Jaywing Regulatory News (JWNG)

This announcement contains inside information

Jaywing plc

06 September 2022

Jaywing plc

("Jaywing" or "the Company")

Final Results and Publication of Annual Report

Jaywing Plc (AIM: JWNG), the UK agency specialising in data science, announces its audited results for the year ended 31 March 2022 and that a General Meeting will be held on Thursday 29th September 2021 at the offices of Jaywing plc, Albert Works, Sidney Street, Sheffield, S1 4RG at 12:00pm. 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/

Enquiries:

Jaywing plc: Christopher Hughes (Company Secretary) Tel: 0333 370 6500

Cenkos Securities plc: Nicholas Wells / Callum Davidson (Nominated Adviser) Tel: 0207 397 8920

Financial highlights

* See note 33

Reconciliation of Operating Loss with Adjusted EBITDA

* See note 33

(1) Adjusted EBITDA represents EBITDA before restructuring costs and impairment charges

(2) Including accrued interest

(3) In response to the Covid-19 pandemic there was a voluntary salary sacrifice scheme in the UK companies between April

2020 and August 2020 which reduced payroll costs by £749k. Government support of £40k in the year ending 31 March

2022 (2021: £781k) was received, refer to note 2 for details.

(4) This non-cash charge has been recognised against the UK Cash Generating Unit ("CGU") and follows a Group restructuring during the course of FY22 during which all UK operations were integrated into one business unit and the previous 4 units were moved into one UK CGU. This impairment has also taken into account the general economic environment and headwinds facing the UK operations. Further details of this impairment are shown in Note 14 to the Consolidated Financial Statements.

Chairman's Statement

Results

I am very pleased to report revenue for FY22 of £23.3m (2021: £20.2m), a growth of 16% on FY21, which demonstrates a strong recovery from the impact of Covid 19 on FY21 revenues. This comprises a 13% growth in UK revenue and a 25% growth in Australia's revenue.

Adjusted EBITDA for the Group, excluding salary sacrifice and Covid-19 government support income of £40k (2021: £1.530k), was £2,166k (2021: £651k), a £1,515k improvement in the underlying Adjusted EBITDA, excluding these credits. The underlying Adjusted EBITDA margin as a percentage of revenue for FY22 amounted to 9.3% compared with 3.2% in FY21.

Cash Generated from Operations for the year, excluding salary sacrifice and Covid-19 government support receipts improved by £819k to £1,547k (2021: £728k). 

During the course of FY22, the Company carried out additional restructuring to further improve business efficiencies, the full effect of which are expected to be realised in FY23.The re-organisation of the business in FY21 into market and client facing business divisions continues to provide Jaywing with an increased focus on a more comprehensive and solution-based service offering to clients.

On 26th August 2022, post year end, we were delighted to announce the acquisition of Midisi Limited, a marketing software development business, which owns the intellectual property rights for the 'Decision' software that Jaywing currently sells to certain clients under a license arrangement, and which enables the automation of Pay-Per-Click advertising management in real time.

We believe this acquisition will provide a strategic platform for the Group to help drive revenue and profits from an advanced and client tailored proposition that combines data analysis and advanced technology to help improve business efficiencies for both our clients and Jaywing.

Strategy 

Following the acquisition of Midisi, the Group plans to focus on further organic growth on the back of a strong new business pipeline. The Group will promote and further develop the recently acquired Decision software as well as explore opportunities for further investment in advanced data analysis products, the application of technology to marketing challenges and related people resources to support our data science led service offerings to clients.

Jaywing Australia, which is led by a successful and autonomous professional team, has continued to demonstrate a track record of strong financial performance during the year with sales up by 25%. The ongoing collaboration with the UK business on clients and services, where required, will now include the opportunity to promote the Decision software in Australia, and we will work with the Australian team to explore opportunities to further accelerate scale and market reach.

Funding 

The Company remains in discussions with each of the holders of the secured debt about a potential debt reorganization to provide a more sustainable long term support facility for the Group. Details of this debt are contained in Note 18 and Note 30.

Board

In April 2022 we announced that Caroline Ackroyd, the Company's Chief Financial Officer and a board director had resigned to pursue other interests. Interim CFO support was then provided by Ajay Handa (who did not join the Board) until 31 August 2022, when the Company announced the appointment of Christopher Hughes as the Company's Chief Financial Officer. Christopher is expected to join the Board in due course.

People

Our staff have remained resilient to the challenges of a fast-changing business environment and have worked closely with our customers to help serve their varied and challenging business needs and continued to win and welcome new customers to Jaywing. The Board would like to thank all our staff for their ongoing hard work and dedication.

Ian Robinson

Non-Executive Chairman

Chief Executive's Report

Overview

Following two challenging years for the business I am delighted to report a strong set of results for the financial year 2022, which establishes the foundation for growth moving forward. The combination of 16% year-on-year revenue growth and improved cost efficiencies has enabled us to increase underlying Adjusted EBITDA (excluding salary sacrifice and Covid-19 government support) by 233% to £2.2m. Cash generated from operations decreased by £0.7m on the previous year, to £1.6m due to the previous year's salary sacrifice and significant Covid-19 government support, but increased £0.8m when these are excluded, supported by strong revenue growth.

We have also been able to complete the acquisition of Frank Digital in Australia and the integration of our two businesses there as "Jaywing Australia" is underway.

There have been a number of legacy issues to resolve in the last two years, including commitments relating to the Put Options for both Australian acquisitions, and a legal claim in relation to a 2016 acquisition (now resolved in favour of Jaywing with costs awarded to the Company). The Company is now well positioned to drive revenues and profitability through 2022/23 and beyond.

Jaywing UK

UK revenue increased by 13% compared with the prior year, driven by some notable new business wins. Our focus on an integrated marketing proposition, enabled by data science, is resonating with existing and potential clients. The acceleration of the move towards digital since the pandemic started has reinforced the need to really understand marketing effectiveness, and we have been able to deliver both outstanding results and unprecedented insight to our clients.

Amongst our existing marketing clients, the biggest increases in spend came from Castrol, HSBC, Savills and La Redoute, and their spend on performance marketing, in particular, has increased significantly.

Key new clients included Rush Hair & Beauty, Hallmark Cards, Cox Automotive, CityFibre and Skipton Building Society. Our new business wins have accelerated through the year, with the most recent marketing successes including BNP Paribas, Restore Group and Verdant.

In Risk Consulting, revenues increased 39%, from a combination of strong growth of existing client revenues and a number of key wins. The biggest existing client spend increases came from HSBC, Starling Bank, Chetwood Financial and Vanquis Bank. Significant wins included Swinton Insurance, Redwood Bank and Connected Places Catapult. We are continuing to develop our Regulatory Risk revenue stream, and we are also seeing increased demand to apply our modelling capabilities to ESG-related risk assessment.

Towards the end of 2021 we implemented some additional cost savings to improve the efficiency of our operations, including the closure of our Newbury office and the merging of some functions to drive economies of scale. The full benefits of this will be seen in the financial year ending 31 March 2023, but it supported a 10 percentage point underlying improvement in contribution margin in the UK for the full year and a 6 percentage point improvement in EBITDA margin. EBITDA, excluding salary sacrifice and Covid-19 government support, improved by £1.6m year-on-year.

Our opportunity pipeline has grown steadily through the last year, giving confidence for the year ahead. In Quarter 4 alone, we won new business with an annualised revenue of £3.3m.

Jaywing Australia

Our Australian businesses have experienced a different impact from the pandemic over the last 18 months. Revenues have continued to grow strongly, but it has become more challenging to deliver those revenues cost-effectively, with the closure of the borders severely restricting migrant labour, leading to dramatic wage inflation. This has been seen in both the cost of new hires and in the impact on existing employee retention. Average salary costs per employee have increased by around 30% year on year, which has squeezed margins and EBITDA.

Revenue grew by 25% for the full year, with key clients including Fiskars, Navitas, CSR and Athena. However, staff costs, including both wage inflation and additional heads to support higher volumes, increased by 58%, reducing Australia's EBITDA (excluding Covid-19 government support) by £0.7m year-on-year.

Now that the borders have reopened, there are signs that wage inflation will move back to more normal levels from here on, allowing future revenue increases to flow through to profitability.

In the first quarter of the year the main focus in Australia has been on integrating Frank Digital into Jaywing Australia, following the completion of the Put Option. The combination of the businesses will allow us to deliver a compelling integrated marketing proposition, whilst driving efficiencies in delivery as one larger business, led by Tom Geekie as CEO. Both companies have now relocated to a new office in Barangaroo, Sydney, which will further support the new combined proposition and operating model.

Acquisition of Midisi Limited

On 26th August 2022, post period end, the Company completed the acquisition of Midisi Limited, a marketing software development business, which owns the intellectual property rights for the 'Decision' software ("the Acquisition").

Decision is an award-winning Artificial Intelligence solution for online marketing activity that Jaywing currently sells to certain clients which enables them to automate Pay-Per-Click advertising management. 

The acquisition will enable Jaywing to take full ownership of the IP for Decision, thus providing a full revenue contribution from Decision sales. The costs of running Decision are relatively fixed and the planned further growth of Decision sales to existing and new customers is expected to help improve Jaywing's overall margins as well as increase its recurring revenues. The acquisition will provide a core platform for establishing an in-house Research & Development unit within Jaywing to develop and introduce new technologies to solve client challenges. The Directors believe that there is a strong commercial rationale for the acquisition.

The Directors believe that the Acquisition will be immediately earnings-enhancing from the retention of 100% of revenues, and that both the revenue and profit will increase over time as Jaywing focuses on adding new clients and developing the proposition further. 

The initial consideration for the acquisition was £400,000, which was paid from Jaywing's existing cash resources, plus excess cash of £845,230. Further fixed payments totalling £1.4m will be paid at 6-monthly intervals over 42 months, plus an additional performance-related earn-out payable at 6-monthly intervals between months 13 and 49, funded out of planned cashflows generated from Decision revenues. The earn-out relates to revenues generated from Decision, and the maximum earn-out payment is capped at £3.2m.

Employees

Whilst the impact of the pandemic has diminished over time, its effects on working patterns are long-lasting. Our employees have continued to adapt to working and collaborating in a hybrid model, and we recognise that our people are our most important asset. During the year we brought all UK employees together onto common contracts, under one company (Jaywing UK Ltd), rather than split between entities. We are also continuing to invest in a combination of experienced hires and talented but less experienced recruits, who represent the Company's future management.

Group revenue per employee grew by 13% in the year to £78.8k (2021: £69.8k).

I would like to thank all our colleagues in both the Australian and UK businesses for their continuing outstanding contribution over the last 12 months.

Future Outlook

Jaywing has generated new business wins and growth in its opportunity pipeline, although the Board remains cautious about the effects of potential recession in the UK and Australia. The Board believes there are significant opportunities for revenue in both of its key markets and this coupled with the restructured cost base gives confidence for the year ahead.

Andrew Fryatt

Chief Executive Officer

Jaywing plc

6 September 2022

Strategic Review

Results

Revenue for FY22 was £23.3m (2021: £20.2m), a growth of 16% on FY21, a pleasing result as the business continues its recovery from the Covid pandemic and benefits from its go to market approach.

Adjusted EBITDA excluding salary sacrifice and Covid-19 government support income of £40k (2021: £1.530k), was £2,166k (2021: £651k), a £1,515k improvement in the underlying Adjusted EBITDA, excluding these credits. The result was achieved through revenue growth of 16% and strong cost control but no salary sacrifices and significantly reduced Covid-19 government support in the current year.

Adjusted EBITDA for FY22 was £2,206k (£2,181k) and FY21 benefiting from £1.5m of salary sacrifice and Covid-19 government support.

The statutory operating loss was £6,086k (2021: loss of £1,040k) and the statutory loss before taxation was £6,560k (2021: £1,491k) following an impairment to Goodwill of £6.1m. This non-cash charge has been recognised against the UK Cash Generating Unit ("CGU") and follows a Group restructuring during the course of FY22 during which all UK operations were integrated into one business unit and the previous 4 units were moved into one UK CGU. This impairment has also taken into account the general economic environment and headwinds facing the UK operations. The acquisition goodwill relating to the Australia CGU remains unimpaired. Further details of this impairment are shown in Note 14 to the Consolidated Financial Statements.

Net cash from operations was down £519k to £1,289k (2021: £1,808k) due no salary sacrifice and significantly reduced Covid-19 government support in the current year, partially offset by strong revenue growth.

Cashflow generated from operations excluding salary sacrifice and Covid-19 government support amounted to £1,547k compared with £728k for the prior year. The Cash Flow statement shows the movement in the cash position of the business. 

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:

* See note 33

(1) Adjusted EBITDA represents EBITDA before restructuring costs and impairment charges

(2) Including accrued interest

(3) In response to the Covid-19 pandemic there was a voluntary salary sacrifice scheme in the UK companies between April

2020 and August 2020 which reduced payroll costs by £749k. Government support of £40k in the year ending 31 March

2022 (2021: £781k) was received, refer to note 2 for details.

(4) This non-cash charge has been recognised against the UK Cash Generating Unit ("CGU") and follows a Group restructuring during the course of FY22 during which all UK operations were integrated into one business unit and the previous 4 units were moved into one UK CGU. This impairment has also taken into account the general economic environment and headwinds facing the UK operations. Further details of this impairment are shown in Note 14 to the Consolidated Financial Statements.

Net Debt

At 31 March 2022, Net Debt including accrued interest (pre IFRS16) was £8.0m (2021: £7.6m), representing gross debt of £8.7m (2021: £8.4m) net of cash of £0.7m (2021: £0.8m). The Company's gross debt is represented by an amount of £7.7m (2021: £7.7m) drawn down from the secured debt funding provided by the "Jaywing Facility" together with £1.0m (2021: £0.7m) of accrued and unpaid interest on the Jaywing Facility. Jaywing Facility is described fully described in Note 30 and Note 18 to the Financial Statements.

On 11 August 2022 the Jaywing Facility was increased by £1.0m to £9.2m. The Jaywing Facility has continued to be provided to the Company on the same terms as the original secured loan facility acquired on 2 October 2019.

Australia

On 2 November 2021Jaywing plc agreed under the terms of a variation agreement with Matt Barbelli as the sole director of Frank Digital Pty Ltd ("Frank Digital") in Australia to accelerate the exercise of the Put and Call Option in relation to the 25% of the shares in Frank Digital held by Barbelli Enterprises Pty Ltd ATF Barbelli Holdings Trust ("BEP"). Jaywing now owns 100% of the shares in Frank Digital. The acceleration of this payment was agreed to facilitate Jaywing's strategy, specifically the timely integration of its two Australian businesses. Jaywing and Frank Digital had entered into an agreement on 27 February 2018, whereby Jaywing acquired 75% of the shares of Frank Digital, with the remaining 25% subject to a Put and Call Option, exercisable from February 2022. The variation agreement that accelerated timing was agreed between Jaywing, BEP, Matt Barbelli and Massive Group Pty Ltd and provided for the immediate acquisition of this 25% stake for a consideration of AUS $1.2m (c.£0.7m).

On 21 October 2020, the business completed the acquisition of the remaining 25% of the shares in Massive Group PTY Ltd ("Massive Group") which were not already owned by Jaywing following the exercise of the put option in relation to that 25% stake by entities controlled by the two directors of Massive Group in Australia. Jaywing and Massive Group had entered into an Agreement on 7 July 2016, whereby Jaywing acquired 75% of the shares of Massive Group, with the remaining 25% subject to a put and call option exercisable from July 2020. Jaywing now owns 100% of the shares in Massive Group, which has traded as Jaywing Australia since 2017.

The 25% stake was acquired by Jaywing on 21 October 2020 for a consideration of $4.0m (c.£2.2m), comprising $3.0m (c.£1.66m) payable immediately, followed by a series of monthly payments totalling $1.0m (c.£0.5m) between the acquisition date and June 2021. At 31 March 2021 the outstanding balance was $0.5m (c £0.3m) which was fully satisfied on 30 June 2021. The total consideration for the purchase of the 100% interest in Massive Group is $9.6m (c. £5.4m).

Impairment

As required by IAS 36, the Company has carried out an impairment review of the carrying value of our intangible assets and goodwill. The weighted average cost of capital ("WACC") was calculated with reference to long-term market costs of debt and equity and the Company's own cost of debt and equity, adjusted for the size of the business and risk premiums. The calculated WACC rate used for the impairment review was 11.5% for Australia and 11.8% in the UK (2021: both 11.5%). 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 main 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 EBITDA would have to the outcome.

The Group has impaired former acquisition goodwill by £6.1m. This non-cash charge has been recognised against the UK Cash Generating Unit ("CGU") and follows a Group restructuring during the course of FY22 during which all UK operations were integrated into one business unit and the previous 4 units were moved into one UK CGU. This impairment has also taken into account the general economic environment and headwinds facing the UK operations. The acquisition goodwill relating to the Australia CGU remains unimpaired.

As part of the prior year restructuring, we have retired the Epiphany brand in the year, this resulted in an impairment to the carrying value of the trademark of £690k in the reported 2021 results.

Share Options

The Company's Performance Share Plan terminated on 8 October 2020 and there are no outstanding share options. This resulted in a credit of £696k through the share option reserve in the prior year. No further balance remains.

Going Concern

The Group financial statements have been prepared on a going concern basis in accordance with UK Adopted International accounting standards. In coming to their conclusion, the Directors have considered the Group's profit and cash flow forecasts for period of at least 12 months from the date these financial statements were approved.

In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

In addition to the normal process of preparing forecasts for the Group, the Board has also considered downside risks and the potential impact of the economic environment on the cash flows of the Group for a period to 30 September 2024. This has been done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast period.

In considering their position the Directors have also had regard to letters of support in respect of the secured debt which have received from each of the holders of that debt. Details of this debt are contained in Note 18 and Note 30.

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

Streamlined Energy and Carbon Reporting (SECR)

Under the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, we are mandated to disclose our UK energy use and associated greenhouse gas (GHG) emissions. Specifically, and as a minimum, we are required to report those GHG emissions relating to natural gas, electricity and transport fuel, as well as an intensity ratio, under the Streamlined Energy and Carbon Reporting (SECR) Regulations.

To ensure we achieve the transparency required, and deliver effective emissions management, we implement and utilise robust and accepted methods. Accordingly, whilst the Regulations provide no prescribed methodology, we collate our GHG data annually and complete the calculation of our carbon footprint using the latest Defra (Department for Environment, Food and Rural Affairs)/BEIS (Department for Business, Energy & Industrial Strategy) emissions factors.

The period covered for the purposes of the SECR section is 1 April 2021 to 31 March 2022 and our calculations are for the following scope:

- Buildings- related energy - natural gas (Scope 1) and electricity (Scope 2) and

- Employee owned vehicles (grey fleet) (Scope 3)

Calculation Methodology

The Jaywing GHG emissions were assessed in accordance with Defra's 'Environmental reporting guidelines: including Streamlined Energy and Carbon Reporting Requirements' and use the 2019 emission factors developed by Defra and BEIS.

Results

Energy Efficiency

As an office-based business, our environmental impact is low and our Corporate Social Responsibility policy is available on https://investors.jaywing.com, which covers our approach to the environment and sustainability.

At Jaywing, we

· encourage the use of remote working facilities to avoid travelling where possible

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

· operate a cycle to work scheme

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

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

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

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

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

· monitor our energy usage within our buildings.

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

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.

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. The Corporate Governance Statement forms part of this report.

The Chairman's Statement and Chief Executive's Report describe the Group's activities, strategy and future prospects, including the considerations for long term decision making.

The Company considers that its major stakeholders are its employees, clients, lenders and shareholders. When making decisions, the interests of these stakeholders are considered informally as part of the Board's group discussions.

The Company is committed to being a responsible employer and strives to create a working environment where its employees are actively engaged and can contribute to its success.

The Company understands the value of maintaining and developing relationships with its clients and suppliers, to support its potential for future growth.

The Board does not believe that the Group has a significant impact on the environments within which it operates. The Board recognises that the Group has a duty to be responsible and is conscious that its business processes minimise harm to the environment, and that it contributes as far as is practicable to the local communities in which it operates. The Group's Corporate and Social Responsibility Policy is available on the Group's investor website and the SECR report for the Group is included in this 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. The Group has presented at forums for retail investors and has regular contact with its major shareholders.

Andrew Fryatt

Chief Executive Officer

Jaywing plc

6 September 2022

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.

Board of Directors

Ian Robinson, Non-Executive Chairman

Chair of Audit & Risk Committee and member of Remuneration and Nomination Committees

Ian is a Non-Executive Director and Chairman of the Audit Committee of Gusbourne plc, an AIM listed English sparkling-wine business. He is also a nonexecutive Director of a number of other privately-owned businesses. He is a Fellow of the Institute of Chartered Accountants in England & Wales and holds an honours degree in Economics from the University of Nottingham.

Andrew Fryatt, Chief Executive,

Andrew has more than 30 years' experience in technology-dependent businesses, primarily in the Retail and Telecoms sectors. Following an honours degree in Economics from the University of Cambridge, he began his career in the Mars Group, progressing through various marketing roles before joining Kingfisher Group in a senior marketing role. His experience included senior marketing and commercial roles before moving into general management, and he has run major divisions of Daisy and Zen Internet, as well as gaining experience as CEO of Ideal Shopping Direct plc. He has a particular focus on customer excellence and has received several awards on behalf of his businesses for delivering outstanding service.

Mark Carrington, Non-Executive Director

Member of Audit & Risk, Remuneration and Nomination Committees

Mark is a Fellow of the Association of Chartered Certified Accountants. He is a Non-Executive Director of a number of privately-owned businesses both in the UK and Overseas. He is also involved in the provision of management services to a number of other privately-owned and AIM listed businesses.

Philip Hanson, Non-Executive Director

Chair of Remuneration and Nomination Committees and member of Audit & Risk Committees

Philip is a fellow of the Chartered Institute of Marketing and has extensive experience in marketing and ecommerce both in the UK and internationally, having held a number of senior roles in the FMCG and retail financial services sectors - latterly as Global Marketing & ecommerce Director for Travelex. He is also Non-Executive Director of the Bettys & Taylors Group. He was a Director of the French and Australian entities of the Goelet family wine business (SCEA Domaine de Nizas and Red Earth Nominees Pty Ltd respectively) until December 2020. He is a Non-Executive Director of Silver Blue LLC which oversees the worldwide agriculture assets of the Goelet family. Philip was a Director of Travelex Card Services Ltd until December 2015.

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 2022.

Principal activity

The principal activity of the Company, and 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.

Results and dividend

The Group's loss after taxation for the year ended 31 March 2022 was £6.4m (2021: loss of £1.4m as restated, see note 33). The Directors do not propose to pay a dividend.

Net assets at 31 March 2022 were £12.2m (2021: £19.0m as restated, see note 33).

Future developments

The future developments of the Group are referred to in the Chief Executive's Report.

Political and charitable donations

The Group made charitable donations of £1k (2021: £3k) and no political donations during the current or prior year.

Directors' interests

The present membership of the Board, together with biographies on each, is set out on page 13. All those Directors served throughout the year or from appointment. The Directors' interests in shares in the Company are set out in the Directors' remuneration report.

Directors' third-party indemnity provisions

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

Employees

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

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

Employees of the Group and its Subsidiaries 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 21 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.

Major interests in shares

As at 31 March 2022, 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:

Corporate Social Responsibility

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

General Meeting

Your attention is drawn to the Notice of Meeting either enclosed with this Annual Report or online at https://investors.jaywing.com, which sets out the resolutions to be proposed at the forthcoming General Meeting.

Post Balance Sheet Events

Bloom legal case

On 12 April 2022 there was a high court judgment in the case of "Others vs Jaywing" where the judge found that the Claimants' claim must be dismissed in its entirety and awarded costs, of which £419k has so far been recovered post year end.

Acquisition of Midisi Limited

On 26th August 2022, post period end, the Company completed the acquisition of Midisi Limited, a marketing software development business, which owns the intellectual property rights for the 'Decision' software. ("the Acquisition)

The Directors believe that the Acquisition will be immediately earnings-enhancing from the retention of 100% of revenues, and that both the revenue and profit will increase over time as Jaywing focuses on adding new clients and developing the proposition further. 

The initial consideration for the Acquisition was £400,000, and which was paid from Jaywing's existing cash resources, plus excess cash of £845,230. Further fixed payments totalling £1.4m will be paid at 6-monthly intervals over 42 months, plus an additional performance-related earn-out payable at 6-monthly intervals between months 13 and 49, funded out of planned cashflows generated from Decision revenues. The earn-out relates to revenues generated from Decision, and the maximum earn-out payment is capped at £3.2m.

Connected to the acquisition, and to provide further working capital to the Group, the Company has increased the headroom in its existing short-term finance facility by £1m, through a variation of the existing debt agreement with its lenders, DSC Investment Holdings Ltd and 1798 Volantis Fund Ltd. This would cover the initial transaction costs, with subsequent payments funded out of the Company's cashflows. Increase in debt facility On 11 August 2022, post year end, the Company increased its existing short-term finance facility of £8.2m by £1m to £9.2m , through a variation of the existing debt agreement with its Lenders. Further details are provided in Notes 30 and 18 to the Consolidated Financial Statements

Auditor

The Directors at the date of approval of this Annual Report confirm that:

· so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and

· the Directors have taken all the steps that they ought to have taken as Directors, in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

The auditor, Grant Thornton UK LLP, has indicated its willingness to remain in office, and a resolution that it be re-appointed will be proposed at the General Meeting.

By Order of the Board

Andrew Fryatt

Director

Dated: 6 September 2022

Directors' Remuneration Report

In preparing this report, we have followed the QCA's Corporate Code of Governance and drawn on best practice available.

The Remuneration Committee

During the year the Remuneration Committee comprised:

Philip Hanson (Chairman)

Ian Robinson

Mark Carrington

The Committee met four times during the year.

The Committee seeks input from the Company Secretary. The Committee makes reference to external evidence of pay and employment conditions in other companies and is free to seek advice from external advisers.

Remuneration policy

The Group's policy on remuneration for the current year and, so far as is practicable, for subsequent years, is set out below. However, the Remuneration Committee believes that it should retain the flexibility to adjust the remuneration policy in accordance with the changing needs of the business. Any changes in policy in subsequent years will be detailed in future reports on remuneration. The Group must ensure that its remuneration arrangements attract and retain people of the right calibre in order to ensure corporate success and to enhance shareholder value. Its overall approach is to attract, develop, motivate and retain talented people at all levels, by paying competitive salaries and benefits to all its staff. Pay levels are set to take account of contribution and individual performance, wage levels elsewhere in the Group, and with reference to relevant market information. The Group seeks to reward its employees fairly and give them the opportunity to increase their earnings by linking pay to achieving business and individual performance targets. Executive Directors are rewarded on the basis of individual responsibility, competence and contribution, and salary increases also consider pay awards made elsewhere in the Group as well as external market benchmarking.

During the year to 31 March 2022 there were two Executive Directors on the Board as follows:

Andrew Fryatt (Chief Executive) - Appointed 21 April 2020

Caroline Ackroyd (Chief Financial Officer) was appointed to the Board on 22 April 2021. On 14 March 2022 we announced that Caroline Ackroyd, the Company's Chief Financial Officer and a board director had resigned to pursue other interests. Interim CFO support was then provided by Ajay Handa (who did not join the Board) until 31 August 2022, when the Company announced the appointment of Christopher Hughes as the Company's Chief Financial Officer. Christopher is expected to join the Board in due course.

The Executive Directors participate in a pension scheme but do not participate in any Group healthcare arrangements.

Non-Executive Directors' fees

Fees for Non-Executive Directors are determined by the Board annually, taking advice as appropriate and reflecting the time commitment and responsibilities of the role. The Non-Executive Chairman received an annual fee of £50,000. Non-Executive Directors' fees currently comprise a basic fee of £30,000 per annum plus £10,000 for chairing a committee.

Non-Executive Directors do not participate in the annual bonus plan, pension scheme or healthcare arrangements. The Company reimburses the reasonable expenses they incur in carrying out their duties as Directors.

Remuneration components - Executive Directors

A proportion of each Executive Director's remuneration is performance related.

Basic salary

Basic salary is set by the Remuneration Committee by considering the responsibilities, individual performance and experience of the Executive Directors, as well as the market practice for executives in a similar position and wage levels elsewhere in the Group. Basic salary is reviewed (but not necessarily increased) annually by the Remuneration Committee.

Annual bonus plan

The Executive Directors are eligible to participate in the annual bonus plan. The range of award is based on annual salary.

The performance requirements, for the ability to earn a bonus, are set by the Committee annually.

Long Term Incentive Plan (LTIP)

There is currently no LTIP although the Remuneration Committee is exploring the development of a new scheme.

Directors' remuneration

The total amounts of the remuneration of the Directors of the Group for the years ended 31 March 2022 and 2021 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 5 times the average salary of all Group employees excluding the Directors in the table above (2021: 4.7 times).

During the prior year, as part of the Covid-19 mitigation factors, the directors took a 20% pay reduction from April to August 2020.

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

Philip Hanson

Dated: 6 September 2022

Corporate Governance Statement

This report is prepared by the Board and describes how the principles of corporate governance are applied, to the extent applicable for a company the size of Jaywing plc. The Board has adopted the QCA Corporate Governance Code and considers that the Company complies with each of the principles of the Code. The following should be noted with regard to the independence of the Company's Non-Executive Directors. The Board considers Philip Hanson, a Non-Executive Director, to be independent. The Board notes that Ian Robinson and Mark Carrington are associated with one of the Company's major shareholders which could appear to impair their independence for the purposes of the Code. However, the Board considers that both Ian Robinson and Mark Carrington can bring an independent view to bear on all matters dealt with by the Board and its various Committees. Independence is a Board judgement. There are details of how the Group applies the ten principles of the QCA Code on the Group's investor website.

The Board

At 31 March 2022, the Board comprised Non-Executive Chairman Ian Robinson and Non-Executive Directors Philip Hanson and Mark Carrington. Andrew Fryatt was appointed to the Board as Chief Executive Officer on 22 April 2020. The Board is responsible to the shareholders for the proper management of the Group and meets at least six times a year to set the overall direction and strategy of the Group. All strategic operational and investment decisions are subject to Board approval.

Caroline Ackroyd, Chief Financial Officer, joined the business in September 2020, and was appointed to the Board on 22 April 2021. Caroline resigned effective on 14 March 2022 and was replaced by an Interim Chief Financial Officer (non-statutory director), Ajay Handa, on the same date.

The roles of Chief Executive Officer and Chairman are separate and there is a clear division of their responsibilities. All Directors are subject to re-election at least every three years

The Chairman's role is to provide leadership to the Board, plan and conduct Board meetings effectively, ensure the Board focuses on its key tasks, and engage the Board in assessing and improving its performance.

Board committees

Remuneration Committee

The Remuneration Committee comprises Philip Hanson (Chair), Ian Robinson and Mark Carrington. The Remuneration Committee, on behalf of the Board, meets at least once a year and as and when necessary to review and approve as appropriate the contract terms, remuneration and other benefits of the Executive Directors and senior management and major remuneration plans for the Group as a whole.

The Remuneration Committee approves the setting of objectives for all the Executive Directors and authorises their annual bonus payments for achievement of objectives. The Remuneration Committee approves remuneration packages sufficient to attract, retain and motivate Executive Directors required to run the Group successfully, but does not pay more than is necessary for this service.

The Committee did not award any share options or pay rises to Executive Directors during the year. It awarded an annual bonus to the CEO and CFO as set out in the Directors Remuneration Report in respect of the prior financial year. It has not awarded an annual bonus in respect of the year to 31 March 2022. Further details of the Group's policies on remuneration and service contracts are given in the Directors' Remuneration report.

Audit & Risk Committee

The Audit & Risk Committee comprises Ian Robinson (Chair), Mark Carrington and Philip Hanson. By invitation, the meetings of the Audit & Risk Committee may be attended by the other Directors and the auditor. The Committee meets not less than three 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 Review. The Committee also reviews the risks outlined in the Principal Risks and Uncertainties and challenges the Executive Directors on the controls and processes in place to manage these. The effectiveness of the external audit process has been assessed through discussions with both management and the auditors, and it is proposed that Grant Thornton be reappointed as external auditor.

Nomination Committee

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

Company Secretary

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

Board performance and evaluation

In addition to the re-election of Directors every three years, the Board has a process for evaluation of its own performance and that of its committees and individual Directors, including the Chairman.

Attendance at Board and Committee meetings

The Directors attended the following Board and Committee meetings during the year ended 31 March 2022:

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

Corporate Social Responsibility

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

Employment

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

Environment

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

By Order of the Board

Andrew Fryatt

Dated: 6 September 2022

Directors' Responsibilities Statement

The Directors are responsible for preparing the Directors' Report, the Strategic Report, Directors Renumeration 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 must prepare the financial statements in accordance with UK-adopted international accounting standards. 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;

· state whether applicable international financial reporting standards in conformity with UK-adopted international 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 Group and the Company's transactions, and disclose with reasonable accuracy, at any time, the financial position of the Group and the Company and enable them to ensure that the financial statements and Directors Renumeration report comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the Group and the Company and hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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.

To the best of our knowledge:

· the group financial statements, prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

· the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

By Order of the Board

Andrew Fryatt

Dated: 6 September 2022

Consolidated Statement of Comprehensive Income

The accompanying Notes form part of these Consolidated Financial Statements.

\* The comparative information has been restated due to fair value adjustments misstated in the prior period as discussed in note 33.

Consolidated Balance Sheet

\* The comparative information has been restated due to fair value adjustments misstated in the prior period as discussed in note 33.

These Financial Statements were approved by the Board of Directors on 6 September 2022 and were signed on its behalf by:

Andrew Fryatt

Director

Company number: 05935923

The accompanying Notes form part of these Consolidated Financial Statements.

Consolidated Cash Flow Statement

The accompanying Notes form part of these Consolidated Financial Statements.

\* The comparative information has been restated due to fair value adjustments misstated in the prior period and restatement of acquisition of non-controlling interest in 2021 reclassified from investing activities to financing activities as discussed in note 33.

Consolidated Statement of Changes in Equity

The accompanying Notes form part of these Consolidated Financial Statements.

\* The comparative information has been restated due to fair value adjustments misstated in the prior period as discussed in note 33.

Principal Accounting Policies

Jaywing plc is a Company incorporated in the UK and is AIM listed.

The Consolidated Financial Statements consolidate those of Jaywing plc and its subsidiaries (together referred to as the 'Group').

The Consolidated Financial Statements have been prepared and approved by the Directors in accordance with UK Adopted International accounting standards. The Consolidated Financial Statements have been prepared under the historical cost convention.

The principal accounting policies of the Group are set out below. The policies have remained unchanged from the previous year.

Going concern

The Group financial statements have been prepared on a going concern basis in accordance with UK Adopted International accounting standards. In coming to their conclusion, the Directors have considered the Group's profit and cash flow forecasts for period of at least 12 months from the date these financial statements were approved.

In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

In addition to the normal process of preparing forecasts for the Group, the Board has also considered downside risks and the potential impact of the economic environment on the cash flows of the Group for a period to 30 September 2024. This has been done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast period.

In considering their position the Directors have also had regard to letters of support in respect of the secured debt which have received from each of the holders of that debt confirming that the debt will not be called in and support will be provided for the foreseeable future. Details of this debt are contained in Note 18 and Note 30.

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

Basis of consolidation

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

Revenue

Revenue is generated mainly under the following four contractual models:

1. Monthly retainers

2. Project-based

3. Consulting day rates

4. Licences (with and without support)

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

1. Identify the contract with the customer

2. Identify the performance obligations

3. Determine the transaction price

4. Allocate the transaction price to the performance obligations

5. Recognise revenue when the performance obligations are satisfied

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

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

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

Monthly retainers

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

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

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

Project-based

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

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

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

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

Consulting day rates

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

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

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

Licences

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

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

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

Gross revenue and direct costs - alternative performance measures We recognise gross revenue and revenue in the financial statements. Gross revenue and direct costs represent non-IFRS 15 measures and are given to disclose where the group act as agent to certain customers, based on the level of control which the group holds over the services provided. Direct costs are recognised in line with the gross revenue recognised. This information is given as it is considered useful to the users of the financial statements.

Foreign currency

Transactions in foreign currencies are translated into the entity's functional currency at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss.

Dilapidations provision

Provision is made for expected future dilapidations costs in respect of property held under leases. The estimated costs are capitalised within leasehold improvements and depreciated over the remaining lease term based on the present value of expected future cash flows.

Classification of instruments issued by the Group

Instruments issued by the Group are treated as equity (i.e. forming part of shareholders' funds) only to the extent that they meet the following two conditions:

§ they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets, or to exchange financial assets or financial liabilities with another party, under conditions that are potentially unfavourable to the Company (or Group); and

§ where the instrument will or may be settled in the Company's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company's own equity instruments, or is a derivative that will be settled by the Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the items are classified as a financial liability. Where the instrument so classified takes the legal form of the Company's own shares, the amounts presented in these Financial Statements for called up Share Capital and Share Premium Account exclude amounts in relation to those shares.

Finance payments associated with financial liabilities are dealt with as part of finance expenses.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:

Leasehold improvements - over period of lease

Office equipment - 3 - 5 years

Buildings - over period of lease

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

Intangible assets and goodwill

All business combinations are accounted for by applying the acquisition method. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. Identifiable intangibles are those that can be sold separately, or that arise from legal or contractual rights, regardless of whether those rights are separable, and are initially recognised at fair value. Development costs incurred in the year, which meet the criteria of IAS 38, are capitalised and amortised on a straight-line basis over their economic life.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment.

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses.

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

The estimated useful lives are as follows:

Customer relationships - 4 to 12 years

Development costs - 3 to 6 years

Trademarks - 2 to 20 years

Order books - 1 year

Impairment

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

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

Impairment losses recognised in respect of cash-generating units, are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised no longer exists.

Put/call options

In the previous year the put/call option in Frank Digital PTY had been valued by an independent assessor and was recognised with both a service and non-service element in the accounts. The non-service element was fully recognised as at the date of acquisition and the fair value reviewed annually. The service element was treated as a cash-settled share-based payment with the share-based payment valued at the point of inception and the cost being spread over the life of the asset. In the year the put/call option has been executed and settled.

Fair value measurement

Management uses valuation techniques to determine the fair value of financial instruments and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible, but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date (see Note 32).

Employee benefits

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in profit or loss as incurred.

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Leases

The Company reports using IFRS 16, whereby the Company now recognises a lease liability and a right of use asset.

The Group leases four offices and printers. The Group has elected not to separate lease and non-lease components and instead accounts for these as a single lease component. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable by the group under residual value guarantees;

• the exercise price of a purchase option if the group is reasonably certain to exercise that option; and

• payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Group, where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received.

If the Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect, then when adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right of use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right of use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability;

• any lease payments made at or before the commencement date less any lease incentives received;

• any initial direct costs; and

• restoration costs.

Right of use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right of use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases of equipment and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

Incentives received to enter into an operating lease are credited to the profit and loss account, to reduce the lease expense, on a straight-line basis over the period of the lease. Associated costs, such as maintenance and insurance, are expensed as incurred.

Net financing costs

Net financing costs comprise interest payable and interest receivable on funds invested. Interest income and interest payable are recognised in profit or loss as they accrue using the effective interest method.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income, or directly in equity, in which case it is recognised in other comprehensive income or in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, except to the extent that it arises on:

· the initial recognition of goodwill;

· the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination;

· differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Financial assets

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank borrowings that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose only of the statement of cash flows.

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

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

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

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

Financial liabilities

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

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

The Group reported its operations based on location of the business (United Kingdom & Australia) as well as three client-facing segments which sit within the operating segments: Retail, FMCG and Financial & Professional Services.

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.

Share Option Reserve

Represents the cumulative fair value charge of share options in issue.

Foreign Currency Translation Reserve

Represents the exchange differences on retranslation of foreign operations.

Retained Earnings

Retained Earnings includes all current and prior period retained profits and share-based employee remuneration.

Non-controlling interests

The profit or loss attributable to the non-controlling ownership stakes in subsidiary companies is transferred from Retained Earnings to non-controlling interests each year.

Significant judgement in applying accounting policies and key estimation uncertainty

When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

Accounting estimates and judgements

Judgements made by the Directors in the application of these accounting policies that have a significant effect on the Consolidated Financial Statements, together with estimates with a significant risk of material adjustment in the next year, are discussed in Note 32 to the Consolidated Financial Statements.

Accounting estimates

Impairment of goodwill and other intangible assets

The carrying amount of goodwill is £21,705k (2021: £29,789k) and the carrying amount of other intangible assets is £69k (2021: £799k). 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.

Accounting judgements

Recognition of revenue

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

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.

Contract liabilities consist of cash advances received from customers on account of work orders received and the remaining liabilities relate to the amount of performance obligations still to be fulfilled and for which payment has already been received from the client.

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.

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.

Capitalisation of internally developed software

Distinguishing the research and development phases of a new customised software project and determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.

Notes to the Consolidated Financial Statements

1. Segmental analysis

Information reported to the Group's Chief Executive (the Chief Operating Decision Maker) for the purposes of resource allocation and assessment of segment performance is focused on the category of customer for each type of activity.

The Group reported its operations based on location of the business (United Kingdom & Australia).

During the year, no customer accounted for greater than 10% of the Group's revenue (2021: None).

Revenue by Operating Segments

All revenue is recognised over time.

Gross revenue in the UK was £24,858k (2021: £21,706k), and in Australia £5,310k (2021: £4,251k).

Revenue by Client Facing Sectors

Analysis is presented on client facing sectors to aid in understanding performance.

"Retail" includes: Retail, Travel & Leisure, Hospitality, Property & Utilities

"FMCG" includes: Consumer Goods, Industrial, Telecoms, Support Services, Healthcare, Education, Public Sector & Non-Profit

"Financial & Professional Services " includes: Financial & Professional Services

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:

*See note 33.

Non-current assets are allocated based on their physical location of the component's operations.

2. Other operating income

The Group has taken the option to present income received from Government sources in relation to Covid-19 as other operating income, rather than netted against costs. The Group received funds from the UK Government under the Covid-19 Job Retention Scheme of £37k (2021: £451k). Under the corresponding scheme in Australia, Cashflow boost and Job Keepers, the Group received £3k (2021: £330k).

Other income includes amounts received from the administrator of a client for a contractual obligation to perform services on their behalf. During the year, the Group received no further distribution (2021: £12k). It is anticipated there may be further distributions in the future but the Board is unaware of the quantum or timing of these potential receipts.

3. Operating expenses

Impairment of other intangible assets in 2021 relates to the retirement of a brand name as part of the restructuring activities and the move towards trading only as Jaywing in the UK.

The results included legal expenses of £774k offset by the release of deferred consideration following the successful conclusion of a court case associated with the 2016 acquisition of Bloom Media (UK) Limited.

4. Finance costs

5. Tax credit

*See note 33

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:

*See note 33

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 required instead to be disclosed on a consolidated basis. In addition to last year's reported audit figures an amount was agreed and paid to cover over-runs, making the total payable in relation to the audit £197,000.

8. Key management personnel compensation

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

*See note 33.

Further information in respect of Directors is given in the Directors' Remuneration Report.

Remuneration in respect of Directors was as follows:

During the current period and the prior year, there were no benefits accruing to Directors in respect of the defined contribution pension scheme.

The highest paid Director received remuneration of £284,000 (2021: £208,000).

9. Staff numbers and costs

The average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows: