Jaywing Regulatory News (JWNG)

This announcement contains inside information

Jaywing plc

07 September 2023

Jaywing plc

("Jaywing" or "the Company")

Final Results and Publication of Annual Report

Jaywing Plc (AIM: JWNG), the Data Science and Marketing business, with operations in the UK and Australia, announces its audited results for the year ended 31 March 2023 and that a General Meeting will be held on Thursday 28th September 2023 at the offices of Jaywing plc, Albert Works, Sidney Street, Sheffield, S1 4RG at 2:30pm. 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: Callum Davidson / Camilla Hume (Nominated Adviser) Tel: 0207 397 8920

Financial highlights

Reconciliation of Operating Loss with Adjusted EBITDA

Revenue, Contribution and Adjusted EBITDA by operating segment

(1) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation & Amortisation ('EBITDA') before restructuring costs and acquisition & related costs

(2) Including accrued interest

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

Operational Highlights

· Group contribution margin increased by 2.3ppt driven by UK cost efficiencies.

· Group Adjusted EBITDA for FY23 up by 9.2% at £2,410k against prior period, on 5.4% lower revenues.

· UK Adjusted EBITDA for FY23 up 12.0% at £1,882k, due to cost management and efficiency improvements.

· FY23 Australian adjusted EBITDA has increased by 0.4% to £528k and which reflects the impact of the cost of the integration activity at the start of 2023.

· New business pipeline remains strong in both territories.

· Decision PPC management IP acquisition successfully completed & encouraging new business growth.

· R&D function established during the year to help build increased Decision IP functionality.

Chairman's Statement

Results

Revenues for the Group for FY23 of £22.1m (2022: £23.3 m), were 5.4% down on FY22, following FY22's strong growth of 16% on FY21. The decrease in revenue in FY23 comprises a fall of 9.5% in UK revenues (2022: increase of 13.3%) and a rise of 8.8% in Australia revenues (2022: increase of 25%). The UK's revenues were affected by weaker demand in FY23 whilst Australia continued to grow although at a slower rate than the previous year. Recent significant new business wins in Australia are expected to restore its return to strong growth in FY24.

It is pleasing to note that the Group's contribution margin increased in FY23 by 2.3ppt to 31.9% driven by cost efficiency improvements in the UK. The UK contribution margin was up by 3.0 % to 29.8%. Adjusted Group EBITDA for FY23, was £2.4m (2022: £2.2m), an increase of 9.2%, reflecting margin improvements on lower Group revenues. The adjusted EBITDA for the UK in FY23 was £1.9m, a 12% increase on FY22's £1.7m. Australia remained flat at £0.5m due to business integration actions at the start of FY23 and increased staff costs. Cash Generated from Operations for FY23 amounted to £1.3m (2022: £1.6m). 

In the first quarter of FY24 the Group carried out a significant restructuring of the UK division to improve margin efficiency through cost reduction, and implemented a new organisational structure which is intended to help the Group rebalance its strengths on its higher margin services. Recent new business wins in data science led services, particularly in the Group's risk, fraud and regulatory services, together with UK cost reductions are expected to help raise UK margins in FY24.

Strategy 

The Group's businesses in the UK and Australia plan to focus on organic growth on the back of recent new business wins and a strong new business pipeline. The Group will promote and further develop the recently acquired Decision software as well as exploring opportunities for further investment in advanced data analysis products as well as the application of technology to the marketing challenges of our clients. Creative services will remain a key component of our services mix, and the Group will continue to promote its award-winning creative services to its clients as part of its comprehensive marketing solution offerings.

It is pleasing to report that Jaywing Australia, which is led by a successful and autonomous professional team, has continued to demonstrate a track record of strong performance during the year with sales up by 8.8% and with some significant business wins towards the end of FY23. The ongoing collaboration with the UK business on clients and services, where required, now includes the promotion of the Decision software in Australia, and we are continuing to work with the Australian team to explore opportunities to further accelerate scale and market reach.

Funding 

The Company remains in discussions with each of the holders of the secured debt about a possible future restructuring of the debt. Details of this debt are contained in Note 18 and Note 30.

Board and senior management

In April 2022 we announced that Caroline Ackroyd, the Company's Chief Financial Officer and a board director had resigned to pursue other interests. On 31 August 2022, the Company announced the appointment of Christopher Hughes as the Company's Chief Financial Officer.

People

Our staff in the UK and Australia have continued to work closely with our customers to help serve their varied and challenging business needs and continued to win and welcome new customers to Jaywing. The Board would like to thank all our staff for their ongoing hard work and dedication.

Outlook

Whilst trading conditions in the UK remain challenging, the recent restructuring of the UK division and recent new business wins as well as a strong pipeline is expected to assist the UK division's ability to withstand ongoing challenges in the macroeconomic environment as well as improving margin run rates. Recent significant new business wins in Australia are expected to provide strong revenue and profitability growth.

Ian Robinson

Non-Executive Chairman

Chief Executive's Report

Overview

The last year saw an increase in FY23 EBITDA of 9.2% at £2,410k against the prior period, on 5.4% lower revenues. This growth was achieved despite challenging economic conditions impacting clients' own performance, and hence their budgets and spend, in both the UK and Australia. Australia's revenue was up 8.8% on the previous year built on strong client wins. In the UK, revenue was down 9.5%. Our Group revenue was therefore down 5.4% year-on-year overall, but I am pleased to report that we have been able to manage our costs well in response to trading conditions, delivering adjusted EBITDA of £2.4m, just ahead of market expectations. 

Performance varied across our operating divisions. Australia had a strong end to the financial year, with a major contract win that will fully crystallise in the current financial year. The UK saw revenues slowing through the year, resulting in the 9.5% drop for the full year, but with a significant improvement in profitability due to tight cost control.

Net cash from operating activities dropped to £1.3m (2022: £1.6m).

The client base for Decision, our AI driven automated Pay-Per-Click advertising management tool, has started to build, and we now have 11 clients live or onboarding, with a good pipeline of further opportunities. We have also now signed our first client for Decision in Australia, which is already live.

Higher interest rates, driven by the economic backdrop, has led to an increase in our WACC, which was a significant factor in the impairment charge of £12.1m to Goodwill in respect of the UK cash-generating-unit. Our outlook remains consistent and the Group remains well positioned to drive revenues and profitability in the future.

Jaywing UK

The dip in UK consumer confidence has put pressure on client budgets, and we have experienced clients slowing new spend through the back end of last year and the first 2 months of the current year. From June onwards we have started to see an upturn in client spend and therefore in our revenues, along with a growing pipeline of new client opportunities. 

Our focus on an integrated marketing proposition, enabled by data science, is resonating with existing and potential clients. The acceleration of the move towards digital since the pandemic started has reinforced the need to really understand marketing effectiveness, and we have been able to deliver both outstanding results and unprecedented insight to our clients. We have continued to win some great work from new clients, most recently including Subaru Europe and DUSK.com but the slowdown in existing client spend resulted in a reduction in UK revenue of 9.5% year-on-year.

In anticipation of the tightening economic conditions, we took action to reduce our cost base, and were able to deliver increased year-on-year EBITDA. Although we have seen an encouraging revenue performance more recently, we continue to manage costs tightly to ensure we have the right cost base for our projected revenues.

Amongst our existing marketing clients, the biggest increases in spend came from Castrol, Virgin Money, Rush Hair Group, and Verdant Leisure, and their spend on performance marketing, in particular, has increased significantly.

Key new clients in the year to March 2023 included University of East Anglia, LHV UK, Fair4All Finance and ROC Technologies. Since the start of the new financial year in April 2023, in addition to Subaru Europe and DUSK.com (Retail), we have also added Virgin Media O2, AO World, Superbike Factory, The Entertainer, and Bettys And Taylors Group. We have recently overhauled our Business Development and Marketing functions, and are seeing an increase in the number and calibre of leads being generated.

Jaywing Australia

Our Australian business successfully completed the integration of Frank Digital into Jaywing Australia at the start of 2022, and the fully integrated business has resonated well in the market, with strong new client wins leading to an 8.8% increase in revenues against prior year. The new business wins have been particularly strong in Q4 FY23 and the full benefit of these will be realised in the current financial year (FY24). Of particular note is a contract with Online Education Services (OES) for creative services, which commenced in February 2023. Notable other wins include CROCS Australia & Singapore and CashRewards.

The increase did not fully flow through to EBITDA, as a result of the wage inflation that began under the pandemic lockdowns. The annualization of this impact resulted in EBITDA growing by just 0.4% year-on-year. This wage inflation has now normalised, and FY24 has started strongly for both revenue and EBITDA in Australia.

Decision and Research and Development

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

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

We have now started to deliver new client wins for Decision, with the benefits showing in FY24. These include Bettys, Superbikes, E-Buyer and the Entertainer.

I am pleased with the level of expertise the team has quickly gained and conversations with clients remain ongoing with plenty of opportunities.

The costs of running Decision are relatively fixed and the planned further growth of Decision sales to existing and new customers is expected to help improve Jaywing's overall margins as well as increase its recurring revenues. 

The in-house Research & Development unit within Jaywing is working to deliver our technology road map. Focus has been on automation within reporting to drive greater efficiency as well as further building of Decision functionality to increase scope of delivery. Progress has been pleasing and we can already see the benefits from this work. Future focus will continue on increased automation to drive efficiency within delivery.

Employees

Given the pressure on revenues, we reduced our UK agency headcount both during FY23 and in the first quarter of FY24. This is never an easy decision, but our employees overall have been very supportive of the plan and the way we have approached it. We believe this will underpin a significant uplift in UK profitability in the current financial year.

We opened our new office in Leeds, located in the city centre, and which is ideally suited to collaborative, integrated working. Our employees have continued to adapt to working and collaborating in a hybrid model, and so we have been able to reduce the required office footprint in Leeds, saving £0.2m of costs per annum against the previous office.

We recognise that our people are our most important asset. We have embedded our vision of making brands grow and talent thrive and have engaged with our employees to get their input into how to further develop a great place to work, increasing training expenditure and regularly tracking employee satisfaction. Our most recent survey showed an overall employee satisfaction score of 85%.

We are also continuing to invest in a combination of experienced hires and talented but less experienced recruits, who represent the Company's future management.

Group revenue per employee remained broadly flat at £77.4k in the year (2022: £78.8k).

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

Future Outlook

Although the UK environment remains tough, we are confident that we can build profitability further in FY24. Australia has the benefit of a full year of the new OES contracts, and has continued to win new business, with a strong first quarter of FY24. In the UK, we have continued to win new clients for Decision, delivering higher margin business. Our Risk & Data Consulting arm has won significant new business and is close to full capacity. Our UK agency (marketing) business had a tougher start to the new financial year in April and May, but is now recovering and we are continuing to win new business. Having reduced our UK headcount and cost base, we expect to finish the first half with strong run rate profitability that is expected to provide a step up in full year performance. We remain optimistic that the Company will achieve revenue and adjusted EBITDA for FY24 in line with market expectations.

Andrew Fryatt

Chief Executive Officer

Jaywing plc

6 September 2023

Strategic Report

Business review

Jaywing is a Data Science and Marketing business, with operations in the UK and Australia. Our focus is providing an integrated marketing proposition, enabled by data science, to our existing and potential clients. The parent company acts as a holding company providing management services to its subsidiaries.

On a Group basis the business review and future prospects for the business are contained within the Chief Executive's Report.

Non-IFRS measures

The financial statements contain all the information and disclosures required by the relevant accounting standards and regulatory obligations that apply to the Group. The annual report and financial statements also include measures which are not defined by generally accepted accounting principles such as IFRS. We believe this information, along with comparable IFRS measures, is useful as it provides investors with a basis for measuring the underlying performance of the Group on a comparable basis. The Board and its executive management use these financial measures to evaluate the Group's underlying operating performance. Non-IFRS financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with IFRS. Similarly, non-IFRS measures as reported by us may not be comparable with similar measures reported by other companies.

Key performance indicators used by the Board and executive managers include:

(1) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation & Amortisation ('EBITDA') before restructuring costs and acquisition & related costs

(2) Including accrued interest

Revenue for FY23 was £22.1m (2022: £23.3m), a drop of 5% on FY22, following FY22's strong growth of 16% on FY21.

Adjusted EBITDA was £2,410k (2022: £2,206k), a £204k improvement in the underlying Adjusted EBITDA. The result was achieved through strong cost control.

The statutory operating loss was £11,340k (2022: loss of £6,086k) and the statutory loss before taxation was £12,535k (2022: loss of £6,660k) following an impairment to Goodwill of £12.1m (2022: £6.1m). This non-cash charge has been recognised against the UK Cash Generating Unit ("CGU") largely due to the increase in WACC in light of the current economic environment in the UK. The acquisition goodwill relating to the Australia CGU remains unimpaired. Further details of this impairment are shown in Note 14 to the Consolidated Financial Statements.

Net cash from operations are £1,293k (2022: £1,587k) due to tight cost control across the group. The Cash Flow statement shows the movement in the cash position of the business. 

Net Debt

At 31 March 2023, Net Debt including accrued interest (pre IFRS16) was £10.3m (2022: £8.3m), representing gross debt of £11.4m (2022: £9.0m) net of cash of £1.1m (2022: £0.7m). The Company's gross debt is represented by an amount of £9.2m (2022: £7.7m) drawn down from the secured debt funding provided by the "Jaywing Facility" together with £1.8m (2022: £1.0m) of accrued and unpaid interest on the Jaywing Facility and £0.4m of withholding tax on the interest expense (2022: £0.3m). The Jaywing Facility is fully described in Note 18 and Note 30 to the Financial Statements.

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

Impairment

As required by IAS 36, the Group has carried out an impairment review of the carrying value of our intangible assets and goodwill. The weighted average cost of capital ("WACC") was calculated with reference to long-term market costs of debt and equity and the Company's own cost of debt and equity, adjusted for the size of the business and risk premiums. The calculated WACC rate used for the impairment review was 16.4% for Australia and 16.6% in the UK (2022: 11.5% for Australia and 11.8% in the UK). This was applied to cash flows for each of the cash generating units using estimated growth rates in each business unit. The impairment review was based on two cash generating units being the UK and Australia. As part of the review, a number of scenarios were calculated using the impairment model. These looked at what effect changes in the WACC rates and movements in Revenue and Costs would have to the outcome.

The Group has impaired former acquisition goodwill by £12.1m (2022: £6.1m). This non-cash charge has been recognised against the UK Cash Generating Unit ("CGU") largely due to the increase in WACC in light of the current economic environment in the UK. The acquisition goodwill relating to the Australia CGU remains unimpaired.

Going Concern

The Group financial statements have been prepared on a going concern basis in accordance with UK Adopted International accounting standards. In coming to their conclusion, the Directors have considered the Group's profit and cash flow forecasts for period to 31 March 2025.

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

In addition to the normal process of preparing forecasts for the Group, the Board has also considered downside risks and the potential impact of the economic environment on the cash flows of the Group for a period to 31 March 2025. This has been done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast period.

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

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

Principal Risks and Uncertainties

The evaluation of the Company's risk management process is the responsibility of the Board. Jaywing has developed its risk reporting framework in conjunction with the business leadership team who take an active and responsible role in this process. Below is a summary of the current key risks.

Section 172 statement

In making decisions over the year, the Directors have considered what would be most likely to promote the success of the Company for the benefit of all stakeholders and have had regard for the following:

· the likely long-term consequences of any decision;

· the interests of the Group's employees;

· the need to foster the Group's business relationships with suppliers, customers and others;

· the impact of the Company's operations on the community and the environment;

· the desirability of the Company maintaining a reputation for high standards of business conduct; and the need to act fairly as between shareholders of the Company.

· the needs to act fairly as between members of the Group.

In 2019 the Company adopted the Corporate Governance Code for Small and Mid-Size Quoted Companies from the Quoted Companies Alliance (the "QCA Code"). The Board considers the QCA Code is an appropriate code of conduct for the Company. There are details of how the Company applies the ten principles of the QCA Code on the Company's investor website; https://www.jaywing.com/investors/governance/. The Corporate Governance Statement forms part of this report.

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

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

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

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

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

The Board recognises the importance of maintaining high standards of business conduct. The Group operates appropriate policies on business ethics and provides mechanisms for whistle blowing and complaints which all employees are aware of. These are maintained by the Policy Steering Committee.

The Board aims to maintain good relationships with its shareholders and treats them equally.

By Order of the Board

Andrew Fryatt

Chief Executive Officer

Jaywing plc

6 September 2023

Directors' Report

The Directors submit their Annual Report on the affairs of the Group and the Company and the audited Financial Statements for the year ended 31 March 2023.

Board of Directors

Ian Robinson, Non-Executive Chairman

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

Ian is a Non-Executive Director and Chairman of the Audit Committee of Gusbourne plc, an AIM listed English sparkling-wine business. He is also a nonexecutive Director of a number of other privately-owned businesses. He is a Fellow of the Institute of Chartered Accountants in 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.

Principal activity

The principal activity of the Group during the year under review is providing agency and consulting services in the areas of creative and brand strategy, performance marketing, data science and risk. The Company is a holding entity for the Group.

Results and dividend

The Group's loss after taxation for the year ended 31 March 2023 was £12.8m (2022: loss of £6.5m). The Directors do not propose to pay a dividend.

Net liabilities at 31 March 2023 were £1.2m (2022 Net assets £12.0m).

Future developments

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

Political and charitable donations

The Group made charitable donations of £3k (2022: £1k) and no political donations during the current or prior year.

Directors' interests

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

Directors' third-party indemnity provisions

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

Employees

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

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

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

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

Financial instruments

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

Share Capital

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

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

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

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

Stakeholder engagement

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

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

Streamlined Energy and Carbon Reporting (SECR)

We choose to disclose our UK energy use and associated greenhouse gas (GHG) emissions. Specifically, and as a minimum, we are required to report those GHG emissions relating to natural gas, electricity and transport fuel, as well as an intensity ratio, under the Streamlined Energy and Carbon Reporting (SECR) Regulations.

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

The period covered for the purposes of the SECR section is 1 April 2022 to 31 March 2023 and our calculations are for the following scope:

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

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

Calculation Methodology

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

Results

Energy Efficiency

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

At Jaywing, we

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

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

· operate a cycle to work scheme

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

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

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

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

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

· monitor our energy usage within our buildings.

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

Going Concern

The Group financial statements have been prepared on a going concern basis in accordance with UK Adopted International accounting standards. In coming to their conclusion, the Directors have considered the Group's profit and cash flow forecasts for period to 31 March 2025.

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

In addition to the normal process of preparing forecasts for the Group, the Board has also considered downside risks and the potential impact of the economic environment on the cash flows of the Group for a period to 31 March 2025. This has been done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast period.

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

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

Major interests in shares

As at 31 March 2023, the Company had been notified, in accordance with chapter 5 of the Disclosure and Transparency Rules, of the following voting rights as shareholder of the Company:

Corporate Social Responsibility

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

General Meeting

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

Post Balance Sheet Events

On 13 April 2023, post period end, the Company granted 1,152,000 LTIP (Long Term Incentive Plan) share options to Andrew Fryatt (CEO) and 4,640,000 CSOP (Company Share Option Plan) options to certain senior employees of the Group. The total number of Shares that can be acquired pursuant to options granted under the LTIP and CSOP amounts to 5,782,000 Shares.

The LTIP Options granted to Andrew Fryatt are subject to a minimum vesting price of 10.0 pence per Share and an exercise price of 5.0 pence per Share. The performance period for LTIP Options granted under the LTIP will typically be four years commencing from the date of grant of the relevant LTIP Option. However, in the case of Andrew Fryatt, in recognition of his service to the Company since March 2020, 50% of the LTIP Options will vest and be exercisable on or after the second anniversary of the date of grant, subject to and to the extent that the performance conditions are met.

Except in the event of a change of control of the Company and in certain 'good leaver' scenarios, LTIP Options may only be exercised after the expiry of the performance period and to the extent that the relevant performance criterion is met. Shares acquired on exercise of LTIP Options shall be subject to a two-year holding period, during which time they cannot be sold, except in certain circumstances including, but not limited to, the sale of Shares to meet any tax liabilities arising upon exercise of the LTIP Options.

The market value CSOP Options were granted over a total of 4,640,000 Shares with an exercise price of 5.0 pence per Share. This total includes the 1,200,000 CSOP Options granted to each of Andrew Fryatt (CEO) and Christopher Hughes (CFO) , and 2,240,000 CSOP Options granted to certain senior employees of the Company. The vesting period of the CSOP Options shall be three years from the date of grant. Except in the event of a change of control of the Company and in certain 'good leaver' scenarios, no CSOP Options may be exercised prior to the expiry of the vesting period. Shares acquired on exercise of the CSOP Options shall be subject to a holding period of one year, during which time they cannot be sold, except in certain circumstances including, but not limited to, the sale of Shares to cover the exercise price payable upon exercise of the CSOP Options. No performance conditions attach to the exercise of the CSOP Options.

Auditor

The Directors confirm that:

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

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

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

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

By Order of the Board

Andrew Fryatt

Director

Dated: 6 September 2023

Directors' Remuneration Report

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

The Remuneration Committee

During the year the Remuneration Committee comprised:

Philip Hanson (Chairman)

Ian Robinson

Mark Carrington

The Committee met six times during the year.

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

Remuneration policy

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

During the year to 31 March 2023 there was one Executive Director on the Board as follows:

Andrew Fryatt (Chief Executive) - Appointed 21 April 2020

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

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

Non-Executive Directors' fees

Fees for Non-Executive Directors are determined by the Board annually, taking advice as appropriate and reflecting the time commitment and responsibilities of the role. The Non-Executive Chairman received an annual fee of £75,000 (2022: £50,000) which is an increase from the previous year following a review of the time commitment and benchmarking of the Chair role in similar AIM listed businesses. Non-Executive Directors' fees currently comprise a basic fee of £30,000 per annum plus £10,000 for chairing a committee.

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

Remuneration components - Executive Directors

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

Basic salary

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

Annual bonus plan

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

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

Long Term Incentive Plan (LTIP) and Company Share Option Plan ( CSOP)

On 13 April 2023, post period end, the Company granted 1,152,000 LTIP (Long Term Incentive Plan) share options to Andrew Fryatt (CEO) and 4,640,000 CSOP (Company Share Option Plan) options to certain senior employees of the Group. The total number of Shares that can be acquired pursuant to options granted under the LTIP and CSOP amounts to 5,782,000 Shares.

See further details in post balance sheet event note 35.

Directors' remuneration

The total amounts of the remuneration of the Directors of the Group for the years ended 31 March 2023 and 2022 are shown below:

The emoluments of the Directors are shown below:

* Fee paid to a third party for the Director's services

The salary of the highest paid Director was 4 times the average salary of all Group employees excluding the Directors in the table above (2022: 5 times).

Pensions

The Group made pension contributions on behalf of the Executive Directors. The amount is shown in the table above.

Directors' service agreements and letters of appointment

Contracts of service are negotiated on an individual basis as part of the overall remuneration package. The contracts of service are not for a fixed period. Details of these service contracts are set out below:

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 2023

Corporate Governance Statement

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

There are details of how the Group applies the ten principles of the QCA Code on the Group's investor website.

The Board

At 31 March 2023, the Board comprised Non-Executive Chairman Ian Robinson and Non-Executive Directors Philip Hanson and Mark Carrington. Andrew Fryatt was appointed to the Board as Chief Executive Officer on 21 April 2020. The Board is responsible to the shareholders for the proper management of the Group and meets at least six times a year to set the overall direction and strategy of the Group. All strategic operational and investment decisions are subject to Board approval.

Caroline Ackroyd, Chief Financial Officer, resigned effective on 14 March 2022 and was replaced by an Interim Chief Financial Officer (non-statutory director), Ajay Handa, on the same date until the 31 August 2022 when the Company announced the appointment of Christopher Hughes as the Company's Chief Financial Officer.

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

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

Board committees

Remuneration Committee

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

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

The Committee did not award any share options or pay rises to Executive Directors during the year. It awarded an annual bonus to the CEO and CFO as set out in the Directors Remuneration Report in respect of the prior financial year. It has not awarded an annual bonus in respect of the year to 31 March 2023. Further details of the Group's policies on remuneration and service contracts are given in the Directors' Remuneration report.

Audit & Risk Committee

The Audit & Risk Committee comprises Ian Robinson (Chair), Mark Carrington and Philip Hanson. By invitation, the meetings of the Audit & Risk Committee may be attended by the other Directors and the auditor. The Committee meets not less than two times annually. The Audit & Risk Committee oversees the monitoring of the adequacy and effectiveness of the Group's internal controls, accounting policies and financial reporting and provides a forum for reporting by the Group's external auditor. Its duties include keeping under review the scope and results of the audit and its cost effectiveness, consideration of management's response to any major audit recommendations and the independence and objectivity of the auditor.

The Audit & Risk Committee review the significant estimates, judgements and risks in relation to the annual report and these are outlined in the Strategic Report. The Committee also reviews the risks outlined in the Principal Risks and Uncertainties and challenges the Executive Directors on the controls and processes in place to manage these. The effectiveness of the external audit process has been assessed through discussions with both management and the auditors, and it is proposed that Grant Thornton be reappointed as external auditor.

Nomination Committee

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

Company Secretary

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

Board performance and evaluation

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

Attendance at Board and Committee meetings

The Directors attended the following Board and Committee meetings during the year ended 31 March 2023:

Relationships with shareholders

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

Internal controls

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

Management structure

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

Financial reporting

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

Monitoring of controls

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

Corporate Social Responsibility

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

Employment

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

Environment

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

By Order of the Board

Andrew Fryatt

Dated: 6 September 2023

Directors' Responsibilities Statement

The directors are responsible for preparing the Strategic Report, Directors' Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have to prepare the Group financial statements in accordance with UK-adopted international accounting standards and applicable law, and they have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law, including FRS 101 'Reduced Disclosure Framework'.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company and group for that period. In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

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

· for the Group financial statement state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

· for the parent company state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors confirm that:

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

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

The directors are responsible for preparing the annual report in accordance with applicable law and regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

By Order of the Board

Andrew Fryatt

Dated: 6 September 2023

Consolidated Statement of Comprehensive Income

The accompanying Notes form part of these Consolidated Financial Statements.

\* The comparative information has been restated due to misstatements in the prior period as discussed in note 34.

Consolidated Balance Sheet

\* The comparative information has been restated due to misstatements in the prior period as discussed in note 34.

These Financial Statements were approved by the Board of Directors on 6 September 2023 and were signed on its behalf by:

Andrew Fryatt

Director

Company number: 05935923

The accompanying Notes form part of these Consolidated Financial Statements.

Consolidated Cash Flow Statement

The accompanying Notes form part of these Consolidated Financial Statements.

\* The comparative information has been restated due to misstatements in the prior period as discussed in note 34.

Consolidated Statement of Changes in Equity

The accompanying Notes form part of these Consolidated Financial Statements.

\* The comparative information has been restated due to misstatements in the prior period as discussed in note 34.

Principal Accounting Policies

The financial information set out above does not constitute the Group or the Company's statutory accounts for the year ended 31 March 2023 or the financial year ended 31 March 2022. Statutory accounts for the year ended 31 March 2022 have been delivered to the registrar of companies, and those for the year ended 31 March 2023 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under s498 (2) or (3) of the Companies Act 2006.

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

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

The Consolidated Financial Statements have been prepared and approved by the Directors in accordance with UK Adopted International accounting standards. The Consolidated Financial Statements have been prepared under the historical cost convention, except for the revaluation of any assets and liabilities carried at fair value.

Items included in both the consolidated and company financial statements are measured using the currency of the primary economic environment in which the Group operates ('the functional currency'). The financial statements are presented in 'Pounds Sterling' rounded to the nearest thousand (£'000), which is also the company's functional currency.

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

Going concern

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

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

In addition to the normal process of preparing forecasts for the Group, the Board has also considered downside risks and the potential impact of the economic environment on the cash flows of the Group for a period to 31 March 2025. This has been done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast period.

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

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

Basis of consolidation

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

Revenue

Revenue is generated mainly under the following four contractual models:

1. Monthly retainers

2. Project-based

3. Consulting day rates

4. Licences (with and without support)

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

1. Identify the contract with the customer

2. Identify the performance obligations

3. Determine the transaction price

4. Allocate the transaction price to the performance obligations

5. Recognise revenue when the performance obligations are satisfied

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

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

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

Monthly retainers

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

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

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

Project-based

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

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

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

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

Consulting day rates

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

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

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

Licences

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

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

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

Foreign currency

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

Non-monetary items are not retranslated at the period-end. They are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

Dilapidations provision

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

Classification of instruments issued by the Group

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

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

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

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

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

Property, plant and equipment

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

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

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

Leasehold improvements - over period of lease

Office equipment - 3 - 5 years

Buildings - over period of lease

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

Intangible assets and goodwill

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

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

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

Intellectual property acquired in a business combination that qualifies for separate recognition are recognised as

intangible assets at their fair values.

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

The estimated useful lives are as follows:

Customer relationships - 4 to 12 years

Development costs - 3 to 6 years

Trademarks - 2 to 20 years

Order books - 1 year

Intellectual property - 5 years

Impairment

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

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

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

Put/call options

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

Fair value measurement

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

Employee benefits

Defined contribution plans

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

Provisions

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

Leases

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

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

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

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

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

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

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

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

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

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

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

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

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

• the amount of the initial measurement of lease liability;

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

• any initial direct costs; and

• restoration costs.

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

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

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

Net financing costs

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

Taxation

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

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

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

· the initial recognition of goodwill;

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

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

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

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

Business combinations

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

Assets acquired and liabilities assumed are measured at their acquisition-date fair values. See separate deferred and contingent consideration accounting policy.

Intellectual property acquired in a business combination that qualifies for separate recognition are recognised as intangible assets at their fair values. Amortisation is charged to profit or loss on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Other intangible assets are amortised from the date they are available for use.

The estimated useful life for intellectual property is 5 years.

Financial assets

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits.

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

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

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

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

Financial liabilities

Interest-bearing borrowings

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

Deferred and contingent consideration

Deferred consideration is recorded at fair value and is estimated using a present value technique, discounted at 3.5%, which is the risk free rate.

Contingent consideration is recorded at fair value using the probability-weighted estimated future cash flows using a present value technique. The consideration is discounted at 11.5% Weighted Average Cost of Capital. The effects on the fair value of risk and uncertainty in the future cash flows are dealt with by adjusting the estimated cash flows rather than adjusting the discount rate.

Contingent consideration is a level 3 financial instrument, and is measured at fair value through profit and loss. As such, at each reporting date the contingent consideration is fair valued, with movement in the fair value taken to the statement of comprehensive income

Trade and other payables

Trade payables are initially recorded at fair value and thereafter at amortised cost using the effective interest rate method.

Segmental reporting

Internal reporting and monitoring by the Chief Operating Decision Maker (CODM) is based on the location of the business, as such under IFRS 8 the two operating segments of the business are deemed to be the results in respect of the United Kingdom and Australia. 

Share Capital

Share Capital represents the nominal value of shares that have been issued.

Share Premium

Share Premium includes any premiums received on issue of Share Capital. Any transaction costs associated with the issuing of shares are deducted from Share Premium, net of any related income tax benefits.

Capital Redemption Reserve

Capital Redemption Reserve represents the amount by which the nominal value of the shares purchased or redeemed is greater than proceeds of a fresh issue of shares.

Shares Purchased for Treasury

Represents the nominal value of the shares purchased by the Company.

Foreign Currency Translation Reserve

Represents the exchange differences on retranslation of foreign operations.

Earnings per Share

Earnings per share is calculated by taking the loss attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding where loss making diluted earnings per share is equal to basic.

Retained Earnings

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

Non-controlling interests

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

Significant judgement in applying accounting policies and key estimation uncertainty

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

Accounting estimates and judgements

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

Accounting estimates

Impairment of goodwill and other intangible assets

The carrying amount of goodwill is £10,602k (2022: £21,705k) and the carrying amount of other intangible assets is £2,125k (2022: £69k). The Directors are confident that the carrying amount of goodwill and other intangible assets is fairly stated and have carried out an impairment review. The forecast cash generation for each CGU and the WACC represent significant assumptions and should the assumptions prove to be incorrect, there would be a significant risk of a material adjustment within the next financial year. The sensitivity to the key assumptions is shown in Note 14.

Business combinations and Contingent Consideration

Management uses valuation techniques when determining the fair values of certain assets and liabilities acquired in a business combination (see Note 33). In particular, the fair value of contingent consideration which is a Level 3 Fair Value asset with movements through the P&L and is dependent on the outcome of the acquirees' future revenues. The key judgement relates to the 30% of estimated revenues in future periods and the 11.5% discount rate used for which management undertake regular reviews of forecasts and obtain external support for the WACC calculation (see Note 33). The present value of the maximum consideration not booked is £1.5m.

Accounting judgements

Revenue

Recognition of revenue

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

Identification of performance obligations

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

Allocation of the transaction price to performance obligations

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

Recognition of contract assets and liabilities

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

IFRS 16

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

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

Notes to the Consolidated Financial Statements

1. Segmental analysis

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

The Group's Chief Operating Decision Maker (CODM) is its chief executive and they monitor the performance of these operating segments as well as deciding on the allocation of resources to them. Segmental performance is monitored using adjusted segment operating results.

During the year, no customer accounted for greater than 10% of the Group's revenue (2022: None).

Revenue, Contribution and Adjusted EBITDA by Operating Segments

All revenue is recognised over time.

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

(2) Adjusted EBITDA represents Earnings Before Interest Tax, Depreciation & Amortisation ('EBITDA') before restructuring costs and acquisition & related costs

Non-current assets by Geographic Markets

The Group's non-current assets (other than financial instruments, investments accounted for using the equity method, deferred tax assets and post-employment benefit assets) are located into the following geographic markets:

2. Other operating income

Within other income this period is a settlement of £502k from the claimant, in relation to the reimbursement of previously incurred legal costs following the dismissal of the claimants' case in April 2022, associated with the 2016 acquisition of Bloom Media (UK) Limited. The remaining £5k relates to sundry income.

The Group has taken the option to present income received from Government sources in relation to Covid-19 as other operating income, rather than netted against costs. In the period to September 2021 the Group received funds from the UK Government under the Covid-19 Job Retention Scheme of £37k, and £3k under the corresponding scheme in Australia, Cashflow boost and Job Keepers. There were no receipts of support after September 2021.

3. Operating expenses

4. Finance costs

5. Tax credit

6. Loss per share

Loss per share has been calculated by dividing the loss attributable to shareholders by the weighted average number of ordinary shares in issue during the year.

The calculations of basic and diluted loss per share are:

Weighted average number of ordinary shares in issue:

7. Auditor's remuneration

Amounts paid to the Group's auditor in respect of services to the Company, other than the audit of the Company's Financial Statements, have not been disclosed separately as the information is required instead to be disclosed on a consolidated basis.

8. Key management personnel compensation

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

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 £236k (2022: £284,000).

9. Staff numbers and costs

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