Jaywing Regulatory News (JWNG)

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Date: 20th November 2017

On behalf of: Jaywing plc ("Jaywing", "the Company" or "the Group")

Embargoed: 0700 hrs 21st November 2017

Jaywing plc

Interim Results 2017/2018

Jaywing plc (AIM: JWNG) today announces its interim results for the six months ended30 September 2017 ("H1").

Financial highlights from continuing operations

* Revenue less direct costs of sale

** Before amortisation, share based charges, exceptional items and acquisition related costs

*** As a percentage of gross profit

Commenting on the results, Martin Boddy, Chairman of Jaywing plc, said:

"Since the election was called in the Spring we have seen consumer-led businesses in the UK grapple with difficult trading conditions. In common with previous periods where there has been a squeeze on consumer spending and more general economic uncertainty, their first action has been to cut costs, including marketing costs. Over the past months, we have experienced the impact of these market pressures in particular parts of our business, alongside every other agency.

If things continue to follow the same cycle, then we can expect the remaining marketing spend to move towards the most accountable and cost effective digital marketing channels and then expect to see spend start to recover on the back of improved marketing performance. Indeed, digital marketing spend is still forecast to increase in the latest e-Marketer report. So as a specialist in data science led digital marketing, we can expect Jaywing to benefit from this in the medium term.

As a result of these market conditions, we saw a number of existing clients either delay or reduce their spend on marketing contracts. With limited exposure to growth in overseas markets to offset this, our UK H1 financial performance has been adversely impacted and we expect profits to be substantially below market expectations for the full financial year. We have continued to carefully monitor costs and have implemented mitigating actions in response.

Despite these factors, we are encouraged with the strong performance of our Media and Analysis segment during H1 due to the demand for our data science consultancy services. We have experienced strong growth in our Australian operation and have secured some excellent new business wins across the UK business, including a rapidly growing company in the UK financial services sector.

Furthermore, our industry profile continues to grow with Epiphany being named Search Agency of the Year at the UK Agency Awards in September. Jaywing was named Prolific North's Large Integrated Agency of the Year and also won Silver at the industry's most prestigious Cannes Corporate Awards in September.

Looking ahead to H2 we are optimistic that performance will improve, particularly in Q4 as this has historically been the period when we typically generate around a third of our profits for the entire year."

Enquiries:

CHIEF EXECUTIVE COMMENTARY

"Overall Gross Profit increased by 4% from the same period last year as a result of the acquisitions of Digital Massive and Bloom.

In the Media & Analysis segment, our data science consultancy has had a strong H1 largely as a result of demand for its risk proposition. However, within our performance marketing division, as a result of the adverse market conditions described above, we saw some clients reduce their monthly spend at renewal or in the case of five clients, cease trading. This impacted H1 performance despite strong Q1 sales. Our Australian operation is performing well. Looking ahead to H2, the reduction in client spend appears to be stabilising, whilst potential new clients remain cautious.

In May we launched Jaywing Intelligence and have since built a pipeline of sales opportunities. At the end of August we acquired a small social content agency and expect to see this contribute to a better H2.

In our Agency segment, we saw some excellent new business wins in brand led marketing. However, these have been somewhat overshadowed by the spend from one of our larger FMCG clients stalling since the election was called. We are now seeing spend from this client slowly recover as well as revenues flow from recent wins.

Our contact centre division also sits within the Agency segment. With a major client taking their contact centre function in house plus cost increases in relation to living wage, apprenticeship levy and rent following a rent review, its H1 performance was adversely impacted. Despite this, we are pleased to report that we have already replaced the client lost with another of similar significance to Jaywing and expect to benefit from this win in Q4.

In terms of cash, net debt has increased by £4.6m from the previous year end to £8.1m at 30 September 2017. £2.7m of this relates to planned earn-out payments with the rest due to capex on the new Sheffield office building and a negative movement in working capital from the strong debtors position at the previous year end. We expect net debt to reduce by this year end.

We continue to actively pursue our strategy to scale the business by looking at complementary acquisitions in other territories and the UK. Adding new capabilities to our successful Australian business is a priority as is adding new services to our online media and data science offerings".

Rob Shaw

Chief Executive Officer

20th November 2017

Consolidated interim statement of comprehensive income (unaudited)

Consolidated interim balance sheet (unaudited)

Consolidated interim cash flow statement (unaudited)

Consolidated interim statement of changes in equity (unaudited)

1. General Information

Jaywing plc (the "Company") is incorporated and domiciled in the United Kingdom. The Company is listed on the AIM market of the London Stock Exchange. The registered address is Albert Works, Sidney Street, Sheffield, S1 4RG.

The interim financial information was approved for issue on 20th November 2017.

2. Basis of preparation

The consolidated interim financial statements for the six months ended 30 September 2017, which are unaudited, have been prepared in accordance with applicable accounting standards and under the historical cost convention except for certain financial instruments that are carried at fair value.

The financial information for the year ended 31 March 2017 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 March 2017 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498 (2) or Section 498 (3) of the Companies Act 2006.

The consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2017, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

3. Accounting policies

Except as described below, the principal accounting policies of Jaywing plc and its subsidiaries ("the Group") are consistent with those set out in the Group's 2017 annual report and financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The following standards and interpretations of relevance to the Group have been issued but are not yet effective and have not been adopted by the Group:

· IFRS 9 Financial Instruments (effective 1 January 2018)

· IFRS 15 Revenue for Contracts with Customers (effective 1 January 2018)

· IFRS 16 Leases (effective 1 January 2019)

· IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective 1 January 2018)

The Group are conducting a review of IFRS 15 - Revenue from Contracts with Customers which is ongoing.

The Group does not currently anticipate that the adoption of the other standards and interpretations above will have a material impact on the Group's financial statements in the period of initial application other than IFRS 16 Leases. A review of IFRS 16 will be conducted to determine its impact on the Group.

Other standards and interpretations in issue but not yet effective are not considered to have any relevance to the Group.

4. Segment information (unaudited)

The Group reports its business activities in two areas: Agency Services and Media & Analysis being its two primary business activities. Unallocated represents the Group's head office function, along with intragroup transactions.

Total assets exclude intangible assets, cash and external borrowings which have not been allocated to operating segments.

The majority of the Group's activities are carried out within the UK. There is also a small subsidiary in Australia.

4. Segment information (unaudited) (continued)

4. Segment information (unaudited) (continued)

The segment into which certain operating expenses are allocated was changed from 1st April 2017. To give an accurate comparison, the numbers for the period to 30th September 2016 and the year to 31st March 2017 have been updated. £505k was transferred from Media & Analysis to Unallocated in the period to 30th September 2016, and £1,153k transferred from Media & Analysis to Unallocated in the year to 31st March 2017.

5. Tax expense (unaudited)

A reconciliation of the charge that would result from applying the standard UK corporation tax rate to profit before tax to the tax charge is given below.

6. Loss per share (unaudited)

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 period. The calculations of basic and diluted loss per share are:

Adjusted earnings per share have been calculated by dividing the profit attributable to shareholders before other income, amortisation, impairment, charges for share based payments and the current period tax charge by the weighted average number of ordinary shares in issue during the period. The numbers used in calculating the basic and diluted adjusted earnings per share are reconciled below:

7. Bank overdraft, borrowings and loans (unaudited)

As the loans are at variable market rates their carrying amount is equivalent to their fair value.

The borrowing facilities available to the Group at 30 September 2017 were £1.1 million (2016: £2.0 million) and, taking into account cash balances within the Group, there was £1.1 million (2016: £5.0 million) of available borrowing facilities.

A composite accounting system is set up with the Group's bankers, which allows debit balances on overdraft to be offset across the Group with credit balances.

8. Provisions (unaudited)

Provisions relate to leases in the Group where the commercial benefit has either ceased or will cease before the normal expiry period.

9. Share capital (unaudited)

Authorised:

Allotted, issued and fully paid

10. Information on acquisitions

On 30 August 2017, Jaywing announced the acquisition of social publishing, native marketing and audience first creative agency HeadOfffice. The agency will become part of its Leeds based digital marketing business Epiphany.

11. Related party transactions (unaudited)

There were no significant changes in the nature and size of related party transactions for the period from those disclosed in the Annual Report for the year ended 31 March 2017.