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
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
|
|
2023 £'000 |
Restated* 2022 £'000 |
Change % |
|
|
|
|
|
|
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 £'000 |
2022 £'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 £'000 |
2022 £'000 |
Change % |
|
|
|
|
|
|
Revenue |
|
|
|
|
|
16,380 |
18,099 |
(9.5%) |
|
|
5,682 |
5,225 |
8.8% |
|
Group total |
22,062 |
23,324 |
(5.4%) |
|
|
|
|
|
|
Contribution(3) |
|
|
|
|
|
4,886 |
4,849 |
0.8% |
|
|
2,142 |
2,057 |
4.1% |
|
Group total |
7,028 |
6,906 |
1.8% |
|
Contribution margin |
31.9% |
29.6% |
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
|
|
|
|
1,882 |
1,680 |
12.0% |
|
|
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
· Group Adjusted EBITDA for FY23 up by 9.2% at
·
· FY23 Australian adjusted EBITDA has increased by 0.4% to
· 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
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
In the first quarter of FY24 the Group carried out a significant restructuring of the
Strategy
The Group's businesses in the
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
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
Outlook
Whilst trading conditions in the
Ian Robinson
Non-Executive Chairman
Chief Executive's Report
Overview
The last year saw an increase in FY23 EBITDA of 9.2% at
Performance varied across our operating divisions.
Net cash from operating activities dropped to
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
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
Jaywing
The dip in
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
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
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 &
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
Decision and Research and Development
On 26th 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
We opened our new office in
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
I would like to thank all our colleagues in both the Australian and
Future Outlook
Although the
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
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:
|
|
2023 £'000 |
Restated 2022* £'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
Adjusted EBITDA was
The statutory operating loss was
Net cash from operations are
Net Debt
At 31 March 2023, Net Debt including accrued interest (pre IFRS16) was
On 11 August 2022 the Jaywing Facility was increased by
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
The Group has impaired former acquisition goodwill by
Going Concern
The Group financial statements have been prepared on a going concern basis in accordance with
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 Jaywing has been impacted by the Covid-19 pandemic, with disruption to client and staff. The long-term effects of this on the
The situation in |
The directors monitor emerging news and trends and remain alert to any potential impact on the trading of the Company. Regular forecasting and review of pricing are undertaken to ensure we are responding to changes in the economic environment. The directors also maintain a close control on costs, reducing these to meet revenue where appropriate.
|
|
2. Loss of key staff Jaywing is dependent on its ability to recruit and retain staff with adequate experience and technical expertise to service its clients. |
The expertise of Jaywing's people is a key source of competitive advantage and the Company's remuneration and incentive packages are reviewed regularly 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 environment Loss of business from clients, whether due to the adverse economic environment or other, could lead to a reduction in overall revenue and profitability.
Adverse economic environment
|
The Company aims to minimise such losses by continuing to focus on providing a high quality service to its clients at all times as well as offering a wide range of services to existing clients and adding new clients through its new business activities. 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 is characterised by constant developments in technology, online media and data science. In this environment, it is vital to be at the forefront of this change, to ensure Jaywing can provide the benefits of these changes in technology to its clients and remain competitive. |
Jaywing is committed to innovation in data science led products and services and has dedicated resources to this. The Company has close relationships with online media owners (e.g. Google) and has early access to new product developments as a consequence of the significant online media budgets that it manages on behalf of its clients. 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 performance could lead to a lack of ongoing support from its lenders and an inability to raise equity to meet the needs of the business. |
Jaywing's key financial measures are focussed on cash generation and net debt. The Company monitors its trading and cash flow performance closely and takes prompt action to mitigate any adverse trends. See commentary included in the Strategic Report. |
|
6. Compliance with regulations and changes in legislation Failure to comply with regulations such as GDPR and changes in legislation could lead to reputational damage for Jaywing and its clients as well as fines and loss of business. |
Jaywing engages advisers in relevant specialisations to assist with compliance in areas such as GDPR. Experts in Jaywing's business areas can ensure client initiatives are all compliant, alongside external input where appropriate. |
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
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
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
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
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
Net liabilities at 31 March 2023 were
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
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
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 (tCO2e) |
2021/22 (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
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 |
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
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
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
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
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 |
|
|
£ |
£ |
|
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 salary |
Fees and salary |
Pension contributions |
Pension contributions |
|
|
|
£ |
£ |
£ |
£ |
|
Andrew Fryatt |
Appointed 21 April 2020 |
226,667 |
275,000 |
9,067 |
8,800 |
|
Caroline Ackroyd |
Appointed 21 April 2021 Resigned 14 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 contract |
Date of appointment |
Notice period |
Company with whom contracted |
|
Andrew Fryatt |
26 March 2020 |
21 April 2020 |
6 months |
Jaywing plc |
|
Caroline Ackroyd |
7 September 2020 |
21 April 2021 |
N/A resigned 14 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:
|
|
Date of contract |
Notice period |
Company with whom contracted |
|
Ian Robinson |
21 May 2014 |
3 months |
Jaywing plc |
|
Philip Hanson |
27 April 2017 |
3 months |
Jaywing plc |
|
Mark Carrington |
21 March 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
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
· for the parent company state whether applicable
· 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
By Order of the Board
Andrew Fryatt
Dated: 6 September 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 March |
|
|
2023 |
Restated 2022* |
|
|
Note |
|
£'000 |
£'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
|
As at 31 March |
|
|
2023 |
Restated 2022* |
|
|
Note |
|
£'000 |
£'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
|
For the year ended 31 March |
|
2023 |
Restated 2022* |
|
|
Note |
£'000 |
£'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 Capital |
Share Premium Account |
Capital Redemption Reserve |
Treasury Shares |
Foreign Currency Translation Reserve |
Retained Earnings |
Equity attributable to parent |
Non-controlling Interest |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 (£'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
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 £1.5m.
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: |
£'000 |
£'000 |
|
United Kingdom |
16,380 |
18,099 |
|
Australia |
5,682 |
5,225 |
|
Total |
22,062 |
23,324 |
|
|
2023 |
2022 |
|
Contribution (1): |
£'000 |
£'000 |
|
United Kingdom |
4,886 |
4,849 |
|
Australia |
2,142 |
2,057 |
|
Total |
7,028 |
6,906 |
|
|
2023 |
2022 |
|
Adjusted EBITDA (2): |
£'000 |
£'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 |
|
|
£'000 |
£'000 |
|
United Kingdom |
13,859 |
21,576 |
|
Australia |
3,511 |
3,015 |
|
|
17,370 |
24,591 |
2. Other operating income
|
|
2023 |
2022 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Covid-19 government support |
- |
40 |
|
Other income |
507 |
- |
|
|
507 |
40 |
Within other income this period is a settlement of £502k 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 £5k 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 £37k, and £3k 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: |
£'000 |
£'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
|
|
2023 |
Restated 2022* |
|
|
£'000 |
£'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 for the year and represents:
|
2023 |
Restated 2022* |
|
|
£'000 |
£'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 follows: |
2023 |
Restated 2022* |
|
|
£'000 |
£'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
|
|
2023 |
Restated 2022* |
|
|
Pence per Share |
Pence per 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:
|
|
2023 |
Restated 2022* |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 £236k (2022: £284,000).
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 |
|
|
£'000 |
£'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 interests and voting rights held by NCI |
Total comprehensive income allocated to NCI |
Accumulated NCI |
|||
|
|
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|
|
% |
% |
£'000 |
£'000 |
£'000 |
£'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 (£0.7m), the total consideration for the purchase of the 100% interest was $3.0m (£1.7m). At 31 March 2022 an amount of £0.7m was still outstanding to the original shareholders, this was fully paid by 31 July 2022.
12. Property, plant and equipment
|
|
Buildings |
Leasehold improvements |
Office equipment |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'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 |
|
|
£'000 |
£'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:
|
|
2023 |
2022 |
|
|
£'000 |
£'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 |
||
|
|
|
|
£'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 |
|||
|
|
£'000 |
£'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 £12.1m (2022: £6.1m). 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 £5.6m 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 £2.3m
• If revenues and costs increase by 5% but indirect costs stay the same, this would result in an additional
impairment of £1.5m
Due to the significance of the headroom in the Australian CGU, detailed sensitivity analysis was not undertaken.
15. Other intangible assets
|
|
Customer relationships |
Order books |
Trademarks |
Intellectual property |
Development costs |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Accrued income |
352 |
453 |
|
|
£'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 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Deferred income |
983 |
1,408 |
|
|
£'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
|
|
2023 |
Restated* 2022 |
|
|
|
£'000 |
£'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* 1 April 2022 |
Cash flow |
Draw down |
Accrual recognised |
31 March 2023 |
|||||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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* 1 April 2022 |
Cash flows |
Draw down |
Accrual recognised |
31 March 2023 |
|||||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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
|
|
2023 |
Restated 2022* |
|
|
£'000 |
£'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 £539k (2022: £719k) 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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
|
|
|
|
At 1 April 2022 |
42 |
|
Additional provisions |
570 |
|
Amounts utilised |
(42) |
|
At 31 March 2023 |
570 |
The dilapidations provision of £570k (2022: £42k) 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 shares |
5p ordinary shares |
|
|
|
|
|
Authorised Share Capital at 31 March 2022 and at 31 March 2023 |
45,000 |
10,000 |
Allotted, issued and fully paid
|
|
|
|
|
|
|
45p deferred shares |
5p ordinary shares |
|
|
|
Number |
Number |
£'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 £1,000,000 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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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
|
|
2023 |
Restated 2022* |
|
|
£'000 |
£'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 £30,000 (2022: £30,000). At the year end, £52,500 (2022: £22,500) 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 £498k (2022: £128k) in the year, of which £360k was for third party digital advertising. As at 31 March 2023 there was a debtor's balance of £49k (2022: £46k).
On 2 October 2019 entities associated with two of its major shareholders (the "Lenders") acquired the Company's existing secured loan facility of £5,200,000 ("Jaywing Facility") The Lenders immediately provided the Company with additional secured facilities by increasing the Jaywing Facility by £3,000,000 to £8,200,000, which enabled the Company to repay its existing outstanding overdraft and provide it with additional working capital. An additional £500,000 and £1,000,000 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 £11,435k (2022: £9,007k) 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 |
|
|
£'000 |
£'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 |
||
|
|
Within 6 months |
6 to 12 months |
1 to 5 years |
later than 5 years |
|
|
£'000 |
£'000 |
£'000 |
£'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 |
||
|
|
Within 6 months |
6 to 12 months |
1 to 5 years |
later than 5 years |
|
|
£'000 |
£'000 |
£'000 |
£'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 £104k (2022: £85k) lower, and if the interest rate on these liabilities had been 1% lower, loss before tax would have improved by £104k (2022: £85k).
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 £82,000 (2022: £22,000) 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:
|
|
2023 |
Restated 2022* |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 input |
Estimate of the input |
Sensitivity of the fair value measurement to input |
|
Put and call options and other deferred consideration |
Probability of meeting target |
100% |
Not applicable |
|
Contingent Consideration |
Probability of meeting target |
100% |
Sensitive to a 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 options |
Contingent Consideration |
|
|
£'000 |
£'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 £3.3m, 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 |
|
|
£'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 £0.4m which was paid from Jaywing's existing cash resources. Further fixed payments totalling £1.4m 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 £1.2m.
The earn-out relates to revenues generated from Midisi, and the maximum earn-out payment is capped at £3.0m. Following the acquisition, the incremental revenue contributions delivered by Midisi are estimated to be at least £5.7m 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 £1.7m. 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 £153k 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 £000 |
|
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 £000 |
|
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 1 |
Restated |
|
|
£'000 |
|
£'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 2 |
Restated |
|
|
£'000 |
|
£'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 1 |
Restated |
|
|
£'000 |
|
£'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
|
|
|
2023 |
Restated 2022* |
|
|
Note |
£'000 |
£'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
|
|
|
2023 |
Restated 2022* |
|
|
Note |
£'000 |
£'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 Capital |
Share Premium account |
Treasury Shares
|
Capital Redemption Reserve |
Profit and loss account |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 (£) and have been presented in round thousands (£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000
|
£'000
|
|
Other income |
505 |
- |
|
Dividends received from subsidiary companies |
- |
418 |
Within other income this period is a settlement of £505k 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
|
|
2023 |
Restated 2022* |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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) |
|
The tax credit can be explained as follows: |
2023 |
Restated 2022* |
|
|
£'000 |
£'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): |
£'000 |
£'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 |
|
|
£'000 |
£'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 £236k (2022: £284k).
9. Dividends
The Directors do not recommend the payment of a dividend for the current year (2022: £Nil).
10. Tangible fixed assets
|
|
Buildings |
Leasehold Improvements |
Office equipment |
Total |
||
|
|
£'000 |
|
£'000 |
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
|
|
£'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 £8.7m (2022: £9.2m) 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 £3.3m, 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 held |
By parent Company |
By the Group |
Nature of 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 Jaywing Australia PTY Limited |
Australia Australia |
36 Hickson Road, Millers Point, NSW 2000 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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
|
|
|
|
At 1 April 2022 |
- |
|
Additional provisions |
290 |
|
Amounts utilised |
- |
|
At 31 March 2023 |
290 |
The dilapidations provision of £290k (2022: £nil) 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
|
|
2023 |
Restated 2022* |
|
|
£'000 |
£'000 |
|
Summary: |
|
|
|
Borrowings |
11,435 |
9,007 |
|
|
|
|
|
Borrowings are repayable as follows: |
2023 |
Restated 2022* |
|
|
£'000 |
£'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 shares |
5p ordinary shares |
|
|
|
Number |
Number |
£'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 £1,000,000 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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 £9,200,000 (2022: £8,200,000).
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 £12,000 (2022: £32,000) with the financial year end pension creditor being £3,000 (2022: £2,000).
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 £000 |
|
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 £000 |
|
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 1 |
Restated |
|
|
£'000 |
|
£'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 2 |
Restated |
|
|
£'000 |
|
£'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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