Digital agency streamlines operations with sale of contact centre business
Jaywing, the Sheffield-based digital agency, has exchanged contracts for the conditional sale of its contact centre business, HSM, to Bidco.
Bidco, which is backed by New York and London-based private equity firm Aquiline Capital Partners LLC, is acquiring HSM in a £500,000 deal.
Jaywing has also entered into a three-year services agreement with Bidco, which will provide the agency with a minimum of £360,000 during the three-year period.
In addition, Jaywing has also reported “solid progress” for the halfway point of its financial year despite seeing revenues slightly drop to £21.98m (2017: £23.46m) and pre-tax losses rise to £743,000 from £309,000. Debt reduced from £8m to £7m.
For the six month period ending 30 September the agency said it was “building sales momentum and recognising early stage benefits of cost realignment and debt reduction year on year.”
Martin Boddy, chairman of Jaywing, said: “The disposal of our contact centre (HSM Limited), as announced by the Company this morning, is an important non-core asset disposal, which will allow management to concentrate entirely on developing its core business and will simplify the Jaywing offering.
“Following the disposal, we will operate as a consultancy, an agency and a technology business all under-pinned by data science. Our skill is to combine these to create solutions that our clients find indispensable. We call this our “One Jaywing” model, a model which is now being utilised with over two thirds of our top 50 clients.
“We are seeing momentum build quarter on quarter this year, particularly in our performance marketing division, Epiphany. The sales pipeline is also far stronger than at the same time last year and our churn rate is far lower. Our overall EBITDA margin, 7.3% H1 18/19, reflects the specific business mix in H1, and also does not yet capture the benefits of the cost base measures we have undertaken.”
Boddy added: “The end of September represents the seasonal peak of our borrowing. However, net debt has reduced year on year. We successfully renegotiated our banking facilities in July and are comfortably within our covenants.
“Looking ahead to the remainder of H2, we don’t anticipate market conditions improving in the UK given the general level of uncertainty in the run up to the UK’s anticipated withdrawal from the European Union on 29 March 2019.
“Fiscal Q4 (calendar Q1) has historically been a seasonally important period for the Company, due to the annual budgeting cycles of our clients, which are not expected to change. Despite the market conditions, the Board believes that Jaywing’s differentiated offering makes it well placed to capitalise on growth opportunities in both the UK and Australia.”
