This announcement contains inside information

Jaywing plc

30 August 2024

Jaywing plc

("Jaywing" or "the Company")

Final Results and Publication of Annual Report

Jaywing Plc (AIM: JWNG), the Data Science and Marketing business, with operations in the UK and Australia, announces its audited results for the year ended 31 March 2024 and that a General Meeting will be held on Thursday 26th September 2024 at the offices of Jaywing plc, Albert Works, Sidney Street, Sheffield, S1 4RG at 2:00pm. The Company is today posting copies of the Annual Report and Accounts to shareholders, an electronic copy of which is available to view on the Company's website: www.jaywing.com/investors/

Operational Highlights

·      Group Adjusted EBITDA for FY24 up by 13.3% at £2,161k against prior period, on 2.8% lower revenues.

·      Australia profitability improved with FY24 Adjusted EBITDA up 91.7% % (107.6% at constant exchange rates) due to strong Australia revenue growth of 17.8% ( 28.1% at constant exchange rates).

·      AUD:GBP FX rate adversely impacted Group results. Under constant exchange rates FY24 Group revenues were static compared to the prior year, with Group Adjusted EBITDA up 17.7%.

·      UK Adjusted EBITDA for FY24 down 16.7%, due to the difficult economic conditions for the UK marketing sector.

·      New business pipeline remains strong in both the UK and Australia divisions.

·      Decision (our AI-based PPC automation tool) is performing well with 16 clients now on Decision, including 2 clients in Australia.

Financial highlights

Reconciliation of Operating Loss with Adjusted EBITDA

Revenue, Contribution and Adjusted EBITDA by operating segment

(1) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation & Amortisation ('EBITDA') before restructuring costs, acquisition & related costs, share based payment charge, fair value adjustments on contingent consideration and exceptional other operating income

(2) Including accrued interest

(3) Contribution is defined as Revenue less Direct Costs comprising of staff and other costs directly attributable to the revenues of the respective operating segments

* At constant exchange rates applicable to the 12 months ended 31 March 2023.

David Beck, Executive Chairman, said:

"The Group has been undergoing a period of significant change and recovery that started in the financial year ended 31 March 2024 (FY24) and has continued since. The results for FY24 reflect some of the early progress made, although the full impact of the actions taken to reduce the cost base will not be felt until the current financial year.

The Australian division is expected to continue to benefit from a strong market and new business pipeline, with revenue growth expected in the current financial year. UK market conditions remain challenging but the UK operation is now leaner, more efficient and able to convert more of its future revenue growth into profit and cash. Changes to our leadership teams and a greater focus on marketing of the Group's data and creative skills alongside investments made in client growth, are beginning to make a difference to operational performance. Cash however remains very tight and a key focus for management. As the cash savings from recent cost reduction initiatives, combined with the benefit of recent new business wins, begin to impact our P&L we anticipate reaching a more stable cash position in the second half of the current year."

Enquiries:

Jaywing plc: Devid Beck (Chairman) / Christopher Hughes (CFO/COO) Tel: 0333 370 6500

SPARK Advisory Partners Limited: Matt Davis / James Keeshan (Nominated Adviser) Tel: 020 3368 3552

Chairman's Statement

Introduction

The Group has been undergoing a period of significant change and recovery that started in the financial year ended 31 March 2024 (FY24) and has continued since. The results for FY24 reflect some of the early progress made, although the full impact of the actions taken to reduce the cost base will not be felt until the current financial year.

The changes at Board level that have been undertaken since the year end; the strong management teams in place within the operating business; and the high-quality individual members of staff employed throughout the Group all give us confidence in the future and our ability to grow the business. As the relatively newly appointed Executive Chairman I would like to record my thanks for the hard work and dedication of all our employees.

Results

In the first quarter of FY24 the Group carried out a significant restructuring of the UK division to improve margin efficiency through cost reduction. The work on cost reductions continued throughout the year and has allowed the Group to report a 13.3% increase in Adjusted EBITDA despite a 2.8% reduction in Group revenues.

Revenues for the Group for FY24 of £21.5m (2023: £22.1m), were 2.8% down on FY23. The decrease in revenue in FY24 comprises a fall of 9.9% in UK revenues (2023: fall of 9.5%) and a rise of 17.8% in Australia revenues (2023: increase of 8.8%) The Australian revenue growth in FY24 in local currency was 28.1%. The UK's revenues were affected by weaker markets whilst Australia's revenue growth accelerated. Further detail on the Group's results is contained in the Operational and Financial Report which follows.

Strategy 

The Group is a data science led marketing and consultancy business; its people are its most important assets. Whilst the difficult market conditions in FY24, especially in the Group's UK market, have necessitated headcount reductions, a priority has been placed on retaining the core skills and talent that mark Jaywing out from its competition. The Group is dependent on the strength of its relationships with its customers and the excellence of the work it undertakes on their behalf. The Group will continue to invest in the talented people that ensure its success in client service and delivery.

In a rapidly changing and increasingly technologically advanced market the Group's expertise in data science, its long experience of Artificial Intelligence tools and applications and its ability to convert data insights into compelling marketing campaigns are core strengths. The Group aims to maintain its lead in these core areas and use them to differentiate itself from its competition.

The Group enjoys a diverse portfolio of world leading brands as clients. Our sales and marketing strategy has been developed and enhanced to allow us to continue to attract and win new business from brands for which we can deliver excellent results.

The Group operates in two principal markets: the UK and Australia. The Australian business has grown significantly in the last two years and has started to expand its client base from within the wider APAC markets. Geopolitical and economic changes make Australia an increasingly attractive base from which to serve the APAC region and the strength of our Australian team allows us to target further growth from region wide clients.

Funding 

The Group has benefitted from the support of the holders of its secured debt, who have helped fund the business through some challenging years. The Group aims to continue its recovery and return to a more stable cash position in the second half of the current financial year.

Board and senior management

In March 2024 we announced that Philip Hanson had stepped down as a Non-Executive Director.

In April 2024 Henry Turcan and I joined the Company's board of directors as Non-Executive Directors. Andrew Fryatt stepped down as the Chief Executive Officer in May 2024 and Christopher Hughes, the Company's Chief Financial Officer, role was expanded to include operations and he joined the Board. The Board asked me to step up into the Executive Chairman role at that time. I would like to thank the departing Directors for their contribution and also Ian Robinson for his long service as Chairman, he remains on the Board as a Non-Executive Director.

Outlook

The Australian division is expected to continue to benefit from a strong market and new business pipeline, with revenue growth expected in the current financial year. UK market conditions remain challenging but the UK operation is now leaner, more efficient and able to convert more of its future revenue growth into profit and cash. Changes to our leadership teams and a greater focus on marketing of the Group's data and creative skills alongside investments made in client growth, are beginning to make a difference to operational performance. Cash however remains very tight and a key focus for management. As the cash savings from recent cost reduction initiatives, combined with the benefit of recent new business wins, begin to impact our P&L we anticipate reaching a more stable cash position in the second half of the current year.

David Beck

Executive Chairman

Jaywing plc

29 August 2024

Operational and Financial 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, data and risk consulting 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.

The Group's adjusted EBITDA of £2.16m in FY24, an increase of 13.3% against the prior period, was achieved despite 2.8% lower revenues. The Group's Operating Loss was reduced to £0.5m from £11.3m in the prior year, and the Loss before Tax came down to £2.4m from £12.6m.

Cash Generated from Operations decreased to £0.4m from £1.3m. Net debt (pre IFRS 16) increased to £13.0m from £10.3m.

Challenging economic conditions, higher interest rates and falling consumer confidence all contributed to a difficult trading period in the UK. Market conditions in Australia were more favourable and helped our business there to grow both revenue and profitability. UK revenue was 9.9% lower at £14.8m whilst Australian revenue increased by 17.8% to £6.7m, at constant exchange rates Australian revenue growth was an even more impressive 28.1%.

Market conditions were difficult for the whole of FY24 and although there have been some significant new business wins at the end of the financial year, trading conditions remain challenging going into FY25.

Jaywing UK

The Jaywing UK business is made up of our data led performance marketing agency, our data and risk consultancy offering, and our AI driven digital advertising tool, Decision.

Overall, the UK division saw a 9.9% reduction in revenue in the year ended 31 March 2024. This is predominantly from our UK agency division which experienced a challenging year due to several sector macro-economic headwinds, but benefited from our early action of headcount to ensure that we reduced our FTE cost base by an annualised £1.6m. This allowed us to maintain an Adjusted EBITDA margin of c. 8%, with the full benefit flowing into the new financial year. The year ended positively with several client wins, most notably becoming digital partner to Yorkshire Tea and winning the Online Education Services contract in the UK.

Our data and risk consultancy business traded strongly for much of the year ended 31 March 2024 following several good client wins, but had an unexpectedly weak last quarter as scheduled work with a major customer did not materialise with this trend continuing into the current year.

Decision is our 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.  Focus remains on continuing to build the pipeline and conversion 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. 

Jaywing Australia

Jaywing Australia continued their pleasing revenue growth with 28.1% local currency growth in the year, stemmed from strong new business, most notably OES, Crocs and New Balance which all ramped up during the year.

Pleasingly the growth in revenue flowed to Adjusted EBITDA that doubled under constant currency in the year with the Adjusted EBITDA margin growing to 15% EBITDA margin for the year ended 31 March 2024, up from 9% EBITDA margin in the previous financial year.

Jaywing Australia was recognised externally for their work by winning the Best Large Integrated Agency of the Year 2024 APAC Search Awards and Performance Agency of the Year 2023 at the B&T Awards.

Technology research and development

We successfully completed our automation reporting project that is driving greater efficiency and continue to build further Decision functionality to increase scope of delivery as well as further developments to ensure we continue to operate at the front of AI / Data Science. Progress has been pleasing and we can already see the benefits from this work. Focus will continue on increased automation to drive efficiency within delivery as well as bringing additional benefits to our clients through our proprietary tools.

Employees

We recognise that our people are our most important asset. Jaywing prioritises our people's health and wellbeing, a commitment solidified through significant organisational changes over the past three years. Our guiding principles of critical thinking, collaboration, and conviction shape our identity and actions, integrating employee welfare as a core pillar of our ethos and focusing on mental, physical, social, and financial wellbeing.

The Group's strategic initiatives include providing comprehensive support programs like the My Health Advantage App, Bright TV for mental health awareness. Additionally, Jaywing fosters a vibrant social culture with monthly events, offers an Employee Support Fund for financial assistance, and ensures work-life balance through its leave policies. The emphasis on diversity and inclusion, coupled with a continued investment in wellbeing, underpins Jaywing's supportive and inclusive workplace culture, resulting in enhanced employee engagement and retention.

The great work our people have done to embed our culture has been recognised by achieving Great Places to Work status in the UK. 79% of employees believe Jaywing in the UK is a great place to work and 93% feel that people care about each other. Furthermore, 98% believe that people are fairly treated regardless of sexual orientation or race. Our diverse workforce includes 8% LGBTQ+ employees, a gender representation of 55% male and 45% female, and 12% of employees with a disability. This diversity, coupled with a balanced age distribution, underscores our inclusive culture.

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.

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:

(1) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation & Amortisation ('EBITDA') before restructuring costs, acquisition & related costs, share based payment charge, fair value adjustments on contingent consideration and exceptional other operating income

(2) Including accrued interest

Revenue for FY24 was £21.5m (2023: £22.1m), a drop of 3% on FY23, as a result of the tough UK economic conditions.

Adjusted EBITDA was £2,161k (2023: £1,908k), a £253k improvement in the Adjusted EBITDA. The result was achieved through strong cost control and the restructuring of UK agency including headcount reduction.

The statutory operating loss was £459k (2023: loss of £11,340k) and the statutory loss before taxation was £2,376k (2023: loss of £12,535k) following an impairment to Goodwill of £nil (2023: £12.1m).

Cash from operations was £387k (2023: £1,293k) reflecting tight cost control across the group, offset by the cost of the restructuring. The Cash Flow statement shows the movement in the cash position of the business. 

Net Debt

At 31 March 2024, Net Debt including accrued interest (pre IFRS16) was £13.0m (2023: £10.3m), representing gross debt of £13.4m (2023: £11.4m) net of cash of £0.5m (2023: £1.1m). The Company's gross debt is represented by an amount of £9.8m (2023: £9.2m) drawn down from the secured debt funding provided by the "Jaywing Facility" together with £2.9m (2023: £1.8m) of accrued and unpaid interest on the Jaywing Facility and £0.7m of withholding tax on the interest expense (2023: £0.4m). The Jaywing Facility is fully described in Note 18 and Note 30 to the Financial Statements.

On 4 March 2024 the Jaywing Facility was increased by £0.6m to £9.8m. 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.

Post year end, on the 28 May 2024 Jaywing announced that it had increased its existing loan facility by £1,030,000. The additional capital being lent by the two lenders is being provided on the same terms as the existing Loan Facility.

Impairment

As required by IAS 36, the Group has carried out an impairment review of the carrying value of its 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 14.8% for Australia and 15.1% in the UK (2023: 16.4% for Australia and 16.6% 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.

In the prior year the Group impaired former acquisition goodwill by £12.1m. No impairment is considered necessary in the current 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 a 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 Directors have considered downside risks and the potential impact of the economic environment on the cash flows of the Group for a period to 31 March 2026. 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 Directors have noted the very tight cash position in the UK division which has led to the Group's very tight cash position as a whole, which is expected to continue in the near term. However, based on current forecast cash flows of the Group, which includes forecast cash receipts from recent new business wins in the UK, the Directors expect that the Group's cash headroom will steadily improve in the second half of FY25 and provide a more stable cash position.

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 which include confirmation that it is intended to provide financial support for the period until at least 31 March 2026 by not making demand for repayment of the debt, should doing so prevent the Group from meeting its debts as and when they fall due. The lenders have also confirmed that they are open to providing short-term financial support to Jaywing if required to support its restructuring of the existing facility with them. Details of this debt are contained in Note 18 and Note 30.

·      Near term support to the UK division by way of remittances from the Australia division.

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.

Christopher Hughes

Chief Financial & Operating Officer

Jaywing plc

29 August 2024

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.

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 Operational and Financial 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

David Beck

Executive Chairman

Jaywing plc

29 August 2024

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 2024.

Board of Directors

David Beck, Executive Chairman (appointed 3 April 2024 as Non-Executive Director, appointed Executive Chairman 13 May 2024)

Member of Nomination Committee

David was Chief Executive of Merit Group Plc, the data and intelligence business, until 31 January 2024, where he led a successful restructuring and turnaround of the business. Previously David spent over thirty years working in the marketing communications industry advising large corporates on strategic reviews and transactions. David was appointed to the Board as a Non-Executive Director as a representative of DSC Investment Holdings Limited ("DSC"), a Company owned and controlled by Lord Ashcroft, which holds 50% of the Company's outstanding Loan Facility. Following the departure of Andrew Fryatt, the Group's CEO, the Board asked David to take on the role of Executive Chairman.

Ian Robinson, Non-Executive Director

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.

Henry Turcan, Non-Executive Director (appointed 3 April 2024)

Chair of Remuneration and Nomination Committees

Henry is a fund manager at Lombard Odier Asset Management (Europe) Limited. He has been advising and investing in UK smaller companies for over 20 years and has extensive experience of assisting public companies in creating value for all stakeholders. Henry was appointed as a representative of Lombard Odier Asset Management (Europe) Limited, acting in its capacity as discretionary investment manager or sub-adviser for and on behalf of certain funds and accounts managed by it which in aggregate hold 18.86% of the Company's issued share capital and 50% of the Company's outstanding Loan Facility.

Mark Carrington, Non-Executive Director

Member of Audit & Risk Committee

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.

Christopher Hughes, Chief Financial Officer (appointed 13 May 2024)

Christopher has extensive experience in financial roles having spent nearly nine years at PwC, focusing on audit and four years at Lowell in various finance roles, playing a key role in optimising financial processes and driving business performance. Christopher is a member of the Institute of Chartered Accountants in England and Wales and holds an honours degree in Business Studies from Lancaster University.

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 2024 was £2.4m (2023: loss of £12.8m). The Directors do not propose to pay a dividend.

Net liabilities at 31 March 2024 were £3.7m (2023 Net liabilities £1.2m).

Future developments

The future developments of the Group are referred to in the Operational and Financial Report.

Political and charitable donations

The Group made charitable donations of £3k (2023: £3k) and no political donations during the current or prior year.

Directors' interests, appointments and resignations

The present membership of the Board, together with biographies on each, is set out on page 12. The Directors' interests in shares in the Company are set out in the Directors' remuneration report. A list of all Directors that served throughout the year and after the period end is set out below:

David Beck (appointed 3 April 2024)

Ian Robinson

Henry Turcan (appointed 3 April 2024)

Mark Carrington

Christopher Hughes (appointed 13 May 2024)

Andrew Fryatt (resigned 13 May 2024)

Phillip Hanson (resigned 4 March 2024)

Directors' third-party indemnity provisions

The Group maintains appropriate insurance to cover Directors' and Officers' liability. The Group provides an indemnity in respect of all the Group's Directors. Neither the insurance nor the indemnity provides cover where the Director has acted fraudulently or dishonestly.

Employees

The Group is an Equal Opportunities Employer and no job applicant or employee receives more or less favourable treatment on the grounds of age, gender, marital status, sexual orientation, race, colour, religion or belief.

It is the policy of the Group that individuals with disabilities, whether registered or not, should receive full and fair consideration for all job vacancies for which they are suitable applicants. Employees who become disabled during their working life will be retained in employment wherever possible and will be given help with any necessary rehabilitation and retraining.

Employees of the Group are regularly consulted by local managers and kept informed of matters affecting them and the overall development of the Group.

The Group is committed to maintaining high standards of Health and Safety for its employees, customers, visitors, contractors and anyone affected by its business activities. Health and Safety is on the agenda for all regularly scheduled Board meetings.

Financial instruments

Details of the financial risk management objectives and policies of the Group, including hedging policies, are given in Note 32 to the Consolidated Financial Statements.

Share Capital

Details of the Company's Share Capital, including rights and obligations attaching to each class of share, are set out in Note 22 of the Consolidated Financial Statements.

There are no restrictions on the transfer of ordinary shares in the capital of the Company, other than customary restrictions contained within the Company's Articles of Association and certain restrictions which may be required from time-to-time by law, for example, insider trading law. In accordance with the Model Code, which forms part of the Listing Rules of the Financial Conduct Authority, certain Directors and employees are required to seek the prior approval of the Company to deal in its shares.

The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities and/or voting rights. The Company's Articles of Association contain limited restrictions on the exercise of voting rights.

The Company's Articles of Association may only be amended by special resolution at a General Meeting of shareholders.

Stakeholder engagement

Jaywing's stakeholders are an integral part of the business, they consist ---of customers, suppliers, employees, shareholders and advisors.

Details of how the Directors have engaged with these stakeholders are included within the Corporate Governance Statement.

Streamlined Energy and Carbon Reporting (SECR)

We have disclosed 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 2023 to 31 March 2024 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 2023 emission factors developed by Defra and BEIS.

Results

Energy Efficiency

As an office-based business, our environmental impact is low and our Corporate Social Responsibility covers our approach to the environment and sustainability.

At Jaywing, we

·      encourage the use of public transport wherever possible, both through our environmental policy and expenses policy, and where not possible, encourage car sharing or environmentally friendly alternatives. We discourage, where possible, the use of domestic flights

·      operate a cycle to work scheme

·      designed our head office to be as energy efficient as possible, with measures such as passive-stack ventilation and a large amount of secure cycle storage plus showering facilities to encourage cycling

·      have switch off policies, including PIR activated lighting in some buildings, as well as trying to use energy as efficiently as possible

·      have a clear policy on the use of plastics, with particular attention paid to single use plastics

·      aim to recycle all waste material that can be recycled and use local facilities to reduce the transportation of waste materials

·      aim to purchase energy efficient, environmentally and ecologically friendly products

·      monitor our energy usage within our buildings.

All policies, including our environmental policy, are reviewed annually.

Going Concern

The Group financial statements have been prepared on a going concern basis in accordance with UK Adopted International accounting standards. In coming to their conclusion, the Directors have considered the Group's profit and cash flow forecasts for period 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 Directors have considered downside risks and the potential impact of the economic environment on the cash flows of the Group for a period to 31 March 2026. 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 Directors have noted the very tight cash position in the UK division which has led to the Group's very tight cash position as a whole, which is expected to continue in the near term. However, based on current forecast cash flows of the Group, which includes forecast cash receipts from recent new business wins in the UK, the Directors expect that the Group's cash headroom will steadily improve in the second half of FY25 and provide a more stable cash position.

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 which include confirmation that it is intended to provide financial support for the period until at least 31 March 2026 by not making demand for repayment of the debt, should doing so prevent the Group from meeting its debts as and when they fall due. The lenders have also confirmed that they are open to providing short-term financial support to Jaywing if required to support its restructuring of the existing facility with them. Details of this debt are contained in Note 18 and Note 30.

·      Near term support to the UK division by way of remittances from the Australia division.

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 2024, 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:

The latest version of the above table is available at https://investors.jaywing.com.

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.

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, Cooper Parry Group Limited was appointed during the period and 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

David Beck

Director

Dated: 29 August 2024

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 (resigned 4 March 2024)

Ian Robinson

Mark Carrington

The Committee met twice during the year.

Post year end, Henry Turcan became a Non-Executive Director of the Company and Chairman of the Remuneration Committee which now comprises:

Henry Turcan - Chairman (appointed 3 April 2024)

Ian Robinson

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 2024 there was one Executive Director on the Board as follows:

Andrew Fryatt (Chief Executive) - resigned 13 May 2024

Post year end, David Beck became the Executive Chairman and Christopher Hughes became an Executive Director.

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 Chairman received an annual fee of £75,000 (2023: £75,000). Non-Executive Directors' fees currently comprise a basic fee of £30,000 per annum plus a discretionary £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, the Company granted 1,142,000 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 note 10. Upon Andrew's resignation post year end, his share options have lapsed.

Directors' remuneration

The total amounts of the remuneration of the Directors of the Group for the years ended 31 March 2024 and 2023 are shown below:

The emoluments of the Directors are shown below:

* 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 (2023: 4 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:

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:

Directors' interests in shares

The Directors' interests in the share capital of the Company are set out below:

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

Henry Turcan

Dated: 29 August 2024

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. During the year the Board considered 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 2024, the Board comprised Non-Executive Chairman Ian Robinson and Non-Executive Director 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.

On 4 March 2024 we announced that Philip Hanson had stepped down as a Non-Executive Director & on 3 April 2024 we announced the appointment of Henry Turcan and David Beck to the Company's board of directors as Non-Executive Directors.

On 13 May 2024 we announced that Andrew Fryatt had stepped down as the Chief Executive Officer, Christopher Hughes, the Company's Chief Financial Officer will expand this role to include operations, and that he had joined the Board with immediate effect. David Beck has stepped into the Executive Chairman role and has taken over the Chairmanship from Ian Robinson, who remains on the Board as a Non-Executive Director.

All Directors are subject to re-election at least every three years.

The Executive 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

During the financial year to 31 March 2024 the Remuneration Committee comprised of 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 aim to pay more than is necessary for this service.

The Committee awarded share options to the Executive Directors during the year. It has not awarded an annual bonus in respect of the year to 31 March 2024. Further details of the Group's policies on remuneration and service contracts are given in the Directors' Remuneration report.

Audit & Risk Committee

During the financial year to 31 March 2024 the Audit & Risk Committee comprised 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 Cooper Parry Group Limited be reappointed as external auditor.

Nomination Committee

During the financial year to 31 March 2024 the Nomination Committee comprised Philip Hanson (Chair), Ian Robinson and Mark Carrington. It is responsible for nominating to the Board candidates for appointment as Directors, having regard for the balance and structure of the Board. The committee meets at least once a year. The terms of reference for all committees are available on the Group's website.

Company Secretary

The Company Secretary is responsible for advising the Board through the Chairman on all governance issues. All Directors have access to the advice and services of the Company 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 2024:

Relationships with shareholders

The Board recognises the importance of effective communication with the Company's shareholders to ensure that its strategy and performance is understood and that it remains accountable to shareholders. The Company communicates with investors through Interim Statements, audited Annual Reports, press releases and the Company's website: https://investors.jaywing.com. At the Company's AGM shareholders are given the opportunity to question the Board. The Company obtains feedback from its broker on the views of institutional investors on a non-attributed and attributed basis and any concerns of major shareholders would be communicated to the Board.

Internal controls

The Board acknowledges its responsibility for establishing and maintaining the Group's system of internal controls and will continue to ensure that management keeps these processes under regular review and improves them where appropriate.

Management structure

There is a clearly defined organisational structure throughout the Group with established lines of reporting and delegation of authority based on job responsibilities and experience.

Financial reporting

Monthly management accounts provide relevant, reliable, up-to-date financial and non-financial information to management and the Board. Annual plans, forecasts and performance targets allow management to monitor the key business and financial activities and the progress towards achieving the financial objectives. The annual budget is approved by the Board.

Monitoring of controls

The Audit Committee receives reports from the external auditor and assures itself that the internal control environment of the Group is operating effectively. There are formal policies and procedures in place to ensure the integrity and accuracy of the accounting records and to safeguard the Group's assets. Significant capital projects and acquisitions and disposals require Board approval.

Corporate Social Responsibility

The Board recognises the importance of social, environmental and ethical matters and it endeavours to take into account the interests of the Group's stakeholders, including its investors, employees, clients, suppliers and business partners when operating the business.

Employment

At a subsidiary level, each individual company has established policies which address key corporate objectives in the management of employee relations, communication and employee involvement, training and personal development and equal opportunity. The Board recognises its legal responsibility to ensure the wellbeing, safety and welfare of its employees and to maintain a safe and healthy working environment for them and for its visitors. Health and Safety is on the agenda for regularly scheduled plc Board and Executive Team meetings.

Environment

By their nature, the Group's regular operations are judged to have a low environmental impact and are not expected to give rise to any significant inherent environmental risks over the next 12 months.

By Order of the Board

David Beck

Dated: 29 August 2024

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

David Beck

Dated: 29 August 2024

Consolidated Statement of Comprehensive Income

The accompanying Notes form part of these Consolidated Financial Statements.

Consolidated Balance Sheet

These Financial Statements were approved by the Board of Directors on 29 August 2024 and were signed on its behalf by:

Christopher Hughes

Director

Company number: 05935923

The accompanying Notes form part of these Consolidated Financial Statements.

Consolidated Cash Flow Statement

The accompanying Notes form part of these Consolidated Financial Statements.

Consolidated Statement of Changes in Equity

The accompanying Notes form part of these Consolidated Financial Statements.

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').

Statement of compliance

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 Directors have considered downside risks and the potential impact of the economic environment on the cash flows of the Group for a period to 31 March 2026. 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 Directors have noted the very tight cash position in the UK division which has led to the Group's very tight cash position as a whole, which is expected to continue in the near term. However, based on current forecast cash flows of the Group, which includes forecast cash receipts from recent new business wins in the UK, the Directors expect that the Group's cash headroom will steadily improve in the second half of FY25 and provide a more stable cash position.

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 which include confirmation that it is intended to provide financial support for the period until at least 31 March 2026 by not making demand for repayment of the debt, should doing so prevent the Group from meeting its debts as and when they fall due. The lenders have also confirmed that they are open to providing short-term financial support to Jaywing if required to support its restructuring of the existing facility with them. Details of this debt are contained in Note 18 and Note 30.

·      Near term support to the UK division by way of remittances from the Australia division.

The Group financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern. The Directors have a reasonable expectation that the Group has adequate resources to continue in existence for the foreseeable future and have concluded it is appropriate to adopt the going concern basis of accounting in the preparation of the financial statements.

Basis of consolidation

Subsidiaries are entities controlled by the Group. Control exists when the Group has the rights to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases. Transactions between subsidiary companies are eliminated on consolidation.

Revenue

Revenue is generated mainly under the following four contractual models:

1. Monthly retainers

2. Project-based

3. Consulting day rates

4. Licences (with and without support)

To determine whether to recognise revenue, the Group follows a 5-step process:

1. Identify the contract with the customer

2. Identify the performance obligations

3. Determine the transaction price

4. Allocate the transaction price to the performance obligations

5. Recognise revenue when the performance obligations are satisfied

The Group often enters into transactions involving a range of the Group's products and services, for example providing a client with data consultancy and brand development work. In all cases, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices.

Revenue is recognised over time, as the Group satisfies performance obligations by transferring the promised goods or services to its customers in accordance with IFRS15.35 (c).

The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these on the face of the consolidated balance sheet. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises a receivable in its consolidated balance sheet as a contract asset.

Monthly retainers

A client will sign up to a contract for a period of between six and 18 months, with a fixed fee each month for an agreed amount of work to be performed. Under each contract, there may be more than one service provided to the customer, such as Pay Per Click (PPC) and Search Engine Optimisation (SEO) management. These will have agreed KPIs and are separately identifiable, hence are identified as separate performance obligations. These services will be set out in the contract with revenue amounts associated and the revenue streams will be recognised separately. Most fees are fixed but some fees are variable each month and are based on a ratchet scale calculation.

The transaction price is set out in the contract for each service provided and revenue is allocated to the various performance obligations on this basis. The customer may choose to take additional services for a period of time, which would be subject to a separate agreement. Any performance fees payable under a contract would relate to a specific month and be calculated in line with the provisions set out in the contract.

Revenue is recognised over time as the customer simultaneously receives and consumes the benefits of the services as the service is performed. It is recognised using the output method, on a straight-line basis over the life of the contract as the amount of work required to perform under these contracts does not vary significantly from month to month, therefore the straight-line method provides a faithful depiction of the transfer of goods or services.

Project-based

A client will enter into a framework agreement that covers all work performed by Jaywing and will then issue a brief or work order for a specific piece of work to be performed. This could be the development of a website for a client, or the production of a creative campaign. The work would normally take a period of between one and six months to complete.

Normally, a specific brief or work order is provided for a project under the overall framework agreement. This will detail the services to be provided to the customer, with a price set out against each element as appropriate. The transaction price is set out in the work order for each element of the project. Due to the high degree of interdependence between the various elements of these projects, they are accounted for as a single performance obligation. 

The customer may choose to vary the scope at any stage, and that would be subject to an updated work order. That work order would still be part of the original contract as those services would not be distinct from those in the original contract, hence this does not create a separate performance obligation.

Revenue is recognised over time, using the input method as Jaywing's performance creates or enhances an asset that the customer controls as the asset is created or enhanced, and the revenue recognised reflects the efforts or inputs Jaywing has made to the satisfaction of the performance obligation.

Consulting day rates

A client will enter into a contract for a piece of work that is quoted as a number of days charged at a rate per day. This work will be either risk, marketing or data based and could involve building models, databases and analysis of data. There may be various elements to the work quoted, however due to the high degree of interdependence between these, they are accounted for as a single performance obligation. Invoices will usually be raised monthly for the number of days of work performed.

A specific piece of work is contracted for, which will normally be a number of days' work charged at a rate per day, with different rates for different levels of seniority. The transaction price is set out in the contract. The customer may choose to vary the scope at any stage, and that would be subject to an updated work schedule. That work order would still be part of the original contract as those services would not be distinct from those in the original contract, hence this does not create a separate performance obligation.

Revenue is recognised over time as the customer simultaneously receives and consumes the benefit of the services as the services are performed. It is recognised using the input method, based on the number of days' work performed during the month.

Licences

A client enters into a contract for a product licence, including support from Jaywing, to run that product and interpret the results from it. The product and support are not separately identifiable because the client is not able to operate the product licence without this support as they do not have the skills or a login to the system. Therefore, they are accounted for together as a single performance obligation. The license price is set out in the contract.

Revenue is recognised over time based on the provision of the licence and support during the month as the customer simultaneously receives and consumes the benefit of the services as the services are provided.

There are no differences in payment terms for each of these categories; the only differences in payments terms are from individual terms agreed with clients which are between 30 and 60 days.

Foreign currency

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at period-end exchange rates are recognised in the statement of comprehensive income.

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.

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 the statement of comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:

Leasehold improvements     -               over period of lease

Office equipment                   -               3 - 5 years

Buildings (ROU assets)        -               over period of lease

It has been assumed that all assets will be used until the end of their economic life.

Gains or losses arising on the disposal of tangible assets are determined by comparing the disposal proceeds with the carrying amount of the assets and are recognised in the statement of comprehensive income.

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 the statement of comprehensive income on a straight-line basis over the estimated useful lives of intangible assets, unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use.

The estimated useful lives are as follows:

Customer relationships        -               4 to 12 years

Development costs              -               3 to 6 years

Trademarks                         -               2 to 20 years

Order books                        -               1 year

Intellectual property             -               5 years

Impairment

For goodwill that has an indefinite useful life, the recoverable amount is estimated annually. For other assets, the recoverable amount is only estimated when there is an indication that an impairment may have occurred. The recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is determined by assessing net present value of the asset based on future cash flows.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income.

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.

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).

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.

Employee benefits

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the statement of comprehensive income as incurred.

Share-based payment transactions

The fair value for the share price options was calculated using the Monte Carlo Model for the LTIP scheme and the

Black-Scholes model for CSOP scheme. This is charged to the statement of comprehensive income over the vesting period of the award. The charge takes account of the estimated number of shares that will vest. Where the options do not have any market conditions attached, the number expected to vest is reassessed at each reporting period. All share-based remuneration is equity-settled.

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.

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.

Leases

The Company reports using IFRS 16, whereby the Company 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 the statement of comprehensive income 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 the statement of comprehensive income. 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 statement of comprehensive income, 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 the statement of comprehensive income as they accrue using the effective interest method.

Taxation

Tax on the statement of comprehensive income 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 the statement of comprehensive income on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Other intangible assets are amortised from the date they are available for use.

The estimated useful life for intellectual property is 5 years.

Financial assets

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits.

Trade and other receivables and contract assets
Trade and other receivables and contract assets are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

IFRS 9's impairment requirements use more forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'.

Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Financial liabilities

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the statement of comprehensive income 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 at the date of acquisition. 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

Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

Judgements made by the Directors in the application of the accounting policies that have a significant effect on the Consolidated Financial Statements, together with estimates with a significant risk of material adjustment in the next year, are discussed below.

Accounting estimates

Impairment of goodwill and other intangible assets     

The carrying amount of goodwill is £10,476k (2023: £10,602) and the carrying amount of other intangible assets is £1,796k (2023: £2,125k). 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 32). In particular, the fair value of contingent consideration which is a Level 3 Fair Value asset with movements through the statement of comprehensive income 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 32).

Accounting judgements

Revenue

Recognition of revenue

The Directors consider that the Group acts as a principal in transactions where the Group has control over the goods and services prior to being transferred to the customer.  Where this is via an agency arrangement and the Group does not have full control over the goods and services, it recognises gross billings as gross revenue, with the direct costs being deducted to present the reportable revenue figure under IFRS 15. For other income sources, revenue recognition is assessed in line with the five steps of IFRS. This decision over the stage of completion, includes judgements made by management.

Identification of performance obligations

The determination of the number of distinct performance obligations in a contract requires judgement, based on whether the customer can benefit from use of the service on its own or together with other resources that are readily available to it, and also whether the promise to transfer the service is separately identifiable from other promises in the contract.

Allocation of the transaction price to performance obligations

Where a contract contains multiple performance obligations, the transaction price is required to be allocated to the different performance obligations. Wherever possible, the transaction price is allocated on a standalone selling price basis, by reference to the agreed customer statement of works. In the event that this is not available, the price is allocated to the various performance obligations on a reasonable basis with reference to the expected time involved in performing the service and management's experience of similar projects.

Recognition of contract assets and liabilities

Contract assets related to the portion of performance obligations already fulfilled by the Group and for which the definitive right to receive cash was subject to completing further work under the relevant contract. Contract assets are converted into trade receivables at the point that work delivered to the client is invoiced resulting in the Group's unconditional right to receive cash. Contract assets therefore represent a portion of future payments receivable by the Group under existing contracts.

IFRS 16

Under IFRS 16 the Group is required to make a judgement in determining the discount rate to be used in calculating the present value of lease payments when recognising the lease liabilities and right of use asset. For the discount rate the Group has used the lessee's incremental borrowing rate, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. To determine the incremental borrowing rate, the Group, where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received.

The right of use asset is depreciated over the term of the lease. The term has been determined with reference to the lease agreements and any expected extension based on management's judgement beyond the end of the lease end date specified in the lease agreement.

Notes to the Consolidated Financial Statements

1.     Segmental analysis

The Group reports 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 (2023: None).

Revenue, Contribution and Adjusted EBITDA by Operating Segments

All revenue is recognised over time.

(1) Contribution is defined as Revenue less Direct Costs comprising of 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, acquisition & related costs, share based payment charge, fair value adjustments on contingent consideration and exceptional legal income.  

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:

2.     Other operating income

Within other income in 2023 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.

3.     Operating expenses

4.     Finance costs

5.     Tax credit

6.     Loss per share

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:

Weighted average number of ordinary shares in issue:

7.     Auditor's remuneration

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 only required to be disclosed on a consolidated basis.

8.     Key management personnel compensation

Key management of the Group is considered to be the Board of Directors and the Senior Leadership Team.