JAYWING PLC

Earnings Release • Dec 10, 2020

National Storage Mechanism | Additional information

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. 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

IR ZZMGZFLMGGZZ