Revenues down as listed marketing firm publishes delayed results

Sheffield-headquartered digital marketing company Jaywing reported revenues of £35.5m, down from £41.5m in its Annual Report and Accounts for the year ending 31 March 2019.

The business, which also employs a large number of people in Leeds,  had delayed its annual financial results earlier this year while it negotiated with its bank and its two major shareholders “with a view to strengthening the company’s balance sheet”.

The results, released today, also recorded a loss after tax from continuing operations of £0.9m (2018: loss of £1.0m).

Gross profit was £29.8m, compared with £30.8m in 2018, with a reduction in net debt of nearly £1.0.

The annual report statement notes: “Slow trading conditions in the UK in Q4 of FY19 and the first quarter of FY20, leading to a requirement for additional funding.

“The company remains in constructive dialogue with its debt and certain equity holders with regards to the company’s financing requirements.”

Commenting on the results, Martin Boddy, Chairman of Jaywing, said: “During the year, overall demand in the UK was relatively soft and at times unpredictable.

“Despite this, margins improved significantly, with adjusted EBITDA increasing by 15% despite an overall 3% reduction in Gross Profit (GP).

“Encouragingly, in the UK we saw a return to top line growth in our Online Performance segment, with GP growing by 10%. But it was in Australia where we experienced the strongest growth and our Australian operation now accounts for 13% of the overall GP.

“The quality of income also improved with nearly 70% of our top 50 clients now buying more than one service line and 50% of revenues being visible beyond 6 months.

“The disposal of a non-core call centre business (HSM Limited) has allowed management to concentrate on the core business. It provided the cash to undertake some re-structuring and sharpen our proposition to clients whose main priority is driving efficiency in marketing.

“With its data, digital and technology focus all delivered through a collaborative operating model, Jaywing is well positioned to take advantage of any hardening in marketing spend as and when it comes.

“Trading in the final quarter of FY19 and the first quarter of the new financial year was particularly challenging and, whilst improving during the second quarter, the ongoing uncertain economic and political outlook is likely to continue to impact client activity.

“The company remains in constructive dialogue with its debt and certain equity holders with regards to the company’s financing requirements with a view to obtaining an enlarged working capital facility.“

Boddy added: “In the marketing industry, clients are forcing a major redesign of the traditional network agency model.

“This creates space for a credible challenger such as Jaywing with the right specialisms and technology allied to a collaborative operating model.

“Whilst the very short-term outlook in the UK is going to be impacted by economic uncertainty and therefore difficult to predict, the mid-term outlook is far more appealing, with most market commentators and industry surveys predicting healthy growth rates in online marketing in particular.”