Last checked at 25 Nov 2015 07:00
Date: 24 November 2015
On behalf of: Jaywing plc ("Jaywing", "the Company" or "the Group")
Embargoed: 0700hrs 25 November 2015
Jaywing plc
Interim Results 2015/2016
Jaywing plc (AIM: JWNG) today announced its interim results for the six months ended 30 September 2015.
Financial highlights from continuing operations
Period to 30 September 2015 £'000 | Period to 30 September 2014 £'000 | |
Gross profit* | 15,447 | 15,271 |
Operating profit | 290 | (1,152) |
Adjusted EBITDA** | 1,807 | 1,976 |
Adjusted EBITDA margin*** | 11.7% | 12.9% |
Basic EPS on adjusted EBITDA | 2.18p | 2.59p |
Basic EPS | 0.03p | (1.74p) |
Net debt | 6,389 | 5,515 |
* Revenue less direct costs of sale
** Before amortisation, share based charges, exceptional items and acquisition related costs
*** As a percentage of gross profit
Highlights:
· Gross profit (fee income) organic growth of 1.2% compared to H1 2015 and 4.3% compared to H2 2015
· Operating profit of £290k represents a turnaround of £1,442k from a loss of £1,152k in the previous year
· Small reduction in EBITDA as a result of planned investment in product development
· Good progress with the Company strategy to accelerate growth and sharpen operational focus with an increasingly integrated service offering with data science at it's core
Outlook:
· Trading in H2 2016 in line with management expectations
Commenting on the results, Ian Robinson, Chairman of Jaywing plc, said:
"The first half of the financial year has been one of further progress for Jaywing. The business continues to grow gross profit and remains profitable and cash generative. Jaywing's investment in product development is showing positive outcomes. We continue to progress our strategic objectives including the provision of increasingly integrated services to our clients with data science at their core."
Enquiries:
Jaywing plc | |
Michael Sprot (Company Secretary) | Tel: 0114 281 1200
|
Cenkos Securities plc | |
Nicholas Wells | Tel: 020 7397 8900 |
CHIEF EXECUTIVE COMMENTARY
We've made an encouraging start to the financial year, successfully balancing the delivery of our current year numbers with investment in the future growth of the business. The level of organic growth has been particularly pleasing and this has contributed to another solid financial performance.
Gross profit (GP) has grown compared to both H1 2015 (£176k / 1.2%) and H2 2015 (£632k / 4.3%). Operating profit of £290k in H1 2016 represents a turnaround of £1,442k from a loss of £1,152k in H1 2015. EBITDA has fallen slightly as a consequence of concentrating some of our key resources on product development at the beginning of the year.
We have seen growth in our Agency Services segment that contains our website design and build, content marketing, social media, brand communications and customer management outsourcing propositions. Both GP and EBITDA have increased from H2 2015, by 1.9% and 10.0% respectively whilst EBITDA margin has also improved from 14.5% to 15.8%. There have been a number of new wins, especially within customer management outsourcing. We have also seen an increase in new business opportunities and wins from brands requiring a combination of services from across Jaywing, particularly those services that are underpinned by data science. This validates our collaborative operating model and should lead to "stickier" client relationships.
The Media & Analysis segment comprising search marketing (branded Epiphany) and data analysis, has also achieved GP growth compared to both H1 2015 (£485k / 5.9%) and H2 2015 (£514k / 6.2%). Product development costs sit within this segment, and as already noted, this investment accounts for a small decrease in EBITDA from £2,238k in H1 2015 to £2,144k in H1 2016 (4.2%).
The underlying performance of both segments is solid and overall we are on track to achieve our full year expectations.
Net debt has increased to £6.4m from £5.2m at 31st March 2015 largely as a consequence of the first Epiphany earn-out payment of £1.6m made in July 2015. However, cash generation from operating activities has remained positive.
We are encouraged by the progress made by our investment in product development. Our online data platform is now being tested by a number of clients whilst we have other products still in development. It is good to see the close collaboration between Jaywing's Data Scientists and Epiphany's online media experts.
With the new senior management team structure announced in July we now have the bandwidth to push forward with greater ambition and in so doing harness the potential of the exceptional collection of specialists that we employ.
Martin Boddy
Chief Executive Officer
24 November 2015
Consolidated interim statement of comprehensive income (unaudited)
Six months ended 30 Sept 2015 | Six months ended 30 Sept 2014 | Audited year ended 31 March 2015 | ||
Note | £'000 | £'000 | £'000 | |
Revenue | 4 | 17,051 | 17,261 | 33,789 |
Direct costs | (1,604) | (1,990) | (3,703) | |
Gross profit | 15,447 | 15,271 | 30,086 | |
Other operating income | - | - | 57 | |
Amortisation | (787) | (1,767) | (3,474) | |
Operating expenses | (14,370) | (14,656) | (27,759) | |
Operating profit/(loss) | 290 | (1,152) | (1,090) | |
Finance income | - | 3 | 3 | |
Finance costs | (128) | (138) | (272) | |
Net financing costs | (128) | (135) | (269) | |
Profit/(loss) before tax | 162 | (1,287) | (1,359) | |
Tax expense | 5 | (173) | (9) | (119) |
Loss for the period from continuing operations | (11) | (1,296) | (1,478) | |
Exchange differences on retranslation of foreign operations | 32 | - | 21 | |
Profit/(loss) for the period attributable to the equity holders of the parent | 21 | (1,296) | (1,457) | |
Profit/(loss) per ordinary share |
6 | |||
Basic earnings/(loss) per share | 0.03p | (1.74p) | (1.91p) | |
Diluted earnings/(loss) per share | 0.03p | (1.70p) | (1.75p) | |
Consolidated interim balance sheet (unaudited)
30 Sept 2015 | 30 Sept 2014 | Audited 31 March 2015 | ||
Note | £'000 | £'000 | £'000 | |
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 707 | 627 | 685 | |
Goodwill | 30,446 | 30,446 | 30,446 | |
Other intangible assets | 7,278 | 9,772 | 8,065 | |
38,431 | 40,845 | 39,196 | ||
Current assets | ||||
Trade and other receivables | 8,402 | 8,376 | 7,530 | |
Cash and cash equivalents | 1 | 1,204 | 1,000 | |
8,403 | 9,580 | 8,530 | ||
Total assets | 46,834 | 50,425 | 47,726 | |
Liabilities | ||||
Current liabilities | ||||
Bank overdraft | 7 | (184) | - | - |
Other interest bearing loans and borrowings | 7 | (4,612) | (4,062) | (4,062) |
Trade and other payables | (5,824) | (8,497) | (7,157) | |
Tax payable | (631) | (713) | (355) | |
Provisions | (161) | (151) | (158) | |
(11,412) | (13,423) | (11,732) | ||
Non-current liabilities | ||||
Other interest bearing loans and borrowings | 7 | (1,594) | (2,657) | (2,126) |
Deferred tax liabilities | (1,526) | (1,983) | (1,667) | |
(3,120) | (4,640) | (3,793) | ||
Total liabilities | (14,532) | (18,063) | (15,525) | |
Net assets | 32,302 | 32,362 | 32,201 | |
Equity | ||||
Capital and reserves attributable to equity holders of the company | ||||
Share capital | 34,139 | 34,051 | 34,139 | |
Share premium account | 6,608 | 6,608 | 6,608 | |
Capital redemption reserve | 125 | 125 | 125 | |
Shares purchased for treasury | (25) | (25) | (25) | |
Share option reserve | 80 | 88 | - | |
Foreign currency translation reserve | 53 | - | 21 | |
Retained earnings | (8,678) | (8,485) | (8,667) | |
Total equity | 32,302 | 32,362 | 32,201 |
Consolidated interim cash flow statement (unaudited)
Six months ended 30 Sept 2015 | Six months ended 30 Sept 2014 | Audited year ended 31 March 2015 | ||
Note | £'000 | £'000 | £'000 | |
Cash flow from operating activities | ||||
Loss for the period | (11) | (1,296) | (1,478) | |
Adjustment for: | ||||
Depreciation, amortisation and impairment | 980 | 1,955 | 3,854 | |
Loss on disposal | - | - | ||
Movement in provisions | 3 | 20 | 27 | |
Foreign exchange | 32 | - | 21 | |
Finance income | - | (3) | (3) | |
Finance costs | 128 | 138 | 272 | |
Share based payment charge/(credit) | 221 | (5) | - | |
Taxation | 173 | 9 | 119 | |
Operating cash flow before changes in working capital | 1,526 | 818 | 2,812 | |
(Increase)/decrease in trade and other receivables | (911) | (326) | 1,034 | |
Increase/(decrease) in trade and other payables | 113 | 103 | (327) | |
Cash generated from operations | 728 | 595 | 3,519 | |
Interest received | - | 3 | 3 | |
Interest paid | (128) | (130) | (267) | |
Tax paid | - | - | (801) | |
Net cash flow from operating activities | 600 | 468 | 2,454 | |
Cash flows from investing activities | ||||
Acquisition of subsidiary Epiphany Solutions net of cash acquired | - | - | (4) | |
Payment of deferred consideration | (1,589) | - | (1,405) | |
Acquisition of property, plant and equipment | (213) | (177) | (427) | |
Net cash outflow from investing activities | (1,802) | (177) | (1,836) | |
Cash flows from financing activities | ||||
Increase in borrowings | 550 | - | - | |
Repayment of borrowings | (531) | (1,081) | (1,612) | |
Net cash inflow/(outflow) from financing activities | 19 | (1,081) | (1,612) | |
Net decrease in cash, cash equivalents and bank overdrafts | (1,183) | (790) | (994) | |
Cash and cash equivalents at beginning of period | 1,000 | 1,994 | 1,994 | |
Cash and cash equivalents at end of period | (183) | 1,204 | 1,000 | |
Cash and cash equivalents comprise: | ||||
Cash at bank and in hand | 1 | 1,204 | 1,000 | |
Bank overdrafts | 7 | (184) | - | - |
Cash and cash equivalents at end of period | (183) | 1,204 | 1,000 | |
Consolidated interim statement of changes in equity (unaudited)
Share capital | Share premium account | Capital redemption reserve | Treasury Shares | Share option reserve | Foreign currency translation reserve | Retained earnings | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 31 March 2014 | 34,051 | 6,608 | 125 | (25) | 88 | - | (7,189) | 33,658 |
Loss for the period | - | - | - | - | - | - | (1,296) | (1,296) |
Total comprehensive income for the period | - | - | - | - | - | - | (1,296) | (1,296) |
Balance at 30 September 2014 | 34,051 | 6,608 | 125 | (25) | 88 | - | (8,485) | 32,362 |
Transfer from share option reserve | 88 | - | - | - | (88) | - | - | - |
Transactions with owners | 88 | - | - | - | (88) | - | - | - |
Loss for the period | - | - | - | - | - | - | (182) | (182) |
Retranslation of foreign currency | - | - | - | - | - | 21 | - | 21 |
Total comprehensive income for the period | - | - | - | - | - | 21 | (182) | (161) |
Balance at 31 March 2015 (audited) | 34,139 | 6,608 | 125 | (25) | - | 21 | (8,667) | 32,201 |
Loss for the period | - | - | - | - | - | - | (11) | (11) |
Retranslation of foreign currency | - | - | - | - | - | 32 | - | 32 |
Charge in respect of share based payments | - | - | - | - | 80 | - | - | 80 |
Total comprehensive income for the period | - | - | - | - | 80 | 32 | (11) | 101 |
Balance at 30 September 2015 | 34,139 | 6,608 | 125 | (25) | 80 | 53 | (8,678) | 32,302 |
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 Players House, 300 Attercliffe Common, Sheffield, S9 2AG.
The interim financial information was approved for issue on 25 November 2015. .
2. Basis of preparation
The consolidated interim financial statements for the six months ended 30 September 2015 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 2015 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 2015 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 2015, 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 2015 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)
· IAS 27 (Revised), Separate Financial Statements (effective 1 January 2016)
· IFRS 15 Revenue for Contracts with Customers (effective 1 January 2017)
These standards and interpretations are not expected to have any significant impact on the Group's financial statements.
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)
Six months ended 30 September 2015 | ||||
Agency Services | Media & Analysis | Unallocated | Total Group | |
£'000 | £'000 | £'000 | £'000 | |
Revenue | 7,352 | 9,865 | (166) | 17,051 |
Direct costs | (666) | (1,104) | 166 | (1,604) |
Gross profit | 6,686 | 8,761 | - | 15,447 |
Operating expenses excluding depreciation, amortisation, exceptional items, acquisition related costs and charges for share based payments | (5,628) | (6,617) | (1,395) | (13,640) |
Operating profit / (loss) before depreciation, amortisation, exceptional items, acquisition related costs and credit for share based payments | 1,058 | 2,144 | (1,395) | 1,807 |
Depreciation | (128) | (54) | (11) | (193) |
Amortisation | (458) | (329) | - | (787) |
Compensation for loss of office | (1) | (29) | (68) | (98) |
Acquisition related costs | (48) | (165) | - | (213) |
Charge for share based payments | - | - | (226) | (226) |
Operating profit / (loss) | 423 | 1,567 | (1,700) | 290 |
Finance costs | (128) | |||
Profit before tax | 162 | |||
Tax expense | (173) | |||
Loss for the period | (11) | |||
Six months ended 30 September 2014 | ||||
Agency Services | Media & Analysis | Unallocated | Total Group | |
£'000 | £'000 | £'000 | £'000 | |
Revenue | 8,053 | 9,399 | (191) | 17,261 |
Direct costs | (1,058) | (1,123) | 191 | (1,990) |
Gross profit | 6,995 | 8,276 | - | 15,271 |
Operating expenses excluding depreciation, amortisation, exceptional items, acquisition related costs and charges for share based payments | (5,853) | (6,038) | (1,404) | (13,295) |
Operating profit/(loss) before depreciation, amortisation, exceptional items, acquisition related costs and charges for share based payments | 1,142 | 2,238 | (1,404) | 1,976 |
Depreciation | (126) | (58) | (4) | (188) |
Amortisation | (458) | (1,309) | - | (1,767) |
Compensation for loss of office | (37) | - | - | (37) |
Acquisition related costs | (106) | (1,035) | - | (1,141) |
Credit for share based payments | - | - | 5 | 5 |
Operating profit / (loss) | 415 | (164) | (1,403) | (1,152) |
Finance costs | (135) | |||
Loss before tax | (1,287) | |||
Tax expense | (9) | |||
Loss for the period | (1,296) | |||
4. Segment information (unaudited) (continued)
Year ended 31 March 2015 (audited) | ||||
Agency Services | Media & Analysis | Unallocated | Total | |
£'000 | £'000 | £'000 | £'000 | |
Revenue | 15,491 | 18,708 | (410) | 33,789 |
Direct costs | (1,932) | (2,185) | 414 | (3,703) |
Gross profit | 13,559 | 16,523 | 4 | 30,086 |
Operating expenses excluding depreciation, amortisation, exceptional items, acquisition related costs and charges for share based payments | (11,465) | (11,943) | (2,615) | (26,023) |
Operating profit/(loss) before depreciation, amortisation, exceptional items, acquisition related costs and charges for share based payments | 2,094 | 4,580 | (2,611) | 4,063 |
Other operating income | - | - | 57 | 57 |
Depreciation | (264) | (108) | (8) | (380) |
Amortisation | (916) | (2,558) | - | (3,474) |
Compensation for loss of office | (63) | - | (10) | (73) |
Acquisition related costs | (211) | (1,059) | - | (1,270) |
Charges for share based payments | - | - | (13) | (13) |
Operating profit / (loss) | 640 | 855 | (2,585) | (1,090) |
Finance income | 3 | |||
Finance costs | (272) | |||
Loss before tax | (1,359) | |||
Tax expense | (119) | |||
Loss for the period | (1,478) | |||
Total assets | Agency Services | Media & Analysis | Unallocated | Total |
£'000 | £'000 | £'000 | £'000 | |
30 September 2015 | 24,016 | 27,817 | (4,999) | 46,834 |
31 March 2015 | 24,518 | 26,170 | (2,962) | 47,726 |
30 September 2014 | 24,487 | 28,772 | (2,834) | 50,425 |
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.
Six months ended 30 Sept 2015 | Six months ended 30 Sept 2014 | Audited year ended 31 March 2015 | ||
£'000 | £'000 | £'000 | ||
Recognised in the consolidated statement of comprehensive income: | ||||
Current year tax | 273 | 308 | 765 | |
Origination and reversal of temporary differences | (100) | (299) | (646) | |
Total tax charge | 173 | 9 | 119 | |
Profit/(loss before tax | 162 | (1,287) | (1,359) | |
Tax charge thereon at UK corporation tax rate of 20% (2014: 21%) | 32 | (270) | (285) | |
Effects of: | ||||
Non-deductible expenses | 54 | 240 | 403 | |
Other | 87 | 39 | (27) | |
Prior year adjustment | - | - | 28 | |
Total tax charge | 173 | 9 | 119 |
6. Profit/(loss) per share (unaudited)
Six months ended 30 Sept 2015 | Six months ended 30 Sept 2014 | Audited year ended 31 March 2015 | ||
Pence per share | Pence per share | Pence per Share | ||
Basic earnings/(loss) per share | 0.03p | (1.74p) | (1.91p) | |
Diluted earnings/(loss) per share | 0.03p | (1.70p) | (1.75p) |
Earnings/(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:
Six months ended 30 Sept 2015 | Six months ended 30 Sept 2014 | Audited year ended 31 March 2015 | |||
£'000 | £'000 | ||||
Profit/(loss) for the period from continuing operations | 21 | (1,296) | (1,457) | ||
Weighted average number of ordinary shares in issue: | Number '000 | Number '000 | Number '000 | ||
Basic | 76,260 | 74,505 | 76,260 | ||
Adjustment for share options, warrants and contingent shares | 6,771 | 1,755 | 6,771 | ||
Diluted | 83,031 | 76,260 | 83,031 | ||
| |||||
Adjusted earnings per share | ||||
Six months ended 30 Sept 2015 | Six months ended 30 Sept 2014 | Audited year ended 31 March 2015 | ||
Pence per share | Pence per share | Pence per Share | ||
Basic adjusted earnings per share | 1.46p | 1.76p | 3.45p | |
Diluted adjusted earnings per share | 1.34p | 1.72p | 3.17p |
Adjusted earnings per share have been calculated by dividing the profit attributable to shareholders before other income, amortisation, impairment and charges for share based payments 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:
Six months ended 30 Sept 2015 | Six months ended 30 Sept 2014 | Audited year ended 31 March 2015 | ||
£'000 | £'000 | £'000 | ||
Profit/(loss) before tax and impairment | 162 | (1,287) | (1,359) | |
Amortisation | 787 | 1,767 | 3,474 | |
Acquisition related costs | 213 | 1,141 | 1,270 | |
Charge/(credit) for share based payments | 226 | (5) | 13 | |
Adjusted profit attributable to shareholders | 1,388 | 1,616 | 3,398 | |
Current period tax charge | (273) | (308) | (765) | |
1,115 | 1,308 | 2,633 | ||
7. Bank overdraft, borrowings and loans (unaudited)
30 Sept 2015 | 30 Sept 2014 | Audited 31 March 2015 | ||
Summary | £'000 | £'000 | £'000 | |
Bank overdraft | 184 | - | - | |
Borrowings, undiscounted cash flows | 6,206 | 6,719 | 6,188 | |
6,390 | 6,719 | 6,188 | ||
Borrowings are repayable as follows: | ||||
Within 1 year | ||||
Bank overdraft | 184 | - | - | |
Borrowings | 4,612 | 4,062 | 4,062 | |
Total due within 1 year | 4,796 | 4,062 | 4,062 | |
In more than one year but less than two years | 1,062 | 1,062 | 1,063 | |
In more than two years but less than three years | 532 | 1,063 | 1,063 | |
In more than three years but less than four years | - | 532 | - | |
Total amount due | 6,390 | 6,719 | 6,188 | |
Average interest rates at the balance sheet date were: | % | % | % | |
Overdraft | 2.75 | 2.75 | 2.75 | |
Term loan | 3.56 | 3.25 | 3.56 | |
Revolving credit facility | 3.51 | 3.25 | 3.51 |
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 2015 were £2.0 million (2014: £2.5 million) and, taking into account cash balances within the Group, there was £1.8 million (2014: £3.8 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.
Reconciliation of net debt | Cash at bank and in hand | Overdraft | Borrowings | Net debt |
£'000 | £'000 | £'000 | £'000 | |
30 September 2015 | 1 | (184) | (6,206) | (6,389) |
31 March 2015 | 1,000 | - | (6,188) | (5,188) |
30 September 2014 | 1,204 | - | (6,719) | (5,515) |
8. Provisions (unaudited)
30 Sept 2015 | 30 Sept 2014 | Audited 31 March 2015 | ||
£'000 | £'000 | £'000 | ||
At the beginning of the period | 151 | 131 | 131 | |
Additional provisions | 10 | 20 | 27 | |
At the end of the period | 161 | 151 | 158 | |
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:
45p deferred shares | 5p ordinary shares |
| ||||
£'000 | £'000 |
| ||||
Authorised share capital at 31 March 2015 and 30 September 2015 | 45,000 | 10,000 |
| |||
| ||||||
Allotted, issued and fully paid
45p deferred shares | 5p ordinary shares | ||||
Number | Number | £'000 | |||
Issued share capital at 31 March 2015 and at 30 September 2015 | 67,378,520 | 76,359,385 | 34,139 | ||
| |||||
No shares were issued in the period.
10. 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 2015.