Jaywing reports £6m reduction in revenue and admits growth will be 'elusive'

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Rob Shaw, Jaywing

Sheffield-headquartered Jaywing has reported a reduction in revenue from £41.5m to £35.5m in its delayed results published today.

At the end of August, the digital marketing agency delayed publication of its annual results to y/e 31st March 2019 following a “very weak” first quarter of trading.

Those results were published today and showed a reduction in gross profit from £30.8m to £29.8m. Adjusted EBITDA grew 15% “in challenging market conditions” and net debt was reduced by almost £1m during the period.

Slow trading conditions in the UK in Q4 of FY19 and the first quarter of FY20 have led to a requirement for additional funding. Jaywing said it “remains in constructive dialogue with its debt and certain equity holders with regards to the Company’s financing requirements.”

Chairman Martin Boddy 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.

“Encouragingly, in the UK we saw a return to top line growth in our Online Performance segment, with gross profit growing by 10%. 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.“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.

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“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.”

Gross profit from Australia now accounts for 13% of the overall and Boddy added: “We expect this number to grow further as we continue to demonstrate the value of the agencies we have acquired and integrated in Sydney.”

The company’s two main shareholders are Lord Ashcroft, who owns 25.63%, and Lombard Odier Investment Managers Group, which holds 23.59%.

Chief Executive Rob Shaw (above) admitted meaningful growth would be “elusive” for the company in the coming financial year.

“In a period of such political and economic uncertainty in the UK, many clients are at present struggling to make long-term decisions on marketing investment,” he said.

“Our experience in the first quarter of our new financial year points to another year when meaningful top line growth will be elusive.  We will push hard on all fronts and take advantage of any hardening in marketing spend as and when it comes; in the meantime we will manage our cost base appropriately.

“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.”