TIDMJWNG
RNS Number : 6468L
Jaywing PLC
07 September 2023
This announcement contains inside information
Jaywing plc
07 September 2023
Jaywing plc
("Jaywing" or "the Company")
Final Results and Publication of Annual Report
Jaywing Plc (AIM: JWNG), the Data Science and Marketing
business, with operations in the UK and Australia, announces its
audited results for the year ended 31 March 2023 and that a General
Meeting will be held on Thursday 28th September 2023 at the offices
of Jaywing plc, Albert Works, Sidney Street, Sheffield , S1 4RG at
2:30pm. The Company is today posting copies of the Annual Report
and Accounts to shareholders, an electronic copy of which is
available to view on the Company's website:
www.jaywing.com/investors/
Enquiries:
Jaywing plc: Christopher Hughes (Company Secretary) Tel: 0333
370 6500
Cenkos Securities plc: Callum Davidson / Camilla Hume (Nominated
Adviser) Tel: 0207 397 8920
Financial highlights
Restated*
2023 2022 Change
GBP'000 GBP'000 %
Revenue 22,062 23,324 (5.4%)
------------------ ---------- ---------
Adjusted EBITDA (1) 2,410 2,206 9.2%
------------------ ---------- ---------
Operating Loss (11,340) (6,086)
------------------ ----------
Loss before Tax (12,535) (6,660)*
------------------ ----------
Cash Generated from Operations 1,293 1,587
------------------ ----------
Net Debt pre IFRS 16 (2) (10,346) (8,293)*
------------------ ----------
Loss per share (13.73p) (7.01p)*
------------------ ----------
Reconciliation of Operating Loss with Adjusted EBITDA
2023 2022
GBP'000 GBP'000
Operating Loss (11,340) (6,086)
------------------- ---------
Add Back:
------------------- ---------
Impairment of Goodwill 12,095 6,131
------------------- ---------
Depreciation of property,
plant & equipment 245 327
------------------- ---------
Depreciation and impairment
of right of use assets 641 752
------------------- ---------
Amortisation of intangibles 320 730
------------------- ---------
EBITDA 1,961 1,854
------------------- ---------
Acquisition & related costs 259 -
------------------- ---------
Restructuring costs 190 352
------------------- ---------
Adjusted EBITDA (1) 2,410 2,206
------------------- ---------
Adjusted EBITDA (1) margin 10.9% 9.5%
------------------- ---------
Revenue, Contribution and Adjusted EBITDA by operating
segment
2023 2022 Change
GBP'000 GBP'000 %
Revenue
--------- --------- -------
United Kingdom 16,380 18,099 (9.5%)
--------- --------- -------
Australia 5,682 5,225 8.8%
--------- --------- -------
Group total 22,062 23,324 (5.4%)
--------- --------- -------
Contribution (3)
--------- --------- -------
United Kingdom 4,886 4,849 0.8%
--------- --------- -------
Australia 2,142 2,057 4.1%
--------- --------- -------
Group total 7,028 6,906 1.8%
--------- --------- -------
Contribution margin 31.9% 29.6%
--------- --------- -------
Adjusted EBITDA (1)
--------- --------- -------
United Kingdom 1,882 1,680 12.0%
--------- --------- -------
Australia 528 526 0.4%
--------- --------- -------
Group total 2,410 2,206 9.2%
--------- --------- -------
(1) Adjusted EBITDA represents Earnings Before Interest Tax,
Depreciation & Amortisation ('EBITDA') before restructuring
costs and acquisition & related costs
(2) Including accrued interest
(3) Contribution is defined as Revenue less Direct Costs
comprise staff and other costs directly attributable to the
revenues of the respective operating segments.
Operational Highlights
-- Group contribution margin increased by 2.3ppt driven by UK cost efficiencies.
-- Group Adjusted EBITDA for FY23 up by 9.2% at GBP2,410k
against prior period, on 5.4% lower revenues.
-- UK Adjusted EBITDA for FY23 up 12.0% at GBP1,882k, due to
cost management and efficiency improvements.
-- FY23 Australian adjusted EBITDA has increased by 0.4% to
GBP528k and which reflects the impact of the cost of the
integration activity at the start of 2023.
-- New business pipeline remains strong in both territories.
-- Decision PPC management IP acquisition successfully completed
& encouraging new business growth.
-- R&D function established during the year to help build
increased Decision IP functionality.
Chairman's Statement
Results
Revenues for the Group for FY23 of GBP22.1m (2022: GBP23.3 m),
were 5.4% down on FY22, following FY22's strong growth of 16% on
FY21. The decrease in revenue in FY23 comprises a fall of 9.5% in
UK revenues (2022: increase of 13.3%) and a rise of 8.8% in
Australia revenues (2022: increase of 25%). The UK's revenues were
affected by weaker demand in FY23 whilst Australia continued to
grow although at a slower rate than the previous year. Recent
significant new business wins in Australia are expected to restore
its return to strong growth in FY24.
It is pleasing to note that the Group's contribution margin
increased in FY23 by 2.3ppt to 31.9% driven by cost efficiency
improvements in the UK. The UK contribution margin was up by 3.0 %
to 29.8%. Adjusted Group EBITDA for FY23, was GBP2.4m (2022:
GBP2.2m), an increase of 9.2%, reflecting margin improvements on
lower Group revenues. The adjusted EBITDA for the UK in FY23 was
GBP1.9m, a 12% increase on FY22's GBP1.7m. Australia remained flat
at GBP0.5m due to business integration actions at the start of FY23
and increased staff costs. Cash Generated from Operations for FY23
amounted to GBP1.3m (2022: GBP1.6m).
In the first quarter of FY24 the Group carried out a significant
restructuring of the UK division to improve margin efficiency
through cost reduction, and implemented a new organisational
structure which is intended to help the Group rebalance its
strengths on its higher margin services. Recent new business wins
in data science led services, particularly in the Group's risk,
fraud and regulatory services, together with UK cost reductions are
expected to help raise UK margins in FY24.
Strategy
The Group's businesses in the UK and Australia plan to focus on
organic growth on the back of recent new business wins and a strong
new business pipeline. The Group will promote and further develop
the recently acquired Decision software as well as exploring
opportunities for further investment in advanced data analysis
products as well as the application of technology to the marketing
challenges of our clients. Creative services will remain a key
component of our services mix, and the Group will continue to
promote its award-winning creative services to its clients as part
of its comprehensive marketing solution offerings.
It is pleasing to report that Jaywing Australia, which is led by
a successful and autonomous professional team, has continued to
demonstrate a track record of strong performance during the year
with sales up by 8.8% and with some significant business wins
towards the end of FY23. The ongoing collaboration with the UK
business on clients and services, where required, now includes the
promotion of the Decision software in Australia, and we are
continuing to work with the Australian team to explore
opportunities to further accelerate scale and market reach.
Funding
The Company remains in discussions with each of the holders of
the secured debt about a possible future restructuring of the debt.
Details of this debt are contained in Note 18 and Note 30.
Board and senior management
In April 2022 we announced that Caroline Ackroyd, the Company's
Chief Financial Officer and a board director had resigned to pursue
other interests. On 31 August 2022, the Company announced the
appointment of Christopher Hughes as the Company's Chief Financial
Officer.
People
Our staff in the UK and Australia have continued to work closely
with our customers to help serve their varied and challenging
business needs and continued to win and welcome new customers to
Jaywing. The Board would like to thank all our staff for their
ongoing hard work and dedication.
Outlook
Whilst trading conditions in the UK remain challenging, the
recent restructuring of the UK division and recent new business
wins as well as a strong pipeline is expected to assist the UK
division's ability to withstand ongoing challenges in the
macroeconomic environment as well as improving margin run rates.
Recent significant new business wins in Australia are expected to
provide strong revenue and profitability growth.
Ian Robinson
Non-Executive Chairman
Chief Executive's Report
Overview
The last year saw an increase in FY23 EBITDA of 9.2% at
GBP2,410k against the prior period, on 5.4% lower revenues. This
growth was achieved despite challenging economic conditions
impacting clients' own performance, and hence their budgets and
spend, in both the UK and Australia. Australia's revenue was up
8.8% on the previous year built on strong client wins. In the UK,
revenue was down 9.5%. Our Group revenue was therefore down 5.4%
year-on-year overall, but I am pleased to report that we have been
able to manage our costs well in response to trading conditions,
delivering adjusted EBITDA of GBP2.4m, just ahead of market
expectations.
Performance varied across our operating divisions. Australia had
a strong end to the financial year, with a major contract win that
will fully crystallise in the current financial year. The UK saw
revenues slowing through the year, resulting in the 9.5% drop for
the full year, but with a significant improvement in profitability
due to tight cost control.
Net cash from operating activities dropped to GBP1.3m (2022:
GBP1.6m).
The client base for Decision, our AI driven automated
Pay-Per-Click advertising management tool, has started to build,
and we now have 11 clients live or onboarding, with a good pipeline
of further opportunities. We have also now signed our first client
for Decision in Australia, which is already live.
Higher interest rates, driven by the economic backdrop, has led
to an increase in our WACC, which was a significant factor in the
impairment charge of GBP12.1m to Goodwill in respect of the UK
cash-generating-unit. Our outlook remains consistent and the Group
remains well positioned to drive revenues and profitability in the
future.
Jaywing UK
The dip in UK consumer confidence has put pressure on client
budgets, and we have experienced clients slowing new spend through
the back end of last year and the first 2 months of the current
year. From June onwards we have started to see an upturn in client
spend and therefore in our revenues, along with a growing pipeline
of new client opportunities.
Our focus on an integrated marketing proposition, enabled by
data science, is resonating with existing and potential clients.
The acceleration of the move towards digital since the pandemic
started has reinforced the need to really understand marketing
effectiveness, and we have been able to deliver both outstanding
results and unprecedented insight to our clients. We have continued
to win some great work from new clients, most recently including
Subaru Europe and DUSK.com but the slowdown in existing client
spend resulted in a reduction in UK revenue of 9.5%
year-on-year.
In anticipation of the tightening economic conditions, we took
action to reduce our cost base, and were able to deliver increased
year-on-year EBITDA. Although we have seen an encouraging revenue
performance more recently, we continue to manage costs tightly to
ensure we have the right cost base for our projected revenues.
Amongst our existing marketing clients, the biggest increases in
spend came from Castrol, Virgin Money, Rush Hair Group, and Verdant
Leisure, and their spend on performance marketing, in particular,
has increased significantly.
Key new clients in the year to March 2023 included University of
East Anglia, LHV UK, Fair4All Finance and ROC Technologies. Since
the start of the new financial year in April 2023, in addition to
Subaru Europe and DUSK.com (Retail), we have also added Virgin
Media O2, AO World, Superbike Factory, The Entertainer, and Bettys
And Taylors Group. We have recently overhauled our Business
Development and Marketing functions, and are seeing an increase in
the number and calibre of leads being generated.
Jaywing Australia
Our Australian business successfully completed the integration
of Frank Digital into Jaywing Australia at the start of 2022, and
the fully integrated business has resonated well in the market,
with strong new client wins leading to an 8.8% increase in revenues
against prior year. The new business wins have been particularly
strong in Q4 FY23 and the full benefit of these will be realised in
the current financial year (FY24). Of particular note is a contract
with Online Education Services (OES) for creative services, which
commenced in February 2023. Notable other wins include CROCS
Australia & Singapore and CashRewards.
The increase did not fully flow through to EBITDA, as a result
of the wage inflation that began under the pandemic lockdowns. The
annualization of this impact resulted in EBITDA growing by just
0.4% year-on-year. This wage inflation has now normalised, and FY24
has started strongly for both revenue and EBITDA in Australia.
Decision and Research and Development
On 26(th) August 2022, the Company completed the acquisition of
Midisi Limited, a marketing software development business, which
owns the intellectual property rights for the 'Decision' software
("the Acquisition").
Decision is an award-winning Artificial Intelligence solution
for online marketing activity that Jaywing currently sells to
clients which enables them to automate Pay-Per-Click advertising
management.
We have now started to deliver new client wins for Decision,
with the benefits showing in FY24. These include Bettys,
Superbikes, E-Buyer and the Entertainer.
I am pleased with the level of expertise the team has quickly
gained and conversations with clients remain ongoing with plenty of
opportunities.
The costs of running Decision are relatively fixed and the
planned further growth of Decision sales to existing and new
customers is expected to help improve Jaywing's overall margins as
well as increase its recurring revenues.
The in-house Research & Development unit within Jaywing is
working to deliver our technology road map. Focus has been on
automation within reporting to drive greater efficiency as well as
further building of Decision functionality to increase scope of
delivery. Progress has been pleasing and we can already see the
benefits from this work. Future focus will continue on increased
automation to drive efficiency within delivery.
Employees
Given the pressure on revenues, we reduced our UK agency
headcount both during FY23 and in the first quarter of FY24. This
is never an easy decision, but our employees overall have been very
supportive of the plan and the way we have approached it. We
believe this will underpin a significant uplift in UK profitability
in the current financial year.
We opened our new office in Leeds, located in the city centre,
and which is ideally suited to collaborative, integrated working.
Our employees have continued to adapt to working and collaborating
in a hybrid model, and so we have been able to reduce the required
office footprint in Leeds, saving GBP0.2m of costs per annum
against the previous office.
We recognise that our people are our most important asset. We
have embedded our vision of making brands grow and talent thrive
and have engaged with our employees to get their input into how to
further develop a great place to work, increasing training
expenditure and regularly tracking employee satisfaction. Our most
recent survey showed an overall employee satisfaction score of
85%.
We are also continuing to invest in a combination of experienced
hires and talented but less experienced recruits, who represent the
Company's future management.
Group revenue per employee remained broadly flat at GBP77.4k in
the year (2022: GBP78.8k).
I would like to thank all our colleagues in both the Australian
and UK businesses for their continuing outstanding contribution
over the last 12 months.
Future Outlook
Although the UK environment remains tough, we are confident that
we can build profitability further in FY24. Australia has the
benefit of a full year of the new OES contracts, and has continued
to win new business, with a strong first quarter of FY24. In the
UK, we have continued to win new clients for Decision, delivering
higher margin business. Our Risk & Data Consulting arm has won
significant new business and is close to full capacity. Our UK
agency (marketing) business had a tougher start to the new
financial year in April and May, but is now recovering and we are
continuing to win new business. Having reduced our UK headcount and
cost base, we expect to finish the first half with strong run rate
profitability that is expected to provide a step up in full year
performance. We remain optimistic that the Company will achieve
revenue and adjusted EBITDA for FY24 in line with market
expectations.
Andrew Fryatt
Chief Executive Officer
Jaywing plc
6 September 2023
Strategic Report
Business review
Jaywing is a Data Science and Marketing business, with
operations in the UK and Australia. Our focus is providing an
integrated marketing proposition, enabled by data science, to our
existing and potential clients. The parent company acts as a
holding company providing management services to its
subsidiaries.
On a Group basis the business review and future prospects for
the business are contained within the Chief Executive's Report.
Non-IFRS measures
The financial statements contain all the information and
disclosures required by the relevant accounting standards and
regulatory obligations that apply to the Group. The annual report
and financial statements also include measures which are not
defined by generally accepted accounting principles such as IFRS.
We believe this information, along with comparable IFRS measures,
is useful as it provides investors with a basis for measuring the
underlying performance of the Group on a comparable basis. The
Board and its executive management use these financial measures to
evaluate the Group's underlying operating performance. Non-IFRS
financial measures should not be considered in isolation from, or
as a substitute for, financial information presented in compliance
with IFRS. Similarly, non-IFRS measures as reported by us may not
be comparable with similar measures reported by other
companies.
Key performance indicators used by the Board and executive
managers include:
Restated
2023 2022*
GBP'000 GBP'000
Revenue 22,062 23,324
------------------ ---------
Adjusted EBITDA (1) 2,410 2,206
------------------ ---------
Adjusted EBITDA % 10.9% 9.5%
------------------ ---------
Operating Loss (11,340) (6,086)
------------------ ---------
Loss before Tax (12,535) (6,660)*
------------------ ---------
Net Debt pre IFRS16 (2) (10,346) (8,293)*
------------------ ---------
Loss per share (13.73p) (7.01p)*
------------------ ---------
Average headcount 285 296
------------------ ---------
Revenue per head 77.4 78.8
------------------ ---------
Cash generated from operations 1,293 1,587
------------------ ---------
(1) Adjusted EBITDA represents Earnings Before Interest Tax,
Depreciation & Amortisation ('EBITDA') before restructuring
costs and acquisition & related costs
(2) Including accrued interest
Revenue for FY23 was GBP22.1m (2022: GBP23.3m), a drop of 5% on
FY22, following FY22's strong growth of 16% on FY21.
Adjusted EBITDA was GBP2,410k (2022: GBP2,206k), a GBP204k
improvement in the underlying Adjusted EBITDA . The result was
achieved through strong cost control.
The statutory operating loss was GBP11,340k (2022: loss of
GBP6,086k) and the statutory loss before taxation was GBP12,535k
(2022: loss of GBP6,660k) following an impairment to Goodwill of
GBP12.1m (2022: GBP6.1m). This non-cash charge has been recognised
against the UK Cash Generating Unit ("CGU") largely due to the
increase in WACC in light of the current economic environment in
the UK. The acquisition goodwill relating to the Australia CGU
remains unimpaired. Further details of this impairment are shown in
Note 14 to the Consolidated Financial Statements.
Net cash from operations are GBP1,293k (2022: GBP1,587k) due to
tight cost control across the group. The Cash Flow statement shows
the movement in the cash position of the business.
Net Debt
At 31 March 2023, Net Debt including accrued interest (pre
IFRS16) was GBP10.3m (2022: GBP8.3m), representing gross debt of
GBP11.4m (2022: GBP9.0m) net of cash of GBP1.1m (2022: GBP0.7m).
The Company's gross debt is represented by an amount of GBP9.2m
(2022: GBP7.7m) drawn down from the secured debt funding provided
by the "Jaywing Facility" together with GBP1.8m (2022: GBP1.0m) of
accrued and unpaid interest on the Jaywing Facility and GBP0.4m of
withholding tax on the interest expense (2022: GBP0.3m). The
Jaywing Facility is fully described in Note 18 and Note 30 to the
Financial Statements.
On 11 August 2022 the Jaywing Facility was increased by GBP1.0m
to GBP9.2m. The Jaywing Facility has continued to be provided to
the Company on the same terms as the original secured loan facility
acquired on 2 October 2019, see Going Concern in Principal
Accounting Policies.
Impairment
As required by IAS 36, the Group has carried out an impairment
review of the carrying value of our intangible assets and goodwill.
The weighted average cost of capital ("WACC") was calculated with
reference to long-term market costs of debt and equity and the
Company's own cost of debt and equity, adjusted for the size of the
business and risk premiums. The calculated WACC rate used for the
impairment review was 16.4% for Australia and 16.6% in the UK
(2022: 11.5% for Australia and 11.8% in the UK). This was applied
to cash flows for each of the cash generating units using estimated
growth rates in each business unit. The impairment review was based
on two cash generating units being the UK and Australia. As part of
the review, a number of scenarios were calculated using the
impairment model. These looked at what effect changes in the WACC
rates and movements in Revenue and Costs would have to the
outcome.
The Group has impaired former acquisition goodwill by GBP12.1m
(2022: GBP6.1m). This non-cash charge has been recognised against
the UK Cash Generating Unit ("CGU") largely due to the increase in
WACC in light of the current economic environment in the UK. The
acquisition goodwill relating to the Australia CGU remains
unimpaired.
Going Concern
The Group financial statements have been prepared on a going
concern basis in accordance with UK Adopted International
accounting standards. In coming to their conclusion, the Directors
have considered the Group's profit and cash flow forecasts for
period to 31 March 2025.
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group can continue in operational existence for the
foreseeable future.
In addition to the normal process of preparing forecasts for the
Group, the Board has also considered downside risks and the
potential impact of the economic environment on the cash flows of
the Group for a period to 31 March 2025. This has been done by
looking at various scenarios within the forecasts for the potential
effect of changes in the market during the forecast period.
In considering their position the Directors have also had regard
to letters of support in respect of the secured debt which they
have received from each of the holders of that debt. Details of
this debt are contained in Note 18 and Note 30.
The Group financial statements do not include the adjustments
that would result if the Group were unable to continue as a going
concern. The Directors have a reasonable expectation that the Group
has adequate resources to continue in existence for the foreseeable
future and have concluded it is appropriate to adopt the going
concern basis of accounting in the preparation of the financial
statements.
Principal Risks and Uncertainties
The evaluation of the Company's risk management process is the
responsibility of the Board. Jaywing has developed its risk
reporting framework in conjunction with the business leadership
team who take an active and responsible role in this process. Below
is a summary of the current key risks.
Risk Mitigation
1. Economic Environment
From the start of March 2020 The directors monitor emerging news
Jaywing has been impacted and trends and remain alert to any
by the Covid-19 pandemic, potential impact on the trading of
with disruption to client the Company. Regular forecasting
and staff. The long-term effects and review of pricing are undertaken
of this on the UK economy to ensure we are responding to changes
are still being felt now with in the economic environment. The
high inflation, interest rates directors also maintain a close control
and economic uncertainty. on costs, reducing these to meet
revenue where appropriate.
The situation in Ukraine is
also having an impact on the
world economy, yet the impact
on Jaywing directly has been
negligible.
-----------------------------------------------
2. Loss of key staff
Jaywing is dependent on its The expertise of Jaywing's people
ability to recruit and retain is a key source of competitive advantage
staff with adequate experience and the Company's remuneration and
and technical expertise to incentive packages are reviewed regularly
service its clients. to retain and incentivise key staff.
The Company also provides an attractive,
diverse, inclusive and collaborative
working environment and culture.
-----------------------------------------------
3. Loss of business from
clients / adverse economic The Company aims to minimise such
environment losses by continuing to focus on
Loss of business from clients, providing a high quality service
whether due to the adverse to its clients at all times as well
economic environment or other, as offering a wide range of services
could lead to a reduction to existing clients and adding new
in overall revenue and profitability. clients through its new business
activities.
Adverse economic environment Jaywing has restructured its main
business sectors based on clients
and markets with the aim of getting
closer to each client with Jaywing's
full range of services tailored to
their needs and the markets they
operate in. This has strengthened
our ability to use our full range
of services to offer them relevant
and effective solutions.
Jaywing's client concentration risk
is low.
The impact of revenue losses due
to an adverse economic environment,
on profitability, is mitigated by
ensuring that the Company's cost
base is efficiently aligned with
its revenues.
Inflation is monitored closely by
the directors.
-----------------------------------------------
4. Changes in technology
The digital marketing industry Jaywing is committed to innovation
is characterised by constant in data science led products and
developments in technology, services and has dedicated resources
online media and data science. to this. The Company has close relationships
In this environment, it is with online media owners (e.g. Google)
vital to be at the forefront and has early access to new product
of this change, to ensure developments as a consequence of
Jaywing can provide the benefits the significant online media budgets
of these changes in technology that it manages on behalf of its
to its clients and remain clients.
competitive. Artificial intelligence continues
to grow and the directors monitor
the opportunities that this creates
as well as any potential changes
required to our business model.
Jaywing also has a specialist team
focused on the use of technology
whose brief is to keep themselves
abreast of new developments through
their own research and through their
relationships with technology providers.
-----------------------------------------------
5. Liquidity
Poor trading and cash flow Jaywing's key financial measures
performance could lead to are focussed on cash generation and
a lack of ongoing support net debt. The Company monitors its
from its lenders and an inability trading and cash flow performance
to raise equity to meet the closely and takes prompt action to
needs of the business. mitigate any adverse trends. See
commentary included in the Strategic
Report.
-----------------------------------------------
6. Compliance with regulations
and changes in legislation Jaywing engages advisers in relevant
Failure to comply with regulations specialisations to assist with compliance
such as GDPR and changes in in areas such as GDPR. Experts in
legislation could lead to Jaywing's business areas can ensure
reputational damage for Jaywing client initiatives are all compliant,
and its clients as well as alongside external input where appropriate.
fines and loss of business.
-----------------------------------------------
Section 172 statement
In making decisions over the year, the Directors have considered
what would be most likely to promote the success of the Company for
the benefit of all stakeholders and have had regard for the
following:
-- the likely long-term consequences of any decision;
-- the interests of the Group's employees;
-- the need to foster the Group's business relationships with suppliers, customers and others;
-- the impact of the Company's operations on the community and the environment;
-- the desirability of the Company maintaining a reputation for
high standards of business conduct; and the need to act fairly as
between shareholders of the Company.
-- the needs to act fairly as between members of the Group.
In 2019 the Company adopted the Corporate Governance Code for
Small and Mid-Size Quoted Companies from the Quoted Companies
Alliance (the "QCA Code"). The Board considers the QCA Code is an
appropriate code of conduct for the Company. There are details of
how the Company applies the ten principles of the QCA Code on the
Company's investor website;
https://www.jaywing.com/investors/governance/. The Corporate
Governance Statement forms part of this report.
The Chairman's Statement and Chief Executive's Report describe
the Group's activities, strategy and future prospects, including
the considerations for long term decision making.
The Company considers that its major stakeholders are its
employees, clients, lenders and shareholders. When making
decisions, the interests of these stakeholders are considered
informally as part of the Board's group discussions.
The Company is committed to being a responsible employer and
strives to create a working environment where its employees are
actively engaged and can contribute to its success.
The Company understands the value of maintaining and developing
relationships with its clients and suppliers, to support its
potential for future growth.
The Board does not believe that the Group has a significant
impact on the environments within which it operates. The Board
recognises that the Group has a duty to be responsible and is
conscious that its business processes minimise harm to the
environment, and that it contributes as far as is practicable to
the local communities in which it operates. The Group's Corporate
and Social Responsibility Policy is available on the Group's
investor website and the SECR report for the Group is included in
the Directors Report.
The Board recognises the importance of maintaining high
standards of business conduct. The Group operates appropriate
policies on business ethics and provides mechanisms for whistle
blowing and complaints which all employees are aware of. These are
maintained by the Policy Steering Committee.
The Board aims to maintain good relationships with its
shareholders and treats them equally.
By Order of the Board
Andrew Fryatt
Chief Executive Officer
Jaywing plc
6 September 2023
Directors' Report
The Directors submit their Annual Report on the affairs of the
Group and the Company and the audited Financial Statements for the
year ended 31 March 2023.
Board of Directors
Ian Robinson, Non-Executive Chairman
Chair of Audit & Risk Committee and member of Remuneration
and Nomination Committees
Ian is a Non-Executive Director and Chairman of the Audit
Committee of Gusbourne plc, an AIM listed English sparkling-wine
business. He is also a nonexecutive Director of a number of other
privately-owned businesses. He is a Fellow of the Institute of
Chartered Accountants in England & Wales and holds an honours
degree in Economics from the University of Nottingham.
Andrew Fryatt, Chief Executive
Andrew has more than 30 years' experience in
technology-dependent businesses, primarily in the Retail and
Telecoms sectors. Following an honours degree in Economics from the
University of Cambridge, he began his career in the Mars Group,
progressing through various marketing roles before joining
Kingfisher Group in a senior marketing role. His experience
included senior marketing and commercial roles before moving into
general management, and he has run major divisions of Daisy and Zen
Internet, as well as gaining experience as CEO of Ideal Shopping
Direct plc. He has a particular focus on customer excellence and
has received several awards on behalf of his businesses for
delivering outstanding service.
Mark Carrington, Non-Executive Director
Member of Audit & Risk, Remuneration and Nomination
Committees
Mark is a Fellow of the Association of Chartered Certified
Accountants. He is a Non-Executive Director of a number of
privately-owned businesses both in the UK and Overseas. He is also
involved in the provision of management services to a number of
other privately-owned and AIM listed businesses.
Philip Hanson, Non-Executive Director
Chair of Remuneration and Nomination Committees and member of
Audit & Risk Committees
Philip is a fellow of the Chartered Institute of Marketing and
has extensive experience in marketing and ecommerce both in the UK
and internationally, having held a number of senior roles in the
FMCG and retail financial services sectors - latterly as Global
Marketing & ecommerce Director for Travelex. He is also
Non-Executive Director of the Bettys & Taylors Group. He was a
Director of the French and Australian entities of the Goelet family
wine business (SCEA Domaine de Nizas and Red Earth Nominees Pty Ltd
respectively) until December 2020. He is a Non-Executive Director
of Silver Blue LLC which oversees the worldwide agriculture assets
of the Goelet family. Philip was a Director of Travelex Card
Services Ltd until December 2015.
Principal activity
The principal activity of the Group during the year under review
is providing agency and consulting services in the areas of
creative and brand strategy, performance marketing, data science
and risk. The Company is a holding entity for the Group.
Results and dividend
The Group's loss after taxation for the year ended 31 March 2023
was GBP12.8m (2022: loss of GBP6.5m). The Directors do not propose
to pay a dividend.
Net liabilities at 31 March 2023 were GBP1.2m (2022 Net assets
GBP12.0m).
Future developments
The future developments of the Group are referred to in the
Chief Executive's Report.
Political and charitable donations
The Group made charitable donations of GBP3k (2022: GBP1k) and
no political donations during the current or prior year.
Directors' interests
The present membership of the Board, together with biographies
on each, is set out in the Directors' Report. All those Directors
served throughout the year or from appointment. The Directors'
interests in shares in the Company are set out in the Directors'
remuneration report.
Directors' third-party indemnity provisions
The Group maintains appropriate insurance to cover Directors'
and Officers' liability. The Group provides an indemnity in respect
of all the Group's Directors. Neither the insurance nor the
indemnity provides cover where the Director has acted fraudulently
or dishonestly.
Employees
The Group is an Equal Opportunities Employer and no job
applicant or employee receives more or less favourable treatment on
the grounds of age, gender, marital status, sexual orientation,
race, colour, religion or belief.
It is the policy of the Group that individuals with
disabilities, whether registered or not, should receive full and
fair consideration for all job vacancies for which they are
suitable applicants. Employees who become disabled during their
working life will be retained in employment wherever possible and
will be given help with any necessary rehabilitation and
retraining.
Employees of the Group are regularly consulted by local managers
and kept informed of matters affecting them and the overall
development of the Group.
The Group is committed to maintaining high standards of Health
and Safety for its employees, customers, visitors, contractors and
anyone affected by its business activities. Health and Safety is on
the agenda for all regularly scheduled Board meetings.
Financial instruments
Details of the financial risk management objectives and policies
of the Group, including hedging policies, are given in Note 32 to
the Consolidated Financial Statements.
Share Capital
Details of the Company's Share Capital, including rights and
obligations attaching to each class of share, are set out in Note
22 of the Consolidated Financial Statements.
There are no restrictions on the transfer of ordinary shares in
the capital of the Company, other than customary restrictions
contained within the Company's Articles of Association and certain
restrictions which may be required from time-to-time by law, for
example, insider trading law. In accordance with the Model Code,
which forms part of the Listing Rules of the Financial Conduct
Authority, certain Directors and employees are required to seek the
prior approval of the Company to deal in its shares.
The Company is not aware of any agreements between shareholders
that may result in restrictions on the transfer of securities
and/or voting rights. The Company's Articles of Association contain
limited restrictions on the exercise of voting rights.
The Company's Articles of Association may only be amended by
special resolution at a General Meeting of shareholders.
Stakeholder engagement
Jaywing's stakeholders are an integral part of the business,
they consist ---of customers, suppliers, employees, shareholders
and advisors.
Details of how the Directors have engaged with these
stakeholders are included within the Corporate Governance
Statement.
Streamlined Energy and Carbon Reporting (SECR)
We choose to disclose our UK energy use and associated
greenhouse gas (GHG) emissions. Specifically, and as a minimum, we
are required to report those GHG emissions relating to natural gas,
electricity and transport fuel, as well as an intensity ratio,
under the Streamlined Energy and Carbon Reporting (SECR)
Regulations.
To ensure we achieve the transparency required, and deliver
effective emissions management, we implement and utilise robust and
accepted methods. Accordingly, whilst the Regulations provide no
prescribed methodology, we collate our GHG data annually and
complete the calculation of our carbon footprint using the latest
Defra (Department for Environment, Food and Rural Affairs)/BEIS
(Department for Business, Energy & Industrial Strategy)
emissions factors.
The period covered for the purposes of the SECR section is 1
April 2022 to 31 March 2023 and our calculations are for the
following scope:
- Buildings- related energy - natural gas (Scope 1) and electricity (Scope 2) and
- Employee owned vehicles (grey fleet) (Scope 3)
Calculation Methodology
The Jaywing GHG emissions were assessed in accordance with
Defra's 'Environmental reporting guidelines: including Streamlined
Energy and Carbon Reporting Requirements' and use the 2019 emission
factors developed by Defra and BEIS.
Results
Element 2022/23 2021/22
(tCO2e) (tCO2e)
Direct emissions (Scope 1) - natural gas
and LPG 36,333 59,126
--------- ---------
Indirect emissions (Scope 2) - from purchases
electricity 41,739 63,396
--------- ---------
Total tCO2e (Scope 1 & 2) 78,072 122,522
--------- ---------
Other indirect emissions (Scope 3) - grey
fleet travel 17,645 20,964
--------- ---------
Gross Total Emissions 95,717 143,486
--------- ---------
Intensity metric (Gross Emissions): Tonnes
of CO2e per employee 336 586
--------- ---------
Total energy consumption (kWh) 394,941 621,382
--------- ---------
Energy Efficiency
As an office-based business, our environmental impact is low and
our Corporate Social Responsibility policy is available on
https://investors.jaywing.com, which covers our approach to the
environment and sustainability.
At Jaywing, we
-- encourage the use of remote working facilities to avoid travelling where possible
-- encourage the use of public transport wherever possible, both
through our environmental policy and expenses policy, and where not
possible, encourage car sharing or environmentally friendly
alternatives. We discourage, where possible, the use of domestic
flights
-- operate a cycle to work scheme
-- designed our head office to be as energy efficient as
possible, with measures such as passive-stack ventilation and a
large amount of secure cycle storage plus showering facilities to
encourage cycling
-- have switch off policies, including PIR activated lighting in
some buildings, as well as trying to use energy as efficiently as
possible
-- have a clear policy on the use of plastics, with particular
attention paid to single use plastics
-- aim to recycle all waste material that can be recycled and
use local facilities to reduce the transportation of waste
materials
-- aim to purchase energy efficient, environmentally and ecologically friendly products
-- monitor our energy usage within our buildings.
All policies, including our environmental policy, are reviewed
annually.
Going Concern
The Group financial statements have been prepared on a going
concern basis in accordance with UK Adopted International
accounting standards. In coming to their conclusion, the Directors
have considered the Group's profit and cash flow forecasts for
period to 31 March 2025.
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group can continue in operational existence for the
foreseeable future.
In addition to the normal process of preparing forecasts for the
Group, the Board has also considered downside risks and the
potential impact of the economic environment on the cash flows of
the Group for a period to 31 March 2025. This has been done by
looking at various scenarios within the forecasts for the potential
effect of changes in the market during the forecast period.
In considering their position the Directors have also had regard
to letters of support in respect of the secured debt which they
have received from each of the holders of that debt. Details of
this debt are contained in Note 18 and Note 30.
The Group financial statements do not include the adjustments
that would result if the Group were unable to continue as a going
concern. The Directors have a reasonable expectation that the Group
has adequate resources to continue in existence for the foreseeable
future and have concluded it is appropriate to adopt the going
concern basis of accounting in the preparation of the financial
statements.
Major interests in shares
As at 31 March 2023, the Company had been notified, in
accordance with chapter 5 of the Disclosure and Transparency Rules,
of the following voting rights as shareholder of the Company:
2023 2022
Number of voting
rights % %
Lord Michael Ashcroft 27,919,737 29.9 25.6
Lombard Odier Investment Managers
Group 17,600,709 18.9 23.6
J & K Riddell 5,372,638 5.8 5.8
A Gardner 5,037,470 5.4 5.4
Bailey Family 4,687,500 5.0 5.0
Canaccord Genuity Group Inc 3,805,000 4.1 4.1
H & J Spinks 3,508,772 3.8 3.8
M Boddy 3,366,667 3.6 3.6
Miton UK Microcap Trust plc 2,771,035 3.0 3.1
Corporate Social Responsibility
The Board recognises the importance of social, environmental and
ethical matters and it endeavours to take account of the interests
of the Group's stakeholders, including its investors, employees,
clients, suppliers and business partners when operating the
business.
General Meeting
Your attention is drawn to the Notice of Meeting either enclosed
with this Annual Report or online at https://investors.jaywing.com,
which sets out the resolutions to be proposed at the forthcoming
General Meeting.
Post Balance Sheet Events
On 13 April 2023, post period end, the Company granted 1,152,000
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.
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.
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.
This total includes the 1,200,000 CSOP Options granted to each of
Andrew Fryatt (CEO) and Christopher Hughes (CFO) , and 2,240,000
CSOP Options granted to certain senior employees of the Company.
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.
Auditor
The Directors confirm that:
-- so far as each Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
-- the Directors have taken all the steps that they ought to
have taken as Directors, in order to make themselves aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies Act
2006.
The auditor, Grant Thornton UK LLP, has indicated its
willingness to remain in office, and a resolution that it be
re-appointed will be proposed at the General Meeting.
By Order of the Board
Andrew Fryatt
Director
Dated: 6 September 2023
Directors' Remuneration Report
In preparing this report, we have followed the QCA's Corporate
Code of Governance and drawn on best practice available.
The Remuneration Committee
During the year the Remuneration Committee comprised:
Philip Hanson (Chairman)
Ian Robinson
Mark Carrington
The Committee met six times during the year.
The Committee seeks input from the Company Secretary. The
Committee makes reference to external evidence of pay and
employment conditions in other companies and is free to seek advice
from external advisers.
Remuneration policy
The Group's policy on remuneration for the current year and, so
far as is practicable, for subsequent years, is set out below.
However, the Remuneration Committee believes that it should retain
the flexibility to adjust the remuneration policy in accordance
with the changing needs of the business. Any changes in policy in
subsequent years will be detailed in future reports on
remuneration. The Group must ensure that its remuneration
arrangements attract and retain people of the right calibre in
order to ensure corporate success and to enhance shareholder value.
Its overall approach is to attract, develop, motivate and retain
talented people at all levels, by paying competitive salaries and
benefits to all its staff. Pay levels are set to take account of
contribution and individual performance, wage levels elsewhere in
the Group, and with reference to relevant market information. The
Group seeks to reward its employees fairly and give them the
opportunity to increase their earnings by linking pay to achieving
business and individual performance targets. Executive Directors
are rewarded on the basis of individual responsibility, competence
and contribution, and salary increases also consider pay awards
made elsewhere in the Group as well as external market
benchmarking.
During the year to 31 March 2023 there was one Executive
Director on the Board as follows:
Andrew Fryatt (Chief Executive) - Appointed 21 April 2020
On 14 March 2022 we announced that Caroline Ackroyd, the
Company's Chief Financial Officer and a board director had resigned
to pursue other interests. Interim CFO support was then provided by
Ajay Handa (who did not join the Board) until 31 August 2022, when
the Company announced the appointment of Christopher Hughes as the
Company's Chief Financial Officer. Christopher is expected to join
the Board in due course.
The Executive Directors participate in a pension scheme but do
not participate in any Group healthcare arrangements.
Non-Executive Directors' fees
Fees for Non-Executive Directors are determined by the Board
annually, taking advice as appropriate and reflecting the time
commitment and responsibilities of the role. The Non-Executive
Chairman received an annual fee of GBP75,000 (2022: GBP50,000)
which is an increase from the previous year following a review of
the time commitment and benchmarking of the Chair role in similar
AIM listed businesses. Non-Executive Directors' fees currently
comprise a basic fee of GBP30,000 per annum plus GBP10,000 for
chairing a committee.
Non-Executive Directors do not participate in the annual bonus
plan, pension scheme or healthcare arrangements. The Company
reimburses the reasonable expenses they incur in carrying out their
duties as Directors.
Remuneration components - Executive Directors
A proportion of each Executive Director's remuneration is
performance related.
Basic salary
Basic salary is set by the Remuneration Committee by considering
the responsibilities, individual performance and experience of the
Executive Directors, as well as the market practice for executives
in a similar position and wage levels elsewhere in the Group. Basic
salary is reviewed (but not necessarily increased) annually by the
Remuneration Committee.
Annual bonus plan
The Executive Directors are eligible to participate in the
annual bonus plan. The range of award is based on annual
salary.
The performance requirements, for the ability to earn a bonus,
are set by the Committee annually.
Long Term Incentive Plan (LTIP) and Company Share Option Plan (
CSOP)
On 13 April 2023, post period end, the Company granted 1,152,000
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.
See further details in post balance sheet event note 35.
Directors' remuneration
The total amounts of the remuneration of the Directors of the
Group for the years ended 31 March 2023 and 2022 are shown
below:
31 March 2023 2022
GBP GBP
Aggregate emoluments 341,677 554,022
Sums paid to third parties
for Directors' services 30,000 30,000
---------------------------- -------- --------
371,677 584,022
---------------------------- -------- --------
The emoluments of the Directors are shown below:
31 March 2023 2022 2023 2022
Fees and Fees and Pension Pension
salary salary contributions contributions
GBP GBP GBP GBP
Appointed 21
Andrew Fryatt April 2020 226,667 275,000 9,067 8,800
Appointed 21
April 2021
Resigned 14
Caroline Ackroyd March 2022 - 189,022 - 6,686
Ian Robinson 75,000 50,000 - -
Philip Hanson 40,000 40,000 - -
Mark Carrington* 30,000 30,000 - -
Total 371,667 584,022 9,067 15,486
---------------------------------- --------------------- --------- --------------- ---------------
* Fee paid to a third party for the Director's services
The salary of the highest paid Director was 4 times the average
salary of all Group employees excluding the Directors in the table
above (2022: 5 times).
Pensions
The Group made pension contributions on behalf of the Executive
Directors. The amount is shown in the table above.
Directors' service agreements and letters of appointment
Contracts of service are negotiated on an individual basis as
part of the overall remuneration package. The contracts of service
are not for a fixed period. Details of these service contracts are
set out below:
Date of Date of Company with
contract appointment Notice period whom contracted
26 March 21 April
Andrew Fryatt 2020 2020 6 months Jaywing plc
Caroline 7 September 21 April N/A resigned 14
Ackroyd 2020 2021 March 2022 Jaywing plc
In the event of termination of their contracts, each Director is
entitled to compensation equal to their basic salary and bonus for
their notice period.
Non-Executive Directors have letters of appointment, the details
of which are as follows:
Company with whom
Date of contract Notice period contracted
Ian Robinson 21 May 2014 3 months Jaywing plc
27 April
Philip Hanson 2017 3 months Jaywing plc
21 March
Mark Carrington 2018 3 months Jaywing plc
Directors' interests in shares
The Directors' interests in the share capital of the Company are
set out below:
31 March 2023 2022
Number of shares Number of shares
Ian Robinson 470,267 470,267
Philip Hanson 109,462 109,462
Andrew Fryatt 120,993 96,969
Other related party transactions
No Director of the Group has, or had, a disclosable interest in
any contract of significance subsisting during or at the end of the
year.
Disclosable transactions by the Company under IAS 24, Related
Party Disclosures, are set out in Note 30. There have been no other
disclosable transactions by the Company and its Subsidiaries with
Directors of the Company or any of the subsidiary companies and
with substantial shareholders since the publication of the last
Annual Report.
By Order of the Board
Philip Hanson
Dated: 6 September 2023
Corporate Governance Statement
This report is prepared by the Board and describes how the
principles of corporate governance are applied, to the extent
applicable for a company the size of Jaywing plc. The Board has
adopted the QCA Corporate Governance Code and considers that the
Company complies with each of the principles of the Code. The
following should be noted with regard to the independence of the
Company's Non-Executive Directors. The Board considers Philip
Hanson, a Non-Executive Director, to be independent. The Board
notes that Ian Robinson and Mark Carrington are associated with one
of the Company's major shareholders which could appear to impair
their independence for the purposes of the Code. However, the Board
considers that both Ian Robinson and Mark Carrington can bring an
independent view to bear on all matters dealt with by the Board and
its various Committees. Independence is a Board judgement.
There are details of how the Group applies the ten principles of
the QCA Code on the Group's investor website.
The Board
At 31 March 2023, the Board comprised Non-Executive Chairman Ian
Robinson and Non-Executive Directors Philip Hanson and Mark
Carrington. Andrew Fryatt was appointed to the Board as Chief
Executive Officer on 21 April 2020. The Board is responsible to the
shareholders for the proper management of the Group and meets at
least six times a year to set the overall direction and strategy of
the Group. All strategic operational and investment decisions are
subject to Board approval.
Caroline Ackroyd, Chief Financial Officer, resigned effective on
14 March 2022 and was replaced by an Interim Chief Financial
Officer (non-statutory director), Ajay Handa, on the same date
until the 31 August 2022 when the Company announced the appointment
of Christopher Hughes as the Company's Chief Financial Officer.
The roles of Chief Executive Officer and Chairman are separate
and there is a clear division of their responsibilities. All
Directors are subject to re-election at least every three
years.
The Chairman's role is to provide leadership to the Board, plan
and conduct Board meetings effectively, ensure the Board focuses on
its key tasks, and engage the Board in assessing and improving its
performance.
Board committees
Remuneration Committee
The Remuneration Committee comprises Philip Hanson (Chair), Ian
Robinson and Mark Carrington. The Remuneration Committee, on behalf
of the Board, meets at least once a year and as and when necessary
to review and approve as appropriate the contract terms,
remuneration and other benefits of the Executive Directors and
senior management and major remuneration plans for the Group as a
whole.
The Remuneration Committee approves the setting of objectives
for all the Executive Directors and authorises their annual bonus
payments for achievement of objectives. The Remuneration Committee
approves remuneration packages sufficient to attract, retain and
motivate Executive Directors required to run the Group
successfully, but does not pay more than is necessary for this
service.
The Committee did not award any share options or pay rises to
Executive Directors during the year. It awarded an annual bonus to
the CEO and CFO as set out in the Directors Remuneration Report in
respect of the prior financial year. It has not awarded an annual
bonus in respect of the year to 31 March 2023. Further details of
the Group's policies on remuneration and service contracts are
given in the Directors' Remuneration report.
Audit & Risk Committee
The Audit & Risk Committee comprises Ian Robinson (Chair),
Mark Carrington and Philip Hanson. By invitation, the meetings of
the Audit & Risk Committee may be attended by the other
Directors and the auditor. The Committee meets not less than two
times annually. The Audit & Risk Committee oversees the
monitoring of the adequacy and effectiveness of the Group's
internal controls, accounting policies and financial reporting and
provides a forum for reporting by the Group's external auditor. Its
duties include keeping under review the scope and results of the
audit and its cost effectiveness, consideration of management's
response to any major audit recommendations and the independence
and objectivity of the auditor.
The Audit & Risk Committee review the significant estimates,
judgements and risks in relation to the annual report and these are
outlined in the Strategic Report. The Committee also reviews the
risks outlined in the Principal Risks and Uncertainties and
challenges the Executive Directors on the controls and processes in
place to manage these. The effectiveness of the external audit
process has been assessed through discussions with both management
and the auditors, and it is proposed that Grant Thornton be
reappointed as external auditor.
Nomination Committee
The Nomination Committee comprises Philip Hanson (Chair), Ian
Robinson and Mark Carrington. It is responsible for nominating to
the Board candidates for appointment as Directors, having regard
for the balance and structure of the Board. The committee meets at
least once a year. The terms of reference for all committees are
available on the Group's website.
Company Secretary
The Company Secretary is responsible for advising the Board
through the Chairman on all governance issues. All Directors have
access to the advice and services of the Secretary.
Board performance and evaluation
In addition to the re-election of Directors every three years,
the Board has a process for evaluation of its own performance and
that of its committees and individual Directors, including the
Chairman.
Attendance at Board and Committee meetings
The Directors attended the following Board and Committee
meetings during the year ended 31 March 2023:
Board Remuneration Audit & Risk Nomination
--------------------- ------ ------------- ------------- -----------
Total meetings held 12 6 2 1
--------------------- ------ ------------- ------------- -----------
Ian Robinson 12 6 2 1
Philip Hanson 12 6 2 1
Mark Carrington 12 6 2 1
Andrew Fryatt 12 6 2 1
Relationships with shareholders
The Board recognises the importance of effective communication
with the Company's shareholders to ensure that its strategy and
performance is understood and that it remains accountable to
shareholders. The Company communicates with investors through
Interim Statements, audited Annual Reports, press releases and the
Company's website: https://investors.jaywing.com. At the Company's
AGM shareholders are given the opportunity to question the Board.
The Company obtains feedback from its broker on the views of
institutional investors on a non-attributed and attributed basis
and any concerns of major shareholders would be communicated to the
Board.
Internal controls
The Board acknowledges its responsibility for establishing and
maintaining the Group's system of internal controls and will
continue to ensure that management keeps these processes under
regular review and improves them where appropriate.
Management structure
There is a clearly defined organisational structure throughout
the Group with established lines of reporting and delegation of
authority based on job responsibilities and experience.
Financial reporting
Monthly management accounts provide relevant, reliable,
up-to-date financial and non-financial information to management
and the Board. Annual plans, forecasts and performance targets
allow management to monitor the key business and financial
activities and the progress towards achieving the financial
objectives. The annual budget is approved by the Board.
Monitoring of controls
The Audit Committee receives reports from the external auditor
and assures itself that the internal control environment of the
Group is operating effectively. There are formal policies and
procedures in place to ensure the integrity and accuracy of the
accounting records and to safeguard the Group's assets. Significant
capital projects and acquisitions and disposals require Board
approval.
Corporate Social Responsibility
The Board recognises the importance of social, environmental and
ethical matters and it endeavours to take into account the
interests of the Group's stakeholders, including its investors,
employees, clients, suppliers and business partners when operating
the business.
Employment
At a subsidiary level, each individual company has established
policies which address key corporate objectives in the management
of employee relations, communication and employee involvement,
training and personal development and equal opportunity. The Board
recognises its legal responsibility to ensure the wellbeing, safety
and welfare of its employees and to maintain a safe and healthy
working environment for them and for its visitors. Health and
Safety is on the agenda for regularly scheduled plc Board and
Executive Team meetings.
Environment
By their nature, the Group's regular operations are judged to
have a low environmental impact and are not expected to give rise
to any significant inherent environmental risks over the next 12
months.
By Order of the Board
Andrew Fryatt
Dated: 6 September 2023
Directors' Responsibilities Statement
The directors are responsible for preparing the Strategic
Report, Directors' Report, the Directors' Remuneration Report and
the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have to prepare the Group financial statements in accordance with
UK-adopted international accounting standards and applicable law,
and they have elected to prepare the parent company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law, including FRS 101 'Reduced Disclosure
Framework'.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs and profit or loss of the company and
group for that period. In preparing these financial statements, the
directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- for the Group financial statement state whether applicable
UK-adopted international accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
-- for the parent company state whether applicable UK Accounting
Standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis,
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors confirm that:
-- so far as each director is aware, there is no relevant audit
information of which the company's auditor is unaware; and
-- the directors have taken all the steps that they ought to
have taken as directors in order to make themselves aware of any
relevant audit information and to establish that the company's
auditor is aware of that information.
The directors are responsible for preparing the annual report in
accordance with applicable law and regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
By Order of the Board
Andrew Fryatt
Dated: 6 September 2023
Consolidated Statement of Comprehensive Income
2023 Restated
For the year ended 31 March 2022*
Note GBP'000 GBP'000
Revenue 1 22,062 23,324
Other operating income 2 507 40
Operating expenses 3 (33,909) (29,450)
-------- ----------
Operating Loss (11,340) (6,086)
Finance costs 4 (1,195) (574)
-------- ----------
Loss before tax (12,535) (6,660)
Tax (expense)/credit 5 (291) 123
-------- ----------
Loss for the year (12,826) (6,537)
-------- ----------
Loss for the year is attributable
to:
Non-controlling interests - 12
Owners of the parent (12,826) (6,549)
-------- ----------
(12,826) (6,537)
Other comprehensive income
Items that will be reclassified
subsequently to profit
or loss
Exchange differences on
retranslation of foreign
operations 27 (368) 279
Total comprehensive loss
for the period (13,194) (6,258)
-------- ----------
Total comprehensive loss
is attributable to:
Non-controlling interests 26 - 12
Owners of the Parent (13,194) (6,270)
-------- ----------
(13,194) (6,258)
Basic and diluted loss
per share
Loss per share 6 (13.73p) (7.01p)
The accompanying Notes form part of these Consolidated Financial
Statements.
*The comparative information has been restated due to
misstatements in the prior period as discussed in note 34.
Consolidated Balance Sheet
Restated
As at 31 March 2023 2022*
Note GBP'000 GBP'000
Non-current assets
Property, plant and equipment 12 4,023 2,173
Goodwill 14 10,602 21,705
Deferred tax asset 20 620 644
Other intangible assets 15 2,125 69
-------- --------
17,370 24,591
-------- --------
Current assets
Trade and other receivables 16 4,418 6,415
Contract assets 17 352 453
Current tax asset - 32
Cash and cash equivalents 18 1,089 714
-------- --------
5,859 7,614
-------- --------
Total assets 23,229 32,205
-------- --------
Current liabilities
Borrowings 18 11,435 9,007
Trade and other payables 19 5,810 7,931
Contract Liabilities 17 983 1,408
Current lease liabilities 13 380 395
Current tax liabilities 20 -
Provisions 21 - 42
-------- --------
18,628 18,783
-------- --------
Non-current liabilities
Non-current lease liabilities 13 2,638 1,448
Provision 21 570 -
Deferred tax liability 20 592 -
Trade and other payables 19 2,021 -
5,821 1,448
-------- --------
Total liabilities 24,449 20,231
-------- --------
Net (liabilities) / assets (1,220) 11,974
-------- --------
Equity
Equity attributable to owners
of the parent
Share capital 22 34,992 34,992
Share premium 23 10,088 10,088
Capital redemption reserve 25 125 125
Treasury shares 24 (25) (25)
Foreign currency translation
reserve 27 (250) 118
Retained earnings 28 (46,150) (33,324)
-------- --------
Equity attributable to owners
of the parent (1,220) 11,974
Non-controlling interest 26 - -
Total equity (1,220) 11,974
-------- --------
*The comparative information has been restated due to
misstatements in the prior period as discussed in note 34.
These Financial Statements were approved by the Board of
Directors on 6 September 2023 and were signed on its behalf by:
Andrew Fryatt
Director
Company number: 05935923
The accompanying Notes form part of these Consolidated Financial
Statements.
Consolidated Cash Flow Statement
Restated
For the year ended 31 March 2023 2022*
Note GBP'000 GBP'000
Cash flow from operating activities
Loss after tax (12,826) (6,537)
Adjustments for:
Impairment of Goodwill 3 12,095 6,131
Depreciation of property, plant & equipment 3 245 327
Depreciation and impairment of right of
use assets 3 641 752
Amortisation of intangibles 3 320 730
Financial costs 4 1,195 574
Taxation expense/(credit) 5 291 (123)
-------- --------
Operating cash flow before changes in working
capital 1,961 1,854
Decrease/(Increase) in trade and other receivables 1,986 (168)
(Decrease)/Increase in trade and other payables (2,654) (99)
-------- --------
Cash generated from operations 1,293 1,587
Interest paid - (58)
Net tax paid (21) (240)
-------- --------
Net cash flow from operating activities 1,272 1,289
-------- --------
Cash flow from investing activities
Payment of deferred consideration (818) (442)
Acquisition of subsidiaries 33 (400) -
Acquisition of property, plant and equipment 12 (483) (163)
-------- --------
Net cash outflow from investing activities (1,701) (605)
-------- --------
Cash flow from financing activities
Increase in borrowings 18 1,500 -
Repayment of Lease Liabilities (IFRS16) 18 (696) (722)
Net cash inflow/(outflow) from financing
activities 804 (722)
-------- --------
Net increase/(decrease) in cash and cash
equivalents 18 375 (38)
Cash and cash equivalents at beginning of
year 714 752
-------- --------
Cash and cash equivalents at end of year 1,089 714
-------- --------
Cash and cash equivalents comprise:
Cash at bank and in hand 1,089 714
The accompanying Notes form part of these Consolidated Financial
Statements.
*The comparative information has been restated due to
misstatements in the prior period as discussed in note 34.
Consolidated Statement of Changes in Equity
Share Share Capital Treasury Foreign Retained Equity Non-controlling Total
Capital Premium Redemption Shares Currency Earnings attributable Interest equity
Account Reserve Translation to parent
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
Balance at 31
March 2021
(as
previously
stated) 34,992 10,088 125 (25) (161) (26,332) 18,687 354 19,041
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
Prior year
adjustment
(see note 34) - - - - - (153) (153) - (153)
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
Restated
Balance at 31
March 2021* 34,992 10,088 125 (25) (161) (26,485) 18,534 354 18,888
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
Acquisition of
subsidiaries
NCI - - - - - (290) (290) (366) (656)
Transactions
with
owners - - - - - (290) (290) (366) (656)
Profit/(loss)
for the
period* - - - - - (6,549) (6,549) 12 (6,537)
Retranslation
of foreign
currency - - - - 279 - 279 - 279
Total
comprehensive
income for
the
period* - - - - 279 (6,839) (6,560) (354) (6,914)
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
Balance at 31
March 2022* 34,992 10,088 125 (25) 118 (33,324) 11,974 - 11,974
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
Loss for the
period - - - - - (12,826) (12,826) - (12,826)
Retranslation
of foreign
currency - - - - (368) - (368) - (368)
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
Total
comprehensive
income for
the
period - - - - (368) (12,826) (13,194) - (13,194)
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
Balance at 31
March 2023 34,992 10,088 125 (25) (250) (46,150) (1,220) - (1,220)
-------- -------- ----------- --------- ------------ --------- ------------- ---------------- ---------
The accompanying Notes form part of these Consolidated Financial
Statements.
*The comparative information has been restated due to
misstatements in the prior period as discussed in note 34.
Principal Accounting Policies
The financial information set out above does not constitute the
Group or the Company's statutory accounts for the year ended 31
March 2023 or the financial year ended 31 March 2022. Statutory
accounts for the year ended 31 March 2022 have been delivered to
the registrar of companies, and those for the year ended 31 March
2023 will be delivered in due course. The auditor has reported on
those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under s498 (2) or (3) of the
Companies Act 2006.
Jaywing plc is a Company incorporated in the UK and is AIM
listed.
The Consolidated Financial Statements consolidate those of
Jaywing plc and its subsidiaries (together referred to as the
'Group').
The Consolidated Financial Statements have been prepared and
approved by the Directors in accordance with UK Adopted
International accounting standards. The Consolidated Financial
Statements have been prepared under the historical cost convention,
except for the revaluation of any assets and liabilities carried at
fair value.
Items included in both the consolidated and company financial
statements are measured using the currency of the primary economic
environment in which the Group operates ('the functional
currency'). The financial statements are presented in 'Pounds
Sterling' rounded to the nearest thousand (GBP'000), which is also
the company's functional currency.
The principal accounting policies of the Group are set out
below. The policies have remained unchanged from the previous
year.
Going concern
The Group financial statements have been prepared on a going
concern basis in accordance with UK Adopted International
accounting standards. In coming to their conclusion, the Directors
have considered the Group's profit and cash flow forecasts for
period of at least 12 months from the date these financial
statements were approved.
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group can continue in operational existence for the
foreseeable future.
In addition to the normal process of preparing forecasts for the
Group, the Board has also considered downside risks and the
potential impact of the economic environment on the cash flows of
the Group for a period to 31 March 2025. This has been done by
looking at various scenarios within the forecasts for the potential
effect of changes in the market during the forecast period.
In considering their position the Directors have also had regard
to letters of support in respect of the secured debt which have
received from each of the holders of that debt confirming that the
debt will not be called in and support will be provided for the
foreseeable future. Details of this debt are contained in Note 18
and Note 30.
The Group financial statements do not include the adjustments
that would result if the Group were unable to continue as a going
concern. The Directors have a reasonable expectation that the Group
has adequate resources to continue in existence for the foreseeable
future and have concluded it is appropriate to adopt the going
concern basis of accounting in the preparation of the financial
statements.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control
exists when the Group has the rights to variable returns from its
involvement with the investee and has the ability to affect these
returns through its power over the investee. In assessing control,
potential voting rights that are currently exercisable or
convertible are taken into account. The Financial Statements of
subsidiaries are included in the Consolidated Financial Statements
from the date that control commences until the date that control
ceases. Transactions between subsidiary companies are eliminated on
consolidation.
Revenue
Revenue is generated mainly under the following four contractual
models:
1. Monthly retainers
2. Project-based
3. Consulting day rates
4. Licences (with and without support)
To determine whether to recognise revenue, the Group follows a
5-step process:
1. Identify the contract with the customer
2. Identify the performance obligations
3. Determine the transaction price
4. Allocate the transaction price to the performance
obligations
5. Recognise revenue when the performance obligations are
satisfied
The Group often enters into transactions involving a range of
the Group's products and services, for example providing a client
with data consultancy and brand development work. In all cases, the
total transaction price for a contract is allocated amongst the
various performance obligations based on their relative stand-alone
selling prices.
Revenue is recognised over time, as the Group satisfies
performance obligations by transferring the promised goods or
services to its customers in accordance with IFRS15.35 (c).
The Group recognises contract liabilities for consideration
received in respect of unsatisfied performance obligations and
reports these on the face of the consolidated balance sheet.
Similarly, if the Group satisfies a performance obligation before
it receives the consideration, the Group recognises a receivable in
its consolidated balance sheet as a contract asset.
Monthly retainers
A client will sign up to a contract for a period of between six
and 18 months, with a fixed fee each month for an agreed amount of
work to be performed. Under each contract, there may be more than
one service provided to the customer, such as Pay Per Click (PPC)
and Search Engine Optimisation (SEO) management. These will have
agreed KPIs and are separately identifiable, hence are identified
as separate performance obligations. These services will be set out
in the contract with revenue amounts associated and the revenue
streams will be recognised separately. Most fees are fixed but some
fees are variable each month and are based on a ratchet scale
calculation.
The transaction price is set out in the contract for each
service provided and revenue is allocated to the various
performance obligations on this basis. The customer may choose to
take additional services for a period of time, which would be
subject to a separate agreement. Any performance fees payable under
a contract would relate to a specific month and be calculated in
line with the provisions set out in the contract.
Revenue is recognised over time as the customer simultaneously
receives and consumes the benefits of the services as the service
is performed. It is recognised using the output method, on a
straight-line basis over the life of the contract as the amount of
work required to perform under these contracts does not vary
significantly from month to month, therefore the straight-line
method provides a faithful depiction of the transfer of goods or
services.
Project-based
A client will enter into a framework agreement that covers all
work performed by Jaywing and will then issue a brief or work order
for a specific piece of work to be performed. This could be the
development of a website for a client, or the production of a
creative campaign. The work would normally take a period of between
one and six months to complete.
Normally, a specific brief or work order is provided for a
project under the overall framework agreement. This will detail the
services to be provided to the customer, with a price set out
against each element as appropriate. The transaction price is set
out in the work order for each element of the project. Due to the
high degree of interdependence between the various elements of
these projects, they are accounted for as a single performance
obligation.
The customer may choose to vary the scope at any stage, and that
would be subject to an updated work order. That work order would
still be part of the original contract as those services would not
be distinct from those in the original contract, hence this does
not create a separate performance obligation.
Revenue is recognised over time, using the input method as
Jaywing's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced, and the
revenue recognised reflects the efforts or inputs Jaywing has made
to the satisfaction of the performance obligation.
Consulting day rates
A client will enter into a contract for a piece of work that is
quoted as a number of days charged at a rate per day. This work
will be either risk, marketing or data based and could involve
building models, databases and analysis of data. There may be
various elements to the work quoted, however due to the high degree
of interdependence between these, they are accounted for as a
single performance obligation. Invoices will usually be raised
monthly for the number of days of work performed.
A specific piece of work is contracted for, which will normally
be a number of days' work charged at a rate per day, with different
rates for different levels of seniority. The transaction price is
set out in the contract. The customer may choose to vary the scope
at any stage, and that would be subject to an updated work
schedule. That work order would still be part of the original
contract as those services would not be distinct from those in the
original contract, hence this does not create a separate
performance obligation.
Revenue is recognised over time as the customer simultaneously
receives and consumes the benefit of the services as the services
are performed. It is recognised using the input method, based on
the number of days' work performed during the month.
Licences
A client enters into a contract for a product licence, including
support from Jaywing, to run that product and interpret the results
from it. The product and support are not separately identifiable
because the client is not able to operate the product licence
without this support as they do not have the skills or a login to
the system. Therefore, they are accounted for together as a single
performance obligation. The license price is set out in the
contract.
Revenue is recognised over time based on the provision of the
licence and support during the month as the customer simultaneously
receives and consumes the benefit of the services as the services
are provided.
There are no differences in payment terms for each of these
categories; the only differences in payments terms are from
individual terms agreed with clients which are between 30 and 60
days.
Foreign currency
Foreign currency transactions are translated into the functional
currency of the respective Group entity, using the exchange rates
prevailing at the dates of the transactions (spot exchange rate).
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the remeasurement of monetary items
denominated in foreign currency at period-end exchange rates are
recognised in profit or loss.
Non-monetary items are not retranslated at the period-end. They
are measured at historical cost (translated using the exchange
rates at the transaction date), except for non-monetary items
measured at fair value which are translated using the exchange
rates at the date when fair value was determined.
Dilapidations provision
Provision is made for expected future dilapidations costs in
respect of property held under leases. The estimated costs are
capitalised within the right of use asset and depreciated over the
remaining lease term based on the present value of expected future
cash flows.
Classification of instruments issued by the Group
Instruments issued by the Group are treated as equity (i.e.
forming part of shareholders' funds) only to the extent that they
meet the following two conditions:
-- they include no contractual obligations upon the Company (or
Group as the case may be) to deliver cash or other financial
assets, or to exchange financial assets or financial liabilities
with another party, under conditions that are potentially
unfavourable to the Company (or Group); and
-- where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments, or is a derivative that will be settled by the
Company exchanging a fixed amount of cash or other financial assets
for a fixed number of its own equity instruments.
To the extent that this definition is not met, the items are
classified as a financial liability. Where the instrument so
classified takes the legal form of the Company's own shares, the
amounts presented in these Financial Statements for called up Share
Capital and Share Premium Account exclude amounts in relation to
those shares.
Finance payments associated with financial liabilities are dealt
with as part of finance expenses.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Depreciation is charged to profit or loss on a straight-line
basis over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated. The
estimated useful lives are as follows:
Leasehold improvements - over period of lease
Office equipment - 3 - 5 years
Buildings - over period of lease
It has been assumed that all assets will be used until the end
of their economic life.
Intangible assets and goodwill
All business combinations are accounted for by applying the
acquisition method. Goodwill represents the difference between the
cost of the acquisition and the fair value of the net identifiable
assets acquired. Identifiable intangibles are those that can be
sold separately, or that arise from legal or contractual rights,
regardless of whether those rights are separable, and are initially
recognised at fair value. Development costs incurred in the year,
which meet the criteria of IAS 38, are capitalised and amortised on
a straight-line basis over their economic life.
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment.
Other intangible assets that are acquired by the Group are
stated at cost less accumulated amortisation and accumulated
impairment losses.
Intellectual property acquired in a business combination that
qualifies for separate recognition are recognised as
intangible assets at their fair values.
Amortisation is charged to profit or loss on a straight-line
basis over the estimated useful lives of intangible assets, unless
such lives are indefinite. Intangible assets with an indefinite
useful life and goodwill are systematically tested for impairment
at each balance sheet date. Other intangible assets are amortised
from the date they are available for use.
The estimated useful lives are as follows:
Customer relationships - 4 to 12 years
Development costs - 3 to 6 years
Trademarks - 2 to 20 years
Order books - 1 year
Intellectual property - 5 years
Impairment
For goodwill that has an indefinite useful life, the recoverable
amount is estimated annually. For other assets, the recoverable
amount is only estimated when there is an indication that an
impairment may have occurred. The recoverable amount is the higher
of fair value less costs to sell and value in use. Value in use is
determined by assessing net present value of the asset based on
future cash flows.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of cash-generating
units, are allocated first to reduce the carrying amount of any
goodwill allocated to the cash-generating unit and then to reduce
the carrying amount of the other assets in the unit on a pro rata
basis. A cash generating unit is the smallest identifiable group of
assets that generates cash inflows that are largely independent of
the cash inflows from other assets or groups of assets. With the
exception of goodwill, all assets are subsequently reassessed for
indications that an impairment loss previously recognised no longer
exists.
Put/call options
In the previous year the put/call option in Frank Digital PTY
had been valued by an independent assessor and was recognised with
both a service and non-service element in the accounts. The
non-service element was fully recognised as at the date of
acquisition and the fair value reviewed annually. The service
element was treated as a cash-settled share-based payment with the
share-based payment valued at the point of inception and the cost
being spread over the life of the asset. In the prior year the
put/call option was executed and settled.
Fair value measurement
Management uses valuation techniques to determine the fair value
of financial instruments and non-financial assets, including
contingent consideration. This involves developing estimates and
assumptions consistent with how market participants would price the
instrument. Management bases its assumptions on observable data as
far as possible, but this is not always available. In that case,
management uses the best information available. Estimated fair
values may vary from the actual prices that would be achieved in an
arm's length transaction at the reporting date (see contingent
consideration accounting policy).
Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension
plans are recognised as an expense in profit or loss as
incurred.
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.
Leases
The Company reports using IFRS 16, whereby the Company now
recognises a lease liability and a right of use asset.
The Group leases three offices and printers. The Group has
elected not to separate lease and non-lease components and instead
accounts for these as a single lease component. The lease
agreements do not impose any covenants other than the security
interests in the leased assets that are held by the lessor. Leased
assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- amounts expected to be payable by the group under residual
value guarantees;
-- the exercise price of a purchase option if the group is
reasonably certain to exercise that option; and
-- payments of penalties for terminating the lease, if the lease
term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability. The
lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be readily determined, which is
generally the case for leases in the group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right of use asset in a
similar economic environment with similar terms, security and
conditions.
To determine the incremental borrowing rate, the Group, where
possible, uses recent third-party financing received by the
individual lessee as a starting point, adjusted to reflect changes
in financing conditions since third party financing was
received.
If the Group is exposed to potential future increases in
variable lease payments based on an index or rate, which are not
included in the lease liability until they take effect, then when
adjustments to lease payments based on an index or rate take
effect, the lease liability is reassessed and adjusted against the
right of use asset.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right of use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
Right of use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the Group is reasonably certain to exercise a purchase
option, the right of use asset is depreciated over the underlying
asset's useful life.
Payments associated with short-term leases of equipment and all
leases of low-value assets are recognised on a straight-line basis
as an expense in profit or loss. Short-term leases are leases with
a lease term of 12 months or less.
Incentives received to enter into an operating lease are
credited to the profit and loss account, to reduce the lease
expense, on a straight-line basis over the period of the lease.
Associated costs, such as maintenance and insurance, are expensed
as incurred.
Net financing costs
Net financing costs comprise interest payable and interest
receivable on funds invested, and withholding tax on borrowings
interest expense. Interest income and interest payable are
recognised in profit or loss as they accrue using the effective
interest method.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in profit or loss, except to the
extent that it relates to items recognised in other comprehensive
income, or directly in equity, in which case it is recognised in
other comprehensive income or in equity, respectively.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes, except to the
extent that it arises on:
-- the initial recognition of goodwill;
-- the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business
combination;
-- differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised.
Business combinations
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities
incurred and the equity interests issued by the Group, which
includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are
expensed as incurred.
Assets acquired and liabilities assumed are measured at their
acquisition-date fair values. See separate deferred and contingent
consideration accounting policy.
Intellectual property acquired in a business combination that
qualifies for separate recognition are recognised as intangible
assets at their fair values. Amortisation is charged to profit or
loss on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite. Other
intangible assets are amortised from the date they are available
for use.
The estimated useful life for intellectual property is 5
years.
Financial assets
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits.
Trade and other receivables and contract assets
Trade and other receivables and contract assets are initially
recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue, and are subsequently
carried at amortised cost using the effective interest rate method,
less provision for impairment.
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses - the 'expected
credit loss (ECL) model'.
Recognition of credit losses is no longer dependent on the Group
first identifying a credit loss event. Instead the Group considers
a broader range of information when assessing credit risk and
measuring expected credit losses, including past events, current
conditions, reasonable and supportable forecasts that affect the
expected collectability of the future cash flows of the
instrument.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected
life of the financial instrument.
Financial liabilities
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised
cost with any difference between cost and redemption value being
recognised in profit or loss over the period of the borrowings on
an effective interest basis.
Deferred and contingent consideration
Deferred consideration is recorded at fair value and is
estimated using a present value technique, discounted at 3.5%,
which is the risk free rate.
Contingent consideration is recorded at fair value using the
probability-weighted estimated future cash flows using a present
value technique. The consideration is discounted at 11.5% Weighted
Average Cost of Capital. The effects on the fair value of risk and
uncertainty in the future cash flows are dealt with by adjusting
the estimated cash flows rather than adjusting the discount
rate.
Contingent consideration is a level 3 financial instrument, and
is measured at fair value through profit and loss. As such, at each
reporting date the contingent consideration is fair valued, with
movement in the fair value taken to the statement of comprehensive
income
Trade and other payables
Trade payables are initially recorded at fair value and
thereafter at amortised cost using the effective interest rate
method.
Segmental reporting
Internal reporting and monitoring by the Chief Operating
Decision Maker (CODM) is based on the location of the business, as
such under IFRS 8 the two operating segments of the business are
deemed to be the results in respect of the United Kingdom and
Australia.
Share Capital
Share Capital represents the nominal value of shares that have
been issued.
Share Premium
Share Premium includes any premiums received on issue of Share
Capital. Any transaction costs associated with the issuing of
shares are deducted from Share Premium, net of any related income
tax benefits.
Capital Redemption Reserve
Capital Redemption Reserve represents the amount by which the
nominal value of the shares purchased or redeemed is greater than
proceeds of a fresh issue of shares.
Shares Purchased for Treasury
Represents the nominal value of the shares purchased by the
Company.
Foreign Currency Translation Reserve
Represents the exchange differences on retranslation of foreign
operations.
Earnings per Share
Earnings per share is calculated by taking the loss attributable
to ordinary equity holders by the weighted average number of
ordinary shares outstanding where loss making diluted earnings per
share is equal to basic.
Retained Earnings
Retained Earnings includes all current and prior period retained
profits and share-based employee remuneration.
Non-controlling interests
The profit or loss attributable to the non-controlling ownership
stakes in subsidiary companies is transferred from Retained
Earnings to non-controlling interests each year.
Significant judgement in applying accounting policies and key
estimation uncertainty
When preparing the financial statements, management makes a
number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and
expenses.
Accounting estimates and judgements
Judgements made by the Directors in the application of these
accounting policies that have a significant effect on the
Consolidated Financial Statements, together with estimates with a
significant risk of material adjustment in the next year, are
discussed below.
Accounting estimates
Impairment of goodwill and other intangible assets
The carrying amount of goodwill is GBP10,602k (2022: GBP21,705k)
and the carrying amount of other intangible assets is GBP2,125k
(2022: GBP69k). The Directors are confident that the carrying
amount of goodwill and other intangible assets is fairly stated and
have carried out an impairment review. The forecast cash generation
for each CGU and the WACC represent significant assumptions and
should the assumptions prove to be incorrect, there would be a
significant risk of a material adjustment within the next financial
year. The sensitivity to the key assumptions is shown in Note
14.
Business combinations and Contingent Consideration
Management uses valuation techniques when determining the fair
values of certain assets and liabilities acquired in a business
combination (see Note 33). In particular, the fair value of
contingent consideration which is a Level 3 Fair Value asset with
movements through the P&L and is dependent on the outcome of
the acquirees' future revenues. The key judgement relates to the
30% of estimated revenues in future periods and the 11.5% discount
rate used for which management undertake regular reviews of
forecasts and obtain external support for the WACC calculation (see
Note 33). The present value of the maximum consideration not booked
is GBP1.5m.
Accounting judgements
Revenue
Recognition of revenue
The Directors consider that they act as a principal in
transactions where the Group has control over the goods and
services prior to being transferred to the customer. Where this is
via an agency arrangement and the Group does not have full control
over the goods and services, it recognises gross billings as gross
revenue, with the direct costs being deducted to present the
reportable revenue figure under IFRS 15. For other income sources,
revenue recognition is assessed in line with the five steps of
IFRS. This decision over the stage of completion, includes
judgements made by management.
Identification of performance obligations
The determination of the number of distinct performance
obligations in a contract requires judgement, based on whether the
customer can benefit from use of the service on its own or together
with other resources that are readily available to it, and also
whether the promise to transfer the service is separately
identifiable from other promises in the contract.
Allocation of the transaction price to performance
obligations
Where a contract contains multiple performance obligations, the
transaction price is required to be allocated to the different
performance obligations. Wherever possible, the transaction price
is allocated on a standalone selling price basis, by reference to
the agreed customer statement of works. In the event that this is
not available, the price is allocated to the various performance
obligations on a reasonable basis with reference to the expected
time involved in performing the service and management's experience
of similar projects.
Recognition of contract assets and liabilities
Contract assets related to the portion of performance
obligations already fulfilled by the Group and for which the
definitive right to receive cash was subject to completing further
work under the relevant contract. Contract assets are converted
into trade receivables at the point that work delivered to the
client is invoiced resulting in the Group's unconditional right to
receive cash. Contract assets therefore represent a portion of
future payments receivable by the Group under existing
contracts.
IFRS 16
Under IFRS 16 the Group is required to make a judgement in
determining the discount rate to be used in calculating the present
value of lease payments when recognising the lease liabilities and
right of use asset. For the discount rate the Group has used the
lessee's incremental borrowing rate, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right of use asset in a
similar economic environment with similar terms, security and
conditions. To determine the incremental borrowing rate, the Group,
where possible, uses recent third-party financing received by the
individual lessee as a starting point, adjusted to reflect changes
in financing conditions since third party financing was
received.
The right of use asset is depreciated over the term of the
lease. The term has been determined with reference to the lease
agreements and any expected extension based on management's
judgement beyond the end of the lease end date specified in the
lease agreement.
Notes to the Consolidated Financial Statements
1. Segmental analysis
The Group reported its operations based on location of the
business (United Kingdom & Australia).
The Group's Chief Operating Decision Maker (CODM) is its chief
executive and they monitor the performance of these operating
segments as well as deciding on the allocation of resources to
them. Segmental performance is monitored using adjusted segment
operating results.
During the year, no customer accounted for greater than 10% of
the Group's revenue (2022: None).
Revenue, Contribution and Adjusted EBITDA by Operating
Segments
2023 2022
Revenue: GBP'000 GBP'000
United Kingdom 16,380 18,099
Australia 5,682 5,225
------- -------
Total 22,062 23,324
------- -------
2023 2022
Contribution (1): GBP'000 GBP'000
United Kingdom 4,886 4,849
Australia 2,142 2,057
------- -------
Total 7,028 6,906
------- -------
2023 2022
Adjusted EBITDA (2): GBP'000 GBP'000
United Kingdom 1,882 1,680
Australia 528 526
------- -------
Total 2,410 2,206
------- -------
All revenue is recognised over time.
(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) Adjusted EBITDA represents Earnings Before Interest Tax,
Depreciation & Amortisation ('EBITDA') before restructuring
costs and acquisition & related costs
Non-current assets by Geographic Markets
The Group's non-current assets (other than financial
instruments, investments accounted for using the equity method,
deferred tax assets and post-employment benefit assets) are located
into the following geographic markets:
2023 2022
GBP'000 GBP'000
United Kingdom 13,859 21,576
Australia 3,511 3,015
------- -------
17,370 24,591
------- -------
2. Other operating income
2023 2022
GBP'000 GBP'000
Covid-19 government support - 40
Other income 507 -
507 40
------- -------
Within other income this period is a settlement of GBP502k from
the claimant, in relation to the reimbursement of previously
incurred legal costs following the dismissal of the claimants' case
in April 2022, associated with the 2016 acquisition of Bloom Media
(UK) Limited. The remaining GBP5k relates to sundry income.
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. In the period to
September 2021 the Group received funds from the UK Government
under the Covid-19 Job Retention Scheme of GBP37k, and GBP3k under
the corresponding scheme in Australia, Cashflow boost and Job
Keepers. There were no receipts of support after September
2021.
3. Operating expenses
2023 2022
Continuing operations: GBP'000 GBP'000
Wages and salaries 14,210 14,865
Social Security Costs 1,306 1,724
Other Pension Costs 905 915
Impairment of Goodwill 12,095 6,131
Depreciation of property, plant & equipment 245 327
Depreciation and impairment of right of use
assets 641 752
Amortisation 320 730
Release of deferred consideration - (882)
Court legal fees - 774
Restructuring costs 190 352
Acquisition and related costs 259 -
Other operating expenses 3,738 3,762
------- -------
Total operating expenses 33,909 29,450
------- -------
4. Finance costs
Restated
2023 2022*
GBP'000 GBP'000
Interest expense on borrowings 748 416
Withholding tax on borrowings interest expense 180 100
Interest on lease liabilities (see note 13) 142 58
Interest on deferred and contingent consideration 125 -
Total 1,195 574
------- --------
5. Tax credit
The tax charge / (credit) is based on the loss Restated
for the year and represents: 2023 2022*
GBP'000 GBP'000
UK corporation tax at 19% (2022: 19%) 152 48
Adjustment for prior year 198 -
Total current tax 350 48
-------- --------
Deferred tax:
Origination and reversal of timing differences (59) (171)
-------- --------
Total tax charge / (credit) 291 (123)
-------- --------
The tax charge / (credit) can be explained as Restated
follows: 2023 2022*
GBP'000 GBP'000
Loss before tax (12,535) (6,660)
-------- --------
Tax using the UK corporation tax rate of 19%
(2022: 19%) (2,382) (1,265)
Effect of:
Recognition of previously unrecognised losses (129) (125)
Goodwill impairment 2,298 1,164
Adjustment for prior year 198 -
Non-deductible expenses 306 103
Current year charge / (credit) 291 (123)
-------- --------
6. Loss per share
Restated
2023 2022*
Pence per Pence per
Share Share
Basic loss per share (13.73p) (7.01p)
--------- ---------
Diluted loss per share (13.73p) (7.01p)
--------- ---------
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 year.
The calculations of basic and diluted loss per share are:
Restated
2023 2022*
GBP'000 GBP'000
Loss for the year attributable to shareholders (12,826) (6,549)
-------- --------
Weighted average number of ordinary shares in issue:
2023 2022
Number Number
Basic and diluted 93,432,217 93,432,217
---------- ----------
7. Auditor's remuneration
2023 2022
GBP'000 GBP'000
Auditor's remuneration:
Audit of Company Financial Statements 48 45
Other amounts payable to the auditor and its
associates in respect of:
Audit of Subsidiary Company Financial Statements 118 111
Audit related assurance services 5 5
Taxation compliance services 30 30
------- -------
Amounts paid to the Group's auditor in respect of services to
the Company, other than the audit of the Company's Financial
Statements, have not been disclosed separately as the information
is required instead to be disclosed on a consolidated basis.
8. Key management personnel compensation
Key management of the Group is considered to be the Board of
Directors and the Senior Leadership Team.
2023 2022
GBP'000 GBP'000
Short-term benefits:
Salaries including bonuses 1,513 1,703
Social security costs 190 235
Total short-term benefits 1,703 1,938
Defined contribution pension plan costs 53 68
Key management compensation 1,756 2,006
------- -------
Further information in respect of Directors is given in the
Directors' Remuneration Report.
Remuneration in respect of Directors was as follows:
2023 2022
GBP'000 GBP'000
Emoluments receivable 342 555
Fees paid to third parties for Directors' services 30 30
Company pension contributions to money purchase
pension schemes 9 15
------- -------
381 600
------- -------
During the current period and the prior year, there were no
benefits accruing to Directors in respect of the defined
contribution pension scheme.
The highest paid Director received remuneration of GBP236k
(2022: GBP284,000).
9. Staff numbers and costs
The average number of persons employed by the Group (including
Directors) during the year, analysed by category, was as
follows:
2023 2022
Number Number
Management and administration 34 35
Client Service Staff 251 261
285 296
------ ------
The aggregate payroll costs of these persons were as
follows:
2023 2022
GBP'000 GBP'000
Wages and salaries 14,210 14,865
Social security costs 1,306 1,724
Other pension costs 905 915
------- -------
Total 16,421 17,504
------- -------
10. Employee benefits
There were no share options outstanding at the year-end. Refer
to note 35 for details of employee benefits issues post year
end.
11. Non-controlling interests
The details of subsidiaries held directly by the Group are set
out in Note 12 of the plc Parent Company accounts. After the
acquisition of the remaining 25% of Frank Digital PTY in November
2021 the Group includes no subsidiaries with non-controlling
interests (NCI):
Name Proportion of ownership Total comprehensive
interests and voting income allocated Accumulated
rights held by NCI to NCI NCI
2023 2022 2023 2022 2023 2022
% % GBP'000 GBP'000 GBP'000 GBP'000
Frank Digital
PTY - - - 12 - -
---------- ---------- -------- --------
- 12 - -
---------- ---------- -------- --------
No dividends were paid to the NCI during the financial years
2023 and 2022.
Jaywing plc acquired the remaining 25% of Frank Digital PTY on 2
November 2021 after the remaining shareholders exercised their put
option. The 25% stake was acquired for $1.2m (GBP0.7m), the total
consideration for the purchase of the 100% interest was $3.0m
(GBP1.7m). At 31 March 2022 an amount of GBP0.7m was still
outstanding to the original shareholders, this was fully paid by 31
July 2022.
12. Property, plant and equipment
Leasehold Office
Buildings improvements equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 March 2021 2,673 1,438 594 4,705
Additions - - 163 163
Right of use asset additions 985 - 44 1,029
At 31 March 2022 3,658 1,438 801 5,897
Additions - - 483 483
Right of use asset additions 2,253 - - 2,253
Disposals - - (283) (283)
--------- ------------- ----------- -------
At 31 March 2023 5,911 1,438 1,001 8,350
--------- ------------- ----------- -------
Depreciation
At 31 March 2021 1,280 1,125 240 2,645
Depreciation charge for
the year - 102 225 327
Impairment of right of
use asset 44 - - 44
Depreciation of right
of use asset 674 - 34 708
--------- ------------- ----------- -------
At 31 March 2022 1,998 1,227 499 3,724
Depreciation charge for
the year - 64 181 245
Depreciation of right
of use asset 588 - 53 641
Depreciation on disposals - - (283) (283)
--------- ------------- ----------- -------
At 31 March 2023 2,586 1,291 450 4,327
--------- ------------- ----------- -------
Net book value
At 31 March 2023 3,325 147 551 4,023
--------- ------------- ----------- -------
At 31 March 2022 1,660 211 302 2,173
--------- ------------- ----------- -------
At 31 March 2021 1,393 313 354 2,060
--------- ------------- ----------- -------
The assets, excluding the right of use assets, are covered by a
fixed charge in favour of the Group's lenders.
13. Leases
The company has lease contracts for offices occupied and
printers. The amounts recognised in the financial statements in
relation to the leases are as follows:
(i) Amounts recognised in the consolidated balance sheet
The balance sheet shows the following amounts relating to
leases:
2023 2022
GBP'000 GBP'000
Right of use assets
Buildings 3,325 1,660
Office equipment 74 90
--------------------- -------
3,399 1,750
===================== =======
Lease liabilities
Current 380 395
Non-current 2,638 1,448
--------------------- -------
3,018 1,843
===================== =======
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to
leases:
202 3 2022
GBP'000 GBP'000
Depreciation and impairment charge of right
of use assets
Buildings 588 718
Office equipment 53 34
-------------------- -------
641 752
-------------------- -------
Interest expense (included in finance cost) 142 58
-------------------- -------
There are no other amounts relating to low value or short term
leases excluded from the above amounts.
14. Goodwill
Goodwill
GBP'000
Cost
At 31 March 2021 27,581
Foreign Exchange 255
--------
At 31 March 2022 27,836
Recognition on acquisition 1,279
Foreign Exchange (287)
--------
At 31 March 2023 28,828
--------
Impairment
At 31 March 2021 and 31 March 2022 -
Impairment charge (6,131)
--------
At 31 March 2022 (6,131)
Impairment charge (12,095)
--------
At 31 March 2023 (18,226)
--------
Net book value
--------
At 31 March 2022 27,581
--------
At 31 March 2022 21,705
--------
At 31 March 2023 10,602
========
Goodwill by CGU 2023 2022
GBP'000 GBP'000
United Kingdom 7,926 18,742
Australia 2,676 2,963
------- --------
10,602 21,705
======= ========
Goodwill and other intangible assets have been tested for
impairment by assessing the value in use of the relevant cash
generating units ("CGU"), the cash generating units are measured at
UK and Australia level as this is how the Board review the trading
positions. The value in use calculations were based on projected
cash flows into perpetuity. Budgeted cash flows for 2023/24 were
haircut by applying a reduction in EBITDA, and used and
extrapolated based on the assumptions below.
The budget has been approved by management and the Board of
Directors and is based on a bottom-up assessment of costs and uses
the known and estimated revenue pipeline. The key assumptions are
revenue growth, cost growth (and by implication EBITDA) and the
WACC. The average year-on-year growth that has been used as the
basis for forecasting cash flows for each of the cash generating
units when testing for impairment were:
Year-on-year growth
Revenue Costs
2023/24 to 2024/25 8.0% 6.0%
2024/25 to 2025/26 7.0% 6.0%
2025/26 to 2026/27 7.0% 6.0%
2026/27 to Perpetuity 1.0% 1.0%
The growth rates shown are the average applied to the cash flows
of the individual cash generating units and do not form a basis for
estimating the consolidated profits of the Group in the future. The
growth rates used and the periods they cover are based on an
ability to deliver additional revenue efficiently.
The discount rate used to test the cash generating units was the
Group's post-tax Weighted Average Cost of Capital ("WACC") of 16.6%
for the UK and 16.4% for Australia (2022: 11.8% for the UK and
11.5% for Australia).
As a result of these tests, that there was no impairment
necessary in Australia. Budgeted cash flows for 2023/24 were
haircut by applying a reduction in EBITDA in respect of the UK
results and future cash flows, management believes that an
impairment is required for the goodwill in relation to the UK CGU
of GBP12.1m (2022: GBP6.1m). This is predominantly due to the
increase in WACC as a result of the currently economic climate in
the UK. If the WACC was the same as the previous year then a
reduced impairment charge of GBP5.6m would have been
recognised.
As part of the impairment review, several scenarios affecting
the UK CGU were calculated, using the impairment model and applying
sensitivities to the key assumptions. These looked at what effect
changes in the WACC rates and movements in EBITDA would have on the
outcome.
-- If there was no Revenue growth from FY25, and costs remained
static, there would be an additional
impairment of GBP2.3m
-- If revenues and costs increase by 5% but indirect costs stay
the same, this would result in an additional
impairment of GBP1.5m
Due to the significance of the headroom in the Australian CGU,
detailed sensitivity analysis was not undertaken.
15. Other intangible assets
Customer Order Intellectual Development
relationships books Trademarks property costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 March 2021 21,305 1,457 1,080 - 1,421 25,263
Additions during the
year - - - - - -
At 31 March 2022 21,305 1,457 1,080 - 1,421 25,263
Additions during the
year (note 33) - - - 2,376 - 2,376
At 31 March 2023 21,305 1,457 1,080 2,376 1,421 27,639
-------------- ------- ------------ ------------ ----------- -------
Amortisation
At 31 March 2021 20,714 1,457 1,080 - 1,213 24,464
Amortisation charge
for the year 591 - - - 139 730
At 31 March 2022 21,305 1,457 1,080 - 1,352 25,194
Amortisation charge
for the year - - - 277 43 320
At 31 March 2023 21,305 1,457 1,080 277 1,395 25,514
-------------- ------- ------------ ------------ ----------- -------
Net book amount
At 31 March 2023 - - - 2,099 26 2,125
-------------- ------- ------------ ------------ ----------- -------
At 31 March 2022 - - - - 69 69
-------------- ------- ------------ ------------ ----------- -------
At 1 April 2021 591 - - - 208 799
-------------- ------- ------------ ------------ ----------- -------
Development costs relate to internally developed products that
are either sold to clients standalone or used to provide services
to them.
16. Trade and other receivables
2023 2022
GBP'000 GBP'000
Trade receivables 3,723 5,629
Prepayments 508 589
Other receivables 187 197
------- -------
4,418 6,415
======= =======
The carrying amount of trade and other receivables approximates
to their fair value. Detailed disclosures relating to credit risk
exposures and analysis relating to the allowance for expected
credit losses are in Note 32.
17. Contract assets and liabilities
Contract assets
2023 2022
GBP'000 GBP'000
Accrued income 352 453
======= =======
GBP'000
Contract assets as at 31 March 2022 453
Amounts billed on contract assets as at 31 March
2022 (437)
New contract assets recognised 336
Contract assets as at 31 March 2023 352
=======
Contract assets related to the portion of performance
obligations already fulfilled by the Group and for which the
definitive right to receive cash was subject to completing further
work under the relevant contract. Contract assets are converted
into trade receivables at the point that work delivered to the
client is invoiced resulting in the Group's unconditional right to
receive cash. Contract assets therefore represent a portion of
future payments receivable by the Group under existing contracts.
There is a credit risk associated with these assets.
Contract Liabilities
2023 2022
GBP'000 GBP'000
Deferred income 983 1,408
======= =======
GBP'000
Contract liabilities as at 31 March 2022 1,408
Revenue recognised in the year on contract liabilities
as at 31 March 2022 (1,314)
New contract liabilities net of revenue recognised
against these 889
Contract liabilities as at 31 March 2023 983
=======
Contract liabilities consist of cash advances received from
customers on account of work orders received and the remaining
liabilities relate to the amount of performance obligations still
to be fulfilled and for which payment has already been received
from the client.
Of the existing contracts that were unsatisfied or partially
satisfied at 31 March 2023, revenue is expected to be recognised in
the financial year to 31 March 2024.
18. Borrowings and Net Debt
Restated*
2023 2022
GBP'000 GBP'000
Borrowings 11,435 9,007
------- ---------
% %
Average interest rates at the
balance sheet date were: 8.57 4.75
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.
The borrowings are secured by charges over all the assets of
Jaywing plc and guarantees and charges over all of 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 excluding lease liability and
deferred consideration
Restated* Cash Draw Accrual 31 March
1 April flow down recognised 2023
2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 714 375 - - 1,089
Borrowings (9,007) - (1,500) (928) (11,435)
---------- --------- --------- -------------- ------------
Net Debt excluding
lease expense and
deferred consideration (8,293) 375 (1,500) (928) (10,346)
---------- --------- --------- -------------- ------------
Reconciliation of Net debt
Restated* Cash Draw Accrual 31 March
1 April flows down recognised 2023
2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Borrowings (9,007) - (1,500) (928) (11,435)
Lease liability (1,843) 696 - (1,871) (3,018)
Deferred and Contingent
Consideration (626) 776 - (2,694) (2,544)
---------- -------- --------- -------------- ------------
Financial liabilities (11,476) 1,472 (1,500) (5,493) (16,997)
Cash and cash equivalents 714 375 - - 1,089
Net debt (10,762) 1,847 (1,500) (5,493) (15,908)
---------- -------- --------- -------------- ------------
19. Trade and other payables
Restated
2023 2022*
GBP'000 GBP'000
Trade payables 2,169 3,686
Tax and social security 1,519 1,125
Accruals 946 1,678*
Deferred consideration payable on acquisition
of subsidiary undertakings 414 626
Contingent consideration payable on acquisition
of subsidiary undertakings 109 -
Other payables 653 816*
------- --------
Trade and other payables due in less
than one year 5,810 7,931
------- --------
Deferred consideration payable on acquisition
of subsidiary undertakings 770 -
Contingent consideration payable on acquisition
of subsidiary undertakings 1,251 -
Trade and other payables due in greater
than one year 2,021 -
-----
The carrying amount of trade and other payables approximates to
their fair values. All amounts are short term.
* Included in other payables is GBP539k (2022: GBP719k) for
media spend not yet purchased, but paid for by the customer. In the
prior year these amounts were included within accruals, and as such
the prior year accruals balance has been restated to reclassify
this amount out of accruals and into other payables, to more
closely reflect the nature of the balance.
20. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities:
2023 2022
GBP'000 GBP'000
Accelerated capital allowances on property,
plant and equipment:
At start of year 10 (48)
Deferred tax on acquisition 661 -
Unwind of deferred tax on acquisition (69) -
Origination and reversal of temporary
differences 28 58
At end of year 630 10
------- -------
Other temporary differences:
At start of year (654) (425)
Origination and reversal of temporary
differences 80 (104)
Utilisation/(Recognition) of previously
unrecognised losses (129) (125)
At end of year (703) (654)
------- -------
Total deferred tax:
At start of year (644) (473)
Deferred tax on acquisition 592 -
Origination and reversal of temporary
differences 24 (171)
At end of year (28) (644)
------- -------
Origination on acquisition
Deferred tax is included within:
Deferred tax liability 592 -
Deferred tax asset (620) (644)
------- -------
(28) (644)
------- -------
There are no deductible differences or losses carried forward
for which no deferred tax asset is recognised.
The March 2021 Budget announced an increase in the UK standard
rate of corporation tax to 25% from 1 April 2023 with the
legislation receiving Royal Assent on 10 June 2021. Deferred tax as
at 31 March 2023 has been provided at a rate of 25% (2022: blended
rate or 19% and 25%) which is based on when the deferred taxation
is expected to crystalise.
Deferred tax assets are recognised to the extent that it is
probable that the underlying tax loss or deductible temporary
difference will be utilised against future taxable income. This is
assessed based on the Group's forecast of future operating results,
adjusted for significant non-taxable income and expenses and
specific limits on the use of any unused tax loss or credit.
21. Provisions
The carrying amounts and the movement in the provision account
are as follows:
Dilapidations
GBP'000
At 1 April 2022 42
Additional provisions 570
Amounts utilised (42)
-------------
At 31 March 2023 570
-------------
The dilapidations provision of GBP570k (2022: GBP42k) 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.
22. Share capital
Authorised:
45p deferred 5p ordinary
shares shares
Authorised Share Capital
at 31 March 2022 and
at 31 March 2023 45,000 10,000
------------- ------------
Allotted, issued and fully paid
45p deferred 5p ordinary
shares shares
Number Number GBP'000
At 31 March 2022 67,378,520 93,432,217 34,992
At 31 March 2023 67,378,520 93,432,217 34,992
------------- ------------ --------
The 5 pence ordinary shares have the same rights (including
voting and dividend rights and rights on a return of capital) as
the previous 50 pence ordinary shares. Holders of the 45 pence
deferred shares do not have any right to receive notice of any
General Meeting of the Company or any right to attend, speak or
vote at any such meeting. The deferred shareholders are not
entitled to receive any dividend or other distribution and shall,
on a return of assets in a winding up of the Company, entitle the
holders only to the repayment of the amounts paid up on the shares,
after the amount paid to the holders of the new ordinary shares
exceeds GBP1,000,000 per new ordinary share. The deferred shares
are also incapable of transfer and no share certificates have been
issued in respect of them.
23. Share premium
2023 2022
GBP'000 GBP'000
At start and end of year 10,088 10,088
------- -------
Share Premium includes any premiums received on issue of Share
Capital. Any transaction costs associated with the issuing of
shares are deducted from Share Premium, net of any related income
tax benefits.
24. Treasury shares
2023 2022
GBP'000 GBP'000
At start and end of year (99,622 shares) (25) (25)
------- -------
Treasury shares represent the nominal value of the shares
purchased by the Company.
25. Capital redemption reserve
2023 2022
GBP'000 GBP'000
At start and end of year 125 125
------- -------
Capital redemption reserve represents the amount by which the
nominal value of the shares purchased or redeemed is greater than
proceeds of a fresh issue of shares.
26. Non-controlling interest
2023 2022
GBP'000 GBP'000
At start of year - 354
Acquisition of non-controlling interest (note
11) - (366)
Share of profit for the year - 12
------- -------
At end of year - -
------- -------
The profit or loss attributable to the non-controlling ownership
stakes in subsidiary companies is transferred from retained
earnings to non-controlling interests each year.
27. Foreign currency translation reserve
2023 2022
GBP'000 GBP'000
At start of year 118 (161)
Exchange differences on translation of foreign
operations (368) 279
At end of year (250) 118
------- -------
Foreign currency translation reserve represents the exchange
differences on retranslation of foreign operations.
28. Retained earnings
Restated
2023 2022*
GBP'000 GBP'000
At start of year (33,324) (26,485)
Acquisition of subsidiaries NCI - (290)
Retained loss for the year (12,826) (6,549)
At end of year (46,150) (33,324)
-------- --------
Retained Earnings includes all current and prior period retained
profits and share-based employee remuneration.
29. Capital commitments
The Group had no commitments to purchase property, plant and
equipment at 31 March 2023 or at 31 March 2022.
30. Related parties
The services of Mark Carrington as Non-Executive Director of the
Company were purchased from Deacon Street Partners Limited for a
fee of GBP30,000 (2022: GBP30,000). At the year end, GBP52,500
(2022: GBP22,500) was outstanding to Deacon Street Partners
Limited.
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 FY22. Gusbourne Estate Limited were invoiced
GBP498k (2022: GBP128k) in the year, of which GBP360k was for third
party digital advertising. As at 31 March 2023 there was a debtor's
balance of GBP49k (2022: GBP46k).
On 2 October 2019 entities associated with two of its major
shareholders (the "Lenders") acquired the Company's existing
secured loan facility of GBP5,200,000 ("Jaywing Facility") The
Lenders immediately provided the Company with additional secured
facilities by increasing the Jaywing Facility by GBP3,000,000 to
GBP8,200,000, which enabled the Company to repay its existing
outstanding overdraft and provide it with additional working
capital. An additional GBP500,000 and GBP1,000,000 was drawn down
on the facility in FY23. The Jaywing Facility has been provided to
the Company on the same terms as those provided by the previous
lender. At the year-end GBP11,435k (2022: GBP9,007k) was
outstanding. Further details of these borrowings are provided in
Note 18.
31. Standards and interpretations in issue at 31 March 2023 but not yet effective
At the date of authorisation of these financial statements,
several new, but not yet effective, Standards and amendments to
existing Standards, and Interpretations have been published by the
IASB. None of these Standards or amendments to existing Standards
have been adopted early by the Group. No new standards have been
adopted in the current year.
Management anticipates that all relevant pronouncements will be
adopted for the first period beginning on or after the effective
date of the pronouncement. New Standards, amendments and
Interpretations not adopted in the current year have not been
disclosed as they are not expected to have a material impact on the
Group's financial statements.
32. Financial risk management
The Group uses various financial instruments. These include
loans, cash, issued equity investments and various items, such as
trade receivables and trade payables that arise directly from its
operations. The main purpose of these financial instruments is to
raise finance for the Company's operations.
The existence of these financial instruments exposes the Group
to several financial risks, which are described in more detail
below. The main risks arising from the Group's financial
instruments are market risk, cash flow interest rate risk, credit
risk and liquidity risk. The Directors review and agree policies
for managing each of these risks and they are summarised below.
Market risk
Market risk encompasses three types of risk, being currency
risk, fair value interest rate risk and price risk. In this
instance, price risk has been ignored as it is not considered a
material risk to the business. The Group's policies for managing
fair value interest rate risk are considered along with those for
managing cash flow interest rate risk and are set out in the
subsection entitled "interest rate risk" below.
Currency risk
The Group is only minimally exposed to translation and
transaction foreign exchange risk.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient
liquidity is available to meet foreseeable needs by closely
managing the cash balance and by investing cash assets safely and
profitably.
The Group policy throughout the period has been to ensure
continuity of funding.
Borrowings are repayable on demand.
Interest rate risk
The Group finances its operations through a mixture of cash,
working capital and borrowings. The Directors' policy to manage
interest rate fluctuations is to regularly review the costs of
capital and the risks associated with each class of capital, and to
maintain an appropriate mix between fixed and floating rate
borrowings.
The interest rate exposure of the financial assets and
liabilities of the Group is shown in the table below. The table
includes trade receivables and payables as these do not attract
interest and are therefore subject to fair value interest rate
risk.
2023 2022
GBP'000 GBP'000
Financial assets:
Floating interest rate:
Cash 1,089 714
Zero interest rate:
Trade receivables 3,723 5,629
------- -------
4,812 6,343
------- -------
Financial liabilities:
Floating interest rate:
Bank loans/revolving facility 11,435 9,007
Zero interest rate:
Trade payables 2,169 3,686
------- -------
13,604 12,693
------- -------
As at 31 March 2023, the Group's non-derivative financial
liabilities have contractual maturities (including interest
payments where applicable) as summarised below:
31 March 2023 Current Non-current
later
Within 6 to 12 1 to 5 than 5
6 months months years years
GBP'000 GBP'000 GBP'000 GBP'000
Bank borrowings 11,435 - - -
Lease liabilities 190 190 1,980 658
Deferred consideration payable on acquisition
of subsidiary undertakings 231 183 770 -
Contingent consideration payable on
acquisition of subsidiary undertakings 34 75 1,251 -
Trade and other payables 6,270 - - -
--------- ------- ------- -------
Total amount due 18,160 448 4,001 658
--------- ------- ------- -------
This compares to the maturity of the Group's non-derivative
financial liabilities in the previous reporting period as
follows:
31 March 2022 Current Non-current
later
Within 6 to 12 1 to 5 than 5
6 months months years years
GBP'000 GBP'000 GBP'000 GBP'000
Bank borrowings 9,007 - - -
Lease liabilities 197 198 1,448 -
Deferred consideration payable on acquisition
of subsidiary undertakings 626 - - -
Trade and other payables 8 ,713 - - -
--------- ------- ------- -------
Total amount due 18,543 198 1,448 -
--------- ------- ------- -------
The above amounts reflect the contractual undiscounted cash
flows, which may differ from the carrying values of the liabilities
at the reporting date.
Sensitivity to interest rate fluctuations
If the average interest rate payable on the net financial
asset/net financial liabilities, subject to a floating interest
rate during the year, had been 1% higher than reported on the
average borrowings during the year, then loss before tax would have
been GBP104k (2022: GBP85k) lower, and if the interest rate on
these liabilities had been 1% lower, loss before tax would have
improved by GBP104k (2022: GBP85k).
Credit risk
The Group applies the IFRS 9 simplified model of recognising
lifetime expected credit losses for all trade receivables as these
items do not have a significant financing component.
In measuring the expected credit losses, the trade receivables
have been assessed on a collective basis as they possess shared
credit risk characteristics. They have been grouped based on the
days past due and also according to the geographical location of
customers.
The expected loss rates are based on the payment profile for
sales over the past 48 months before 31 March 2020 and 1 January
respectively, as well as the corresponding historical credit losses
during that period. The historical rates are adjusted to reflect
current and forward-looking macroeconomic factors affecting the
customer's ability to settle the amount outstanding. The Group has
identified gross domestic product (GDP) and unemployment rates of
the countries in which the customers are domiciled to be the most
relevant factors, and accordingly adjusts historical loss rates for
expected changes in these factors. However, given the short period
exposed to credit risk, the impact of these macroeconomic factors
has not been considered significant within the reporting
period.
Trade receivables are written off (i.e. derecognised) when there
is no reasonable expectation of recovery. Failure to make payments
within 180 days from the invoice date and failure to engage with
the Group on alternative payment arrangement, amongst other things,
are considered indicators of no reasonable expectation of
recovery.
The Directors consider that after review, the Group's trade
receivables require an impairment for the year ended 31 March 2023
of GBP82,000 (2022: GBP22,000) which has been provided
accordingly.
Summary of financial assets and liabilities by category
The carrying amount of financial assets and liabilities
recognised at the balance sheet date of the reporting periods under
review may also be categorised as follows:
Restated
202 3 2022*
GBP'000 GBP'000
Financial assets
Financial assets measured at amortised
cost
Trade and other receivables 3,910 5,826
Cash and cash equivalents 1,089 714
-------- --------
4,999 6,540
Financial liabilities:
Financial liabilities measured at
amortised cost
Borrowings (11,435) (9,007)
Lease liabilities (3,018) (1,843)
Deferred consideration payable on acquisition
of subsidiary undertakings (1,184) (626)
Trade and other payables (6,270) (8,713)
Provisions for liabilities (570) (42)
Financial liabilities measured at
fair value
Contingent consideration payable on
acquisition of subsidiary undertakings (1,360) -
-------- --------
(23,837) (20,231)
-------- --------
Net financial assets and liabilities (18,838) (13,691)
-------- --------
Plant, property and equipment 4,023 2,173
Goodwill 10,602 21,705
Other intangible assets 2,125 69
Contract assets 352 453
Prepayments 508 589
Deferred tax asset 620 644
Deferred tax liability (592) -
Taxation (payable)/receivable (20) 32
17,618 25,665
-------- --------
Total equity (1,220) 11,974
-------- --------
Capital management policies and procedures
The Group's capital management objectives are:
-- to ensure the Group's ability to continue as a going concern; and
-- to provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
This is achieved through close management of working capital and
regular reviews of pricing. Decisions on whether to raise funding
using debt or equity are made by the Board based on the
requirements of the business.
Capital for the reporting period under review is summarised as
follows:
2023 2022
GBP'000 GBP'000
Total equity (1,220) 11,974
------- -------
Financial assets and financial liabilities measured at fair
value in the statement of financial position are grouped into three
levels of a fair value hierarchy. The three levels are defined
based on the observability of significant inputs to the
measurement, as follows:
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly
-- Level 3: unobservable inputs for the asset or liability.
Measurement of fair value of financial instruments
The Group's finance team performs valuations of financial items
for financial reporting purposes, including Level 3 fair values, in
consultation with third party valuation specialists for complex
valuations. Valuation techniques are selected based on the
characteristics of each instrument, with the overall objective of
maximising the use of market-based information. The finance team
reports directly to the chief financial officer (CFO) and to the
audit committee. Valuation processes and fair value changes are
discussed among the audit committee and the valuation team at least
every year, in line with the Group's reporting dates.
The following table provides information about the sensitivity
of the fair value measurement to changes in the most significant
inputs:
Description Significant unobservable Estimate Sensitivity of
input of the the fair value
input measurement to
input
Put and call options Probability of meeting 100% Not applicable
and other deferred target
consideration
Contingent Consideration Probability of meeting 100% Sensitive to a
target fluctuation in
expected revenues
There are no significant interrelationships between the inputs
and the unobservable inputs.
Level 3 fair value measurements
The reconciliation of the carrying amounts of financial
instruments classified within Level 3 is as follows:
Put/call Contingent
options Consideration
GBP'000 GBP'000
Balance at 31 March 2021 49 -
Amount recognised through -
retained earnings (49)
---------- ---------------
Balance at 31 March 2022 - -
---------- ---------------
Amount recognised through
acquisition - 1,262
Interest expenses - 98
---------- ---------------
Balance at 31 March 2023 - 1,360
---------- ---------------
33. Business combination
On 26 August 2022 the group purchased 100% of the ordinary share
capital of Midisi Limited for consideration of GBP3.3m, before
discounting..
The amounts below recognised in respect of the identifiable
assets and liabilities acquired are as set out in the table
below:
Fair value
on acquisition
GBP'000
Assets
Goodwill 1,279
Intangible assets (note 15) 2,376
---------------------------
3,655
---------------------------
Liabilities
Deferred tax (661)
Accruals (3)
Social security and other
taxes (22)
---------------------------
(686)
---------------------------
Total identifiable net assets
at fair value 2,969
---------------------------
Purchase consideration
Satisfied by:
Cash 400
Deferred consideration 1,307
Contingent consideration 1,262
---------------------------
Total consideration 2,969
---------------------------
The initial consideration for the acquisition was GBP0.4m which
was paid from Jaywing's existing cash resources. Further fixed
payments totalling GBP1.4m will be paid at 6-monthly intervals over
42 months, plus an additional performance-related earn-out payable
at 6-monthly intervals between months 13 and 49. The discounted
deferred consideration outstanding at the year end is GBP1.2m.
The earn-out relates to revenues generated from Midisi, and the
maximum earn-out payment is capped at GBP3.0m. Following the
acquisition, the incremental revenue contributions delivered by
Midisi are estimated to be at least GBP5.7m over 42 months, based
on planned growth in the client base and enhancements to other
existing Jaywing services. This would generate earn-out payments
totalling GBP1.7m. The figures included in the table above are
recorded at present value.
34. Prior year restatement
Withholding tax
Borrowings are in respect of lenders in low tax jurisdictions
and as a result withholding tax is payable. Recognition of
withholding tax within the interest expense and borrowing costs
lines is required as this was omitted from the previous financial
years results. For the year end 31 March 2021, the closing retained
earnings was adjusted by GBP153k to recognise the withholding tax
liability at 31 March 2021.
The following table summarises the impact of the prior period
restatement in relation to the financial statements of the
Group:
2022
GBP000
Loss for the year as previously stated (6,437)
Adjustment 1 - Recognition of withholding tax expense (100)
Loss for the year as restated (6,537)
--------
2022
GBP000
Total equity for the year as previously stated 12,227
Adjustment 2 - Recognition of withholding tax expense (253)
--------
Total equity for the year as restated 11,974
--------
Statement of Comprehensive Income
For the year ended 31 March 2022 Adjustment Restated
1 2022
GBP'000 GBP'000
Revenue 23,324 - 23,324
Other operating income 40 - 40
Operating expenses (29,450) - (29,450)
--------- ----------- ---------
Operating Loss (6,086) - (6,086)
Finance costs (474) (100) (574)
--------- ----------- ---------
Loss before tax (6,560) (100) (6,660)
Tax (expense)/credit 123 - 123
--------- ----------- ---------
Loss for the year (6,437) (100) (6,537)
Loss for the year is attributable
to:
Non-controlling interests 12 - 12
Owners of the parent (6,449) (100) (6,549)
--------- ----------- ---------
(6,437) (100) (6,537)
--------- ----------- ---------
Other comprehensive income
Items that will be reclassified
subsequently to profit or loss
Exchange differences on retranslation
of foreign operations 279 - 279
Total comprehensive loss for the
period (6,158) (100) (6,258)
--------- ----------- ---------
Total comprehensive loss is attributable
to:
Non-controlling interests 12 - 12
Owners of the Parent (6,170) (100) (6,270)
--------- ----------- ---------
(6,158) (100) (6,258)
--------- ----------- ---------
Basic and diluted loss per share
Loss per share (6.90p) (0.11p) (7.01p)
Statement of Financial Position
As at 31 March 2022 Adjustment Restated
2 2022
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 2,173 - 2,173
Goodwill 21,705 - 21,705
Deferred tax asset 644 - 644
Other intangible assets 69 - 69
--------- ----------- ---------
24,591 - 24,591
--------- ----------- ---------
Current assets
Trade and other receivables 6,415 - 6,415
Contract assets 453 - 453
Current tax asset 32 - 32
Cash and cash equivalents 714 - 714
--------- ----------- ---------
7,614 - 7,614
--------- ----------- ---------
Total assets 32,205 - 32,205
--------- ----------- ---------
Current liabilities
Borrowings 8,754 253 9,007
Trade and other payables 7,931 - 7,931
Contract Liabilities 1,408 - 1,408
Current lease liabilities 395 - 395
Current tax liabilities - - -
Provisions 42 - 42
--------- ----------- ---------
18,530 253 18,783
--------- ----------- ---------
Non-current liabilities
Non-current lease liabilities 1,448 - 1,448
1,448 - 1,448
--------- ----------- ---------
Total liabilities 19,978 253 20,231
--------- ----------- ---------
Net (liabilities) / assets 12,227 (253) 11,974
--------- ----------- ---------
Equity
Equity attributable to
owners of the parent
Share capital 34,992 - 34,992
Share premium 10,088 - 10,088
Capital redemption reserve 125 - 125
Treasury shares (25) - (25)
Foreign currency translation
reserve 118 - 118
Retained earnings (33,071) (253) (33,324)
--------- ----------- ---------
Equity attributable to
owners of the parent 12,227 (253) 11,974
Non-controlling interest - - -
Total equity 12,227 (253) 11,974
--------- ----------- ---------
Statement of Cash Flows
As at 31 March 2022 Adjustment Restated
1 2022
GBP'000 GBP'000
Cash flow from operating activities
Loss after tax (6,437) (100) (6,537)
Adjustments for:
Impairment of Goodwill 6,131 - 6,131
Depreciation of property, plant
& equipment 327 - 327
Depreciation and impairment of right
of use assets 752 - 752
Amortisation of intangibles 730 - 730
Financial costs 474 100 574
Taxation expense/(credit) (123) - (123)
------- ---------- --------
Operating cash flow before changes
in working capital 1,854 - 1,854
Decrease/(Increase) in trade and
other receivables (168) - (168)
(Decrease)/Increase in trade and
other payables (99) - (99)
------- ---------- --------
Cash generated from operations 1,587 - 1,587
Interest paid (58) - (58)
Net tax paid (240) - (240)
------- ---------- --------
Net cash flow from operating activities 1,289 - 1,289
------- ---------- --------
Cash flow from investing activities
Payment of deferred consideration (442) - (442)
Acquisition of subsidiaries - - -
Acquisition of property, plant and
equipment (163) - (163)
------- ---------- --------
Net cash outflow from investing
activities (605) - (605)
------- ---------- --------
Cash flow from financing activities
Increase in borrowings - - -
Repayment of Lease Liabilities (IFRS16) (722) - (722)
Net cash inflow/(outflow) from
financing activities (722) - (722)
------- ---------- --------
Net increase/(decrease) in cash
and cash equivalents (38) - (38)
Cash and cash equivalents at beginning
of year 752 - 752
------- ---------- --------
Cash and cash equivalents at end
of year 714 - 714
------- ---------- --------
Cash and cash equivalents comprise:
Cash at bank and in hand 714 - 714
35. Post balance sheet events
On 13 April 2023, post period end, the Company granted 1,152,000
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.
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.
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.
This total includes the 1,200,000 CSOP Options granted to each of
Andrew Fryatt (CEO) and Christopher Hughes (CFO) , and 2,240,000
CSOP Options granted to certain senior employees of the Company.
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.
Company Financial Statements
Company Profit and Loss account
Restated
2023 2022*
Note GBP'000 GBP'000
Turnover - -
Administrative expenses 2 (10,275) (10,743)
-------- ----------
Operating loss 3 (10,275) (10,743)
Income from fixed asset investment 4 - 418
Other income 4 505 -
Finance Costs 5 (1,100) (560)
-------- ----------
Loss on ordinary activities before taxation (10,870) (10,885)
Taxation on ordinary activities 6 125 573
-------- ----------
Loss and total comprehensive loss on ordinary
activities after taxation (10,745) (10,312)
-------- ----------
The accompanying Notes to the Parent Company Financial
Statements form an integral part of these Financial Statements.
*The comparative information has been restated in the prior
period as discussed in note 27.
Company Balance Sheet
Restated
2023 2022*
Note GBP'000 GBP'000
Non-current assets
Tangible assets 10 1,154 1,040
Deferred tax 21 717 605
Investments 12 20,457 26,235
-------- --------
22,328 27,880
-------- --------
Current assets
Cash at bank 1 2
Debtors due within one year 13 442 575
-------- --------
443 577
Current liabilities
Borrowings 17 (11,435) (9,007)
Creditors: amounts falling due within one
year 14 (14,757) (14,351)
-------- --------
Total assets less current liabilities (3,421) 5,099
-------- --------
Non-current liabilities
Creditors: amounts falling due after more
than one year 15 (2,625) (690)
Provisions 16 (290) -
-------- --------
Net (liabilities)/assets (6,336) 4,409
-------- --------
Equity
Called up share capital 18 34,992 34,992
Share premium account 19 10,088 10,088
Treasury shares 20 (25) (25)
Capital redemption reserve 19 125 125
Profit and loss account 19 (51,516) (40,771)
-------- --------
Total equity (6,336) 4,409
-------- --------
The Financial Statements were approved by the Board of Directors
and authorised for issue on 6 September 2023.
Signed on behalf of the Board of Directors:
Andrew Fryatt
Director
The accompanying Notes to the Parent Company Financial
Statements form an integral part of these Financial Statements.
*The comparative information has been restated in the prior
period as discussed in note 27.
Company Statement of Changes in Equity
Called-up Share Treasury Capital Profit
Share Premium Shares Redemption and loss
Capital account Reserve account Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2021
(as previously stated) 34,992 10,088 (25) 125 (30,355) 14,825
Prior year adjustment
(see note 26) - - - - (153) (153)
At 1 April 2021
(restated*) 34,992 10,088 (25) 125 (30,508) 14,672
Release of Put /
Call Option - - - - 49 49
Loss for the year
and total other
comprehensive income* - - - - (10,312) (10,312)
Total comprehensive
income - - - - (10,263) (10,263)
--------- -------- -------- ----------- --------- --------
At 31 March 2022* 34,992 10,088 (25) 125 (40,771) 4,409
--------- -------- -------- ----------- --------- --------
At 1 April 2022* 34,992 10,088 (25) 125 (40,771) 4,409
Loss for the year
and total other
comprehensive income - - - - (10,745) (10,745)
Total comprehensive
income - - - - (10,745) (10,745)
--------- -------- -------- ----------- --------- --------
At 31 March 2023 34,992 10,088 (25) 125 (51,516) (6,336)
--------- -------- -------- ----------- --------- --------
The accompanying Notes to the Parent Company Financial
Statements form an integral part of these Financial Statements.
*The comparative information has been restated in the prior
period as discussed in note 27.
Notes to the Parent Company Financial Statements
1. Accounting policies
Jaywing plc is incorporated in England and Wales.
Statement of compliance
These Financial Statements have been prepared in accordance with
applicable accounting standards and in accordance with Financial
Reporting Standard 101 - 'The Reduced Disclosure Framework' (FRS
101). The principal accounting policies adopted in the preparation
of these Financial Statements are set out below. These policies
have all been applied consistently throughout the year unless
otherwise stated.
The Financial Statements have been prepared on a historical cost
basis.
The Financial Statements are presented in Sterling (GBP) and
have been presented in round thousands (GBP'000).
Going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group can continue in operational existence for the
foreseeable future.
In addition to the normal process of preparing forecasts for the
Group, the Board has also considered downside risks and the
potential impact of Covid-19 and the economic environment on the
cash flows of the Group for a period to 31 March 2025. This has
been done by looking at various scenarios within the forecasts for
the potential effect of changes in the market during the forecast
period.
The outcome for the year and the forecasts prepared by the
business show that we do not consider there to be same level of
uncertainty now as there was 12 months ago.
In considering their position the Directors have also had regard
to letters of support in respect of the secured debt which have
received from each of the holders of that debt confirming that the
debt will not be called in and support will be provided for the
foreseeable future. Details of this debt are contained in Note 18
and Note 30 in the consolidated financial statements.
The Group financial statements do not include the adjustments
that would result if the Group were unable to continue as a going
concern. The Directors have a reasonable expectation that the Group
has adequate resources to continue in existence for the foreseeable
future and have concluded it is appropriate to adopt the going
concern basis of accounting in the preparation of the financial
statements.
Disclosure exemptions adopted
In preparing these Financial Statements, the Company has taken
advantage of all disclosure exemptions conferred by FRS 101.
Therefore, these Financial Statements do not include:
1 A statement of cash flows and related notes
2 The requirement to produce a balance sheet at the beginning of
the earliest comparative period
3 The requirements of IAS 24 related party disclosures to
disclose related party transactions entered in to between two or
more members of the Group as they are wholly owned within the
Group
4 Presentation of comparative reconciliations for property,
plant and equipment, intangible assets
5 Capital management disclosures
6 Presentation of comparative reconciliation of the number of
shares outstanding at the beginning and at the end of the
period
7 The effect of future accounting standards not adopted
8 Certain share-based payment disclosures
9 Disclosures in relation to impairment of assets
10 Disclosures in respect of financial instruments (other than
disclosures required as a result of
recording financial instruments at fair value)
11 IFRS 9 disclosures in respect of allowances for expected
credit losses reconciliations and credit risk and hedge
accounting
12. IFRS 15 disclosures in respect of disaggregation of revenue,
contract assets reconciliations and contract liabilities
reconciliation and unsatisfied performance obligations
Investments in Subsidiaries, Associates and Joint Ventures
Investments in Subsidiary undertakings are stated at cost less
any applicable provision for impairment.
In the previous year the trade and assets of subsidiary entities
were transferred within the Group. As the economic substance of the
transaction did not result in a loss of value, investments in
subsidiaries have continued to be held at their carrying value. An
impairment review is performed annually in line with IAS36. See
valuation of investments in significant judgement and
estimates.
Tangible assets
Property, plant and equipment (PPE) is initially recognised at
acquisition cost or manufacturing cost, including any costs
directly attributable to bringing the assets to the location and
condition necessary for them to be capable of operating in the
manner intended by the Company's management.
PPE is subsequently measured at cost less accumulated
depreciation and impairment losses.
Depreciation is recognised on a straight-line basis (unless
otherwise stated) to write down the cost less estimated residual
value of PPE. The following useful lives are applied:
- Leasehold improvements: 5-10 years
- Office equipment: 2-5 years
- Buildings: period of the lease
Material residual value estimates and estimates of useful life
are updated as required, but at least annually.
Gains or losses arising on the disposal of property, plant and
equipment are determined as the difference between the disposal
proceeds and the carrying amount of the assets, and are recognised
in profit or loss within other income or other expenses.
Financial Instruments - Recognition, initial measurement and
derecognition
Financial assets and financial liabilities are recognised when
the Company becomes a party to the contractual provisions of the
financial instrument and are measured initially at fair value
adjusted for transaction costs, except for those carried at fair
value through profit or loss, which are measured initially at fair
value. Subsequent measurement of financial assets and financial
liabilities is described below.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Financial Instruments - Classification and subsequent
measurement of financial assets
For the purpose of subsequent measurement, financial assets,
other than those designated and effective as hedging instruments,
are classified into the following categories upon initial
recognition:
-- financial assets subsequently measured at amortised costs
There are no financial assets that have been designated as fair
value through other comprehensive income, or fair value through
profit or loss.
All financial assets are reviewed for impairment at least at
each reporting date, to identify whether there is any objective
evidence that a financial asset or a group of financial assets is
impaired. Different criteria to determine impairment are applied
for each category of financial assets, which are described
below.
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses - the 'expected
credit loss (ECL) model'.
Recognition of credit losses is no longer dependent on the
Company first identifying a credit loss event. Instead the Company
considers a broader range of information when assessing credit risk
and measuring expected credit losses, including past events,
current conditions, reasonable and supportable forecasts that
affect the expected collectability of the future cash flows of the
instrument.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected
life of the financial instrument.
Financial instruments - classification and subsequent
measurement of financial liabilities
The Company's financial liabilities include borrowings, trade
creditors and other creditors.
Financial liabilities are measured subsequently at amortised
cost using the effective interest method.
Cash and cash equivalents
Cash comprises cash on hand and demand deposits, which is
presented as cash at bank and in hand in the Balance Sheet.
Cash equivalents comprise short-term, highly liquid investments
with maturities of three months or less from inception, that are
readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value. Cash
equivalents are presented as part of current asset investments in
the Balance Sheet.
Leases
The Company reports using IFRS 16, whereby the Company now
recognises a lease liability and a right of use asset.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- amounts expected to be payable by the group under residual
value guarantees;
-- the exercise price of a purchase option if the group is
reasonably certain to exercise that option; and
-- payments of penalties for terminating the lease, if the lease
term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability. The
lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be readily determined, which is
generally the case for leases in the group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right of use asset in a
similar economic environment with similar terms, security and
conditions.
To determine the incremental borrowing rate, the Company, where
possible, uses recent third-party financing received by the
individual lessee as a starting point, adjusted to reflect changes
in financing conditions since third party financing was
received.
If the Company is exposed to potential future increases in
variable lease payments based on an index or rate, which are not
included in the lease liability until they take effect, then when
adjustments to lease payments based on an index or rate take
effect, the lease liability is reassessed and adjusted against the
right of use asset.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right of use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
Right of use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the Company is reasonably certain to exercise a purchase
option, the right of use asset is depreciated over the underlying
asset's useful life.
Payments associated with short-term leases of equipment and all
leases of low-value assets are recognised on a straight-line basis
as an expense in profit or loss. Short-term leases are leases with
a lease term of 12 months or less.
See note 11.
Financial guarantees
Financial guarantees in respect of the borrowings of fellow
Group companies are not regarded as insurance contracts. They are
recognised at fair value and are subsequently measured at the
higher of:
-- the amount that would be required to be provided under IAS 37
(see policy on provisions below); and
-- the amount of any proceeds received net of amortisation recognised as income.
Provisions, contingent assets and contingent liabilities
Provisions for product warranties, legal disputes, onerous
contracts or other claims are recognised when the Company has a
present legal or constructive obligation as a result of a past
event, it is probable that an outflow of economic resources will be
required, and amounts can be estimated reliably. The timing or
amount of the outflow may still be uncertain.
Restructuring provisions are recognised only if a detailed
formal plan for the restructuring exists and management has either
communicated the plan's main features to those affected or started
implementation. Provisions are not recognised for future operating
losses.
Provisions are measured at the estimated expenditure required to
settle the present obligation, based on the most reliable evidence
available at the reporting date, including the risks and
uncertainties associated with the present obligation. Where there
are a number of similar obligations, the likelihood that an outflow
will be required in settlement is determined by considering the
class of obligations as a whole. Where the time value of money is
material, provisions are discounted to their present values using a
pre-tax discount rate that reflects the current market assessment
of the time value of money and the risks specific to the
liability.
Any reimbursement that is virtually certain to be collected from
a third party with respect to the obligation is recognised as a
separate asset. However, this asset may not exceed the amount of
the related provision.
No liability is recognised if an outflow of economic resources
as a result of present obligations is not probable. Such situations
are disclosed as contingent liabilities unless the outflow of
resources is remote.
Equity, reserves and dividend payments
Financial instruments issued by the Company are classified as
equity only to the extent that they do not meet the definition of a
financial liability or financial asset.
The Company's ordinary shares are classified as equity.
Transaction costs on the issue of shares are deducted from the
Share Premium Account arising on that issue. Dividends on the
Company's ordinary shares are recognised directly in equity.
Income
Interest receivable
Interest receivable is reported on an accrual basis using the
effective interest method.
Dividends receivable
Dividends are recognised at the time the right to receive
payment is established.
Operating expenses
Operating expenses are recognised in profit or loss upon
utilisation of the service or as incurred.
Foreign currency translation
Foreign currency transactions are translated into the Company's
functional currency using the exchange rates prevailing at the
dates of the transactions (spot exchange rate).
Foreign exchange gains and losses resulting from the
re-measurement of monetary items denominated in foreign currency at
year-end exchange rates are recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are
measured at historical cost (translated using the exchange rates at
the transaction date), except for non-monetary items measured at
fair value, which are translated using the exchange rates at the
date when fair value was determined. Where a gain or loss on a
non-monetary item is recognised in other comprehensive income, the
foreign exchange component of that gain or loss is also recognised
in other comprehensive income.
Income taxes
Tax expense recognised in profit or loss comprises the sum of
deferred tax and current tax not recognised in other comprehensive
income or directly in equity.
Calculation of current tax is based on tax rates and laws that
have been enacted or substantively enacted by the end of the
reporting period. Deferred income taxes are calculated using the
liability method.
Calculation of deferred tax is based on tax rates and laws that
have been enacted or substantively enacted by the end of the
reporting period, that are expected to apply when the asset is
realised, or the liability is settled.
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the entity expects to
recover the related asset or settle the related obligation.
Deferred tax assets are recognised to the extent that it is
probable that the underlying tax loss or deductible temporary
difference will be utilised against future taxable income. This is
assessed based on the Company's forecast of future operating
results, adjusted for significant non-taxable income and expenses,
and specific limits on the use of any unused tax loss or credit.
Deferred tax assets are not discounted.
Deferred tax liabilities are generally recognised in full, with
the exception of the following:
-- on the initial recognition of goodwill on investments in
Subsidiaries, where the Company is able to control the timing of
the reversal of the difference, and it is probable that the
difference will not reverse in the foreseeable future, on the
initial recognition of a transaction that is not a business
combination and at the time of the transaction affects neither
accounting nor taxable profit.
Deferred tax liabilities are not discounted.
Deferred and contingent consideration
Deferred consideration is recorded at amortised costs and is
estimated using a present value technique, discounted at 3.5%,
which is the risk free rate.
Contingent consideration is recorded at fair value using the
probability-weighted estimated future cash flows using a present
value technique. The consideration is discounted at 11.5% which is
the prior year Weighted Average Cost of Capital. The effects on the
fair value of risk and uncertainty in the future cash flows are
dealt with by adjusting the estimated cash flows rather than
adjusting the discount rate.
Post-employment benefits and short-term employee benefits
Short-term employee benefits
Short-term employee benefits, including holiday entitlement, are
current liabilities included in pension and other employee
obligations, measured at the undiscounted amount that the Company
expects to pay as a result of unused entitlement.
Post-employment benefit plans
Contributions to defined contribution pension schemes are
charged to profit or loss in the year to which they relate. Prepaid
contributions are recognised as an asset. Unpaid contributions are
reflected as a liability.
Profit from operations
Profit from operations comprises the results of the Company
before interest receivable and similar income, interest payable and
similar charges, corporation tax and deferred tax.
Fair value measurement
Management uses valuation techniques to determine the fair value
of financial instruments and non-financial assets. This involves
developing estimates and assumptions consistent with how market
participants would price the instrument. Management bases its
assumptions on observable data as far as possible, but this is not
always available. In that case, management uses the best
information available. Estimated fair values may vary from the
actual prices that would be achieved in an arm's length transaction
at the reporting date.
Significant judgement in applying accounting policies and key
estimation uncertainty
When preparing the Financial Statements, management makes a
number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and
expenses.
The following are significant management judgements in applying
the accounting policies of the Company that have the most
significant effect on the Financial Statements.
Useful lives of depreciable assets
Management reviews its estimate of the useful lives of
depreciable assets at each reporting date, based on the expected
utility of the assets. Uncertainties in these estimates relate to
technological obsolescence that may change the utility of certain
software and IT equipment.
Valuation of investments
Management reviews the carrying value of investments at each
reporting date, based on the future cash flows of those
investments.
IFRS 16
Under IFRS 16 the Company is required to make a judgement in
determining the discount rate to be used in calculating the present
value of lease payments when recognising the lease liabilities and
right of use asset. For the discount rate the Company has used the
lessee's incremental borrowing rate, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right of use asset in a
similar economic environment with similar terms, security and
conditions. To determine the incremental borrowing rate, the
Company, where possible, uses recent third-party financing received
by the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third party financing was
received. The right of use asset is depreciated over the term of
the lease. The term has been determined with reference to the lease
agreements and any expected extension beyond the end of the lease
end date specified in the lease agreement.
Business combinations
Management uses valuation techniques when determining the fair
values of certain assets and liabilities acquired in a business
combination (see Note 33 of the consolidated accounts). In
particular, the fair value of contingent consideration is dependent
on the outcome of the acquirees' future revenues (see Note 33 of
the consolidated accounts).
2. Other operating charges
2023 2022
GBP'000 GBP'000
Impairment of investment (note 12) 8,747 9,185
Administrative expenses 1,528 1,558
Total administrative expenses 10,275 10,743
------- -------
3. Operating loss
2023 2022
GBP'000 GBP'000
Operating loss is stated after charging:
Impairment of investment (note 12) 8,747 9,185
Depreciation of owned fixed assets 67 73
Depreciation of right of use assets 246 241
======= =======
4. Income from fixed asset investments and other income
2023 2022
GBP'000 GBP'000
Other income 505 -
Dividends received from subsidiary companies - 418
======= =======
Within other income this period is a settlement of GBP505k in
relation to previously incurred legal costs following the dismissal
of the claimant's case in April 2022, associated with the 2016
acquisition of Bloom Media (UK) Limited.
5. Finance costs
Restated
2023 2022*
GBP'000 GBP'000
Bank interest payable 748 416
Withholding tax on borrowings interest expense 180 100
Interest on lease liability (note 11) 47 44
Interest on deferred and contingent consideration 125 -
------- --------
Total 1,100 560
------- --------
6. Tax on ordinary activities
The tax credit/(charge) is based on the loss
for the year and represents: 2023 2022
GBP'000 GBP'000
UK corporation tax at 19% (2022: 19%) - (2)
-------- ----------
Total current tax - (2)
Deferred tax:
Origination and reversal of timing differences (125) (571)
Total tax credit (125) (573)
======== ==========
Restated
The tax credit can be explained as follows: 2023 2022*
GBP'000 GBP'000
Loss before tax (10,870) (10,885)
-------- ----------
Tax using the UK corporation tax rate of 19%
(2022: 19%) (2,065) (2,068)
Effect of:
Non-taxable income (505) -
Recognition of unused losses 330 (240)
Impairment of investments 1,662 1,745
Non-deductible expenses / (credits) 453 (10)
Current year credit (125) (573)
-------- ----------
7. Auditor's remuneration
Details of remuneration paid to the auditor by the Company are
shown in Note 7 to the Consolidated Financial Statements.
8. Directors and employees
2023 2022
Average number of staff employed by the Company 5 5
------- -------
2023 2022
Aggregate emoluments (including those of Directors): GBP'000 GBP'000
Wages and salaries 453 584
Social security costs 53 73
Pension contribution 12 15
Total emoluments 518 672
------- -------
Further information in respect of Directors is given in the
Directors' Remuneration Report.
Remuneration in respect of Directors was as follows:
2023 2022
GBP'000 GBP'000
Emoluments receivable 342 554
Fees paid to third parties for Directors' services 30 30
Company pension contributions to money purchase
pension schemes 9 15
------- -------
381 599
------- -------
The highest paid Director received remuneration of GBP236k
(2022: GBP284k).
9. Dividends
The Directors do not recommend the payment of a dividend for the
current year (2022: GBPNil).
10. Tangible fixed assets
Leasehold
Buildings Improvements Office equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost at 31 March 2022 1,147 389 416 1,952
Right of use asset additions 427 - - 427
Disposals - - (5) (5)
--------------- ----------- ---------------- ---------------
Cost at 31 March 2023 1,574 389 411 2,374
--------------- ----------- ---------------- ---------------
Depreciation at 31 March
2022 438 203 271 912
Charge for the year on owned
assets - 39 28 67
Disposals - - - (5) (5)
Charge on right of use assets 223 - 23 246
--------------- ----------- ---------------- ---------------
Depreciation at 31 March
2023 661 242 317 1,220
--------------- ----------- ---------------- ---------------
Net book value at 31 March
2023 913 147 94 1,154
--------------- ----------- ---------------- ---------------
Net book value at 31 March
2022 709 186 145 1,040
--------------- ----------- ---------------- ---------------
11. Leases
The company has lease contracts for the offices occupied in
Sheffield and printers. The amounts recognised in the financial
statements in relation to the leases are as follows:
(i) Amounts recognised in the statement of financial
position
The balance sheet shows the following amounts relating to
leases:
2023 2022
GBP'000 GBP'000
Right of use assets
Buildings 913 709
Office equipment 73 97
------- -------
986 806
======= =======
Lease liabilities
Current 135 170
Non-current 604 690
------- -------
739 860
======= =======
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to
leases:
2023 2022
GBP'000 GBP'000
Depreciation charge of right of use assets
Buildings 223 152
Office equipment 23 89
------- -------
246 241
------- -------
Interest expense (included in finance cost) 47 44
======= =======
12. Investments
Subsidiaries
GBP'000
Cost at 31 March 2022 61,824
Additions 2,969
Cost at 31 March 2023 64,793
------------
Impairment at 31 March 2022 35,589
Impairment in year 8,747
Impairment at 31 March 2023 44,336
------------
Net book value at 31 March 2023 20,457
------------
Net book value at 31 March 2022 26,235
------------
The Company has carried out an impairment review of the carrying
amount of the investments in Subsidiaries. The impairment review of
investments was performed using the same cash flows and assumptions
as were used in the Group's Financial Statements for the impairment
review of goodwill, details of which can be found in Note 14 in the
Group's Financial Statements. This review has concluded that an
impairment was required to the carrying value of the Company's UK
investments of GBP8.7m (2022: GBP9.2m) based upon sensitivities
applied to forecast EBITDA.
On 14 April 2022 the following companies which were 100% owned
by the group were dissolved; Alphanumeric Group Holdings Limited,
Alphanumeric (Holdings) Limited, Dig for Fire Limited, Digital
Marketing Network Limited, Digital Media and Analytics Limited ,
DMG London Limited, Hyperlaunch New Media Limited, Inbox Media
Limited, Iris Associates Limited, Jaywing Information Limited,
Jaywing North Limited, Shackleton PR Limited, The Comms Department
Limited, Woken Limited.
On 26 August 2022 the group purchased 100% of the ordinary share
capital of Midisi Limited for consideration of GBP3.3m, before
discounting. Details of the business combination can be found in
Note 33 of the consolidated financial statements.
At 31 March 2023 the Company held either directly or indirectly,
20% or more of the allotted Share Capital of the following
companies:
Proportion held
Class of
share
capital By parent By the Nature of
held Company Group Business
Alphanumeric Limited Ordinary 100% 100% Non-trading
Bloom Media (UK) Limited Ordinary 100% 100% Dormant
Epiphany Solutions Limited Ordinary 100% 100% Non-trading
Frank Digital PTY Limited Ordinary 100% 100% Website design and build
Gasbox Limited Ordinary 100% 100% Non-trading
Jaywing Central Limited Ordinary 100% 100% Non-trading
Jaywing Innovation Limited Ordinary 100% 100% Non-trading
Jaywing Australia PTY
Limited Ordinary 100% 100% Search Engine Optimisation
Jaywing UK Limited Ordinary 100% 100% Direct marketing
Midisi Limited Ordinary 100% 100% Non-trading
All the companies listed above have been consolidated.
All the companies listed above are incorporated in England and
Wales with the following exceptions:
Company Country of Incorporation Address
Frank Digital PTY Limited Australia 36 Hickson Road, Millers
Jaywing Australia PTY Australia Point, NSW 2000
Limited 36 Hickson Road, Millers
Point, NSW 2000
The companies incorporated in England and Wales all have their
registered office at Albert Works, Sidney Street, Sheffield, S1
4RG. The companies incorporate in Australia all have their
registered office at 36 Hickson Road, Millers Point, NSW 2000.
13. Debtors due within one year
2023 2022
GBP'000 GBP'000
Amounts due from Group undertakings 192 58
Prepayments 128 173
Other taxation and social security 122 344
442 575
------- -------
Amounts due from Group undertakings attract no interest and are
repayable on demand.
14. Creditors: amounts falling due within one year
2023 2022
GBP'000 GBP'000
Trade creditors 352 449
Amounts owed to Group undertakings 13,509 12,593
Other taxation and social security 60 19
Other creditors 6 -
Accruals 172 494
Lease liability 135 170
Deferred consideration payable on acquisition
of subsidiary undertakings 414 626
Contingent consideration payable on acquisition
of subsidiary undertakings 109 -
14,757 14,351
------- -------
Amounts owed to Group undertakings attract no interest and are
repayable on demand.
15. Creditors: amounts falling due in more than one year
2023 2022
GBP'000 GBP'000
Lease liability 604 690
Deferred consideration payable on acquisition
of subsidiary undertakings 770 -
Contingent consideration payable on acquisition
of subsidiary undertakings 1,251 -
------- -------
2,625 690
======= =======
16. Provisions
The carrying amounts and the movement in the provision account
are as follows:
Dilapidations
GBP'000
At 1 April 2022 -
Additional provisions 290
Amounts utilised -
-------------
At 31 March 2023 290
-------------
The dilapidations provision of GBP290k (2022: GBPnil) has been
recognised for the head office held within Jaywing Plc.
The dilapidations provision will be settled at the end of the
lease period, which is greater than one year.
17. Borrowings
Restated
2023 2022*
GBP'000 GBP'000
Summary:
Borrowings 11,435 9,007
------- --------
Restated
Borrowings are repayable as follows: 2023 2022*
GBP'000 GBP'000
Within one year:
Borrowings 11,435 9,007
------- --------
Total due within one year 11,435 9,007
------- --------
As the loans are at variable market rates their carrying amount
is equivalent to their fair value.
Interest is calculated at 3 month LIBOR plus a margin.
18. Share capital
Allotted, issued and fully paid:
45p deferred 5p ordinary
shares shares
Number Number GBP'000
At 31 March 2022 67,378,520 93,432,217 34,992
At 31 March 2023 67,378,520 93,432,217 34,992
------------- ------------ --------
The 5 pence ordinary shares have the same rights (including
voting and dividend rights and rights on a return of capital) as
the previous 50 pence ordinary shares. Holders of the 45 pence
deferred shares do not have any right to receive notice of any
General Meeting of the Company or any right to attend, speak or
vote at any such meeting. The deferred shareholders are not
entitled to receive any dividend or other distribution and shall,
on a return of assets in a winding up of the Company, entitle the
holders only to the repayment of the amounts paid up on the shares,
after the amount paid to the holders of the new ordinary shares
exceeds GBP1,000,000 per new ordinary share. The deferred shares
are also incapable of transfer and no share certificates have been
issued in respect of them.
19. Reserves
Called-up Share Capital - represents the nominal value of shares
that have been issued.
Share Premium Account - includes any premiums received on issue
of Share Capital. Any transaction costs associated with the issuing
of shares are deducted from Share Premium.
Profit and Loss Account - includes all current and prior period
retained profits and losses.
Treasury Shares - shares in the company that have been acquired
by the company.
Capital Redemption Reserve - represents amounts transferred from
Share Capital on redemption of issued shares.
20. Treasury shares
2023 2022
GBP'000 GBP'000
At 31 March 2023 and 31 March 2022 25 25
------- -------
21. Deferred tax asset
A deferred tax asset is provided for in the financial statements
and consists of the following:
2023 2022
GBP'000 GBP'000
Accelerated capital allowances 68 52
Unused losses 649 553
Deferred tax asset 717 605
======= =======
The amount of deferred tax recognised in profit or loss was as
follows:
2023 2022
GBP'000 GBP'000
Accelerated capital allowances (16) 18
Unused losses 141 553
Total 125 571
======= =======
The March 2021 Budget announced an increase in the UK standard
rate of corporation tax to 25% from 1 April 2023 with the
legislation receiving Royal Assent on 10 June 2021. Deferred tax as
at 31 March 2023 has been provided at a rate of 25% (2022: blended
rate of 19% and 25%) which is based on when the deferred taxation
is expected to crystalise.
Deferred tax assets are recognised to the extent that it is
probable that the underlying tax loss or deductible temporary
difference will be utilised against future taxable income. This is
assessed based on the Group's forecast of future operating results,
adjusted for significant non-taxable income and expenses and
specific limits on the use of any unused tax loss or credit.
22. Contingent liabilities
There is a cross guarantee between members of the Jaywing plc
group of companies on all overdrafts and borrowings with the
group's lenders. At 31 March 2023 the amount thus guaranteed by the
company was GBP9,200,000 (2022: GBP8,200,000).
23. Related parties
The Company is exempt from the requirements of FRS 101 to
disclose transactions with other 100% members of the Jaywing plc
group of companies.
Transactions with other related parties are disclosed in Note 30
to the Consolidated Financial Statements.
24. Ultimate controlling related party
At the year end, the Directors considered that the Company had
no ultimate controlling party.
25. Financial risk management objectives and policies
Details of Group policies are set out in Note 32 to the
Consolidated Financial Statements.
26. Retirement benefits
Defined Contribution Schemes
The Company operates a defined contribution pension scheme. The
assets of the scheme are held separately from those of the Company
in an independently administered fund. The pension cost charge
represents contributions payable by the Company to the fund and
amounted to GBP12,000 (2022: GBP32,000) with the financial year end
pension creditor being GBP3,000 (2022: GBP2,000).
27. Prior year restatement
Withholding tax
Borrowings are in respect of lenders in low tax jurisdictions
and as a result withholding tax is payable. Recognition of
withholding tax within the interest expense and borrowing costs
lines is required as this was omitted from the previous financial
years results.
The following table summarises the impact of the prior period
restatement in relation to the financial statements of the parent
company.
2022
GBP000
Loss for the year as previously stated (10,212)
Adjustment 1 - Recognition of withholding tax expense (100)
Loss for the year as restated (10,312)
---------
2022
GBP000
Total equity for the year as previously stated 4,662
Adjustment 2 - Recognition of withholding tax expense (253)
--------
Total equity for the year as restated 4,409
--------
Statement of Comprehensive Income
For the year ended 31 March 2022 Adjustment Restated
1 2022
GBP'000 GBP'000
Turnover - - -
Administrative expenses (10,743) - (10,743)
--------- ----------- ---------
Operating loss (10,743) - (10,743)
Income from fixed asset investment 418 - 418
Other income - - -
Finance Costs (460) (100) (560)
--------- ----------- ---------
Loss on ordinary activities before
taxation (10,785) (100) (10,885)
Taxation on ordinary activities 573 - 573
--------- ----------- ---------
Loss and total comprehensive loss
on ordinary activities after taxation (10,212) (100) (10,312)
--------- ----------- ---------
Statement of Financial Position
As at 31 March 2022 Adjustment Restated
2 2022
GBP'000 GBP'000
Non-current assets
Tangible assets 1,040 - 1,040
Deferred tax 605 - 605
Investments 26,235 - 26,235
--------- ----------- ---------
27,880 - 27,880
--------- ----------- ---------
Current assets
Cash at bank 2 - 2
Debtors due within one year 575 - 575
--------- ----------- ---------
577 - 577
Current liabilities
Borrowings (8,754) (253) (9,007)
Creditors: amounts falling
due within one year (14,351) - (14,351)
--------- ----------- ---------
Total assets less current
liabilities 5,352 (253) 5,099
--------- ----------- ---------
Non-current liabilities
Creditors: amounts falling
due after more than one year (690) - (690)
Net (liabilities) / assets 4,662 (253) 4,409
--------- ----------- ---------
Equity
Called up share capital 34,992 - 34,992
Share premium account 10,088 - 10,088
Treasury shares (25) - (25)
Capital redemption reserve 125 - 125
Profit and loss account (40,518) (253) (40,771)
--------- ----------- ---------
Total equity 4,662 (253) 4,409
--------- ----------- ---------
27. Post balance sheet events
On 13 April 2023, post period end, the Company granted 1,152,000
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.
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.
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.
This total includes the 1,200,000 CSOP Options granted to each of
Andrew Fryatt (CEO) and Christopher Hughes (CFO) , and 2,240,000
CSOP Options granted to certain senior employees of the Company.
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.
Shareholder Information
General Meeting
A General Meeting will be held on 28 September 2023 at the
offices of Jaywing plc, Albert Works, Sidney Street, Sheffield, S1
4RG at 2:30pm.
Dividend
There is no dividend payable.
Multiple accounts on the shareholder register
If you have received two or more copies of or notifications
about this document, this means that there is more than one account
in your name on the Shareholders Register. This may be caused by
your name or address appearing on each account in a slightly
different way. For security reasons, the Registrars will not
amalgamate the account without your written consent, so if you
would like any multiple accounts to be combined into one account,
please write to Neville Registrars at the address given below.
Documents
The following documents, which are available for inspection
during normal business hours at the registered office of the
Company on any weekday (Saturdays, Sundays and public holidays
excluded), will also be available for inspection at the place of
the General Meeting from at least 15 minutes prior to the meeting
until its conclusion.
-- Copies of the Executive Directors' service agreements and the
Non-Executive Directors' letters of appointment;
-- The memorandum and articles of association of the Company; and
-- Register of Directors' interests in the Share Capital of the
Company maintained under Section 809 of the Companies Act 2006.
Particulars of the Directors' interest in shares are given in
the Remuneration Report, which is contained in the Report and
Accounts for the year ended 31 March 2023.
Issued Share Capital
As at 31 August 2023 (being the last practicable date before the
publication of this document), the Company's issued Share Capital
comprised 93,432,217 ordinary shares of 5p each, of which 99,622
are held in Treasury. Therefore, as at 31 August 2023 the total
voting rights in the Company were 93,332,595. On a vote by show of
hands, every member who is present in person or by proxy has one
vote. On a poll, every member who is present in person or by proxy
has one vote for every ordinary share of which he or she is a
holder.
Shareholder enquiries
Neville Registrars Limited maintain the register of members of
the Company. If you have any queries concerning your shareholding,
or if any of your details change, please contact the
Registrars:
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen, B62 8HD
Shareholder Helpline: 0121 5851131, fax: 0121 5851132.
Website address www.nevilleregistrars.co.uk
Website
Information on the Group is available at
https://investors.jaywing.com .
Company Information
Registered Office
Albert Works
71 Sidney Street
Sheffield
S1 4RG
Registered Number: 05935923
Country of incorporation: England
Auditor
Grant Thornton UK LLP
No.1 Whitehall Riverside
Whitehall Road
Leeds
LS1 4BN
Nominated adviser and broker
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Solicitors
Fieldfisher LLP
No 1 Spinningfields
Hardman Street
Manchester
M3 3EB
Company Secretary
Chris Hughes
Albert Works
71 Sydney Street
Sheffield
S1 4RG
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END
FR FFFLVAAIRIIV
(END) Dow Jones Newswires
September 07, 2023 02:00 ET (06:00 GMT)
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