2. Basis of preparation
The consolidated interim financial statements for the six months ended 30
September 2023, 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 2023 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 2023 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 2023, which
have been prepared and approved by the Directors in accordance with UK-adopted
International accounting standards in conformity with the Companies Act 2006.
The Consolidated Financial Statements have been prepared under the historical
cost convention, except for revaluation of any assets and liabilities carried
at fair value.
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 2023.
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. 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 2023 annual report
and financial statements other than the new policies included below.
There were no new relevant Standards or Interpretations to be adopted for the
six months ended 30 September 2023.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
3.1 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.
3.2 Share-based payment transactions
The fair value of the CSOP & LTIP options have been taken as the market
price as at the grant date. The charge to profit or loss takes account of the
estimated number of shares that will vest. Where the options do not have any
market conditions attached, the number expected to vest is reassessed at each
reporting period. All share-based remuneration is equity-settled. Provision is
made for National Insurance when the Group is committed to settle this
liability. The charge to profit or loss takes account of the options expected
to vest, is deemed to arise over the vesting period, and is discounted.
4. Segment information
The Group reported its operations based on location of business (United
Kingdom & Australia).
Revenue, Contribution and Adjusted EBITDA by operating segments
Unaudited six months ended 30 Sept 2023 Unaudited six months ended
30 Sept 2022
£'000 £'000
Revenue
United Kingdom 7,690 8,426
Australia 3,417 2,735
11,107 11,161
Contribution (1)
United Kingdom 2,595 3,012
Australia 1,178 792
3,773 3,804
Underlying Adjusted EBITDA (2)
United Kingdom 810 801
Australia 501 141
1,311 942
(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) Underlying Adjusted EBITDA represents Earnings Before Interest Tax,
Depreciation & Amortisation ('EBITDA') before restructuring costs,
acquisition and related costs and legal recoveries.
5. Loss per share
Unaudited Six months ended Unaudited Six months Audited year
30 Sept 2023 ended ended
30 Sept 2022 31 March 2023
Pence per share Pence per share Pence per
Share
Basic loss per share (1.81p) (0.22p) (13.73p)
Diluted loss per share (1.81p) (0.22p) (13.73p)
6. Property, plant and equipment
Unaudited Unaudited Audited
30 Sept 2023 30 Sept 2022 31 March 2023
£'000 £'000 £'000
Buildings 3,085 3,462 3,325
Leasehold improvements 202 216 147
Office equipment 360 332 551
3,647 4,010 4,023
7. Other intangible assets
Unaudited Unaudited Audited
30 Sept 2023 30 Sept 2022 31 March 2023
£'000 £'000 £'000
Development costs 97 39 29
Intellectual property 1,886 3,292 2,099
1,983 3,331 2,125
8. Borrowings
Unaudited Unaudited Audited
30 Sept 2023 30 Sept 2022* 31 March 2023
Summary £'000 £'000 £'000
Borrowings 12,136 10,871 11,435
12,136 10,871 11,435
Borrowings are repayable as follows:
Within 1 year
Borrowings 12,136 10,871 11,435
Total due within 1 year 12,136 10,871 11,435
In more than one year but less than two years - - -
Total amount due 12,136 10,871 11,435
Average interest rates at the balance sheet date were: % % %
Term loan 9.77 5.60 8.57
*The comparative information has been restated due to misstatements in the
prior period as discussed in the Annual Report and Accounts for the year ended
31 March 2023
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 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** Cash and cash equivalents Borrowings Net debt
£'000 £'000 £'000
30 September 2023 (Unaudited)* 211 (12,136) (11,925)
31 March 2023 (Audited)* 1,089 (11,435) (10,346)
30 September 2022 (Unaudited) 490 (10,871) (10,381)
*The comparative information has been restated due to misstatements in the
prior period as discussed in the Annual Report and Accounts for the year ended
31 March 2023
**Excluding lease liabilities and deferred consideration
9. Provisions (unaudited)
Unaudited Unaudited Audited
30 Sept 2023 30 Sept 2022 31 March 2023
£'000 £'000 £'000
Due in less than one year:
Restructuring provision 552 - -
Due in greater than one year:
Dilapidations provision 570 - 570
The dilapidations provision of £570k 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.
The restructuring provision of £552k has been recognised for the constructive
obligation of expenditure confirmed as part of the current year UK headcount
reduction process.
10. Share capital (unaudited)
Allotted, issued and fully paid
45p deferred shares 5p ordinary shares
Number Number £'000
Issued share capital at 31 March 2023 and 30 September 2023 and 30 September 67,378,520 93,432,217 34,992
2022
11. Related party transactions (unaudited)
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 2023.
12. Employee benefits (unaudited)
On 13 April 2023, the Company granted 1,142,000 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.
LTIP Options
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.
Charge to the statement of comprehensive income
Under IFRS 2, the Group is required to recognise an expense in the financial
statements. The expense is apportioned over the vesting period based upon the
number of options which are expected to vest and the fair value of those
options at the date of grant.
Based on the market conditions at grant date, we have assessed the fair value
of these options to be £nil at the interim date. This will be monitored
across the vesting period and will be updated accordingly, at subsequent
reporting dates.
CSOP 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. 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.
Charge to the statement of comprehensive income
Under IFRS 2, the Group is required to recognise an expense in the financial
statements. The expense is apportioned over the vesting period based upon the
number of options which are expected to vest and the fair value of those
options at the date of grant. Due to their being no performance conditions
attached to the options, all of these are expected to vest.
Based on the fair value of 4.5 pence per share, the calculated charge for the
period to Sep-23 is £32k. Due to the amount being immaterial we have not
included this in our interim results.
13. Post balance sheet event (unaudited)
There are no post balance sheet events that require disclosure.
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