Jaywing Regulatory News (JWNG)

The following amendment has been made to the 'Final Results' announcement released on 25 August 2021 at 7.00am under RNS No 6673J:

Jaywing plc has updated the website URL where investors can access copies of the Annual Report to https://investors.jaywing.com All other details remain unchanged. The full amended text is shown below.

This announcement contains inside information

Jaywing plc

25 August 2021

Jaywing plc

("Jaywing" or "the Company")

Posting of Annual Report and Accounts

Jaywing plc, the UK agency specialising in data science, announces that copies of the Annual Report and Accounts for the year ended 31 March 2021 are today being posted to shareholders and are available to view on the Company's website: https://investors.jaywing.com   

Enquiries:

Jaywing plc

Caroline Ackroyd (Company Secretary) Tel: 0114 281 1200

Cenkos Securities plc

Nicholas Wells

Callum Davidson (Nominated Adviser) Tel: 0207 397 8920

Financial highlights

Statutory Results

Reconciliation of Operating Profit / (Loss) with Adjusted EBITDA

* Revenue less third-party direct costs of sale

** Adjusted EBITDA represents EBITDA before restructuring costs, impairment charges, share based payment credits and fair value movement on Put / Call options

*** Including accrued interest

Chairman's Statement

Results

I am pleased to report an increase in underlying earnings in FY21 with an Adjusted EBITDA for the Group of £2,181,000 (2020: Adjusted EBITDA loss of £35,000). This represents a £2.2m turnaround, despite a 16% contraction in Net Revenue in FY21 to £20.2m from £24.0m in FY20. Net Revenue in the second half of FY21 at £10.9m was 16% up on Net Revenue for the first half of £9.3m. Adjusted EBITDA margin as a percentage of Net Revenue for FY21 amounted to 10.8 % compared with a loss in FY20.

Cash Generated from Operations for the year improved by £1,305,000 to £2,258,000 (2020: £ 953,000).

The statutory operating profit was £91,000 (2020: operating loss of £ 8,874,000).

Despite the challenges of FY21 these results reflect improving efficiencies in the business and the impact of a successful restructuring of the Group in late FY20 and FY21. This included a reorganisation of the business in FY21 into market and client facing business divisions with an increased focus on a more comprehensive and solution-based service offering to clients. Jaywing Australia has continued to perform strongly with net revenues for the year of £4.2m, a 9% increase over 2020 and an underlying growth in local currency of 6%.

FY22 Q1 Net Revenue to June 2021 (unaudited) amounted to c.£5.9m. and represents a 23% increase over Q1 in FY21 of £4.8m, demonstrating a continued year on year recovery in our Net Revenue.

Strategy

In the short to medium term the Company plans to focus on further organic growth with the support of recent new business wins and a strong pipeline. The Company will also explore opportunities for further investment in advanced data analysis products, the application of technology to marketing challenges and related people resources to support our data science led service offerings to clients.

In Jaywing Australia we will continue to support a successful and autonomous professional team with a track record of strong financial performance to date. This will include ongoing collaboration with the UK business on clients and services where required. We are working with the Australian team to explore opportunities to accelerate scale and market reach via further local investment.

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

Board

In April 2021 we announced the appointment of Caroline Ackroyd, the Company's Chief Financial Officer to the Board. Caroline joined the Company in September 2020 and has been closely involved with the reorganisation of the business and its processes. Caroline is an experienced CFO with significant commercial experience in technology-based businesses operating in competitive and client-centric markets.

People

Our staff have demonstrated their ability to adapt to significant external challenges from the pandemic as well as successfully adapting to the internal challenges of the business restructuring and reorganisation in FY21. They have continued to serve our customers without interruption as well as winning new business. The Board would like to thank all our staff for their ongoing hard work and dedication.

Ian Robinson

Non-Executive Chairman

* Adjusted EBITDA represents EBITDA before restructuring costs, impairment charges and share based payment credits and fair value movement on Put / Call options.

Chief Executive's Report

Overview

It has been an extraordinarily difficult twelve months for the economy, the Group and the marketing sector, as a result of the Covid-19 pandemic. However, whilst Net Revenue for FY21 was expectedly lower than FY20 over the 12 months, I am delighted to report that the business has continued to grow and progress from the first half, with Net Revenues up 16% compared with the first 6 months of the year. The month of March 2021 saw Net Revenues 5% ahead of March 2020, the first month to exceed pre-pandemic levels. Underpinned by the cost realignment activities outlined in the interim results, we have been able to rebuild profitability, with adjusted EBITDA of £2.2m for the full year compared with the previous year loss of £35k. Excluding the benefits of covid-related salary sacrifice and government support, Adjusted EBITDA increased from £88k in the first half to £613k in the second half of the financial year, reflecting the progress we are making.

This improvement in Net Revenue and underlying profitability has continued in the first quarter of the new financial year, giving us confidence for the year ahead.

Net cash generated from operations increased to £2.3m. This was before the outlay of £1.9m in the year to acquire the final 25% of Massive Group Pty Ltd in Australia.

Throughout the pandemic restrictions, the business has continued to operate successfully via a home-based model, and, although our offices are now reopening, we expect to operate a hybrid of office-based and home-based working moving forward.

Australia

In Australia, where the impact of Covid-19 in FY21 was less pronounced, we delivered 9% year-on-year growth in Net Revenue despite the pandemic, with second half Net Revenues up 37% on the first half. This reflects both strong growth in new business and also further development of our existing client relationships. Notable wins included a contract to build 18 websites for Navitas, the global education provider, a full service digital marketing contract with CSR (building products) and performance marketing contracts for Fiskars Group, Lyres (non-alcoholic spirits), Princess Polly (apparel) and Noble Oak Insurance.

One impact of Covid-19 in Australia was the closing of its borders, which has contributed to significant wage inflation in the Sydney market, in particular, requiring careful cost management. We are, nonetheless, continuing to deliver year-on-year Net Revenue growth in FY22.

We have previously reported our intention to bring the two Australian businesses together as "Jaywing Australia", and have now restructured the management team to drive that. One of our senior Australian directors, Chris Pittham, is stepping back from day-to-day responsibilities to become a non-executive director of the combined Australian business, with Tom Geekie assuming the role of CEO for Australia, and Matt Barbelli becoming Chief Creative Officer. I would like to thank Chris for his extraordinary contribution, and am delighted that he will remain involved in the business as a non-exec. Tom and Matt have identified significant growth opportunities in the Australian market, and we are now focusing on addressing those.

UK

In the UK, our three client-facing divisions all saw Net Revenue growth in the second half compared with H1. The recovery has been led by Retail, which increased by 15% in H2. Retail Net Revenues were enhanced by new contract wins from La Redoute and Rohan Designs, which will both mostly benefit the current financial year, along with very resilient revenues from Euro Car Parts and Yorkshire Water. By the end of the half, the monthly Net Revenue run rate had recovered to exceed that of 12 months earlier, and in FY22 we expect to see further growth from newly won contracts, including Rush Hair & Beauty, and Cox Automotive. In our FMCG division, the recovery of Net Revenue has been slightly slower at 12% increase in H2, although some clients have increased their spend with us, notably Britvic and ACCA. In our Financial & Professional Services division, H2 growth was initially slower, but we exited Q4 with a strong run rate, ahead of pre-pandemic levels. This was, fuelled by Net Revenue growth with first direct, HSBC and National Bank of Kuwait International. This has been supported further in the new financial year by a significant contract win with Skipton Building Society, and a new umbrella agreement with HSBC, which is underpinning continued Net Revenue growth.

The revised operating structure implemented last summer, which focuses around core client sectors, is now enabling us to cross-sell our services to the existing client base and also more easily offer our broad portfolio of capabilities to new prospects. For example, this has already resulted in sales of marketing services to a Risk client, and risk modelling work to a client who had previously only bought marketing services.

Focus on data

We are continuing to focus on developing our advanced data capabilities, which support both our Risk business and our Marketing Effectiveness proposition, giving us a distinct advantage in the markets in which we operate. Our attribution modelling has made significant contributions to clients such as Studio Retail, Furniture & Choice, and Mazda UK. The application of technology to marketing challenges is a key component of our strategy moving forward, and we are investing in growing this revenue stream.

Employees

Our employees have risen to the challenge magnificently over the last year, both in terms of personal sacrifice to protect the business and adapting to remote working. Despite the 16% net revenue reduction, Net Revenue per employee grew by 4% to £69.8k for the full year (FY20: £66.9k), and Adjusted EBITDA per employee reached £7.5k (FY20: loss of 0.1k).

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

Current trading

Having protected our cash and profitability through the pandemic, we are now well positioned to focus on growth. The first quarter of FY22 has been encouraging, with Net Revenue up 23% on last year, several new clients, and a good pipeline of opportunities.

Andrew Fryatt

Chief Executive Officer

Jaywing plc

24 August 2021 

Strategic Review

Results

The results for the FY21 have been encouraging. Whilst there was a general reduction in client activity following the outbreak of the Covid-19 pandemic, leading to a 16% fall in Net Revenue for the full year compared to the previous year, the Net Revenue run rate had returned to pre-pandemic levels by the end of the year. March 2021 Net Revenue was £2.0m, an increase of 5% on March 2020. This was the result of a number of new client wins and increased spending by existing clients.

The Adjusted EBITDA profit amounted to £2.2m compared with an adjusted EBITDA loss of £35k for the prior year.

The statutory operating profit was £91,000 (2020: operating loss of £8,874,000) and the statutory loss before taxation was £360,000 (2020: loss before taxation of £9,392,000).

Cashflow generated from operations amounted to £2.3m compared with £1.0m for the prior year. The cashflow statement shows the movement in the cash position of the business.

Non-IFRS measures

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

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

* Revenue less third-party direct costs of sale

** Adjusted EBITDA represents EBITDA before restructuring costs, impairment charges, share based payment credits and fair value movement on Put / Call options

*** Including accrued interest

Net Debt

At 31 March 2021, Net Debt including accrued interest (pre IFRS16) was £7.6m (2020: £5.9m) and was represented by The Jaywing Facility (as described in Note 30 and Note 18) of £8.3m less cash of £0.7m.

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

Restructuring Plan

In August 2019 the Board appointed a consulting firm to assist with the preparation of a restructuring plan to realign the business more closely to its clients and its service offerings with a view to significantly improving post restructuring monthly EBITDA and cash flow run rates of the business. This review resulted in a detailed implementation plan (the "Restructuring Plan") which was implemented during the latter part of FY20 and continued into FY21 under the leadership of Andrew Fryatt, who was appointed as CEO at the end of March 2020. The Restructuring Plan is now complete, and costs related to this plan incurred during FY21 amounted to £488k, principally relating to staff redundancies.

Australia

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

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

Impairment

As required by IAS 36, the Company has carried out an impairment review of the carrying value of our intangible assets and goodwill. The weighted average cost of capital ("WACC") was calculated with reference to long-term market costs of debt and equity and the Company's own cost of debt and equity, adjusted for the size of the business and risk premiums. The calculated WACC rate used for the impairment review was 11.5% (2020: 10.9%). This was applied to cash flows for each of the cash generating units using estimated growth rates in each business unit. The impairment review was based on two main cash generating units being the UK, following the reorganisation of the UK operations into one business unit and Australia. Growth rates were assumed at 7.5% for the financial year 22/23 and 23/24, and then at 2.5% for the following periods, these are below Group forecasts for the periods.

As a result of these calculations the Board has concluded that no goodwill impairment was required for the year (2020: £5,468k).

As part of the review, a number of scenarios were calculated using the impairment model. These looked at what effect changes in the WACC rates and movements in EBITDA would have to the outcome. With no movement in EBIDTA a movement of 0.5% to 12% in the WACC rate gave the result of no impairment, a movement by 1% to 12.5% gave rise to no impairment. Keeping the WACC rate at 11.5% and reducing EBITDA by 5% gave rise to no impairment, a reduction of EBITDA by 10% gave rise to no impairment. The final test was an increase in WACC by 1% to 12.5% and a reduction in EBITDA by 10%, this gave rise to an impairment of £2,313k.

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

Share Options

The Company's Performance Share Plan terminated on 8 October 2020 and there are no outstanding share options. This resulted in a credit of £696k to the profit and loss in the period. No further balance remains.

Going Concern

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

In addition to the normal process of preparing forecasts for the Group, the board has also considered the potential impact of Covid-19 on the cash flows of the Group for a period to 31 March 2023. This has been done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast period.

Since March 2020, the economic impact of Covid-19 has resulted in revenue levels below those of the prior year, although we have been able to provide continuous service to our clients during this period. The Group has taken actions to protect both cash and profitability through this period, including voluntary salary reductions, and taking advantage of the Government Job Retention Scheme and VAT payment deferral. The Group has continued to win new work through the period, and as we come to the end of the year, we have seen revenue levels return to pre-pandemic levels with a period of continued growth on the back of the new client wins and increased spend from existing clients.

At the beginning of the financial year being reported, the impact of Covid-19 indicated the existence of a degree of uncertainty which cast significant doubt, as with many other organisations, about the Group's ability to continue as a going concern. The outcome for the year and the forecasts prepared by the business show that we do not consider there to be same level of uncertainty now as there was 12 months ago.

In considering their position the Directors have also had regard to letters of support in respect of the secured debt which have received from each of the holders of that debt. 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.

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 2021.

Principal activity

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

Results and dividend

The Group's loss after taxation for the year ended 31 March 2021 was £0.2m (2020: loss of £9.0 million). The Directors do not propose to pay a dividend.

Net assets at 31 March 2021 were £21.2m (2020: £22.2m)

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 and no political donations during the year (2020: £Nil).

Directors' interests

All those Directors served throughout the year or from appointment. The Directors' interests in shares in the Company are set out in the Directors' remuneration report.

Directors' third-party indemnity provisions

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

Employees

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

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

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

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

Financial instruments

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

Share Capital

Details of the Company's Share Capital, including rights and obligations attaching to each class of share, are set out in Note 21 of the Consolidated Financial Statements.

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

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

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

Major interests in shares

As at 10 August 2021, the Company had been notified, in accordance with chapter 5 of the Disclosure and Transparency Rules, of the following voting rights as shareholder of the Company:

Section 172 statement

The Directors are required by the Companies Act 2006 to act in the way they consider, in good faith, would be most likely to promote success of the Company for the benefit of its stakeholders as a whole and in doing so are required to have regard for the following:

· the likely long-term consequences of any decision;

· the interests of the Group's employees;

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

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

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

In 2019 the Company adopted the Corporate Governance Code for Small and Mid-Size Quoted Companies from the Quoted Companies Alliance (the "QCA Code"). The Board considers the QCA Code is an appropriate code of conduct for the Company. There are details of how the Company applies the ten principles of the QCA Code on the Company's investor website.

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

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

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

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

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

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

The Board aims to maintain good relationships with its shareholders and treats them equally. The Group has presented at forums for retail investors and has regular contact with its major shareholders.

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.

Streamlined Energy and Carbon Reporting (SECR)

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

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

The period covered for the purposes of the SECR section is 1 April 2020 to 31 March 2021 and our calculations are for the following scope:

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

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

Calculation Methodology

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

Results

Energy Efficiency

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

At Jaywing, we

· encourage the use of remote working facilities to avoid travelling where possible, particularly in the past year where the effect of Covid-19 has meant that our offices have been closed and travel has reduced by over 97%

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

· operate a cycle to work scheme

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

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

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

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

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

· monitor our energy usage within our buildings.

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

General Meeting

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

Auditor

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

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

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

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

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

By Order of the Board

Andrew Fryatt

Director

Dated: 24 August 2021

Directors' Remuneration Report

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

The Remuneration Committee

During the year the Remuneration Committee comprised:

Philip Hanson (Chairman)

Ian Robinson

Mark Carrington

The Committee met four times during the year.

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

Remuneration policy

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

During the year to 31 March 2021 there was one Executive Director on the Board as follows:

Andrew Fryatt (Chief Executive) - Appointed 21 April 2020

Caroline Ackroyd (Chief Financial Officer) was appointed to the board on 21 April 2021, after the year end.

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

Non-Executive Directors' fees

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

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

Remuneration components - Executive Directors

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

Basic salary

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

Annual bonus plan

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

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

Directors' remuneration

The total amounts of the remuneration of the Directors of the Group for the years ended 31 March 2021 and 2020 are shown below:

The emoluments of the Directors are shown below:

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

The salary of the highest paid Director was 4.7 times the average salary of all Group employees excluding the Directors in the table above (2020: 5.6 times).

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

Pensions

The Group made pension contributions on behalf of the Executive Director. 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: 24 August 2021

Corporate Governance Statement

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

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

The Board

At 31 March 2021, 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, joined the business in September 2020, and was appointed to the Board on 21 April 2021.

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 pay rises, bonus payments or share options during the year.

Further details of the Group's policies on remuneration and service contracts are given in the Directors' Remuneration report.

Audit & Risk Committee

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

The Audit & Risk Committee review the significant estimates, judgements and risks in relation to the annual report and these are outlined in the Strategic Review. The 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 2021:

Relationships with shareholders

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

Internal controls

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

Management structure

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

Financial reporting

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

Monitoring of controls

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

Corporate Social Responsibility

The Board recognises the importance of social, environmental and ethical matters and it endeavours to take into account the interests of the Group's stakeholders, including its investors, employees, 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

Caroline Ackroyd

Dated: 24 August 2021 

Directors' Responsibilities Statement

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

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have to prepare the financial statements in accordance with international financial reporting standards in conformity with the requirements of the Companies Act 2006. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company and group for that period.

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

· select suitable accounting policies and then apply them consistently;

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

· state whether applicable international financial reporting standards in conformity with the requirements of the Companies Act 2006 have been followed, subject to any material departures disclosed and explained in the financial statements; and

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

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

By Order of the Board

Andrew Fryatt

Dated: 24 August 2021

Consolidated Statement of Comprehensive Income

The accompanying Notes form part of these Consolidated Financial Statements.

These Financial Statements were approved by the Board of Directors on 24 August 2021 and were signed on its behalf by:

Andrew Fryatt

Director

Company number: 05935923

The accompanying Notes form part of these Consolidated Financial Statements. 

Consolidated cash flow statement

The accompanying Notes form part of these Consolidated Financial Statements.

Consolidated statement of changes in equity

The accompanying Notes form part of these Consolidated Financial Statements.

Principal Accounting Policies

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

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

The Consolidated Financial Statements have been prepared and approved by the Directors in accordance with International accounting standards in conformity with the Companies Act 2006. The Consolidated Financial Statements have been prepared under the historical cost convention.

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

The summary accounts set out above do not constitute statutory accounts as defined by section 434 of the Companies Act 2006. The Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the Notes to the Financial Statements for the year the ended 31 March 2021 have been extracted from the Group's statutory financial statements upon which (i) the auditor's opinion is unqualified and (ii) did not contain a statement under either sections 498(2) or 498 (3) of the Companies Act 2006. The audit report for the year ended 31 March 2020 did not contain statements under section 498(2) or 498 (3) of the Companies Act 2006. The statutory financial statements for the year ended 31 March 2020 have been delivered to the Registrar of Companies. The 31 March 2021 accounts were approved by the directors on 24 August 2021, but have not yet been delivered to the Registrar of Companies.

Going concern

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

In addition to the normal process of preparing forecasts for the individual companies with the group and a consolidated position for the group, the board has also considered the potential impact of Covid-19 on the cash flows of the group for the assessed period to 31 March 2023. This has been done by looking at various scenarios within the forecasts for the potential effect of changes in the market during the forecast period.

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

At the beginning of the financial year being reported, the impact of Covid-19 indicated the existence of a degree of uncertainty which cast significant doubt, as with many other organisations, about the Group's ability to continue as a going concern. The outcome for the year and the forecasts prepared by the business show that we do not consider there to be same level of uncertainty now as there was 12 months ago.

In considering their position the Directors have also had regard to letters of support in respect of the secured debt which have received from each of the holders of that debt. 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.

We recognise revenue and net revenue in the financial statements, net revenue is defined as revenue recognised against a client less any direct third party costs, where we act as principal in the transaction, based on the control which the group holds over the services provided.

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

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

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

Project-based

A client will enter into a framework agreement that covers all work performed by Jaywing, and will then issue a brief or 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. The customer may choose to vary the scope at any stage, and that would be subject to an updated work order. That work order would still be part of the original contract as those services would not be distinct from those in the original contract.

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

Consulting day rates

A client will enter into a contract for a piece of work that is quoted as a number of days charged at a rate per day. This work will be either risk, marketing or data based and could involve building models, databases and analysis of data. Invoices will usually be raised monthly for the number of days of work performed.

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

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

Licences

A client enters into a contract for a product licence, including support from Jaywing, to run that product and interpret the results from it. The product and support are not separately identifiable because the client is not able to operate the product licence without this support as they do not have the skills or a login to the system. 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

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

Dilapidations provision

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

Judgements made by the Directors in the application of these accounting policies that have a significant effect on the Consolidated Financial Statements, together with estimates with a significant risk of material adjustment in the next year, are discussed in Note 31 to the Consolidated Financial Statements.

Classification of instruments issued by the Group

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

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

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

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

Finance payments associated with financial liabilities are dealt with as part of finance expenses. Finance payments associated with financial instruments that are classified in equity are dividends and are recorded directly in equity.

Property, plant and equipment

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

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

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

Leasehold improvements - over period of lease

Office equipment - 3 - 5 years

Buildings - over period of lease

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

Intangible assets and goodwill

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

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

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

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

The estimated useful lives are as follows:

Customer relationships - 4 to 12 years

Development costs - 3 to 6 years

Trademarks - 2 to 20 years

Order books - 1 year

Impairment

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

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

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

Put/call options

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

Fair value measurement

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

Employee benefits

Defined contribution plans

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

Share-based payment transactions

The weighted average fair value for the EBITDA performance options was calculated using the Black-Scholes Merton Option Pricing Model, and the fair value for the share price options was calculated using the Monte Carlo Model. This is charged to profit or loss over the vesting period of the award. The charge to profit or loss takes account of the estimated number of shares that will vest. Where the options do not have any market conditions attached, the number expected to vest is reassessed at each reporting period. All share-based remuneration is equity-settled. Provision is made for National Insurance when the Group is committed to settle this liability. The charge to profit or loss takes account of the options expected to vest, is deemed to arise over the vesting period, and is discounted. The remaining share based payment schemes were terminated in October 2020.

Provisions

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

Expenses

Leases

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

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

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

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

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

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

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

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

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

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

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

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

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

• the amount of the initial measurement of lease liability;

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

• any initial direct costs; and

• restoration costs.

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

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

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

Net financing costs

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

Taxation

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

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

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

· the initial recognition of goodwill;

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

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

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

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

Financial assets

Cash and cash equivalents

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

Trade and other receivables

IFRS 9's impairment requirements use more forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'. This replaced IAS 39's 'incurred loss model'.

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

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

Financial liabilities

Interest-bearing borrowings

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

Trade and other payables

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

Segmental reporting

The Group reports its business activities in three client-facing operating segments: Retail, FMCG and Financial & Professional Services.

Share Capital 

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

Share Premium

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

Capital Redemption Reserve

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

Shares Purchased for Treasury 

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

Share Option Reserve 

Represents the fair value charge of share options in issue.

Foreign Currency Translation Reserve

Represents the exchange differences on retranslation of foreign operations.

Retained Earnings

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

Non-controlling interests

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

Significant judgement in applying accounting policies and key estimation uncertainty

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

Significant management judgement

The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.

Capitalisation of internally developed software

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

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment.

Accounting estimates and judgements

Accounting estimates

Impairment of goodwill and other intangible assets

The carrying amount of goodwill is £29,789k (2020: £27,586k) and the carrying amount of other intangible assets is £799k (2020: £2,604k). The Directors are confident that the carrying amount of goodwill and other intangible assets is fairly stated and have carried out an impairment review. The forecast cash generation for each CGU and the WACC represent significant assumptions and should the assumptions prove to be incorrect, there would be a significant risk of a material adjustment within the next financial year. The sensitivity to the key assumptions is shown in Note 14.

Accounting judgements

Recognition of revenue

The Directors consider that they act as a principal in transactions where the Group assumes the credit risk. Where this is via an agency arrangement and the Group assumes the credit risk for all billings, it therefore recognises gross billings as revenue. For other income sources, revenue recognition is assessed in line with the five steps of IFRS.

Recognition of contract assets and liabilities

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

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

Put / Call Option

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

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. As explained in the accounting policy for revenue, contracts usually include just one distinct performance obligation.

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.

Notes to the Consolidated Financial Statements

1. Segmental analysis

During the year 2020/21, the Group reported its operations by client-facing market segments (Retail, FMCG, Financial & Professional Services), reflecting the revised operating divisions of the Group.

During the year, no customer accounted for greater than 10% of the Group's revenue (2020: None).

Group Net Revenue by Client Facing Operating Segments

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

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

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

Net Revenue by Geographic Markets

All revenue is recognised over time.

Net Revenue is defined as revenue less third-party direct costs of sale. Revenue in the UK was £21,706k (2020: £25,810k), and in Australia £4,251k (2020: £3,913k).

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:

Non-current assets are allocated based on their physical location.

2. Other operating income

The Group has taken the option to present income received from Government sources in relation to Covid-19 as other operating income, rather than netted against costs. The Group received funds from the UK Government under the Covid-19 Job Retention Scheme of £451,000. Under the corresponding scheme in Australia, Cashflow boost and Job Keepers, the Group received £330,000. Of the £781,000 received in the year to March 2021, £601,000 was received in the six month period to September 2020.

Other operating income includes amounts received from the administrator of a client for a contractual obligation to perform services on their behalf. During the year, the Group received a further distribution of £12,000 (2020: £38,000). It is anticipated there may be further distributions in the future but the Board is unaware of the quantum or timing of these potential receipts.

3. Operating expenses

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

The fair value movement in put / call option in 2021 relates to the crystallisation of a gain on the acquisition of the remaining 25% of Massive Group PTY Ltd and a movement in relation to the fair value measurement of the Frank Digital PTY Ltd put / call option.

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. In addition to last year's reported audit figures an amount was agreed and paid to cover over-runs of £40,000, making the total payable in relation to the audit £167,000.

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 £208,000 (2020: £257,000).

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:

The aggregate payroll costs of these persons were as follows:

10. Employee benefits

The Group had granted share options under the Jaywing plc Performance Share Plan.

The share option schemes terminated in October 2020. Details are as follows:

The share options scheme was terminated in October 2020.

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

As at 31 March 2021

As at 31 March 2020

Credit to the statement of comprehensive income

Under IFRS 2, the Group is required to recognise an expense in the relevant Company's Financial Statements. The expense is apportioned over the vesting period based upon the number of options which are expected to vest and the fair value of those options at the date of grant. In the year to March 2021 this resulted in a credit to the P&L of £696k.

11. Interests in Subsidiaries

The details of subsidiaries held directly by the Group are set out in Note 12 of the plc Parent Company accounts. After the acquisition of the remaining 25% of Massive Group Pty in October 2020, the Group includes one subsidiary (2020: two) with material non-controlling interests (NCI):

No dividends were paid to the NCI during the financial years 2021 and 2020.

Jaywing plc acquired the remaining 25% of Massive Group PTY on 21 October 2020 after the remaining shareholders exercised their put option. The 25% stake was acquired for $4.0m (£2.2m), the total consideration for the purchase of the 100% interest was $9.6m (£5.4m). At 31 March 2021 an amount of £0.3m was still outstanding to the original shareholders, this was fully paid by 30 June 2021.

12. Property, plant and equipment

The assets are covered by a fixed charge in favour of the Group's lenders.

13. Leases

The company has lease contracts for offices occupied and printers. The amounts recognised in the financial statements in relation to the leases are as follows:

(i) Amounts recognised in the consolidated balance sheet

The balance sheet shows the following amounts relating to leases:

(ii) Amounts recognised in the income statement

The income statement shows the following amounts relating to leases:

There are no other amounts relating to low value or short term leases excluded from the above amounts.

14. Goodwill

Goodwill and other intangible assets have been tested for impairment by assessing the value in use of the relevant cash generating units ("CGU"), the cash generating units are measured at UK and Australia level as this is how we will be reviewing the trading positions going forward. This is a change to previous year when there were 6 CGU's used in the forecast, the re-organisation of the business operation means that it is more accurate to use 2 CGU's for forecasting, as this is how the businesses are run on a day to day basis. The value in use calculations were based on projected cash flows in perpetuity. Budgeted cash flows for 2021/22 to 2028/29 were used. These were based on the forecast for 2022 with growth rates of 7.5% then applied to EBITDA for the following two years, and 2.5% for subsequent years. In management's view this is a conservative assumption.

The average year-on-year growth in earnings before interest, tax, depreciation and amortisation (EBITDA) that has been used as the basis for forecasting cash flows for each of the cash generating units when testing for impairment were: