Jaywing Regulatory News (JWNG)

Jaywing plc

("Jaywing", the "Company" or "Group")

Audited results for the year ended 31 March 2020

Jaywing plc, the UK agency specialising in data science, announces its audited results for the year ended 31 March 2020. Copies of the annual report and accounts together with the notice of the General Meeting will be issued to shareholders shortly and will also be available to view and download from the Company's website: www.jaywingplc.com.

Financial highlights

First Half Year and Second Half Year Performance

Reconciliation of Operating Loss with Adjusted EBITDA

* Revenue less third-party direct costs of sale

** Adjusted EBITDA represents EBITDA before restructuring costs, impairment charges and share based payment charges / (credits)

*** Including accrued interest

Enquiries:

Jaywing plc ( www.jaywingplc.com )

Andrew Fryatt (CEO)

Tel: 0114 281 1200

Cenkos Securities plc

Nicholas Wells/Callum Davidson (Nominated Adviser)

Tel: 0207 397 8900

This announcement is released by Jaywing and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"), and is disclosed in accordance with the Group's obligations under Article 17 of MAR.

Chairman's Statement

The results for the year ended 31 March 2020 reflect a disappointing first half to 30 September 2019 of deteriorating revenues and cash flow performance followed by a more pleasing second half of revenue stabilisation and adjusted EBITDA and cash flow improvement as a result of actions taken by the board. These actions were part of a formal restructuring plan adopted by the board to streamline business processes and cost structures, improve efficiencies and working capital performance.

Adjusted EBITDA* for the first half was a loss of £573k and a profit of £415k for the second half, resulting in a net adjusted EBITDA loss of £158k for the year.

Cash flow generated from operations**, which include restructuring costs, was £380k in the first half and £573k in the second half, a total of £953k for the year.

It is pleasing to note that the Australian businesses continued to perform well throughout the year delivering strong Net Revenue and cash flow generation. We look forward to further developing the collaboration between our UK and Australian management teams.

In late March 2020 we were delighted to welcome Andrew Fryatt to the board as CEO. Andrew has continued to implement the remaining elements of the restructuring plan as well as taking the urgent actions required to mitigate the impact of Covid-19 on the business, our clients and our people.

We continue to win new business and the recent realignment of our business sectors to align with the clients and market segments we serve, should enable the business to further develop and tailor its comprehensive service offering to existing and new clients.

I am pleased to see the results of the actions taken to improve profitability and cash flow performance and would like to thank our people throughout the group both in the UK and Australia for their dedication and achievements during these challenging times and for their ongoing support. Whilst the general business outlook remains uncertain, I believe the actions we have taken have placed us in a better position to adapt to change, whilst continuing to serve and further develop our services to clients.

Ian Robinson

Non-Executive Chairman

* Adjusted EBITDA represents EBITDA before restructuring costs, impairment charges and share based payment charges / (credits).

** including IFRS 16

Chief Executive's Report

The year ended 31 March 2020 ("FY 20") was a challenging year for Jaywing, with difficult market conditions impacting trading and cash flow performance in the first half. This led to the implementation of a restructuring plan which delivered a turnround in second half performance. These actions taken to restructure the business have enabled Jaywing to enter the new financial year in a more resilient state at the end of March 2020, at the time I joined the board. Further details of the year's trading-performance and these actions are provided in the Strategic Review section below.

Since the end of March 2020, the business has been impacted by the COVID-19 pandemic, which has reduced revenues by around 20% in the first quarter of the new financial year, as a result of clients reducing or delaying spend during the initial lockdown period. However, the business has been able to continue operating successfully on a remote basis, and has taken measures to secure its financial position, including voluntary salary reductions by all employees and use of the Government's furlough arrangements for around 50 employees.

During FY 20 our Australian businesses delivered 1% revenue growth, and 46% EBITDA growth. We have started to see the benefit of being able to offer multiple services to individual clients, generating larger monthly retainers, and also our growing reputation for data and analytics in the Australian market. A more "consulting-led" approach has enabled us to build stickier client relationships.

Outlook

Extrapolating from Q4 performance would have suggested a significant improvement in profitability in FY 21. However, in the face of COVID-19, significant reductions in marketing spend across the industry have severely impacted many businesses, and, with the rate of recovery continuing to be unclear, it is difficult to confidently assess the outlook for FY 21. Our broad client mix means we are less reliant on any one specific sector and more able to manage variations in market conditions. Some clients have already returned to pre-pandemic spend levels, but others continue to defer expenditure. We have nonetheless continued to win new business and have a good pipeline of new opportunities.

We have also reorganised our UK operating structure to focus on core market sectors and better support future growth, with a further 8% reduction in headcount, and this will be described more fully in the interim results statement, which are expected to be published in early December.

The actions taken to support the business through the pandemic have very effectively protected profitability and cashflow, but we believe that we are still at least 6 months away from revenues returning to pre-pandemic levels in the UK, which could be further extended if the second wave hits hard. In Australia, where the pandemic seems to now be more controlled, revenues are already close to Q4's level, which is very encouraging.

At this stage we expect the impact of COVID-19 to be a significant reduction in full year net revenues for FY 21 compared to FY 20, but with good prospects for a significant improvement in underlying EBITDA.

Our employees have demonstrated an inspiring commitment to Jaywing, not least in the voluntary salary reduction during the first wave of the pandemic, and the capabilities of our people are our biggest asset. We are focusing on promoting our broad range of specialist capabilities across our full client base, seamlessly collaborating to address client challenges, and we believe this joined-up approach will be the blueprint for future revenue growth.

Andrew Fryatt

Chief Executive Officer

Jaywing plc 

Strategic Review

Results

The results for the year overall have been disappointing. There was a significant fall in Net Revenue, EBITDA and cash flow in the first half of the year which led to the appointment of external consultants in August 2019, to review the cash flow position of the Group and make recommendations. This was followed by the acquisition of the Company's existing secured loan facility by entities associated with two of its major shareholders, described in further detail below, and the board's implementation of a restructuring plan to turn the financial position around. It is pleasing to note that the second half year results following implementation of this plan have delivered a stronger second half with higher exit adjusted EBITDA run rates. Further details are provided below.

The Company's Net Revenue for the year ended 31 March 2020 was £24.0m, a decrease of 20% on the prior year of £29.8m. This reflected weak trading in the UK business partly offset by strong growth in the Australian business.

The adjusted EBITDA loss amounted to £0.2m (a loss of £0.9m excluding IFRS 16) compared with a profit of £2.6m for the prior year (excluding IFRS 16).

Cashflow generated from operations including IFRS 16 amounted to £1.0m (£0.3m excluding IFRS 16) compared with £2.4m for the prior year excluding IFRS 16.

First and second half performance

The results for the year reflect a significant turnround in Adjusted EBITDA and cash flow performance between the first half of the year to 30 September 2019 and the second half of the year to 31 March 2020 following actions taken by the board, as referred to below, to stabilise the decline in Net Revenue and significantly improve profitability and cash flow performance.

The table in the Financial Highlights shows the key figures for the two half years. The Net Revenue decline in the first half stabilised in the second half. Adjusted EBIDTA turned round by £1.0m, from a first half loss of £0.6m to a positive of £0.4m. Cash flow generated from operations increased by £0.2m from £0.4m in the first half to £0.6m in the second half, though these figures include restructuring costs of £0.3m and £0.6m in the first and second half respectively.

Secured Loan Facility

The weak trading and cash flow performance during the first half of the year led to the appointment of external consultants in August 2019, to review the cash flow position of the Group and make recommendations. On 2 October 2019 entities associated with two of its major shareholders (the "Major Shareholders") acquired the Company's existing secured loan facility of £5.2m ("Jaywing Facility") The Major Shareholders immediately provided the Company with additional secured facilities by increasing the Jaywing Facility by £3m to £8.2m, which enabled the Company to repay its existing outstanding overdraft and provide it with additional working capital. The Jaywing Facility has been provided to the Company on the same terms as the term loan previously provided to Jaywing. The Company remains in ongoing discussions with the Major Shareholders with regard to a possible future restructuring of the Jaywing Facility.

Net Debt

At 31 March 2020, Net Debt including accrued interest (excluding IFRS 16) was £5.9m (2019: £5.0m) and was represented by The Jaywing Facility of £7.9m less cash of £2.0m.

On 21 October 2020, $3.0m (£1.7m) of funds generated by and retained in the Australian business were used as part payment of the Massive Group put option. Further details of the settlement of this put option are provided below.

On 31 October 2020 the Net Debt including accrued interest (excluding IFRS 16) was £6.9m and comprised the Jaywing Facility of £8.2m less cash of £1.3m.

Restructuring Plan

In August 2019 the board of the Company appointed a consulting firm to assist with the preparation of a restructuring plan to realign the business more closely to its clients and its service offerings with a view to significantly improving post restructuring EBITDA and cash flow run rates of the business . This review resulted in a detailed implementation plan (the "Restructuring Plan") which was implemented by the Company under the oversight of the consultants, on behalf of the board. The implementation of the Restructuring Plan has continued into the current financial year under the leadership of Andrew Fryatt, who was appointed as CEO at the end of March 2020. The main restructuring costs arising from this plan were incurred in the period from September 2019 to March 2020.

Total restructuring costs disclosed for the year ended 31 March 2020 amount to £867,000. These comprise £295,000 relating to the initial consulting exercise and the subsequent acquisition of the Jaywing Facility, and £572,000 relating to the costs of the restructuring plan and its implementation.

Australia

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 now owns 100% of the shares in Massive Group, which has traded as Jaywing Australia since 2017.

Jaywing and Massive Group 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 from July 2020. This 25% stake has now been acquired by Jaywing for a consideration of $4.0m (c.£2.2m), comprising $3.0m (c.£1.66m) immediately, followed by a series of monthly payments totalling $1.0m (c.£0.54m) between now and 30 June 2021. The total consideration for the purchase of the 100% interest in Massive Group is $9.6m (c. £5.4m).

Massive Group's business has grown strongly since 2016 and has more than doubled its EBITDA since then. This has enabled approximately 93% of the total consideration for the put option to be funded from cash generated in Australia. Massive Group continues to work collaboratively with the UK business on clients and services.

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 10.9% (2019: 10.2%). This was applied to cash flows for each of the business units using estimated growth rates in each business unit. As a result of these calculations the Board has concluded that a goodwill impairment of £5,468k was required (2019: £1,050k).

Share Options

The Company's Performance Share Plan terminated on 8 October 2020 and there are no outstanding share options.

Current trading and future prospects 

Since March 2020, the economic impact of COVID-19 has resulted in revenue levels below those of the prior year, although the Group has been able to provide continuous service to its clients during this period. The Company has taken actions to protect both cash and profitability through this period, including voluntary salary reductions, cost reductions, rent deferrals, Government grant income and deferral of certain HMRC payments. The Group has continued to win new business during the first half of the financial year and, whilst there remains considerable uncertainty in markets generally, the Company believes that it is well positioned following the restructuring of its business to benefit as economic activity recovers.

Going Concern

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

In addition to the normal process of preparing forecasts for the individual companies within the Group and a consolidated position for the Group, the board has also considered the potential impact of Covid-19 on the cash flows of the group for a period in excess of 12 months from the date of signing the financial statements. 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.

Since March 2020, the economic impact of Covid-19 has resulted in revenue levels below those of the prior year, although the Group has been able to provide continuous service to its clients during this period. The Group has taken actions to protect both cash and profitability through this period, including voluntary salary reductions, rent deferrals and taking advantage of Government schemes for job retention and VAT payment deferral. The Group has continued to win new work through the period, and it remains on track to improve its performance year on year and building on the results which followed implementation of the Restructuring Plan in late 2019.

The second quarter has continued to see a positive trend. Whilst there remains considerable uncertainty in markets generally, the Group believes that it is well placed to benefit as economic activity recovers.

The impact of Covid-19 indicates the existence of a material uncertainty which may cast significant doubt about the Company's and the Group's ability to continue as a going concern. The Company and Group financial statements do not include the adjustments that would result if the Company and Group were unable to continue as a going concern. Notwithstanding this material uncertainty, the Directors have a reasonable expectation that the Company and Group have 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.

The Company's lenders have confirmed that they will continue to provide financial support for a period of at least 12 months from the date of the Directors signing the financial statements for the year ended 31 March 2020 by not making demand for repayment of the balance of the Jaywing Facility, should doing so prevent Jaywing PLC from meeting its debts as and when they fall due.

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 Audit Committee of Gusbourne plc, an Aim listed company. He is also a Director of a number of privately-owned businesses. He has previously held a number of other senior financial appointments both in the UK and overseas. 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 quoted businesses, ensuring he is always abreast of the most recent regulatory changes and associated best practice. Mark is a Non-Executive Director of Political Holdings Limited US and Shutdown Maintenance Services Limited.

Philip Hanson, Non-Executive Director

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

Philip 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 is a Director of the French and Australian entities of the Goelet family wine business (Silver Blue LLC, SCEA Domaine de Nizas and Red Earth Nominees Pty Ltd respectively) where he regularly travels to understand the business, its changing markets and resultant challenges, and to provide counsel to the Executive Directors. 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 2020.

Principal activity

The principal activity of the Company, and Group, during the year under review is that of data-science-led performance marketing agency and consulting services.

Results and dividend

The Group's profit after taxation from continuing operations for the year ended 31 March 2020 was a loss of £9.0 million (2019: loss of £0.9 million). The Directors do not propose to pay a dividend.

Future developments

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

Political and charitable donations

No political or charitable donations were made during the year (2019: £Nil).

Directors' interests

The present membership of the Board, together with biographies on each, is set out above. 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 34 to the Consolidated Financial Statements.

Share Capital

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

There are no restrictions on the transfer of ordinary shares in the capital of the Company, other than customary restrictions contained within the Company's Articles of Association and certain restrictions which may be required from time-to-time by law, for example, insider trading law. In accordance with the Model Code, which forms part of the Listing Rules of the Financial Services 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 16 November 2020, 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:

Section 172 statement

The Directors are required by the Companies Act 2006 to act in the way they consider, in good faith, would be most likely to promote success of the Company for the benefit of its stakeholders as a whole and in doing so are required to have 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 Chairman's and Chief Executive Officer's statements 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, customers, lenders and shareholders. When making decisions, the interests of these stakeholders is 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 customers 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.

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, suppliers and business partners when operating the business.

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 2019 to 31 March 2020 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 relatively 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.

General Meeting

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

Auditor

The Directors at the date of approval of this announcement 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: 25 November 2020

Directors' Remuneration Report

In preparing this report, we have followed the spirit of the QCA's Corporate Code of Governance and drawn on best practice available, as well as those aspects of the UK Corporate Governance Code that we consider to be relevant to the Group.

The Remuneration Committee

During the year the Remuneration Committee comprised:

Philip Hanson (Chairman)

Ian Robinson

Mark Carrington

The Committee met five 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 take into account pay awards made elsewhere in the Group as well as external market benchmarking.

During the year to 31 March 2020 there were four Executive Directors on the Board as follows:

Martin Boddy (Executive Chairman) - resigned 27 January 2020

Robert Shaw (Chief Executive Officer) - resigned 26 March 2020

Michael Sprot (Chief Financial Officer) - resigned 24 March 2020

Adrian Lingard (Chief Operating Officer) - resigned 20 December 2019

On 21 April 2020 Andrew Fryatt (Chief Executive Officer), who joined the company on 26 March 2020, was appointed to the Board.

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 receives 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 taking into account the responsibilities, individual performance and experience of the Executive Directors, as well as the market practice for executives in a similar position. 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.

Directors' remuneration

The total amounts of the remuneration of the Directors of the Company for the years ended 31 March 2020 and 2019 are shown below:

The emoluments of the Directors are shown below:

~ paid to a third party for the Director's services

The salary of the highest paid Director was 5.6 times the average salary of all company employees excluding the Directors in the table above.

Pensions

The Company made pension contributions on behalf of each of the Executive Directors. The amounts are 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:

The table below sets out options granted under the Company's Performance Share Plan. All these options lapsed on 30 September 2020, and the Performance Share Plan was closed to all participants once all options lapsed:

Other related party transactions

No Director of the Group, except for Rob Shaw, 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 32. 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: 25 November 2020

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 are able to 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 2020, the Board comprised Non-Executive Chairman Ian Robinson and Non-Executive Directors Philip Hanson and Mark Carrington. Andrew Fryatt was appointed to the Board as Chief Executive Officer on 21 April 2020. The Board is responsible to the shareholders for the proper management of the Group and meets at least five times a year to set the overall direction and strategy of the Group. All strategic operational and investment decisions are subject to Board approval.

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 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 of 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 pay rises, bonuses or share options during the year.

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 twice annually. The Audit & Risk Committee oversees the monitoring of the adequacy and effectiveness of the Group's internal controls, accounting policies and financial reporting and provides a forum for reporting by the Group's external auditor. Its duties include keeping under review the scope and results of the audit and its cost effectiveness, consideration of management's response to any major audit recommendations and the independence and objectivity of the auditor.

The Audit & Risk Committee review the significant estimates, judgements and risks in relation to the annual report and these are outlined in the Strategic Report. The Committee also reviews the risks outlined in the Principal Risks and Uncertainties detailed above, 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 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 2020:

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

It is intended that 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, 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 Operations Board 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

Caroline Ackroyd Dated: 25 November 2020 

Directors' Responsibilities Statement

The Directors are responsible for preparing the Directors' Report, the Strategic Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the Group Financial Statements in accordance with International Financial Reporting Standards (IFRSs), as adopted by the European Union, and have elected to prepare the Parent Company Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law, including FRS101 "Reduced Disclosure Framework"). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company and Group for that period.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether applicable UK Accounting Standards/IFRSs as adopted by the EU 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 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.

By Order of the Board

Andrew Fryatt

Dated: 25 November 2020

Independent auditor's report to the members of Jaywing plc

Opinion

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 'Auditor's responsibilities for the audit of the financial statements' section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

The impact of uncertainties arising from the UK exiting the European Union on our audit

Our audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence of the effects of Brexit. All audits assess and challenge the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the group's and the parent company's future prospects and performance.

Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the group's and the parent company's future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a group or a parent company associated with a course of action such as Brexit.

Material uncertainty related to going concern

We draw attention to the going concern note within the principal accounting policies, which details the factors that the directors have considered in making their going concern assessment. The uncertainty as to the future impact of the recent COVID-19 outbreak has been included as part of the directors' consideration, and they have considered the reasonably plausible impact of the outbreak on the group's trading and cash flow forecasts. As stated in the going concern note, these events or conditions, along with the other matters as set forth in the going concern note, indicate that a material uncertainty exists that may cast significant doubt on the group's and the parent company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In concluding that a material uncertainty exists, our audit work included, but was not restricted to:

· obtaining management's base case cash flow forecasts covering the period to March 2022, assessing how these cash flow forecasts were compiled and assessing their appropriateness by applying relevant sensitivities to the underlying assumptions, and challenging those assumptions;

· assessing the accuracy of management's past forecasting by comparing management's forecasts for last year to the actual results for last year and considering the impact on the base case cash flow forecast;

· obtaining management's worst-case scenario prepared to assess the potential impact of Covid-19 on the business. We evaluated management's assumptions regarding the impact of a reduction in revenue. We considered whether the assumptions are consistent with our understanding of the business derived from other detailed audit work undertaken;

· assessing the impact of the mitigating factors available to management in respect of the ability to restrict cash impact, including the level of available facilities; and

· assessing the adequacy of related disclosures within the annual report and accounts.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Our application of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work.

Materiality was determined as follows:

An overview of the scope of our audit

Our audit approach was a risk-based approach founded on a thorough understanding of the group's business, its environment and risk profile and in particular included:

· documenting the processes and controls covering all of the significant risks and evaluating the design and implementation of those controls;

· evaluation by the group audit team of identified components to assess the significance of that component and to determine the planned audit response based on a measure of materiality. Significance was determined as a percentage of the group's total assets, revenues and loss before tax;

· a full scope statutory audit of the financial statements of the parent company and of the financial information of all other non-dormant UK-based group entities;

· specified audit procedures on financial information of the Australian components;

· there has been no change in the overview of the scope of the current year audit from the scope of that of the prior year;

· we performed a full scope audit of the financial statement of the parent company, and of the UK trading entities. The components that were subject to full scope audit procedures made up 84% of the group's revenue and 93% of the group's net assets; and

· audit work on all components in the UK was performed by the group engagement team. The audit work on all components in Australia was carried out by Grant Thornton Australia under the direction and supervision of the group engagement team.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report and accounts, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report under the Companies Act 2006

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Responsibilities of directors for the financial statements

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Donna Steel

Senior Statutory Auditorfor and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered Accountants

SHEFFIELD

25 November 2020

Consolidated Statement of Comprehensive Income

The accompanying Notes form part of these Consolidated Financial Statements.

Net Revenue was previously called Gross Profit. It is calculated in the same way, as revenue less third party direct cost of sales.

These Financial Statements were approved by the Board of Directors on 25 November 2020 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.

Consolidated statement of changes in equity

The accompanying Notes form part of these Consolidated Financial Statements.

Principal Accounting Policies

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

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

The Group's statutory accounts for 31 March 2019 have been delivered to the Registrar of Companies and those for 31 March 2020 will be delivered following the Company's General Meeting. The Auditor's reports on both the 31 March 2019 and 31 March 2020 accounts were unqualified, did not draw attention to any matters by way of an emphasis and did not contain any statement under Section 498 of the Companies Act 2006.

The Consolidated Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU (Adopted IFRSs). The Consolidated Financial Statements have been prepared under the historical cost convention.

The accounting policies set out in the most recently published statutory financial statements have been followed. The policies have remained unchanged from the previous year, except as set out below.

Changes in accounting policies

New and revised standards that are effective for annual periods beginning on or after 1 April 2019

The Group has adopted IFRS 16 during the year. Details of the impact of this is below and in the Notes to the Accounts.

Going concern

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

In addition to the normal process of preparing forecasts for the individual companies with the group and a consolidated position for the group, the board has also considered the potential impact of COVID-19 on the cash flows of the group for a period in excess of 12 months from the date of signing the financial statements. 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.

Since March 2020, the economic impact of COVID-19 has resulted in revenue levels below those of the prior year, although we have been able to provide continuous service to our clients during this period. The Group has taken actions to protect both cash and profitability through this period, including voluntary salary reductions, rent deferrals and taking advantage of Government schemes for job retention and VAT payment deferral. The Group has continued to win new work through the period, and it remains on track to improve its performance year on year building on the restructure started in late 2019.

The second quarter has continued to see a positive trend. Whilst there remains considerable uncertainty in markets generally, the Group believes that it is well placed to benefit as economic activity recovers.

The impact of COVID-19 indicates the existence of a material uncertainty which may cast significant doubt about the Company's and the Group's ability to continue as a going concern. The Company and Group financial statements do not include the adjustments that would result if the Company and Group were unable to continue as a going concern. Notwithstanding this material uncertainty, the Directors have a reasonable expectation that the Company and Group have 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.

The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of financial position (see Note 19). Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises a receivable in its statement of financial position (see Note 17).

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, each with different performance obligations, such as PPC and SEO management, which will have agreed KPIs. These services will be set out in the contract with revenue amounts associated and the revenue streams will be recognised separately.

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 PO 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. 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.

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. 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.

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.

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

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

Foreign currency

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.

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 33 to the Consolidated Financial Statements.

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. Finance payments associated with financial instruments that are classified in equity are dividends and are recorded directly in equity.

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

The put/call options in Massive Group PTY and Frank Digital PTY have been valued by an independent assessor and are recognised with both a service and non-service element in the accounts. The non-service element is fully recognised as at the date of acquisition and the fair value reviewed annually. The service element is 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.

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 35).

Employee benefits

Defined contribution plans

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

Share-based payment transactions

The weighted average fair value for the EBITDA performance options was calculated using the Black-Scholes Merton Option Pricing Model, and the fair value for the share price options was calculated using the Monte Carlo Model. This is charged to profit or loss over the vesting period of the award. The charge to profit or loss takes account of the estimated number of shares that will vest. Where the options do not have any market conditions attached, the number expected to vest is reassessed at each reporting period. All share-based remuneration is equity-settled. Provision is made for National Insurance when the Group is committed to settle this liability. The charge to profit or loss takes account of the options expected to vest, is deemed to arise over the vesting period, and is discounted.

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.

Expenses

Leases

The Company has adopted IFRS 16 - Leases for the financial year ended 31 March 2020, and it has chosen to use the modified retrospective approach to adoption which means there are no restatements to the prior year figures. This has resulted in a change to accounting policy and this is detailed fully in note 14.

IFRS 16 introduces a single lessee accounting model, whereby the Company now recognises a lease liability and a right of use asset at 1 April 2019 for leases previously classified as operating leases. Within the income statement, operating lease charges, which previously were included in administrative expenses, have been replaced by depreciation and interest expenses.

See notes 14 and 30 for more details.

For the comparative period ended 31 March 2019, where the Company is a lessee, payments made under an operating lease agreement are recognised as an expense on a straight-line basis over the lease term.

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 receivables

IFRS 9's impairment requirements use more forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'. This replaced IAS 39's 'incurred loss 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 reports its business activities in three areas: Brand Performance, Online Performance and Data, Analysis & Technology. Central Costs represents the Group's head office function, along with intragroup transactions.

The Group derives its revenue from the provision of digital marketing services.

Standards and interpretations in issue at 31 March 2020 but not yet effective

At the date of authorisation of these financial statements, several new, but not yet effective, Standards and amendments to existing Standards, and Interpretations have been published by the IASB. None of these Standards or amendments to existing Standards have been adopted early by the Group.

Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New Standards, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Group's financial statements.

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 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.

Minority Interests

The profit or loss attributable to the minority ownership stakes in subsidiary companies is transferred from Retained Earnings to Minority Interest each year.

Notes to the Consolidated Financial Statements

1. Segmental analysis

During the year 2019/20, Jaywing reported its business activities in three areas: Brand Performance, Online Performance and Data, Analysis & Technology. From 1 April 2020, the Group will report its revenues by market sector (Retail, FMCG, Financial and Professional Services) as well as by main service segments, reflecting the updated organisation structure of the Company which is now organised by market channels.

The Group primarily derives its revenue from the provision of digital marketing services in the UK. Approximately £3,863,000 (2019: £3,813,000) of sales were made to clients via the Company's Australian subsidiaries. During the year, no customer accounted for greater than 10% of the Group's revenue (2019: One customer).

Group Net Revenue analysed by sector and geography is as follows:

For 2020, revenue includes £1,530k (2019: £1,133k) included in the contract liability balance at the beginning of the period.

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 regions:

Non-current assets are allocated based on their physical location. The above table does not include discontinued operations (disposal groups), for which revenue and assets can be attributed to United Kingdom.

Capital additions; Property, plant and equipment

2. Other operating income

During the years to 31 March 2019 and 31 March 2020, the Group received money from the administrator of a client for a contractual obligation to perform services on their behalf. During the year, the Group received a further distribution of £38,000. 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

4. Finance income

5. Finance costs

6. Tax credit

7. 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:

8. Expenses and 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.

9. Key management personnel compensation

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

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 £257,000 (2019: £264,000).

10. Staff numbers and costs

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

The aggregate payroll costs of these persons were as follows:

11. Employee benefits

The Company grants share options under the Jaywing plc Performance Share Plan, more details of which are given in the Directors' Remuneration Report.

Details of the share options outstanding at the end of the year are as follows, the share option schemes terminated after the balance sheet date:

Share options outstanding at the end of the year have an exercise price of 5 pence. Awards of share options are made on an individual basis with particular performance criteria relevant to the participant. Options are usually granted for a maximum of five years. The share options scheme was terminated in October 2020.

Share options outstanding at the year-end were as follows:

As at 31 March 2020