Jaywing plc (AIM: JWNG) today announces its interim results for the six months ended 30 September 2019 (“H1”).
Financial highlights from continuing operations
|
|
6 months to 30 September 2019 £’000 |
6 months to 30 September 2018 £’000 |
|
Gross profit* |
11,996 |
14,979 |
|
Adjusted EBITDA** |
(551) |
1,327 |
|
Adjusted EBITDA margin*** |
(4.6%) |
8.9% |
|
Loss after tax |
(1,215) |
(634) |
|
Reported EPS |
(1.38p) |
(0.70p) |
|
Net debt |
5,748 |
7,132 |
* Revenue less direct costs of sale
** Before amortisation, share based charges, exceptional items, acquisition related costs and adjustment for the impact of IFRS 16
*** As a percentage of gross profit
Commenting on the results, Martin Boddy, Chairman of Jaywing plc, said:
“As we have outlined in previous announcements, trading in the UK in the first quarter of the year was very weak with a modest improvement in the second quarter. With the political and economic uncertainty in the period, many clients have been focused on their short term marketing spend and where this spend is discretionary, it has been running at a level well below that seen in previous years. However, trading in our Australia operation continued to show profitable growth with EBITDA increasing by 40%.
Overall, like for like Gross Profit for the half year fell by 20% to £12m but the impact on EBITDA was mitigated through cost management and efficiencies resulting in a like for like EBITDA loss of £551k. Despite this, we have generated a small positive cashflow from operations. Net debt reduced year on year following the sale of HSM Limited in January 2019 and loan repayments.
On 2 October 2019, following the half year period, we announced that entities associated with two of our major shareholders had acquired the Company’s existing secured loan facility of £5.2 million owed to Barclays Bank plc. The major shareholders immediately provided the Company with additional secured facilities by increasing the Jaywing Facility by £3.0 million to £8.2 million, which enabled the Company to repay its outstanding overdraft and provided it with additional working capital.
By successfully tackling the Group’s funding challenge Jaywing is now in a financially stronger position.
During September we developed a plan with the objective of returning our UK operations to profitability and cash generation in the short term, which assumed no improvement in trading conditions. Taking expert input we concluded that we needed to take a different approach and the plan sets out how we will reshape and re-engineer the organisation to address the changes that we are seeing in the way clients engage with agencies and the new demands that they are making of them. Since September management has been focused on executing the plan and I am pleased to say that we are making good progress. We have improved the management of our working capital, materially realigned our cost base and adopted a new and contemporary agency model that drives revenue and creates efficiencies in delivering even higher quality and effective work for clients. All of this is now being reflected in a stronger financial run rate.
The composition of the Board has also been reviewed and by mutual agreement. Adrian Lingard, Chief Operating Officer, is stepping down from the Board with immediate effect. On behalf of the Board I would like to thank him for his contribution over the past four years.
Beyond the short term, the Board is considering a range of strategic options to return the Company to highly accretive revenue growth. With its performance marketing proposition and pedigree in data science, Jaywing has some highly attractive capabilities that differentiate it from its competition and position it in areas of marketing spend that are set to grow.”
Enquiries:
Jaywing plc
Andrew Fryatt (CEO) Tel: 0333 370 6500
Cenkos Securities plc
Nicholas Wells / Callum Davidson (Nominated Adviser) Tel: 0207 397 8920