Operating losses have grown at Leeds-based Jaywing as its revenue dropped 5.4% to £22.1m, however, its adjusted EBITDA has risen 9.2%.
While its UK operation saw a 9.5% fall in revenue, in Australia it has achieve growth of 8.8%, to £5.7m – albeit at a “slower rate” than the previous year.
The agency also saw its losses before tax increase from (£6.7m) to (£12.5m). Its Adjusted EBITDA is up 9.2% – from £2.2m to £2.4m.
In the annual report and accounts published this morning, the group stated that its new business pipeline across both countries “remained strong.”
It had also seen a upturn in client spend since June.
Non-executive Chairman, Ian Robinson explained that its UK income was impacted by a “weaker demand.” He also stated that “cost efficiency improvements” had helped margins. That included a “reduction in its UK headcount.”
The agency has also moved into a new office in Leeds, so it can continue a hybrid working model – thus reducing its office footprint in the city and saving £0.2m each year in office costs.
In August last year, Jaywing acquired York-based software developer, Midisi and the IP to its Decision pay-per-click ad management software. The initial payment was £400k, rising to £2.5m over the period of 42 months.
“In the first quarter of FY24 the Group carried out a significant restructuring of the UK division to improve margin efficiency through cost reduction, and implemented a new organisational structure which is intended to help the Group rebalance its strengths on its higher margin services,” he said.
“Recent new business wins in data science led services, particularly in the Group’s risk, fraud and regulatory services, together with UK cost reductions are expected to help raise UK margins in FY24.”
Robinson added:
“The Group’s businesses in the UK and Australia plan to focus on organic growth on the back of recent new business wins and a strong new business pipeline.
“The Group will promote and further develop the recently acquired Decision software as well as exploring opportunities for further investment in advanced data analysis products as well as the application of technology to the marketing challenges of our clients. Creative services will remain a key component of our services mix, and the Group will continue to promote its award-winning creative services to its clients as part of its comprehensive marketing solution offerings.”
Looking ahead, he stated:
“Whilst trading conditions in the UK remain challenging the recent restructuring of the UK division and recent new business wins as well as a strong pipeline is expected to assist the UK division’s ability to withstand ongoing challenges in the macroeconomic environment as well as improving margin run rates. Recent significant new business wins in Australia are expected to provide strong revenue and profitability growth.”
Its key wins for 2023 included University of East Anglia, LHV UK, Fair4All Finance and ROC Technologies. It’s since added Subaru Europe Virgin Media O2, AO World, Superbike Factory, The Entertainer, and Bettys And Taylors Group.
Andrew Fryatt, the CEO, added:
“In the UK, we have continued to win new clients for Decision, delivering higher margin business. Our Risk & Data Consulting arm has won significant new business and is close to full capacity. Our UK agency (marketing) business had a tougher start to the new financial year in April and May, but is now recovering and we are continuing to win new business. Having reduced our UK headcount and cost base, we expect to finish the first half with strong run rate profitability that is expected to provide a step up in full year performance. We remain optimistic that the Company will achieve revenue and adjusted EBITDA for FY24 in line with market expectations.”
