Company number 05935923
Jaywing plc
Annual Report and Accounts
For the year ended 31 March 2023
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Contents
Overview
Financial highlights
Chairman’s Statement
Chief Executive's Report
Strategic Report
Corporate Governance
Directors’ Report
Directors’ Remuneration Report
Corporate Governance Statement
Directors’ Responsibilities Statement
Financial Statements
Independent Auditor’s Report to the Members of Jaywing plc
Consolidated Financial Statements
Company Financial Statements
Additional Information
Shareholder Information
Company
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91
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Overview
Jaywing is a Data Science and Marketing business, with operations in the UK and Australia. Jaywing is home to nearly 300 of
the best thinkers across creative and brand strategy, performance marketing, risk consulting and data science. Every day,
handpicked teams collaborate to respond to diverse challenges across a range of sectors and businesses to connect powerful
ideas, rich data and new technologies to provide winning solutions for our clients. With large, specialist technical and creative
power and over 60 experienced data scientists, Jaywing is particularly skilled at turning data into value, fuelling brands,
connecting on customers’ terms and reimagining businesses. Jaywing’s clients include a number of blue-chip companies such
as first direct, Castrol, PepsiCo, Euro Car Parts, ADT, HSBC and Yorkshire Water.
Clients
Jaywing helps its clients find smart solutions to deliver profit growth and build brand value. It uses its science-based expertise
to create compelling insights from complex customer behaviour and builds these into effective digital marketing, customer
engagement and portfolio management activities.
Client concentration risk is low, with 170 active clients at the year end and with the largest client of the Group accounting for
around 4% of annual revenue.
Revenue from the Group’s operations in Australia accounted for 26% of revenue (2022: 22%), and we continue to benefit from
close collaboration between Australia and the UK both on specific clients and development of new capabilities.
People
Our people comprise a diverse mix of specialists, many with scarce skill sets. They include:
• Award-winning creative teams
• Experts in brand strategy, client management, PR and performance marketing
• PhD mathematicians
• Marketing analysts and econometric modellers
• Highly skilled AI practitioners
These skills can be applied to a wide spectrum of challenges, ranging from credit risk modelling through to brand advertising
and a key strength is our ability to harness cross-functional teams to collaborate on client solutions.
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Financial highlights
Revenue
Adjusted EBITDA(1)
Operating Loss
Loss before Tax
Cash Generated from Operations
Net Debt pre IFRS 16(2)
Loss per share
2023
£’000
22,062
2,410
(11,340)
(12,535)
1,293
(10,346)
(13.73p)
Restated*
2022
£’000
23,324
2,206
(6,086)
(6,660)*
1,587
(8,293)*
(7.01p)*
Change
%
(5.4%)
9.2%
Reconciliation of Operating Loss with Adjusted EBITDA
2023
£’000
2022
£’000
(11,340)
(6,086)
Operating Loss
Add Back:
Impairment of Goodwill
Depreciation of property, plant & equipment
Depreciation and impairment of right of use assets
Amortisation of intangibles
EBITDA
Acquisition & related costs
Restructuring costs
Adjusted EBITDA(1)
Adjusted EBITDA(1) margin
12,095
245
641
320
1,961
259
190
2,410
10.9%
Revenue, Contribution and Adjusted EBITDA by operating segment
Revenue
United Kingdom
Australia
Group total
Contribution(3)
United Kingdom
Australia
Group total
Contribution margin
Adjusted EBITDA(1)
United Kingdom
Australia
Group total
2023
£’000
16,380
5,682
22,062
4,886
2,142
7,028
31.9%
1,882
528
2,410
6,131
327
752
730
1,854
-
352
2,206
9.5%
2022
£’000
18,099
5,225
23,324
4,849
2,057
6,906
29.6%
1,680
526
2,206
Change %
(9.5%)
8.8%
(5.4%)
0.8%
4.1%
1.8%
12.0%
0.4%
9.2%
(1) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation & Amortisation (‘EBITDA’) before restructuring
costs and acquisition & related costs
(2) Including accrued interest
(3) Contribution is defined as Revenue less Direct Costs comprise staff and other costs directly attributable to the revenues of
the respective operating segments.
Operational Highlights
• Group contribution margin increased by 2.3ppt driven by UK cost efficiencies.
• Group Adjusted EBITDA for FY23 up by 9.2% at £2,410k against prior period, on 5.4% lower revenues.
•
•
UK Adjusted EBITDA for FY23 up 12.0% at £1,882k, due to cost management and efficiency improvements.
FY23 Australian adjusted EBITDA has increased by 0.4% to £528k and which reflects the impact of the cost of the
integration activity at the start of 2023.
New business pipeline remains strong in both territories.
Decision PPC management IP acquisition successfully completed & encouraging new business growth.
R&D function established during the year to help build increased Decision IP functionality.
•
•
•
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Chairman’s Statement
Results
Revenues for the Group for FY23 of £22.1m (2022: £23.3 m), were 5.4% down on FY22, following FY22’s strong growth of
16% on FY21. The decrease in revenue in FY23 comprises a fall of 9.5% in UK revenues (2022: increase of 13.3%) and a rise
of 8.8% in Australia revenues (2022: increase of 25%). The UK’s revenues were affected by weaker demand in FY23 whilst
Australia continued to grow although at a slower rate than the previous year. Recent significant new business wins in Australia
are expected to restore its return to strong growth in FY24.
It is pleasing to note that the Group’s contribution margin increased in FY23 by 2.3ppt to 31.9% driven by cost efficiency
improvements in the UK. The UK contribution margin was up by 3.0 % to 29.8%. Adjusted Group EBITDA for FY23, was £2.4m
(2022: £2.2m), an increase of 9.2%, reflecting margin improvements on lower Group revenues. The adjusted EBITDA for the
UK in FY23 was £1.9m, a 12% increase on FY22’s £1.7m. Australia remained flat at £0.5m due to business integration actions
at the start of FY23 and increased staff costs. Cash Generated from Operations for FY23 amounted to £1.3m (2022: £1.6m).
In the first quarter of FY24 the Group carried out a significant restructuring of the UK division to improve margin efficiency
through cost reduction, and implemented a new organisational structure which is intended to help the Group rebalance its
strengths on its higher margin services. Recent new business wins in data science led services, particularly in the Group’s risk,
fraud and regulatory services, together with UK cost reductions are expected to help raise UK margins in FY24.
Strategy
The Group’s businesses in the UK and Australia plan to focus on organic growth on the back of recent new business wins and
a strong new business pipeline. The Group will promote and further develop the recently acquired Decision software as well as
exploring opportunities for further investment in advanced data analysis products as well as the application of technology to the
marketing challenges of our clients. Creative services will remain a key component of our services mix, and the Group will
continue to promote its award-winning creative services to its clients as part of its comprehensive marketing solution offerings.
It is pleasing to report that Jaywing Australia, which is led by a successful and autonomous professional team, has continued to
demonstrate a track record of strong performance during the year with sales up by 8.8% and with some significant business
wins towards the end of FY23. The ongoing collaboration with the UK business on clients and services, where required, now
includes the promotion of the Decision software in Australia, and we are continuing to work with the Australian team to explore
opportunities to further accelerate scale and market reach.
Funding
The Company remains in discussions with each of the holders of the secured debt about a possible future restructuring of the
debt. Details of this debt are contained in Note 18 and Note 30.
Board and senior management
In April 2022 we announced that Caroline Ackroyd, the Company’s Chief Financial Officer and a board director had resigned to
pursue other interests. On 31 August 2022, the Company announced the appointment of Christopher Hughes as the
Company’s Chief Financial Officer.
People
Our staff in the UK and Australia have continued to work closely with our customers to help serve their varied and challenging
business needs and continued to win and welcome new customers to Jaywing. The Board would like to thank all our staff for
their ongoing hard work and dedication.
Outlook
Whilst trading conditions in the UK remain challenging, the recent restructuring of the UK division and recent new business
wins as well as a strong pipeline is expected to assist the UK division’s ability to withstand ongoing challenges in the
macroeconomic environment as well as improving margin run rates. Recent significant new business wins in Australia are
expected to provide strong revenue and profitability growth.
Ian Robinson
Non-Executive Chairman
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Chief Executive’s Report
Overview
The last year saw an increase in FY23 EBITDA of 9.2% at £2,410k against the prior period, on 5.4% lower revenues. This
growth was achieved despite challenging economic conditions impacting clients’ own performance, and hence their budgets
and spend, in both the UK and Australia. Australia’s revenue was up 8.8% on the previous year built on strong client wins. In
the UK, revenue was down 9.5%. Our Group revenue was therefore down 5.4% year-on-year overall, but I am pleased to report
that we have been able to manage our costs well in response to trading conditions, delivering adjusted EBITDA of £2.4m, just
ahead of market expectations.
Performance varied across our operating divisions. Australia had a strong end to the financial year, with a major contract win
that will fully crystallise in the current financial year. The UK saw revenues slowing through the year, resulting in the 9.5% drop
for the full year, but with a significant improvement in profitability due to tight cost control.
Net cash from operating activities dropped to £1.3m (2022: £1.6m).
The client base for Decision, our AI driven automated Pay-Per-Click advertising management tool, has started to build, and we
now have 11 clients live or onboarding, with a good pipeline of further opportunities. We have also now signed our first client
for Decision in Australia, which is already live.
Higher interest rates, driven by the economic backdrop, has led to an increase in our WACC, which was a significant factor in
the impairment charge of £12.1m to Goodwill in respect of the UK cash-generating-unit. Our outlook remains consistent and the
Group remains well positioned to drive revenues and profitability in the future.
Jaywing UK
The dip in UK consumer confidence has put pressure on client budgets, and we have experienced clients slowing new spend
through the back end of last year and the first 2 months of the current year. From June onwards we have started to see an
upturn in client spend and therefore in our revenues, along with a growing pipeline of new client opportunities.
Our focus on an integrated marketing proposition, enabled by data science, is resonating with existing and potential clients.
The acceleration of the move towards digital since the pandemic started has reinforced the need to really understand marketing
effectiveness, and we have been able to deliver both outstanding results and unprecedented insight to our clients. We have
continued to win some great work from new clients, most recently including Subaru Europe and DUSK.com but the slowdown in
existing client spend resulted in a reduction in UK revenue of 9.5% year-on-year.
In anticipation of the tightening economic conditions, we took action to reduce our cost base, and were able to deliver increased
year-on-year EBITDA. Although we have seen an encouraging revenue performance more recently, we continue to manage
costs tightly to ensure we have the right cost base for our projected revenues.
Amongst our existing marketing clients, the biggest increases in spend came from Castrol, Virgin Money, Rush Hair Group, and
Verdant Leisure, and their spend on performance marketing, in particular, has increased significantly.
Key new clients in the year to March 2023 included University of East Anglia, LHV UK, Fair4All Finance and ROC
Technologies. Since the start of the new financial year in April 2023, in addition to Subaru Europe and DUSK.com (Retail), we
have also added Virgin Media O2, AO World, Superbike Factory, The Entertainer, and Bettys And Taylors Group. We have
recently overhauled our Business Development and Marketing functions, and are seeing an increase in the number and calibre
of leads being generated.
Jaywing Australia
Our Australian business successfully completed the integration of Frank Digital into Jaywing Australia at the start of 2022, and
the fully integrated business has resonated well in the market, with strong new client wins leading to an 8.8% increase in
revenues against prior year. The new business wins have been particularly strong in Q4 FY23 and the full benefit of these will
be realised in the current financial year (FY24). Of particular note is a contract with Online Education Services (OES) for
creative services, which commenced in February 2023. Notable other wins include CROCS Australia & Singapore and
CashRewards.
The increase did not fully flow through to EBITDA, as a result of the wage inflation that began under the pandemic lockdowns.
The annualization of this impact resulted in EBITDA growing by just 0.4% year-on-year. This wage inflation has now
normalised, and FY24 has started strongly for both revenue and EBITDA in Australia.
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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 UK agency headcount both during FY23 and in the first quarter of FY24. This
is never an easy decision, but our employees overall have been very supportive of the plan and the way we have approached
it. We believe this will underpin a significant uplift in UK profitability in the current financial year.
We opened our new office in Leeds, located in the city centre, and which is ideally suited to collaborative, integrated working.
Our employees have continued to adapt to working and collaborating in a hybrid model, and so we have been able to reduce
the required office footprint in Leeds, saving £0.2m of costs per annum against the previous office.
We recognise that our people are our most important asset. We have embedded our vision of making brands grow and talent
thrive and have engaged with our employees to get their input into how to further develop a great place to work, increasing
training expenditure and regularly tracking employee satisfaction. Our most recent survey showed an overall employee
satisfaction score of 85%.
We are also continuing to invest in a combination of experienced hires and talented but less experienced recruits, who
represent the Company’s future management.
Group revenue per employee remained broadly flat at £77.4k in the year (2022: £78.8k).
I would like to thank all our colleagues in both the Australian and UK businesses for their continuing outstanding contribution
over the last 12 months.
Future Outlook
Although the UK environment remains tough, we are confident that we can build profitability further in FY24. Australia has the
benefit of a full year of the new OES contracts, and has continued to win new business, with a strong first quarter of FY24. In
the UK, we have continued to win new clients for Decision, delivering higher margin business. Our Risk & Data Consulting arm
has won significant new business and is close to full capacity. Our UK agency (marketing) business had a tougher start to the
new financial year in April and May, but is now recovering and we are continuing to win new business. Having reduced our UK
headcount and cost base, we expect to finish the first half with strong run rate profitability that is expected to provide a step up
in full year performance. We remain optimistic that the Company will achieve revenue and adjusted EBITDA for FY24 in line
with market expectations.
Andrew Fryatt
Chief Executive Officer
Jaywing plc
6 September 2023
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Strategic Report
Business review
Jaywing is a Data Science and Marketing business, with operations in the UK and Australia. Our focus is providing an
integrated marketing proposition, enabled by data science, to our existing and potential clients. The parent company acts as a
holding company providing management services to its subsidiaries.
On a Group basis the business review and future prospects for the business are contained within the Chief Executive’s Report.
Non-IFRS measures
The financial statements contain all the information and disclosures required by the relevant accounting standards and
regulatory obligations that apply to the Group. The annual report and financial statements also include measures which are not
defined by generally accepted accounting principles such as IFRS. We believe this information, along with comparable IFRS
measures, is useful as it provides investors with a basis for measuring the underlying performance of the Group on a
comparable basis. The Board and its executive management use these financial measures to evaluate the Group’s underlying
operating performance. Non-IFRS financial measures should not be considered in isolation from, or as a substitute for, financial
information presented in compliance with IFRS. Similarly, non-IFRS measures as reported by us may not be comparable with
similar measures reported by other companies.
Key performance indicators used by the Board and executive managers include:
Revenue
Adjusted EBITDA(1)
Adjusted EBITDA %
Operating Loss
Loss before Tax
Net Debt pre IFRS16(2)
Loss per share
Average headcount
Revenue per head
Cash generated from operations
2023
£’000
22,062
2,410
10.9%
(11,340)
(12,535)
(10,346)
(13.73p)
285
77.4
1,293
Restated
2022*
£’000
23,324
2,206
9.5%
(6,086)
(6,660)*
(8,293)*
(7.01p)*
296
78.8
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 £22.1m (2022: £23.3m), a drop of 5% on FY22, following FY22’s strong growth of 16% on FY21.
Adjusted EBITDA was £2,410k (2022: £2,206k), a £204k improvement in the underlying Adjusted EBITDA. The result was
achieved through strong cost control.
The statutory operating loss was £11,340k (2022: loss of £6,086k) and the statutory loss before taxation was £12,535k (2022:
loss of £6,660k) following an impairment to Goodwill of £12.1m (2022: £6.1m). This non-cash charge has been recognised
against the UK Cash Generating Unit (“CGU”) largely due to the increase in WACC in light of the current economic environment
in the UK. The acquisition goodwill relating to the Australia CGU remains unimpaired. Further details of this impairment are
shown in Note 14 to the Consolidated Financial Statements.
Net cash from operations are £1,293k (2022: £1,587k) due to tight cost control across the group. The Cash Flow statement
shows the movement in the cash position of the business.
Net Debt
At 31 March 2023, Net Debt including accrued interest (pre IFRS16) was £10.3m (2022: £8.3m), representing gross debt of
£11.4m (2022: £9.0m) net of cash of £1.1m (2022: £0.7m). The Company’s gross debt is represented by an amount of £9.2m
(2022: £7.7m) drawn down from the secured debt funding provided by the “Jaywing Facility” together with £1.8m (2022: £1.0m)
of accrued and unpaid interest on the Jaywing Facility and £0.4m of withholding tax on the interest expense (2022: £0.3m). The
Jaywing Facility is fully described in Note 18 and Note 30 to the Financial Statements.
On 11 August 2022 the Jaywing Facility was increased by £1.0m to £9.2m. The Jaywing Facility has continued to be provided
to the Company on the same terms as the original secured loan facility acquired on 2 October 2019, see Going Concern in
Principal Accounting Policies.
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Impairment
As required by IAS 36, the Group has carried out an impairment review of the carrying value of our intangible assets and
goodwill. The weighted average cost of capital (“WACC”) was calculated with reference to long-term market costs of debt and
equity and the Company’s own cost of debt and equity, adjusted for the size of the business and risk premiums. The calculated
WACC rate used for the impairment review was 16.4% for Australia and 16.6% in the UK (2022: 11.5% for Australia and 11.8%
in the UK). This was applied to cash flows for each of the cash generating units using estimated growth rates in each business
unit. The impairment review was based on two cash generating units being the UK and Australia. As part of the review, a
number of scenarios were calculated using the impairment model. These looked at what effect changes in the WACC rates and
movements in Revenue and Costs would have to the outcome.
The Group has impaired former acquisition goodwill by £12.1m (2022: £6.1m). This non-cash charge has been recognised
against the UK Cash Generating Unit (“CGU”) largely due to the increase in WACC in light of the current economic environment
in the UK. The acquisition goodwill relating to the Australia CGU remains unimpaired.
Going Concern
The Group financial statements have been prepared on a going concern basis in accordance with UK Adopted International
accounting standards. In coming to their conclusion, the Directors have considered the Group’s profit and cash flow forecasts
for period to 31 March 2025.
In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether
the Group can continue in operational existence for the foreseeable future.
In addition to the normal process of preparing forecasts for the Group, the Board has also considered downside risks and the
potential impact of the economic environment on the cash flows of the Group for a period to 31 March 2025. This has been
done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast
period.
In considering their position the Directors have also had regard to letters of support in respect of the secured debt which they
have received from each of the holders of that debt. Details of this debt are contained in Note 18 and Note 30.
The Group financial statements do not include the adjustments that would result if the Group were unable to continue as a
going concern. The Directors have a reasonable expectation that the Group has adequate resources to continue in existence
for the foreseeable future and have concluded it is appropriate to adopt the going concern basis of accounting in the
preparation of the financial statements.
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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
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 UK
economy are still being felt now with high inflation,
interest rates and economic uncertainty.
The situation in Ukraine is also having an impact on the
world economy, yet the impact on Jaywing directly has
been negligible.
2. Loss of key staff
Jaywing is dependent on its ability to recruit and retain
staff with adequate experience and technical expertise to
service its clients.
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
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.
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.
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.
Mitigation
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.
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.
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.
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.
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.
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.
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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
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Directors’ Report
The Directors submit their Annual Report on the affairs of the Group and the Company and the audited Financial Statements for
the year ended 31 March 2023.
Board of Directors
Ian Robinson, Non-Executive Chairman
Chair of Audit & Risk Committee and member of Remuneration and Nomination Committees
Ian is a Non-Executive Director and Chairman of the Audit Committee of Gusbourne plc, an AIM listed English sparkling-wine
business. He is also a nonexecutive Director of a number of other privately-owned businesses. He is a Fellow of the Institute of
Chartered Accountants in England & Wales and holds an honours degree in Economics from the University of Nottingham.
Andrew Fryatt, Chief Executive
Andrew has more than 30 years’ experience in technology-dependent businesses, primarily in the Retail and Telecoms sectors.
Following an honours degree in Economics from the University of Cambridge, he began his career in the Mars Group, progressing
through various marketing roles before joining Kingfisher Group in a senior marketing role. His experience included senior
marketing and commercial roles before moving into general management, and he has run major divisions of Daisy and Zen
Internet, as well as gaining experience as CEO of Ideal Shopping Direct plc. He has a particular focus on customer excellence
and has received several awards on behalf of his businesses for delivering outstanding service.
Mark Carrington, Non-Executive Director
Member of Audit & Risk, Remuneration and Nomination Committees
Mark is a Fellow of the Association of Chartered Certified Accountants. He is a Non-Executive Director of a number of privately-
owned businesses both in the UK and Overseas. He is also involved in the provision of management services to a number of
other privately-owned and AIM listed businesses.
Philip Hanson, Non-Executive Director
Chair of Remuneration and Nomination Committees and member of Audit & Risk Committees
Philip is a fellow of the Chartered Institute of Marketing and has extensive experience in marketing and ecommerce both in the
UK and internationally, having held a number of senior roles in the FMCG and retail financial services sectors – latterly as
Global Marketing & ecommerce Director for Travelex. He is also Non-Executive Director of the Bettys & Taylors Group. He was
a Director of the French and Australian entities of the Goelet family wine business (SCEA Domaine de Nizas and Red Earth
Nominees Pty Ltd respectively) until December 2020. He is a Non-Executive Director of Silver Blue LLC which oversees the
worldwide agriculture assets of the Goelet family. Philip was a Director of Travelex Card Services Ltd until December 2015.
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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 £12.8m (2022: loss of £6.5m). The Directors do not
propose to pay a dividend.
Net liabilities at 31 March 2023 were £1.2m (2022 Net assets £12.0m).
Future developments
The future developments of the Group are referred to in the Chief Executive’s Report.
Political and charitable donations
The Group made charitable donations of £3k (2022: £1k) and no political donations during the current or prior year.
Directors’ interests
The present membership of the Board, together with biographies on each, is set out on page 12. 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.
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Streamlined Energy and Carbon Reporting (SECR)
We choose to disclose our UK energy use and associated greenhouse gas (GHG) emissions. Specifically, and as a minimum,
we are required to report those GHG emissions relating to natural gas, electricity and transport fuel, as well as an intensity ratio,
under the Streamlined Energy and Carbon Reporting (SECR) Regulations.
To ensure we achieve the transparency required, and deliver effective emissions management, we implement and utilise robust
and accepted methods. Accordingly, whilst the Regulations provide no prescribed methodology, we collate our GHG data
annually and complete the calculation of our carbon footprint using the latest Defra (Department for Environment, Food and Rural
Affairs)/BEIS (Department for Business, Energy & Industrial Strategy) emissions factors.
The period covered for the purposes of the SECR section is 1 April 2022 to 31 March 2023 and our calculations are for the
following scope:
-
-
Buildings- related energy – natural gas (Scope 1) and electricity (Scope 2) and
Employee owned vehicles (grey fleet) (Scope 3)
Calculation Methodology
The Jaywing GHG emissions were assessed in accordance with Defra’s ‘Environmental reporting guidelines: including
Streamlined Energy and Carbon Reporting Requirements’ and use the 2019 emission factors developed by Defra and BEIS.
Results
Element
Direct emissions (Scope 1) – natural gas and LPG
Indirect emissions (Scope 2) – from purchases electricity
Total tCO2e (Scope 1 & 2)
Other indirect emissions (Scope 3) – grey fleet travel
Gross Total Emissions
2022/23
(tCO2e)
36,333
41,739
78,072
17,645
95,717
2021/22
(tCO2e)
59,126
63,396
122,522
20,964
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.
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Going Concern
The Group financial statements have been prepared on a going concern basis in accordance with UK Adopted International
accounting standards. In coming to their conclusion, the Directors have considered the Group’s profit and cash flow forecasts
for period to 31 March 2025.
In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether
the Group can continue in operational existence for the foreseeable future.
In addition to the normal process of preparing forecasts for the Group, the Board has also considered downside risks and the
potential impact of the economic environment on the cash flows of the Group for a period to 31 March 2025. This has been
done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast
period.
In considering their position the Directors have also had regard to letters of support in respect of the secured debt which they
have received from each of the holders of that debt. Details of this debt are contained in Note 18 and Note 30.
The Group financial statements do not include the adjustments that would result if the Group were unable to continue as a
going concern. The Directors have a reasonable expectation that the Group has adequate resources to continue in existence
for the foreseeable future and have concluded it is appropriate to adopt the going concern basis of accounting in the
preparation of the financial statements.
Major interests in shares
As at 31 March 2023, the Company had been notified, in accordance with chapter 5 of the Disclosure and Transparency Rules,
of the following voting rights as shareholder of the Company:
Lord Michael Ashcroft
Lombard Odier Investment Managers Group
J & K Riddell
A Gardner
Bailey Family
Canaccord Genuity Group Inc
H & J Spinks
M Boddy
Miton UK Microcap Trust plc
Number of voting rights
27,919,737
17,600,709
5,372,638
5,037,470
4,687,500
3,805,000
3,508,772
3,366,667
2,771,035
2023
%
29.9
18.9
5.8
5.4
5.0
4.1
3.8
3.6
3.0
2022
%
25.6
23.6
5.8
5.4
5.0
4.1
3.8
3.6
3.1
Corporate Social Responsibility
The Board recognises the importance of social, environmental and ethical matters and it endeavours to take account of the
interests of the Group’s stakeholders, including its investors, employees, clients, suppliers and business partners when operating
the business.
General Meeting
Your attention is drawn to the Notice of Meeting either enclosed with this Annual Report or online at https://investors.jaywing.com,
which sets out the resolutions to be proposed at the forthcoming General Meeting.
Post Balance Sheet Events
On 13 April 2023, post period end, the Company granted 1,152,000 LTIP (Long Term Incentive Plan) share options to Andrew
Fryatt (CEO) and 4,640,000 CSOP (Company Share Option Plan) options to certain senior employees of the Group. The total
number of Shares that can be acquired pursuant to options granted under the LTIP and CSOP amounts to 5,782,000 Shares.
The LTIP Options granted to Andrew Fryatt are subject to a minimum vesting price of 10.0 pence per Share and an exercise
price of 5.0 pence per Share. The performance period for LTIP Options granted under the LTIP will typically be four years
commencing from the date of grant of the relevant LTIP Option. However, in the case of Andrew Fryatt, in recognition of his
service to the Company since March 2020, 50% of the LTIP Options will vest and be exercisable on or after the second
anniversary of the date of grant, subject to and to the extent that the performance conditions are met.
Except in the event of a change of control of the Company and in certain 'good leaver' scenarios, LTIP Options may only be
exercised after the expiry of the performance period and to the extent that the relevant performance criterion is met. Shares
acquired on exercise of LTIP Options shall be subject to a two-year holding period, during which time they cannot be sold, except
in certain circumstances including, but not limited to, the sale of Shares to meet any tax liabilities arising upon exercise of the
LTIP Options.
The market value CSOP Options were granted over a total of 4,640,000 Shares with an exercise price of 5.0 pence per Share.
This total includes the 1,200,000 CSOP Options granted to each of Andrew Fryatt (CEO) and Christopher Hughes (CFO) , and
2,240,000 CSOP Options granted to certain senior employees of the Company. The vesting period of the CSOP Options shall
be three years from the date of grant. Except in the event of a change of control of the Company and in certain 'good leaver'
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scenarios, no CSOP Options may be exercised prior to the expiry of the vesting period. Shares acquired on exercise of the CSOP
Options shall be subject to a holding period of one year, during which time they cannot be sold, except in certain circumstances
including, but not limited to, the sale of Shares to cover the exercise price payable upon exercise of the CSOP Options. No
performance conditions attach to the exercise of the CSOP Options.
Auditor
The Directors confirm that:
•
•
so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
the Directors have taken all the steps that they ought to have taken as Directors, in order to make themselves aware
of any relevant audit information and to establish that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
The auditor, Grant Thornton UK LLP, has indicated its willingness to remain in office, and a resolution that it be re-appointed will
be proposed at the General Meeting.
By Order of the Board
Andrew Fryatt
Director
Dated: 6 September 2023
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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 £75,000 (2022: £50,000)
which is an increase from the previous year following a review of the time commitment and benchmarking of the Chair role in
similar AIM listed businesses. Non-Executive Directors’ fees currently comprise a basic fee of £30,000 per annum plus £10,000
for chairing a committee.
Non-Executive Directors do not participate in the annual bonus plan, pension scheme or healthcare arrangements. The Company
reimburses the reasonable expenses they incur in carrying out their duties as Directors.
Remuneration components – Executive Directors
A proportion of each Executive Director’s remuneration is performance related.
Basic salary
Basic salary is set by the Remuneration Committee by considering the responsibilities, individual performance and experience of
the Executive Directors, as well as the market practice for executives in a similar position and wage levels elsewhere in the
Group. Basic salary is reviewed (but not necessarily increased) annually by the Remuneration Committee.
Annual bonus plan
The Executive Directors are eligible to participate in the annual bonus plan. The range of award is based on annual salary.
The performance requirements, for the ability to earn a bonus, are set by the Committee annually.
Long Term Incentive Plan (LTIP) and Company Share Option Plan ( CSOP)
On 13 April 2023, post period end, the Company granted 1,152,000 LTIP (Long Term Incentive Plan) share options to Andrew
Fryatt (CEO) and 4,640,000 CSOP (Company Share Option Plan) options to certain senior employees of the Group. The total
number of Shares that can be acquired pursuant to options granted under the LTIP and CSOP amounts to 5,782,000 Shares.
See further details in post balance sheet event note 35.
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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
Aggregate emoluments
Sums paid to third parties for Directors’ services
The emoluments of the Directors are shown below:
31 March
Andrew Fryatt
Caroline Ackroyd
Ian Robinson
Philip Hanson
Mark Carrington*
Total
Appointed 21 April 2020
Appointed 21 April 2021
Resigned 14 March 2022
2023
Fees and
salary
£
226,667
-
75,000
40,000
30,000
371,667
2023
£
341,677
30,000
371,677
2022
Fees and
salary
£
275,000
189,022
50,000
40,000
30,000
584,022
2022
£
554,022
30,000
584,022
2023
Pension
contributions
£
9,067
-
-
-
-
2022
Pension
contributions
£
8,800
6,686
-
-
-
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:
Andrew Fryatt
Caroline Ackroyd
Date of contract
26 March 2020
7 September 2020
Date of
appointment
21 April 2020
Notice period
6 months
21 April 2021
N/A resigned 14 March 2022
Company with
whom contracted
Jaywing plc
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:
Ian Robinson
Philip Hanson
Mark Carrington
Date of contract
Notice period
Company with whom contracted
21 May 2014
27 April 2017
21 March 2018
3 months
3 months
3 months
Jaywing plc
Jaywing plc
Jaywing plc
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Directors’ interests in shares
The Directors’ interests in the share capital of the Company are set out below:
31 March
Ian Robinson
Philip Hanson
Andrew Fryatt
2023
Number of shares
470,267
109,462
120,993
2022
Number of shares
470,267
109,462
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
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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.
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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:
Total meetings held
Ian Robinson
Philip Hanson
Mark Carrington
Andrew Fryatt
Board
12
Remuneration
6
Audit & Risk
2
Nomination
1
12
12
12
12
6
6
6
6
2
2
2
2
1
1
1
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
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.
Interim Statements, audited Annual Reports, press
releases and
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
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Directors’ Responsibilities Statement
The directors are responsible for preparing the Strategic Report, Directors’ Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have to
prepare the Group financial statements in accordance with UK-adopted international accounting standards and applicable law,
and they have elected to prepare the parent company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law, including FRS 101 ‘Reduced
Disclosure Framework’.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and
fair view of the state of affairs and profit or loss of the company and group for that period. In preparing these financial statements,
the directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgements and accounting estimates that are reasonable and prudent;
•
for the Group financial statement state whether applicable UK-adopted international accounting standards have been
followed, subject to any material departures disclosed and explained in the financial statements;
for the parent company state whether applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Company
will continue in business.
•
•
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure
that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors confirm that:
•
•
so far as each director is aware, there is no relevant audit information of which the company’s auditor is unaware; and
the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of
any relevant audit information and to establish that the company’s auditor is aware of that information.
The directors are responsible for preparing the annual report in accordance with applicable law and regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
By Order of the Board
Andrew Fryatt
Dated: 6 September 2023
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Independent auditor’s report to the members of Jaywing plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Jaywing plc (the ‘parent company’) and its subsidiaries (the ‘group’)
for the year ended 31 March 2023, which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in
Equity, notes to the Consolidated financial statements, including a summary of significant accounting policies, the
Company Profit and Loss account, the Company Balance Sheet, the Company Statement of Changes in Equity
and the notes to the Parent company financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial statements is
applicable law and UK-adopted international accounting standards. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United
Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 March 2023 and of the group’s loss and the parent company’s loss for the year then
ended;
the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit
of the financial statements’ section of our report. We are independent of the group and the parent company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the group’s and the parent company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the
related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s
opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future
events or conditions may cause the group or the parent company to cease to continue as a going concern.
A description of our evaluation of management’s assessment of the ability to continue to adopt the going concern
basis of accounting, and the key observations arising with respect to that evaluation is included in the Key Audit
Matters section of our report.
In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the group’s and
the parent company’s business model including effects arising from macro-economic uncertainties such as
current interest and inflation rates, we assessed and challenged the reasonableness of estimates made by the
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directors and the related disclosures and analysed how those risks might affect the group’s and the parent
company’s financial resources or ability to continue operations over the going concern period.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s and the parent company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Our approach to the audit
Overview of our audit approach
Overall materiality:
Group: £222,000, which represents approximately 1% of the
group’s revenue.
Parent company: £140,000, which represents 0.5% of the parent
company’s total assets at the planning stage of the audit.
Key audit matters in respect of both the group and parent
company were identified as:
• Going concern (same as previous year for the Group but new
for the parent company);
Key audit matters in respect of the group were identified as:
• Revenue recognition (same as previous year);
•
Impairment of goodwill and other non-current assets (same
as previous year); and
• Business combinations including deferred and contingent
Materiality
Key audit
matters
Scoping
consideration (new).
Key audit matters in respect solely of the parent company were
identified as:
•
Impairment of investments in subsidiaries (same as previous
year).
Our auditor’s report for the year ended 31 March 2022 included
no key audit matters that have not been reported as key audit
matters in our current year’s report.
A full scope audit was performed on the financial information of
two components that were determined to be significant.
An audit of one or more classes of transactions, account
balances or disclosures was performed on one component within
the Group.
Analytical procedures at group level was performed on eight
components.
The components where we performed full or specified audit
procedures accounted for 97% of the Group’s revenue, 83% of
the Group’s total assets and 100% of the Group’s loss before tax.
The approach taken differs to the prior year and this is described
further in the section below named ‘An overview of the scope of
our audit’.
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Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These
matters included those that had the greatest effect on: the
overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
In the graph below, we have presented the key audit
matters, significant risks and other risks relevant to the audit.
Description
Audit
response
KAM
Disclosures
Key results
High
Potential
financial
statement
impact
Impairment of goodwill and
other non-current assets
Revenue
recognition
Going
concern
Impairment of investments in
subsidiaries (Parent company only)
Business
combinations
IFRS 16 balances
Management override of controls
Wages and salaries
Trade receivables
Contract assets and
liabilities
Trade payables
Bank and cash
Low
Low
Extent of management judgement
High
Key audit matter
Significant risk
Other risk
Key Audit Matter – Group
How our scope addressed the matter – Group
Revenue recognition
In responding to the key audit matter, we performed
the following audit procedures:
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Key Audit Matter – Group
How our scope addressed the matter – Group
• Assessed revenue recognition policies for
compliance with the requirements of
International Financial Reporting Standard
(‘IFRS’) 15 ‘Revenue from Contracts with
Customers’, and tested the revenue recorded in
the year for adherence to the policy adopted;
• Used data analytics to assess entries made to
the revenue nominal account and investigated
any outside of our expectation, including
agreeing to supporting evidence;
•
•
For a sample of open projects in the last two
months of the year agreed to supporting
documentation including signed contract,
invoice and timesheet data to corroborate the
occurrence of revenue;
For the sample of open projects, recalculated
expected revenue based on the input method
per IFRS 15 'Revenue from Contracts with
Customers' to assess management's judgement
regarding revenue recognised in the year;
• Selected a sample of retainers within the last
month of the year to supporting documentation
including signed contract to corroborate the
occurrence of revenue and that revenue was
recognised in the correct period; and
• Assessed whether there was an indication of
loss-making contracts (such as by identifying
contracts with negative margins), and held
discussions with management to understand
any negative margins included on client
contracts which may have an indication of loss-
making jobs at year end.
Our results
Based on our audit work, we did not identify material
misstatements or fraudulent transactions in the
revenue recognised in the year to 31 March 2023.
We identified revenue recognition as one of
the most significant assessed risks of
material misstatement due to fraud and error.
The Group enters into a high volume of
transactions and some contracts are entered
into which span the 31 March 2023 year end.
The contracts across all revenue streams
have varying terms and degrees of
complexity.
We have pinpointed the significant risk of
fraud in revenue recognition to open projects
which have had time incurred within the last 2
months of the year; and the last month of the
year for the retainers revenue. These are
open contracts which are not yet complete
and include more judgement around the
amount of revenue to recognise and therefore
have heightened potential for material
misstatement due to fraud and error.
We have also pinpointed the risk to any
transactions impacting revenue, where the
offsetting side of the journal does not affect
accounts receivable or cash balances,
meaning they pose a risk due to their unusual
nature. This is across all revenue streams.
Relevant disclosures in the Annual Report
and Accounts for the year ended 31 March
2023
• Financial statements: Principal Accounting
Policies
• Financial statements: Note 1 to the
consolidated financial statements,
Segmental analysis
• Financial statements: Note 17 to the
consolidated financial statements,
Contract Assets and Liabilities
Impairment of goodwill and other non-
current assets
In responding to the key audit matter, we performed
the following audit procedures:
We identified impairment of goodwill and
other non-current assets as one of the most
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Key Audit Matter – Group
How our scope addressed the matter – Group
significant assessed risks of material
misstatement due to error.
The carrying value of goodwill at 31 March
2023 was £10.1m (2022: £21.7 million) after
an impairment charge of £12.1m (2022:
£6.1m). Based on the current trading
conditions in the environment within which
the Group operates, we have identified a
significant risk in relation to the impairment of
goodwill and other non-current assets,
pinpointed to the UK cash-generating unit
(CGU), based on the size of the balance and
the expected headroom.
The goodwill in respect of the UK CGU is
subject to an annual impairment review under
International Accounting Standard ('IAS') 36
'Intangible Assets'.
The key judgements made by management in
assessing goodwill and other non-current
assets for impairment include, due to the
sensitivity of amounts determined to changes
in these assumptions, the growth and
discount rates applied in the discounted cash
flow calculations, and the identification of
CGUs.
• Obtained and challenged the impairment review
performed by management, assessing and testing
key inputs;
• Assessed management’s allocation of assets to
CGUs and challenged the appropriateness of
CGUs identified within the group;
• Challenged the assumptions and calculations
incorporated in the impairment review of goodwill
and intangible assets and subsequent impairment
assessments;
• Assessed the reasonableness of the discount rate
calculated by management’s expert, including
through the use of our internal valuation experts;
• Recalculated and challenged the implied growth
rates included in the model by comparing the
actual results to historical forecasting and
assessing post-year end performance against
budget;
• Evaluated management’s sensitivity analysis and
performed additional sensitivities to understand
the impact of reasonably possible changes on the
impairment charge; and
• Assessed the disclosures prepared in the financial
statements for appropriateness in accordance
with IAS 36.
Relevant disclosures in the Annual Report
and Accounts for the year ended 31 March
2023
•
•
Financial statements: Principal
Accounting Policies
Financial statements: Notes 14 and 15 to
the consolidated financial statements,
Goodwill and Other intangible assets,
respectively
Our results
From our audit work performed we are satisfied that
the impairment review is appropriate. We are satisfied
that the impairment charge of £12.1m is not materially
misstated and consequently that the goodwill and
other non-current assets are held at an appropriate
carrying value.
Business Combinations (including deferred
and contingent consideration)
We identified business combinations as one of
the most significant assessed risks of material
misstatement due to error.
The acquisition of Midisi Limited gave rise to
consideration in the form of cash, deferred and
contingent consideration.
IFRS 3 ‘Business Combinations’ requires most
assets and liabilities in the consolidated
financial statements to be recorded at fair
value. There is significant management
judgement involved in determining the fair
value of the assets and liabilities acquired,
In responding to the key audit matter, we performed the
following audit procedures:
• Obtained management’s purchase price allocation
assessment for the acquisition in the year,
assessed it for reasonableness and agreed it to
supporting legal documentation;
• Obtained and inspected legal documentation to
corroborate the details of the acquisition and
understand all elements of the transaction and
agreed the consideration paid / payable to
supporting documentation;
• Read the acquisition documentation to ensure
consideration is appropriately defined and
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Key Audit Matter – Group
How our scope addressed the matter – Group
including the calculation of the fair value of
technology and customer-related intangible
assets acquired, and the discount rate and
long-term growth rates used in the valuation.
There is also significant management
judgement in determining the contingent
consideration as this is reliant on whether
future conditions are met.
.
Relevant disclosures in the Annual Report
and Accounts for the year ended 31 March
2023
•
•
Financial statements: Principal Accounting
Policies
Financial statements: Note 32 to the
consolidated financial statements,
Business combination
quantified, in addition to inspecting the related
conditions to classify deferred and contingent
balances;
• Assessed the treatment of the acquisition in
accordance with IFRS 3, specifically around the
valuation of contingent consideration and intangible
assets recognition;
•
Tested the acquisition balance sheet by agreeing
material balances to supporting evidence, including
cash balances to bank letter;
• Utilised our valuation experts to assist in assessing
the work performed by management in relation to
the valuation of acquired intangible assets and
consideration paid. This included challenging
whether the methodology used in the valuation is in
accordance with acceptable valuation methods and
whether inputs such as future profits, attrition rates
and discount rates used are appropriate; and
• Assessed the disclosures in the financial
statements in relation to these transactions.
Our results
Based on our audit work performed we have not
identified material misstatements relating to the
valuation of intangible assets arising on acquisition.
Key Audit Matter – Group and Parent company How our scope addressed the matter – Group
Going concern
We identified going concern as one of the most
significant assessed risks of material misstatement
due to error.
Due to the disruption caused to the UK economy in
recent years and the current high interest and
inflationary environment, there is a heightened risk
that the entity will not be able to continue in
operation for the foreseeable future.
In recent years the group and parent company
have both suffered losses which have weakened
their respective financial positions.
In undertaking their assessment of going concern
for the Group and the Parent company, the
directors considered the impact of macro-
economic factors in their forecast future
performance of the Group and the Parent
company.
and Parent company
In responding to the key audit matter, we
performed the following audit procedures:
• Obtained management’s assessment of the
use of the going concern assumption
and considered for reasonableness;
• Examined the reasonabless of management’s
going concern assumptions and supporting
information for the going concern period,
including budgets and cash flow forecasts;
• Assessed the accuracy of management’s
forecasting by comparing the reliability of
past forecasts to management’s actual results,
and considered whether management’s
historic forecasting accuracy impacts the
reliance we can place upon the forecasts
provided;
• Obtained management’s sensitivity analysis,
including reverse stress test, and
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The directors have concluded, based on the
various scenarios developed, that the Group and
the Parent company have sufficient resources
available to meet their liabilities as they fall due
untill March 2025, and have concluded that there
are no material uncertainties that may cast
significant doubt over the Group’s and the Parent
company’s ability to continue as a going concern.
assessed the likelihood of the assumptions
which would mean that the going concern
assumption was not appropriate;
• Assessed the plausibility of the mitigating
actions available to management to continue
as a going concern if downside sensitivities
were to crystalise;
• Assessed the financing facilities which are in
place, including speaking directly to the
lenders and obtaining the letters of support
which have been provided from the loan
holders and shareholders;
• Obtained confirmation of post-year end
performance and cash position to assess
whether this is in line with budgeted results;
• Evaluated the arithmetical accuracy and
consistency of management’s going concern
base case model; and
• Assessed the adequacy of related disclosures
within the annual report and accounts.
Relevant disclosures in the Annual Report and
Accounts for the year ended 31 March 2023
Our results
•
•
Financial statements (Group): Principal
accounting policies, Going concern
Financial statements (Parent company) Note 1
‘Accounting policies’ to the Parent company
financial statements, Going concern
We have nothing to report in addition to that stated
in the ‘Conclusions related to going concern’
section of our report.
Key Audit Matter – Parent company
How our scope addressed the matter– Parent
company
Impairment of investments in subsidiaries
We identified impairment of investments in
subsidiaries as one of the most significant
assessed risks of material misstatement due to
error.
The carrying value of the Parent company’s
investments in subsidiaries at 31 March 2023
was £20.5m (2022: £26.2m) after an impairment
charge of £8.8m (2022: £9.2m). Based on the
current trading conditions in the environment
within which the parent company operates, we
have identified an elevated risk in relation to the
impairment of investments in subsidiaries.
The investments held in subsidiaries are subject
to an annual assessment as to whether there is
any indication that the assets may be impaired. If
any such indication exists, management are
required to estimate the recoverable amount of
the investments held in accordance with
International Accounting Standard ('IAS') 36
'Intangible Assets'.
In responding to the key audit matter, we
performed the following audit procedures:
• Obtained management’s assessment of
impairment indicators and considered its
reasonableness;
• Obtained and challenged the impairment
review performed by management, testing
key inputs and performing sensitivity
analysis;
• Challenged the assumptions and
calculations incorporated in the impairment
review of investments in subsidiaries and
subsequent impairment assessments;
• Assessed the reasonableness of the
discount rate calculated by management’s
expert, including the use of our internal
valuation experts;
• Recalculated and challenged the implied
growth rates included in the model by
comparing the actual results to historical
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The key judgements made by management in
assessing the carrying value of investments in
subsidiaries for impairment include the growth
and discount rates applied in the discounted cash
flow calculations, due to the sensitivity of the
determined amount to changes in these
assumptions.
forecasting and assessing post-year end
performance against budget; and
• Assessed the disclosures prepared in the
financial statements for appropriateness in
accordance with IAS 36.
Relevant disclosures in the Annual Report
and Accounts for the year ended 31 March
2023
• Financial statements: Note 12 to the Parent
company financial statements, Investments
Our results
We did not identify a material misstatement in
relation to the impairment charge recognised.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of
identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in
forming the opinion in the auditor’s report.
Materiality was determined as follows:
Materiality measure
Group
Parent company
Materiality for financial
statements as a whole
Materiality threshold
We define materiality as the magnitude of misstatement in the
financial statements that, individually or in the aggregate, could
reasonably be expected to influence the economic decisions of
the users of these financial statements. We use materiality in
determining the nature, timing and extent of our audit work.
£222,000, which is
approximately 1% of the
Group’s revenue.
£140,000, which is 0.5% of
the Parent company’s total
assets at the planning stage of
the audit.
Significant judgements made by
auditor in determining materiality
In determining materiality, we
made the following significant
judgements:
In determining materiality, we
made the following significant
judgements:
• Revenue is a key
• The Parent company is a
performance indicator for
management as identified
within the Strategic Report
and is the focus for further
growth of the Group. We
therefore considered
revenue to be the most
appropriate benchmark for
the Group.
• We determined a
percentage of 1% to be
appropriate based on the
Group’s size and
holding company which has
no trade, so we therefore
considered total assets to
be the most appropriate
benchmark for the Parent
company.
• The percentage of 0.5%
was selected based on the
risk profile of the company
as a component within a
listed entity Group.
Materiality for the current year
is higher than the level that we
determined for the year ended
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Materiality measure
Group
Parent company
31 March 2022 due to
materiality in the prior year
being capped as a percentage
of group materiality.
complexity as an AIM-
listed entity.
Materiality for the current year
is higher than the level that we
determined for the year ended
31 March 2022 due to a
change in the measurement
percentage being applied to
total revenue.
Performance materiality used to
drive the extent of our testing
We set performance materiality at an amount less than
materiality for the financial statements as a whole to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality
for the financial statements as a whole.
Performance materiality threshold
£166,500, which is 75% of
financial statement materiality.
£105,000, which is 75% of
financial statement materiality.
Significant judgements made by
auditor in determining performance
materiality
In determining performance
materiality, we made the
following significant
judgements:
In determining performance
materiality, we made the
following significant
judgements:
•
that management of the
group maintain an effective
control environment; and
• our experience auditing the
financial statements of the
Group, including the limited
number and quantum of
misstatements and
significant control
deficiencies identified in
previous audits.
•
•
that management of the
parent company maintain
an effective control
environment; and
in our experience of
previous audits of the
parent company we have
not identified a significant
number of uncorrected
misstatements nor
significant control
deficiencies.
We determine specific materiality for one or more particular
classes of transactions, account balances or disclosures for
which misstatements of lesser amounts than materiality for the
financial statements as a whole could reasonably be expected to
influence the economic decisions of users taken on the basis of
the financial statements.
We determined a lower level of
specific materiality for the
following areas:
We determined a lower level
of specific materiality for the
following areas:
• Directors’ remuneration; and
• Directors’ remuneration;
• Related party transactions.
and
• Related party transactions.
Specific materiality
Specific materiality
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Materiality measure
Group
Parent company
Communication of
misstatements to the audit
committee
Threshold for communication
We determine a threshold for reporting unadjusted differences to
the audit committee.
£11,100 and misstatements
below that threshold that, in our
view, warrant reporting on
qualitative grounds.
£7,000 and misstatements
below that threshold that, in
our view, warrant reporting on
qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent company
Revenue
£26,892,000
PM
£166,500
75%
FSM
£222,000,
approx.1%
Total assets
£22,771,000
PM
£105,000
75%
FSM
£140,000,
0.5% of total
assets at the
planning
stage
TFPUM
£55,500 25%
TFPUM
£35,000 25%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected
misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the group’s and the parent company’s
business and in particular matters related to:
Understanding the group, its components, and their environments, including group-wide controls
• We obtained an understanding of the group and its environment, including group-wide controls, and assessed
the risks of material misstatement at the group level;
• We obtained an understanding of the individual components, including component specific controls, and
assessed the risks of material misstatement at the Group level. We held planning discussions with the
Group’s management team;
• We obtained an understanding of the business processes for key areas of focus, including significant risks, in
order to confirm our understanding of the control environment across the Group; and
• We documented and assessed the design and implementation of controls related to key audit matters
communicated in this report
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Identifying significant components
• We identified a total of eleven components, of which two were identified as significant based on their
individual financial significance to the Group. The measures used to determine significance were based on
the Group’s revenue, the Group’s loss before tax and the Group’s total assets.
• Additional components were selected based on an assessment of the risk of material misstatement to the
group. For these components an audit of one or more accounts, balances, class of transactions or
disclosures (specific-scope audit) was performed.
Type of work to be performed on financial information of parent and other components (including how it
addressed the key audit matters)
• We performed an audit of the financial information of the component using component materiality (full-scope
audit) on two components identified as significant. These full-scope audits included our work on the revenue
recognition key audit matter as described in the key audit matter section of our report.
• We performed an audit of one or more classes of transactions, account balances or disclosures (specific-
scope audit) on one component identified as likely to include significant risks to the group. We identified
impairment of investments in subsidiaries as a key audit matter and the work we performed to address this is
as described in the key audit matters table above.
• We performed analytical procedures on the financial information of the remaining components.
• We identified impairment of goodwill and other non-current assets and going concern at a group level as key
audit matters. The procedures performed in respect of these have been included in the key audit matter
section of our report.
Performance of our audit
• We performed full and specific-scope audit procedures across the components in accordance with the scope
described above with the support of one component auditor.
Audit approach
No. of
components
% coverage
total assets
% coverage
revenue
%
coverage
LBT
100
0
0
27
56
17
97
0
3
100%
100%
100%
Full-scope audit
Specific-scope audit
Analytical procedures
Total
2
1
8
10
Communications with component auditors
•
The Group engagement team communicated with one component auditor covering one component
performing a single full-scope audit. The Group audit team were involved in all stages of their work, from
planning and risk assessment, through fieldwork and as part of concluding procedures.
Changes in approach from the previous period
•
Our audit scope has changed since the prior year. As a result of the trade and assets of Frank Digital Pty
Ltd being transferred into Jaywing Australia Pty Limited the component is no longer individually financially
significant and therefore analytical procedures were performed at Group level.
Other information
The other information comprises the information included in the annual report and accounts for the year ended 31
March 2023, other than the financial statements and our auditor’s report thereon. The directors are responsible
for the other information contained within the annual report and accounts for the year ended 31 March 2023. Our
33 Jaywing plc Annual Report and Accounts 2023
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opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether there is a material misstatement in the financial statements themsleves. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with
applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 22, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
34 Jaywing plc Annual Report and Accounts 2023
DocuSign Envelope ID: ADC985DC-8762-41CA-A278-3C55258E307F Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below:
• We enquired of management whether they were aware of any instances of non-compliance with laws and
regulations or whether they had any knowledge of actual, suspected or alleged fraud. We corroborated our
enquiries through our analysis of board minutes.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and
the parent company and determined that the most significant are UK-adopted international accounting
standards (for the group), Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (for the parent
company) and the Companies Act 2006.
• We identified areas of laws and regulations that could reasonably be expected to have a material effect on
the financial statements from our general commercial and sector experience, through discussion with the
directors and the Audit Committee, and from inspection of the Group board minutes and legal and regulatory
correspondence. We discussed the policies and procedures regarding compliance with laws and regulations
across the Group with the directors and the Audit Committee, and reviewed meeting minutes to identify any
instances of non-compliance with laws and regulations.
• We assessed the susceptibility of Jaywing plc's consolidated financial statements to material misstatement,
including how fraud might occur, by meeting with management from relevant parts of the business to
understand where they considered there was a susceptibility to fraud. We also considered performance
targets and their influence on efforts made by management to manage earnings or influence the perceptions
of analysts. This included the evaluation of the risk of management override of controls. We determined that
the principal risks were in relation to:
journal entries that reclassified costs from the income statement to the balance sheet or were posted by
senior finance personel;
potential management bias in determining accounting estimates, especially in relation to the calculation of
impairment of intangible assets; and
transactions with related parties.
• Audit procedures performed by the engagement team included:
-
-
-
-
-
-
journal entry testing, with a focus on material manual journals, including those posted by senior finance
personnel and those posted directly to the consolidation that reduced costs in the last quarter of the
financial year;
performing stress testing on management’s impairment calculation;
challenging assumptions and judgements made by management in its significant accounting estimates;
testing the completeness of the Group's related party transactions through information obtained at the
Parent and other component entities and corroborating that those transactions had a valid business
purpose;
assessing matters reported through the Group's whistleblowing programme and the results of
management's evaluation of such matters; and
assessing the compliance of disclosures in the annual report and accounts with applicable financial
reporting requirements.
•
These audit procedures were designed to provide reasonable assurance that the financial statements were
free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently
more difficult than detecting those that result from error, as fraud may involve collusion, deliberate
concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with
laws and regulations is from events and transactions reflected in the financial statements, the less likely we
would become aware of it.
•
The engagement partner’s assessment of the appropriateness of the collective competence and capabilities
of the engagement team included consideration of the engagement team's:
35 Jaywing plc Annual Report and Accounts 2023
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-
-
understanding of, and practical experience with, audit engagements of a similar nature and complexity,
through appropriate training and participation;
knowledge of the industry in which the Group and Parent company operate; and
understanding of the legal and regulatory frameworks applicable to the Group and the Parent company.
• Relevant laws and regulations and potential fraud risks were communicated to all engagement team
members. We remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
• We enquired of the component auditor to request details of any instances of non-compliance with laws and
regulations that could give rise to a material misstatement of the Group financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our reithereport
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Victoria McLoughlin
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Leeds
6 September 2023
36 Jaywing plc Annual Report and Accounts 2023
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Consolidated Statement of Comprehensive Income
For the year ended 31 March
Revenue
Other operating income
Operating expenses
Operating Loss
Finance costs
Loss before tax
Tax (expense)/credit
Loss for the year
Note
1
2
3
4
5
Loss for the year is attributable to:
Non-controlling interests
Owners of the parent
Other comprehensive income
Items that will be reclassified subsequently
to profit or loss
Exchange differences on retranslation of foreign
operations
27
Total comprehensive loss for the period
Total comprehensive loss is attributable to:
Non-controlling interests
Owners of the Parent
Basic and diluted loss per share
Loss per share
26
6
2023
£’000
Restated
2022*
£’000
22,062
23,324
507
40
(33,909)
(29,450)
(11,340)
(1,195)
(12,535)
(291)
(12,826)
-
(12,826)
(12,826)
(368)
(13,194)
-
(13,194)
(13,194)
(6,086)
(574)
(6,660)
123
(6,537)
12
(6,549)
(6,537)
279
(6,258)
12
(6,270)
(6,258)
(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.
37 Jaywing plc Annual Report and Accounts 2023
DocuSign Envelope ID: ADC985DC-8762-41CA-A278-3C55258E307F
Consolidated Balance Sheet
As at 31 March
Non-current assets
Property, plant and equipment
Goodwill
Deferred tax asset
Other intangible assets
Current assets
Trade and other receivables
Contract assets
Current tax asset
Cash and cash equivalents
Total assets
Current liabilities
Borrowings
Trade and other payables
Contract Liabilities
Current lease liabilities
Current tax liabilities
Provisions
Non-current liabilities
Non-current lease liabilities
Provision
Deferred tax liability
Trade and other payables
Total liabilities
Net (liabilities) / assets
Equity
Equity attributable to owners of the parent
Share capital
Share premium
Capital redemption reserve
Treasury shares
Foreign currency translation reserve
Retained earnings
Equity attributable to owners of the parent
Non-controlling interest
Total equity
Note
12
14
20
15
16
17
18
18
19
17
13
21
13
21
20
19
22
23
25
24
27
28
26
2023
£’000
4,023
10,602
620
2,125
17,370
4,418
352
-
1,089
5,859
23,229
11,435
5,810
983
380
20
-
18,628
2,638
570
592
2,021
5,821
Restated
2022*
£’000
2,173
21,705
644
69
24,591
6,415
453
32
714
7,614
32,205
9,007
7,931
1,408
395
-
42
18,783
1,448
-
-
-
1,448
24,449
20,231
(1,220)
11,974
34,992
10,088
125
(25)
(250)
(46,150)
(1,220)
-
(1,220)
34,992
10,088
125
(25)
118
(33,324)
11,974
-
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.
38 Jaywing plc Annual Report and Accounts 2023
DocuSign Envelope ID: ADC985DC-8762-41CA-A278-3C55258E307F
Consolidated Cash Flow Statement
For the year ended 31 March
Cash flow from operating activities
Loss after tax
Adjustments for:
Impairment of Goodwill
Depreciation of property, plant & equipment
Depreciation and impairment of right of use assets
Amortisation of intangibles
Financial costs
Taxation expense/(credit)
Operating cash flow before changes in working capital
Decrease/(Increase) in trade and other receivables
(Decrease)/Increase in trade and other payables
Cash generated from operations
Interest paid
Net tax paid
Net cash flow from operating activities
Cash flow from investing activities
Payment of deferred consideration
Acquisition of subsidiaries
Acquisition of property, plant and equipment
Net cash outflow from investing activities
Cash flow from financing activities
Increase in borrowings
Repayment of Lease Liabilities (IFRS16)
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents comprise:
Cash at bank and in hand
Note
2023
£’000
Restated
2022*
£’000
(12,826)
(6,537)
3
3
3
3
4
5
33
12
18
18
18
12,095
245
641
320
1,195
291
1,961
1,986
(2,654)
1,293
-
(21)
1,272
(818)
(400)
(483)
(1,701)
1,500
(696)
804
375
714
1,089
6,131
327
752
730
574
(123)
1,854
(168)
(99)
1,587
(58)
(240)
1,289
(442)
-
(163)
(605)
-
(722)
(722)
(38)
752
714
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.
39 Jaywing plc Annual Report and Accounts 2023
DocuSign Envelope ID: ADC985DC-8762-41CA-A278-3C55258E307F
Consolidated Statement of Changes in Equity
Share
Capital
Share
Premium
Account
Capital
Redempti
on
Reserve
Treasury
Shares
Foreign
Currency
Translatio
n Reserve
Retained
Earnings
Equity
attributabl
e to
parent
Non-
controlling
Interest
Total
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
34,992
10,088
125
(25)
(161)
(26,332)
18,687
354
19,041
-
-
-
-
-
(153)
(153)
-
(153)
34,992
10,088
125
(25)
(161)
(26,485)
18,534
354
18,888
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
279
279
(290)
(290)
(290)
(290)
(6,549)
(6,549)
-
279
(366)
(366)
12
-
(656)
(656)
(6,537)
279
(6,839)
(6,560)
(354)
(6,914)
Balance at 31 March 2021 (as
previously stated)
Prior year adjustment (see note
34)
Restated
Balance at 31 March 2021*
Acquisition of subsidiaries NCI
Transactions with owners
Profit/(loss) for the period*
Retranslation of foreign currency
Total comprehensive income for
the period*
Balance at 31 March 2022*
34,992
10,088
125
(25)
118
(33,324)
11,974
Loss for the period
Retranslation of foreign currency
Total comprehensive income for
the period
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,826)
(12,826)
(368)
-
(368)
(368)
(12,826)
(13,194)
Balance at 31 March 2023
34,992
10,088
125
(25)
(250)
(46,150)
(1,220)
-
-
-
-
-
11,974
(12,826)
(368)
(13,194)
(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.
40 Jaywing plc Annual Report and Accounts 2023
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Principal Accounting Policies
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).
41 Jaywing plc Annual Report and Accounts 2023
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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.
42 Jaywing plc Annual Report and Accounts 2023
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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
Office equipment
Buildings
-
-
-
over period of lease
3 - 5 years
over period of lease
It has been assumed that all assets will be used until the end of their economic life.
43 Jaywing plc Annual Report and Accounts 2023
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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
Development costs
Trademarks
Order books
Intellectual property
-
-
-
-
-
4 to 12 years
3 to 6 years
2 to 20 years
1 year
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.
44 Jaywing plc Annual Report and Accounts 2023
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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.
45 Jaywing plc Annual Report and Accounts 2023
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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.
46 Jaywing plc Annual Report and Accounts 2023
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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.
47 Jaywing plc Annual Report and Accounts 2023
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Accounting estimates
Impairment of goodwill and other intangible assets
The carrying amount of goodwill is £10,602k (2022: £21,705k) and the carrying amount of other intangible assets is £2,125k
(2022: £69k). The Directors are confident that the carrying amount of goodwill and other intangible assets is fairly stated and
have carried out an impairment review. The forecast cash generation for each CGU and the WACC represent significant
assumptions and should the assumptions prove to be incorrect, there would be a significant risk of a material adjustment
within the next financial year. The sensitivity to the key assumptions is shown in Note 14.
Business combinations and Contingent Consideration
Management uses valuation techniques when determining the fair values of certain assets and liabilities acquired in a business
combination (see Note 33). In particular, the fair value of contingent consideration which is a Level 3 Fair Value asset with
movements through the P&L and is dependent on the outcome of the acquirees’ future revenues. The key judgement relates to
the 30% of estimated revenues in future periods and the 11.5% discount rate used for which management undertake regular
reviews of forecasts and obtain external support for the WACC calculation (see Note 33). The present value of the maximum
consideration not booked is £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.
48 Jaywing plc Annual Report and Accounts 2023
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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
Revenue:
United Kingdom
Australia
Total
Contribution (1):
United Kingdom
Australia
Total
Adjusted EBITDA (2):
United Kingdom
Australia
Total
All revenue is recognised over time.
2023
£'000
16,380
5,682
22,062
2023
£'000
4,886
2,142
7,028
2023
£'000
1,882
528
2,410
2022
£'000
18,099
5,225
23,324
2022
£'000
4,849
2,057
6,906
2022
£'000
1,680
526
2,206
(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:
United Kingdom
Australia
2. Other operating income
Covid-19 government support
Other income
2023
£'000
13,859
3,511
17,370
2023
£'000
-
507
507
2022
£'000
21,576
3,015
24,591
2022
£'000
40
-
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
49 Jaywing plc Annual Report and Accounts 2023
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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
Continuing operations:
Wages and salaries
Social Security Costs
Other Pension Costs
Impairment of Goodwill
Depreciation of property, plant & equipment
Depreciation and impairment of right of use assets
Amortisation
Release of deferred consideration
Court legal fees
Restructuring costs
Acquisition and related costs
Other operating expenses
Total operating expenses
4. Finance costs
Interest expense on borrowings
Withholding tax on borrowings interest expense
Interest on lease liabilities (see note 13)
Interest on deferred and contingent consideration
Total
5. Tax credit
The tax charge / (credit) is based on the loss for the year and represents:
UK corporation tax at 19% (2022: 19%)
Adjustment for prior year
Total current tax
Deferred tax:
Origination and reversal of timing differences
Total tax charge / (credit)
The tax charge / (credit) can be explained as follows:
Loss before tax
Tax using the UK corporation tax rate of 19% (2022: 19%)
Effect of:
Recognition of previously unrecognised losses
Goodwill impairment
Adjustment for prior year
Non-deductible expenses
Current year charge / (credit)
2023
£'000
14,210
1,306
905
12,095
245
641
320
-
-
190
259
3,738
33,909
2023
£'000
748
180
142
125
1,195
2023
£'000
152
198
350
(59)
291
2023
£’000
(12,535)
2022
£'000
14,865
1,724
915
6,131
327
752
730
(882)
774
352
-
3,762
29,450
Restated
2022*
£'000
416
100
58
-
574
Restated
2022*
£'000
48
-
48
(171)
(123)
Restated
2022*
£'000
(6,660)
(2,382)
(1,265)
(129)
2,298
198
306
291
(125)
1,164
-
103
(123)
50 Jaywing plc Annual Report and Accounts 2023
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6. Loss per share
Basic loss per share
Diluted loss per share
2023
Pence per
Share
Restated
2022*
Pence per
Share
(13.73p)
(7.01p)
(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:
Loss for the year attributable to shareholders
Weighted average number of ordinary shares in issue:
Basic and diluted
7. Auditor's remuneration
Auditor's remuneration:
Audit of Company Financial Statements
Other amounts payable to the auditor and its associates in respect of:
Audit of Subsidiary Company Financial Statements
Audit related assurance services
Taxation compliance services
2023
£'000
Restated
2022*
£'000
(12,826)
(6,549)
2023
Number
2022
Number
93,432,217
93,432,217
2023
£'000
48
118
5
30
2022
£'000
45
111
5
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.
51 Jaywing plc Annual Report and Accounts 2023
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8. Key management personnel compensation
Key management of the Group is considered to be the Board of Directors and the Senior Leadership Team.
Short-term benefits:
Salaries including bonuses
Social security costs
Total short-term benefits
Defined contribution pension plan costs
Key management compensation
Further information in respect of Directors is given in the Directors’ Remuneration Report.
Remuneration in respect of Directors was as follows:
Emoluments receivable
Fees paid to third parties for Directors’ services
Company pension contributions to money purchase pension schemes
2023
£’000
1,513
190
1,703
53
1,756
2023
£'000
342
30
9
381
2022
£’000
1,703
235
1,938
68
2,006
2022
£'000
555
30
15
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:
Management and administration
Client Service Staff
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
Total
10. Employee benefits
2023
Number
2022
Number
34
251
285
2023
£'000
14,210
1,306
905
16,421
35
261
296
2022
£'000
14,865
1,724
915
17,504
There were no share options outstanding at the year-end. Refer to note 35 for details of employee benefits issues post year
end.
52 Jaywing plc Annual Report and Accounts 2023
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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
Frank Digital PTY
Proportion of ownership
interests and voting rights held
by NCI
2022
%
-
2023
%
-
Total comprehensive
income allocated to NCI
2023
£’000
-
-
2022
£’000
12
12
Accumulated NCI
2023
£’000
-
-
2022
£’000
-
-
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
Cost
At 31 March 2021
Additions
Right of use asset additions
At 31 March 2022
Additions
Right of use asset additions
Disposals
At 31 March 2023
Depreciation
At 31 March 2021
Depreciation charge for the year
Impairment of right of use asset
Depreciation of right of use asset
At 31 March 2022
Depreciation charge for the year
Depreciation of right of use asset
Depreciation on disposals
At 31 March 2023
Net book value
At 31 March 2023
At 31 March 2022
At 31 March 2021
Buildings
£'000
Leasehold
improvements
£'000
Office
equipment
£'000
Total
£'000
2,673
-
985
3,658
-
2,253
-
5,911
1,280
-
44
674
1,998
-
588
-
2,586
3,325
1,660
1,393
1,438
-
-
1,438
-
-
-
1,438
1,125
102
-
-
1,227
64
-
-
1,291
147
211
313
594
163
44
801
483
-
(283)
1,001
240
225
-
34
499
181
53
(283)
450
551
302
354
4,705
163
1,029
5,897
483
2,253
(283)
8,350
2,645
327
44
708
3,724
245
641
(283)
4,327
4,023
2,173
2,060
The assets, excluding the right of use assets, are covered by a fixed charge in favour of the Group’s lenders.
53 Jaywing plc Annual Report and Accounts 2023
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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:
Right of use assets
Buildings
Office equipment
Lease liabilities
Current
Non-current
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
Depreciation and impairment charge of right of use assets
Buildings
Office equipment
Interest expense (included in finance cost)
2023
£'000
3,325
74
3,399
380
2,638
3,018
2023
£'000
588
53
641
142
2022
£'000
1,660
90
1,750
395
1,448
1,843
2022
£'000
718
34
752
58
There are no other amounts relating to low value or short term leases excluded from the above amounts.
14. Goodwill
Cost
At 31 March 2021
Foreign Exchange
At 31 March 2022
Recognition on acquisition
Foreign Exchange
At 31 March 2023
Impairment
At 31 March 2021 and 31 March 2022
Impairment charge
At 31 March 2022
Impairment charge
At 31 March 2023
Net book value
At 31 March 2022
At 31 March 2022
At 31 March 2023
Goodwill by CGU
United Kingdom
Australia
Goodwill
£'000
27,581
255
27,836
1,279
(287)
28,828
-
(6,131)
(6,131)
(12,095)
(18,226)
27,581
21,705
10,602
2022
£'000
18,742
2,963
21,705
2023
£'000
7,926
2,676
10,602
54 Jaywing plc Annual Report and Accounts 2023
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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
2023/24 to 2024/25
2024/25 to 2025/26
2025/26 to 2026/27
2026/27 to Perpetuity
Revenue
8.0%
7.0%
7.0%
1.0%
Costs
6.0%
6.0%
6.0%
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.
55 Jaywing plc Annual Report and Accounts 2023
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15. Other intangible assets
Customer
relationships
Order books
Trademarks
Intellectual
property
Development
costs
£'000
£’000
£’000
£’000
£'000
Total
£'000
Cost
At 31 March 2021
Additions during the year
At 31 March 2022
Additions during the year (note 33)
At 31 March 2023
Amortisation
At 31 March 2021
Amortisation charge for the year
At 31 March 2022
Amortisation charge for the year
21,305
-
21,305
-
21,305
20,714
591
21,305
-
1,457
-
1,457
-
1,457
1,457
-
1,457
-
At 31 March 2023
21,305
1,457
Net book amount
At 31 March 2023
At 31 March 2022
At 1 April 2021
-
-
591
-
-
-
1,080
-
1,080
-
1,080
1,080
-
1,080
-
1,080
-
-
-
-
-
-
2,376
2,376
-
-
-
277
277
2,099
-
-
1,421
25,263
-
1,421
-
1,421
1,213
139
1,352
43
-
25,263
2,376
27,639
24,464
730
25,194
320
1,395
25,514
26
69
208
2,125
69
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
Trade receivables
Prepayments
Other receivables
2023
£'000
3,723
508
187
4,418
2022
£'000
5,629
589
197
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.
56 Jaywing plc Annual Report and Accounts 2023
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17. Contract assets and liabilities
Contract assets
Accrued income
Contract assets as at 31 March 2022
Amounts billed on contract assets as at 31 March 2022
New contract assets recognised
Contract assets as at 31 March 2023
2023
£'000
352
2022
£'000
453
£'000
453
(437)
336
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
Deferred income
Contract liabilities as at 31 March 2022
Revenue recognised in the year on contract liabilities as at 31 March 2022
New contract liabilities net of revenue recognised against these
Contract liabilities as at 31 March 2023
2023
£'000
983
2022
£'000
1,408
£'000
1,408
(1,314)
889
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.
57 Jaywing plc Annual Report and Accounts 2023
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18. Borrowings and Net Debt
Borrowings
Average interest rates at the balance sheet date were:
2023
£'000
Restated*
2022
£'000
11,435
9,007
%
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
Cash and cash equivalents
Borrowings
Net Debt excluding lease expense and
deferred consideration
Reconciliation of Net debt
Borrowings
Lease liability
Deferred and Contingent
Consideration
Financial liabilities
Cash and cash equivalents
Net debt
Restated*
1 April
2022
£’000
714
(9,007)
(8,293)
Restated*
1 April
2022
£’000
(9,007)
(1,843)
(626)
(11,476)
714
(10,762)
Cash flow
Draw down
Accrual
recognised
31 March
2023
£’000
£’000
£’000
£’000
375
-
375
-
(1,500)
-
(928)
1,089
(11,435)
(1,500)
(928)
(10,346)
Cash flows
Draw down
Accrual
recognised
31 March
2023
£’000
£’000
£’000
£’000
-
696
776
1,472
375
1,847
(1,500)
-
-
(1,500)
-
(1,500)
(928)
(1,871)
(2,694)
(5,493)
-
(5,493)
(11,435)
(3,018)
(2,544)
(16,997)
1,089
(15,908)
58 Jaywing plc Annual Report and Accounts 2023
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19. Trade and other payables
Trade payables
Tax and social security
Accruals
Deferred consideration payable on acquisition of subsidiary undertakings
Contingent consideration payable on acquisition of subsidiary undertakings
Other payables
Trade and other payables due in less than one year
Deferred consideration payable on acquisition of subsidiary undertakings
Contingent consideration payable on acquisition of subsidiary undertakings
Trade and other payables due in greater than one year
2023
£'000
2,169
1,519
946
414
109
653
5,810
770
1,251
2,021
Restated
2022*
£'000
3,686
1,125
1,678*
626
-
816*
7,931
-
-
-
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:
Accelerated capital allowances on property, plant and equipment:
At start of year
Deferred tax on acquisition
Unwind of deferred tax on acquisition
Origination and reversal of temporary differences
At end of year
Other temporary differences:
At start of year
Origination and reversal of temporary differences
Utilisation/(Recognition) of previously unrecognised losses
At end of year
Total deferred tax:
At start of year
Deferred tax on acquisition
Origination and reversal of temporary differences
At end of year
Origination on acquisition
Deferred tax is included within:
Deferred tax liability
Deferred tax asset
2023
£'000
2022
£'000
10
661
(69)
28
630
(654)
80
(129)
(703)
(644)
592
24
(28)
592
(620)
(28)
(48)
-
-
58
10
(425)
(104)
(125)
(654)
(473)
-
(171)
(644)
-
(644)
(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.
59 Jaywing plc Annual Report and Accounts 2023
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21. Provisions
The carrying amounts and the movement in the provision account are as follows:
At 1 April 2022
Additional provisions
Amounts utilised
At 31 March 2023
Dilapidations
£'000
42
570
(42)
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:
Authorised Share Capital at 31 March
2022 and at 31 March 2023
Allotted, issued and fully paid
45p deferred
shares
5p ordinary
shares
45,000
10,000
At 31 March 2022
At 31 March 2023
45p deferred
shares
Number
67,378,520
67,378,520
5p ordinary
shares
Number
93,432,217
93,432,217
£’000
34,992
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
At start and end of year
2023
£'000
2022
£'000
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
£'000
2022
£'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.
60 Jaywing plc Annual Report and Accounts 2023
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25. Capital redemption reserve
At start and end of year
2023
£'000
2022
£'000
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
At start of year
Acquisition of non-controlling interest (note 11)
Share of profit for the year
At end of year
2023
£'000
-
-
-
-
2022
£'000
354
(366)
12
-
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
At start of year
Exchange differences on translation of foreign operations
At end of year
2023
£’000
118
(368)
(250)
2022
£’000
(161)
279
118
Foreign currency translation reserve represents the exchange differences on retranslation of foreign operations.
28. Retained earnings
At start of year
Acquisition of subsidiaries NCI
Retained loss for the year
At end of year
2023
£'000
(33,324)
-
(12,826)
(46,150)
Restated
2022*
£'000
(26,485)
(290)
(6,549)
(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.
61 Jaywing plc Annual Report and Accounts 2023
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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.
62 Jaywing plc Annual Report and Accounts 2023
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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.
Financial assets:
Floating interest rate:
Cash
Zero interest rate:
Trade receivables
Financial liabilities:
Floating interest rate:
Bank loans/revolving facility
Zero interest rate:
Trade payables
2023
£'000
2022
£'000
1,089
714
3,723
4,812
5,629
6,343
11,435
9,007
2,169
13,604
3,686
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
Bank borrowings
Lease liabilities
Deferred consideration payable on acquisition of subsidiary undertakings
Contingent consideration payable on acquisition of subsidiary undertakings
Trade and other payables
Total amount due
Current
Within 6
months
6 to 12
months
Non-current
1 to 5
years
later than
5 years
£'000
11,435
190
231
34
6,270
18,160
£'000
-
190
183
75
-
448
£'000
-
1,980
770
1,251
-
4,001
£'000
-
658
-
-
-
658
63 Jaywing plc Annual Report and Accounts 2023
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This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting period as follows:
31 March 2022
Bank borrowings
Lease liabilities
Deferred consideration payable on acquisition of subsidiary undertakings
Trade and other payables
Total amount due
Current
Within 6
months
6 to 12
months
Non-current
1 to 5
years
later than
5 years
£'000
9,007
197
626
8,713
18,543
£'000
-
198
-
-
198
£'000
-
1,448
-
-
1,448
£'000
-
-
-
-
-
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.
64 Jaywing plc Annual Report and Accounts 2023
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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:
Financial assets
Financial assets measured at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial liabilities:
Financial liabilities measured at amortised cost
Borrowings
Lease liabilities
Deferred consideration payable on acquisition of subsidiary undertakings
Trade and other payables
Provisions for liabilities
Financial liabilities measured at fair value
Contingent consideration payable on acquisition of subsidiary undertakings
2023
£'000
3,910
1,089
4,999
(11,435)
(3,018)
(1,184)
(6,270)
(570)
(1,360)
(23,837)
Restated
2022*
£'000
5,826
714
6,540
(9,007)
(1,843)
(626)
(8,713)
(42)
-
(20,231)
Net financial assets and liabilities
(18,838)
(13,691)
Plant, property and equipment
Goodwill
Other intangible assets
Contract assets
Prepayments
Deferred tax asset
Deferred tax liability
Taxation (payable)/receivable
4,023
10,602
2,125
352
508
620
(592)
(20)
17,618
2,173
21,705
69
453
589
644
-
32
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:
Total equity
2023
£'000
2022
£'000
(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.
65 Jaywing plc Annual Report and Accounts 2023
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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
Put and call options and other
deferred consideration
Contingent Consideration
Probability of meeting target
Estimate of
the input
100%
Sensitivity of the fair value
measurement to input
Not applicable
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:
Balance at 31 March 2021
Amount recognised through retained earnings
Balance at 31 March 2022
Amount recognised through acquisition
Interest expenses
Balance at 31 March 2023
Put/call
options
£’000
49
(49)
Contingent
Consideration
£’000
-
-
-
-
-
-
-
1,262
98
1,360
66 Jaywing plc Annual Report and Accounts 2023
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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:
Assets
Goodwill
Intangible assets (note 15)
Liabilities
Deferred tax
Accruals
Social security and other taxes
Total identifiable net assets at fair value
Purchase consideration
Satisfied by:
Cash
Deferred consideration
Contingent consideration
Total consideration
Fair value on
acquisition
£’000
1,279
2,376
3,655
(661)
(3)
(22)
(686)
2,969
400
1,307
1,262
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.
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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
(6,437)
(100)
(6,537)
2022
£000
12,227
(253)
11,974
Restated
2022
£’000
23,324
40
(29,450)
(6,086)
(574)
Loss for the year as previously stated
Adjustment 1 - Recognition of withholding tax expense
Loss for the year as restated
Total equity for the year as previously stated
Adjustment 2 - Recognition of withholding tax expense
Total equity for the year as restated
Statement of Comprehensive Income
For the year ended 31 March
2022 Adjustment 1
Revenue
Other operating income
Operating expenses
Operating Loss
Finance costs
Loss before tax
Tax (expense)/credit
Loss for the year
Loss for the year is attributable to:
Non-controlling interests
Owners of the parent
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
Exchange differences on retranslation of foreign operations
Total comprehensive loss for the period
Total comprehensive loss is attributable to:
Non-controlling interests
Owners of the Parent
Basic and diluted loss per share
Loss per share
£’000
23,324
40
(29,450)
(6,086)
(474)
(6,560)
123
-
-
-
-
(100)
(100)
(6,660)
-
123
(6,437)
(100)
(6,537)
12
(6,449)
(6,437)
-
(100)
(100)
12
(6,549)
(6,537)
279
(6,158)
-
279
(100)
(6,258)
12
(6,170)
(6,158)
-
(100)
(100)
12
(6,270)
(6,258)
(6.90p)
(0.11p)
(7.01p)
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Statement of Financial Position
As at 31 March
2022
Adjustment 2
Non-current assets
Property, plant and equipment
Goodwill
Deferred tax asset
Other intangible assets
Current assets
Trade and other receivables
Contract assets
Current tax asset
Cash and cash equivalents
Total assets
Current liabilities
Borrowings
Trade and other payables
Contract Liabilities
Current lease liabilities
Current tax liabilities
Provisions
Non-current liabilities
Non-current lease liabilities
Total liabilities
£’000
2,173
21,705
644
69
24,591
6,415
453
32
714
7,614
32,205
8,754
7,931
1,408
395
-
42
-
-
-
-
-
-
-
-
-
-
-
253
-
-
-
-
-
Restated
2022
£’000
2,173
21,705
644
69
24,591
6,415
453
32
714
7,614
32,205
9,007
7,931
1,408
395
-
42
18,530
253
18,783
1,448
1,448
19,978
-
-
1,448
1,448
253
20,231
Net (liabilities) / assets
12,227
(253)
11,974
Equity
Equity attributable to owners of the parent
Share capital
Share premium
Capital redemption reserve
Treasury shares
Foreign currency translation reserve
Retained earnings
Equity attributable to owners of the parent
Non-controlling interest
Total equity
34,992
10,088
125
(25)
118
(33,071)
12,227
-
12,227
-
-
-
-
-
(253)
34,992
10,088
125
(25)
118
(33,324)
(253)
11,974
-
-
(253)
11,974
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Statement of Cash Flows
As at 31 March
Cash flow from operating activities
Loss after tax
Adjustments for:
Impairment of Goodwill
Depreciation of property, plant & equipment
Depreciation and impairment of right of use assets
Amortisation of intangibles
Financial costs
Taxation expense/(credit)
Operating cash flow before changes in working capital
Decrease/(Increase) in trade and other receivables
(Decrease)/Increase in trade and other payables
Cash generated from operations
Interest paid
Net tax paid
Net cash flow from operating activities
Cash flow from investing activities
Payment of deferred consideration
Acquisition of subsidiaries
Acquisition of property, plant and equipment
Net cash outflow from investing activities
Cash flow from financing activities
Increase in borrowings
Repayment of Lease Liabilities (IFRS16)
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents comprise:
Cash at bank and in hand
2022 Adjustment 1
£’000
Restated
2022
£’000
(6,437)
(100)
(6,537)
6,131
327
752
730
474
(123)
1,854
(168)
(99)
1,587
(58)
(240)
1,289
(442)
-
(163)
(605)
-
(722)
(722)
(38)
752
714
714
-
-
-
-
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,131
327
752
730
574
(123)
1,854
(168)
(99)
1,587
(58)
(240)
1,289
(442)
-
(163)
(605)
-
(722)
(722)
(38)
752
714
714
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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.
71 Jaywing plc Annual Report and Accounts 2023
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Company Financial Statements
Company Profit and Loss account
Turnover
Administrative expenses
Operating loss
Income from fixed asset investment
Other income
Finance Costs
Loss on ordinary activities before taxation
Taxation on ordinary activities
Note
2023
£'000
Restated
2022*
£'000
2
3
4
4
5
6
-
(10,275)
-
(10,743)
(10,275)
(10,743)
-
418
505
-
(1,100)
(560)
(10,870)
(10,885)
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.
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Company Balance Sheet
Non-current assets
Tangible assets
Deferred tax
Investments
Current assets
Cash at bank
Debtors due within one year
Current liabilities
Borrowings
Creditors: amounts falling due within one year
Total assets less current liabilities
Non-current liabilities
Creditors: amounts falling due after more than one year
Provisions
Net (liabilities)/assets
Equity
Called up share capital
Share premium account
Treasury shares
Capital redemption reserve
Profit and loss account
Total equity
Note
10
21
12
13
17
14
15
16
18
19
20
19
19
2023
£'000
1,154
717
20,457
22,328
1
442
443
(11,435)
(14,757)
(3,421)
(2,625)
(290)
(6,336)
34,992
10,088
(25)
125
(51,516)
(6,336)
Restated
2022*
£'000
1,040
605
26,235
27,880
2
575
577
(9,007)
(14,351)
5,099
(690)
-
4,409
34,992
10,088
(25)
125
(40,771)
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.
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Company Statement of Changes in Equity
Called-up
Share
Capital
£'000
Share
Premium
account
£’000
Treasury
Shares
£’000
Capital
Redemption
Reserve
£’000
Profit
and loss
account
£'000
Total
£'000
At 1 April 2021 (as previously
stated)
Prior year adjustment (see note
26)
34,992
10,088
-
-
At 1 April 2021 (restated*)
34,992
10,088
Release of Put / Call Option
Loss for the year and total other
comprehensive income*
Total comprehensive income
-
-
-
-
-
-
At 31 March 2022*
34,992
10,088
At 1 April 2022*
34,992
10,088
Loss for the year and total other
comprehensive income
Total comprehensive income
-
-
-
-
(25)
-
(25)
-
-
-
(25)
(25)
-
-
125
(30,355)
14,825
-
(153)
(153)
125
(30,508)
14,672
-
-
-
49
49
(10,312)
(10,312)
(10,263)
(10,263)
125
(40,771)
4,409
125
(40,771)
4,409
-
-
(10,745)
(10,745)
(10,745)
(10,745)
(6,336)
At 31 March 2023
34,992
10,088
(25)
125
(51,516)
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.
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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
2
3
4
5
6
7
8
9
10
11
12.
A statement of cash flows and related notes
The requirement to produce a balance sheet at the beginning of the earliest comparative period
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
Presentation of comparative reconciliations for property, plant and equipment, intangible assets
Capital management disclosures
Presentation of comparative reconciliation of the number of shares outstanding at the beginning and at the end of the
period
The effect of future accounting standards not adopted
Certain share-based payment disclosures
Disclosures in relation to impairment of assets
Disclosures in respect of financial instruments (other than disclosures required as a result of recording financial
instruments at fair value)
IFRS 9 disclosures in respect of allowances for expected credit losses reconciliations and credit risk and hedge
accounting
IFRS 15 disclosures in respect of disaggregation of revenue, contract assets reconciliations and contract liabilities
reconciliation and unsatisfied performance obligations
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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.
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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.
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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.
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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.
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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
Impairment of investment (note 12)
Administrative expenses
Total administrative expenses
3. Operating loss
Operating loss is stated after charging:
Impairment of investment (note 12)
Depreciation of owned fixed assets
Depreciation of right of use assets
4.
Income from fixed asset investments and other income
Other income
Dividends received from subsidiary companies
2023
£'000
8,747
1,528
10,275
2023
£'000
8,747
67
246
2023
£'000
505
-
2022
£'000
9,185
1,558
10,743
2022
£'000
9,185
73
241
2022
£'000
-
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.
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5. Finance costs
Bank interest payable
Withholding tax on borrowings interest expense
Interest on lease liability (note 11)
Interest on deferred and contingent consideration
Total
6. Tax on ordinary activities
The tax credit/(charge) is based on the loss for the year and represents:
UK corporation tax at 19% (2022: 19%)
Total current tax
Deferred tax:
Origination and reversal of timing differences
Total tax credit
The tax credit can be explained as follows:
Loss before tax
Tax using the UK corporation tax rate of 19% (2022: 19%)
Effect of:
Non-taxable income
Recognition of unused losses
Impairment of investments
Non-deductible expenses / (credits)
Current year credit
7. Auditor’s remuneration
2023
£'000
748
180
47
125
1,100
2023
£'000
-
-
(125)
(125)
2023
£’000
(10,870)
Restated
2022*
£'000
416
100
44
-
560
2022
£'000
(2)
(2)
(571)
(573)
Restated
2022*
£'000
(10,885)
(2,065)
(2,068)
(505)
330
1,662
453
(125)
-
(240)
1,745
(10)
(573)
Details of remuneration paid to the auditor by the Company are shown in Note 7 to the Consolidated Financial Statements.
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8. Directors and employees
Average number of staff employed by the Company
Aggregate emoluments (including those of Directors):
Wages and salaries
Social security costs
Pension contribution
Total emoluments
Further information in respect of Directors is given in the Directors’ Remuneration Report.
Remuneration in respect of Directors was as follows:
Emoluments receivable
Fees paid to third parties for Directors’ services
Company pension contributions to money purchase pension schemes
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).
2023
2022
5
5
2023
£’000
453
53
12
518
2023
£'000
342
30
9
381
2022
£’000
584
73
15
672
2022
£'000
554
30
15
599
10. Tangible fixed assets
Cost at 31 March 2022
Right of use asset additions
Disposals
Cost at 31 March 2023
Depreciation at 31 March 2022
Charge for the year on owned assets
Disposals
Charge on right of use assets
Depreciation at 31 March 2023
Net book value at 31 March 2023
Net book value at 31 March 2022
Buildings
Leasehold
Improvements
£’000
£’000
Office
equipment
£'000
1,147
427
-
1,574
438
-
- -
223
661
913
709
389
-
-
389
203
39
-
-
242
147
186
416
-
(5)
411
271
28
(5)
23
317
94
145
Total
£’000
1,952
427
(5)
2,374
912
67
(5)
246
1,220
1,154
1,040
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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:
Right of use assets
Buildings
Office equipment
Lease liabilities
Current
Non-current
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
Depreciation charge of right of use assets
Buildings
Office equipment
Interest expense (included in finance cost)
2023
£'000
2022
£'000
913
73
986
135
604
739
2023
£'000
223
23
246
47
709
97
806
170
690
860
2022
£'000
152
89
241
44
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12.
Investments
Cost at 31 March 2022
Additions
Cost at 31 March 2023
Impairment at 31 March 2022
Impairment in year
Impairment at 31 March 2023
Net book value at 31 March 2023
Net book value at 31 March 2022
Subsidiaries
£'000
61,824
2,969
64,793
35,589
8,747
44,336
20,457
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:
Alphanumeric Limited
Bloom Media (UK) Limited
Epiphany Solutions Limited
Frank Digital PTY Limited
Gasbox Limited
Jaywing Central Limited
Jaywing Innovation Limited
Jaywing Australia PTY Limited
Jaywing UK Limited
Midisi Limited
Proportion held
Class of
share
capital held
By parent
Company
By the
Group
Nature of
Business
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Non-trading
Dormant
Non-trading
Website design and build
Non-trading
Non-trading
Non-trading
Search Engine Optimisation
Direct marketing
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
Frank Digital PTY Limited
Jaywing Australia PTY Limited
Country of Incorporation
Australia
Australia
Address
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.
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13. Debtors due within one year
Amounts due from Group undertakings
Prepayments
Other taxation and social security
Amounts due from Group undertakings attract no interest and are repayable on demand.
14. Creditors: amounts falling due within one year
Trade creditors
Amounts owed to Group undertakings
Other taxation and social security
Other creditors
Accruals
Lease liability
Deferred consideration payable on acquisition of subsidiary undertakings
Contingent consideration payable on acquisition of subsidiary undertakings
Amounts owed to Group undertakings attract no interest and are repayable on demand.
15. Creditors: amounts falling due in more than one year
Lease liability
Deferred consideration payable on acquisition of subsidiary undertakings
Contingent consideration payable on acquisition of subsidiary undertakings
16. Provisions
The carrying amounts and the movement in the provision account are as follows:
2023
£’000
192
128
122
442
2022
£’000
58
173
344
575
2023
£'000
352
13,509
60
6
172
135
414
109
14,757
2023
£'000
604
770
1,251
2,625
2022
£'000
449
12,593
19
-
494
170
626
-
14,351
2022
£'000
690
-
-
690
At 1 April 2022
Additional provisions
Amounts utilised
At 31 March 2023
Dilapidations
£'000
-
290
-
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.
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17. Borrowings
Summary:
Borrowings
Borrowings are repayable as follows:
Within one year:
Borrowings
Total due within one year
2023
£'000
Restated
2022*
£'000
11,435
9,007
2023
£'000
11,435
11,435
Restated
2022*
£'000
9,007
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:
At 31 March 2022
At 31 March 2023
45p deferred
shares
Number
5p ordinary
shares
Number
67,378,520
93,432,217
67,378,520
93,432,217
£’000
34,992
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
At 31 March 2023 and 31 March 2022
2023
£'000
2022
£'000
25
25
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21. Deferred tax asset
A deferred tax asset is provided for in the financial statements and consists of the following:
Accelerated capital allowances
Unused losses
Deferred tax asset
The amount of deferred tax recognised in profit or loss was as follows:
Accelerated capital allowances
Unused losses
Total
2023
£'000
68
649
717
2023
£'000
(16)
141
125
2022
£'000
52
553
605
2022
£'000
18
553
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).
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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.
Loss for the year as previously stated
Adjustment 1 - Recognition of withholding tax expense
Loss for the year as restated
Total equity for the year as previously stated
Adjustment 2 - Recognition of withholding tax expense
Total equity for the year as restated
Statement of Comprehensive Income
For the year ended 31 March
2022 Adjustment 1
Turnover
Administrative expenses
Operating loss
Income from fixed asset investment
Other income
Finance Costs
Loss on ordinary activities before taxation
Taxation on ordinary activities
Loss and total comprehensive loss on ordinary activities after
taxation
£’000
-
(10,743)
(10,743)
418
-
(460)
(10,785)
573
(10,212)
2022
£000
(10,212)
(100)
(10,312)
2022
£000
4,662
(253)
4,409
Restated
2022
£’000
-
(10,743)
(10,743)
418
-
(560)
(10,885)
573
-
-
-
-
-
(100)
(100)
-
(100)
(10,312)
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Statement of Financial Position
As at 31 March
2022
Adjustment 2
Non-current assets
Tangible assets
Deferred tax
Investments
Current assets
Cash at bank
Debtors due within one year
Current liabilities
Borrowings
Creditors: amounts falling due within one year
Total assets less current liabilities
Non-current liabilities
Creditors: amounts falling due after more than one year
Net (liabilities) / assets
Equity
Called up share capital
Share premium account
Treasury shares
Capital redemption reserve
Profit and loss account
Total equity
£’000
1,040
605
26,235
27,880
2
575
577
(8,754)
(14,351)
5,352
(690)
4,662
34,992
10,088
(25)
125
(40,518)
4,662
Restated
2022
£’000
1,040
605
26,235
27,880
2
575
577
-
-
-
-
-
-
-
(253)
(9,007)
-
(14,351)
(253)
5,099
-
(253)
(690)
4,409
-
-
-
-
34,992
10,088
(25)
125
(253)
(253)
(40,771)
4,409
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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.
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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.
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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
92 Jaywing plc Annual Report and Accounts 2023
DocuSign Envelope ID: ADC985DC-8762-41CA-A278-3C55258E307F