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

30 September 2021

6 months to

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 government support income

641

566

Net Debt (excluding IFRS 16) ***

(8,138)

(5,131)

 

 

Reconciliation of Operating Profit with Adjusted EBITDA

 

 

6 months to

30 September 2021

 £'000

6 months to

30 September 2020

£'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

Six months ended

30 Sept 2021

Unaudited

Six months ended

30 Sept 2020

Audited

year ended

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

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)

 

 

 

Consolidated balance sheet

 

 

 

Unaudited

30 Sept 2021

 

Unaudited

30 Sept 2020

 

Audited

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

Six months ended

30 Sept 2021

Unaudited

Six months ended

30 Sept 2020

Audited

year ended

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

(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)

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

30 Sept 2021

Unaudited Six months ended

30 Sept 2020

Audited year

 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

30 Sept 2021

Unaudited

30 Sept 2020

Audited

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 2020

67,378,520

93,432,217

34,992

 

 

 

 

 

           

 

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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