Jaywing Regulatory News (JWNG)

WEARE 2020 plc

Interim Results 2011/2012

WEARE 2020 plc (AIM: 2020) today announced its interim results for the six months ended 30 September 2011.

Performance Highlights

·; Gross profits £15.25m; (2010: £17.90m), -15%

·; EBITDA before other income £2.06m; (2010: £1.23m), +68%

·; Profit before tax ("PBT") £1.01m; (2010: £0.59m) +69%

·; Profit after tax £0.79m; (2010: £0.32m), +152%

·; Net debt £4.3m; (2010: £6.1m); undrawn banking facilities of £3.2million

·; All cash deferred consideration of £2.4million paid in respect of acquisition of Technology business

·; £0.9million of Term Loans repaid final £0.3million to be paid in December 2011

·; Basic earnings per share 1.06 pence; (2010: 0.42 pence) +152%

·; Diluted earnings per share 1.02 pence (2010: 0.41 pence) +149%

Commenting on the results, Stephen Davidson, Chairman of WEARE 2020 plc, said: "It is with great pleasure I announce a 68% increase in our operating performance for the six months to 30 September 2011. Although our gross profits are down as a result of our decision to close our contact centre in Nottingham, our operating performance has been positive in the other areas of our business, especially Jaywing within our Dialogue business. We continue to reduce our debt which now stands at £4.3 million after paying off all deferred consideration. The final payment of our Term loans will be made in December 2011. The financial robustness of the Group is evident."

Enquiries:

WEARE 2020 plc

Stephen Davidson, Chairman

Keith Sadler, COO/Group Finance Director

finnCap

Tom Jenkins/Charles Cunningham 020 7600 1658

INTERIM RESULTS

It is with great pleasure that I announce our interim results for the six months ended 30 September 2011. After a very difficult period we have returned to significant growth in the underlying performance of the Group. Profit before tax is up 69% at £1.0 million for the six months (H1 2010: £0.6 million) and our profit after tax increased by 152% to £0.8million (H1 2010: £0.3 million). At the EBITDA before other income line we have produced £2.1 million for the six months to 30 September 2011 against £1.2 million for the six months to 30 September 2010, a 68% improvement.

Gross profit has declined by £2.6 million in the six months to 30 September 2011 compared with the six months to 30 September 2010. £1.8 million of this decline is due to the decision to close our contact centre in Nottingham as the result of its main client terminating their contract with us. This location was only marginally profitable and therefore not material to the profitability of the Group.

Our Group has three segments, 2020 Agency, digital and direct marketing services, 2020 Dialogue, lead generation and data and risk consultancy, and 2020 Technology, eCommerce project implementation and consultancy services.

With the impact of the economic environment on our 2020 Agency business we have seen a decline in gross profit within this division as well by £1.9 million. This is in the main due to our decision to consolidate our business within three locations, Newbury, Sheffield and Ipswich. With the cost savings we made at the time, the profit before tax for our 2020 Agency business only fell by £79,000. We believe the consolidation of the 2020 Agency business now means it has a good platform to return to growth. We have seen some small wins in clients but more importantly we are seeing increased expenditure from existing clients.

2020 Technology division continues to grow with a 10% increase in gross profit and a 12% increase in profit before tax. This is on the back of new client wins including Debenhams and Ann Summers.

The significant improvement has been within our 2020 Dialogue business and principally the risk consultancy part of this division. Gross profit has increased by 25% and profit before tax has improved from £72,000 loss in the six months to 30 September 2010 to a profit of £854,000 in the six months to 30 September 2011. It is too early to say if there is a maintainable pick up in this sector but we have secured assignments through to next year. The team at Jaywing have worked extremely hard to deliver these results and I would like to thank them for their determination to deliver increasingly profitable results.

As stated in previous announcements we continue to receive settlement of a contractual obligation from a client who has gone into liquidation. In the six months to 30 September 2011 we received £0.3 million (2010: £0.9 million), to date we have received £3.3 million from the administrators or 63 pence in the £ against our claim. These receipts are disclosed as other income on the face of the income statement. The administrators have indicated that the full pay out could be up to 86 pence in total or approximately a further £1.2 million.

Operating expenses fell from £16.9 million to £13.4 million, a 21% reduction. £1.6 million was associated with the closure of Nottingham and the balance with the consolidation of Bristol and Swindon with Newbury.

Net debt as at 30 September 2011 was £4.3 million (2010: £6.1 million). This is after settling £2.0 million of deferred consideration and the repayment of the term loans. As at 30 September 2011 there was a balance of £0.4 million of deferred consideration, which was settled in October 2011. There is a final repayment on the term loans due in December 2011 of £0.3 million at which time the Group will operate with its Revolving Credit Facility and overdraft facility. This facility, which amortises over the life of the facility, was renewed for another three years in June of this year. The net debt is less than one times the EBITDA for the full year to March 2011.

The Board has been prudent in the management of the balance sheet and as the debt of the Group continues to reduce the Board intends to consider the initiation of dividend payments in the next financial year. 

Board changes

The Board expect to make an announcement in due course on the appointment of a new Chief Executive.

Outlook

We have produced an excellent set of results with indications that we have returned to growth. Notwithstanding major concerns about the macroeconomic outlook, the Board believe that growth can be maintained for each of the divisions in the Group and are confident about achieving management expectations for the full year.

Stephen Davidson

Chairman

22 November 2011

Consolidated interim balance sheet (unaudited)

Consolidated interim cash flow statement (unaudited)

Consolidated interim statement of changes in equity (unaudited)

1. General Information

WEARE 2020 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 30-33 Minories, Tower Hill, London, EC3N 1DD.

The company changed its name from Digital Marketing Group plc to WEARE 2020 plc on 15 September 2011.

The interim financial information was approved for issue on 22 November 2011.

2. Basis of preparation

The consolidated interim financial statements for the six months ended 30 September 2011 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 2011 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 2011 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 2011, 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 WeAre 2020 plc and its subsidiaries ("the Group") are consistent with those set out in the Group's 2011 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.

Standards and interpretations in issue at 30 September 2011 but not yet effective:

·; IFRS 9 Financial Instruments (effective 1 January 2013)

·; IFRS 10 Consolidated Financial Statements (effective 1 January 2013)

·; IFRS 11 Joint Arrangements (effective 1 January 2013)

·; IFRS 12 Disclosure of interests in Other Entities (effective 1 January 2013)

·; IFRS 13 Fair Value Measurement (effective 1 January 2013)

·; IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)

·; IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013)

·; Deferred Tax: Recovery of Underlying Assets - Amendments to IAS 12 Income Taxes (effective 1 January 2012)

4. Segment information (unaudited)

The Group now reports its business activities in three areas: Agency, Dialogue and Technology, its three primary business activities. In previous years this has been reported on a pillar business activity basis based around geography and business activity. The comparative information has been amended to reflect this change of management reporting. 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.

No single client accounts for more than 10% of Group revenue. All the Group's activities are carried out within the UK.

4. Segment information (unaudited) (continued)

4. Segment information (unaudited) (continued)

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. Earnings per share (unaudited)

Earnings per share have been calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares in issue during the period. The calculations of basic and diluted earnings per share are:

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:

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 2011 were £7.6 million (2010: £10.4 million) and, taking into account cash balances within the Group, there was £3.2 million (2010: £3.3 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. Financial derivatives (unaudited)

In 2007 the Group purchased an interest rate swap of 6.19% for the period 2007 to 2012 for £4.0 million of its borrowings. This swap is designated a hedge of the interest expense relating to the Group loans. The contract was marked to market at 30 September 2011 and was a net liability of £156,000 (2010: £363,000).

9. Provisions (unaudited)

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

10. Share capital (unaudited)

Authorised:

Allotted, issued and fully paid

The shares issued in the period were as a result of the exercise of share options by employees and directors.

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 2011.

INDEPENDENT REVIEW REPORT TO WEARE 2020 PLC

Introduction

We have been engaged by the company to review the interim financial information in the interim report for the six months ended 30 September 2011 which comprises the consolidated interim statement of comprehensive income, the consolidated interim balance sheet, the consolidated interim cash flow statement and the consolidated interim statement of changes in equity and the related notes 1 to 11. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the interim financial information.

This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, "Review of Interim Financial Information performed by the Independent Auditor of the Entity". Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The interim report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the interim financial information are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The interim financial information in the interim report has been prepared in accordance with the basis of preparation in note 2.

Our responsibility

Our responsibility is to express to the company a conclusion on the interim financial information in the interim report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information in the interim report for the six months ended 30 September 2011 is not prepared, in all material respects, in accordance with the basis of accounting described in note 2.

Grant Thornton UK LLP

Chartered Accountants

Sheffield

22 November 2011