Press Release
3 December 2024
System1 Group
PLC (AIM: SYS1)
("System1" or "the Group" or "the
Company")
Unaudited interim results for the six months ended 30
September 2024
System1 Group the marketing decision-making
platform www.system1group.com announces
its unaudited interim results for the six months ended 30 September
2024 ("H1", "H1
FY25").
|
Statutory
Basis
|
|
H1
FY25
|
H1
FY24*
|
Change**
|
|
|
|
£m
|
£m
|
%
|
|
Platform
|
|
16.7
|
10.9
|
53%
|
|
Non-Platform
|
|
1.6
|
2.4
|
-31%
|
|
Total
Revenue
|
|
18.3
|
13.3
|
38%
|
|
Gross
Profit
|
|
16.0
|
11.7
|
37%
|
|
Operating
Costs
|
|
(13.7)
|
(10.9)
|
26%
|
|
Other
Operating Income*
|
|
0.3
|
0.2
|
35%
|
|
Profit
before Taxation
|
|
2.6
|
0.9
|
176%
|
|
Income Tax
Expense
|
|
(0.8)
|
(0.3)
|
167%
|
|
Profit for
the Period
|
|
1.8
|
0.6
|
180%
|
|
Diluted
Earnings per Share
|
|
13.8p
|
4.9p
|
182%
|
|
|
|
|
* FY24 restated to align with
full-year FY24 accounting for sublease income - see Note
3
** Percentages and totals are based
on numbers rounded to £'000s
H1 Highlights
· Platform revenue grew 53% on H1 FY24 to £16.7m and represented
91% of total revenue (H1 FY24: 82%). Total revenue increased by
38%.
· Strong
total revenue growth in the USA (+79%), and UK (+38%).
· 161
new platform clients in H1 FY25 (H1 FY24: 136) providing £3.3m of
additional revenue.
· Platform Net Revenue Retention3 of over
120%.
· Gross
profit margin in line with FY24 at 87.3% (H1 FY24:
87.8%).
· Benefits of operational gearing and our scalable business
model showing through: profit before tax up 176% to £2.6m (H1 FY24:
£0.9m).
· £2m additional
discretionary investment in the next 18 months aimed at building
our position in America and revitalising System1's Innovation
proposition.
· Average H1 headcount up 12% to 160 (H1 FY24: 143).
· Share
based payments credit of £0.1m.
· £0.3m
free cash outflow in H1 (H1 FY24: inflow of £0.6m). Cash balance of
£8.9 as at 30 September 2024 (31 March 2024: £9.6m; 30 September
2023: £6.3m).
· Diluted and basic earnings per share up 184% to 13.8p and
13.9p respectively (H1 FY24 diluted and basic earnings per share:
4.9p).
Current
Trading & Outlook
· The
Company is trading in line with market expectations, including the
impact of the additional investment expenditure to be incurred in
the second half of the fiscal year2.
· The
third quarter has begun well, and at this stage we recognise that
there may potentially be some revenue upside compared to current
market expectations and we will provide further guidance as
appropriate with the Q3 Trading update in early February
2025.
System1 CEO James Gregory commented:
"The first half has played out in line with our
plan with strong platform growth and good progress in the USA, over
160 new client wins and improved net revenue retention with
existing clients. System1 has a significant opportunity to increase
revenue both in America and within the Innovation market segment
and we have already begun a £2m additional discretionary investment
programme over the next 18 months to target medium-term revenue
growth in these areas".
1 Adjusted Profit is
Profit before Taxation excluding share-based payments.
2 For the purpose of
this announcement, the Group believes market consensus for FY25 to
be Revenue of £36.5m, and Adjusted Profit before Tax1 of
£4.4m.
3 NRR is calculated as
H1 FY25 Revenue excluding new clients divided by H1 FY24
Revenue.
Further information on the Company can be found
at www.system1group.com.
This announcement contains inside information
for the purposes of article 7 of the Market Abuse Regulation (EU)
596/2014 as amended by regulation 11 of the Market Abuse
(Amendment) (EU Exit) Regulations 2019/310. With the publication of
this announcement, this information is now considered to be in the
public domain.
For further information, please
contact:
|
System1 Group
PLC
|
Tel: +44 (0)20 7043
1000
|
|
|
James Gregory, CEO
Chris Willford, Chief Financial
Officer
|
|
|
|
|
|
|
|
Canaccord
Genuity Limited
|
Tel: +44 (0)20 7523
8000
|
|
Simon Bridges / Andrew Potts/ Harry
Rees
|
|
Interim Statement
Financial Performance
|
KPIs
|
H1 FY25
|
H1 FY24*
|
|
Platform
Revenue as a % of Total Revenue
|
91
|
82
|
|
Platform
Revenue growth %
|
53
|
44
|
|
Gross
Profit % Revenue
|
87.3
|
87.8
|
|
Adjusted
EBITDA £m* 1
|
3
|
1.6
|
|
Adjusted
EBITDA % Revenue
|
16
|
12
|
|
"Rule of
40" 2
|
69
|
56
|
|
Free cash
flow3
|
-0.3
|
0.6
|
|
Net cash
£m
|
8.9
|
6.3
|
1 Statutory profit before taxation + share-based payments +
interest, depreciation and amortisation.
2 Platform Revenue growth % + Adjusted Group EBITDA % Group
Revenue.
3 Cash flow after interest and before debt raising/reduction,
buybacks/dividends.
*H1 FY24 restated to align with
full-year FY24 accounting for sublease income.
|
Revenues
|
Sep-24
|
Sep-23
|
|
|
Revenue
|
Revenue
Restated**
|
|
|
£'000
|
£'000
|
|
|
|
|
|
By location of
customer
|
|
|
|
USA
|
6,353
|
3,555
|
|
LatAm
|
1,171
|
1,193
|
|
United Kingdom
|
7,767
|
5,610
|
|
Rest of Europe
|
2,097
|
2,182
|
|
APAC
|
945
|
765
|
|
|
18,333
|
13,305
|
|
|
|
|
|
By product
variant
|
|
|
|
Data
("Predict Your")
|
13,365
|
9,036
|
|
Data-led
consultancy ("Improve Your")
|
3,334
|
1,902
|
|
Platform
revenue
|
16,699
|
10,938
|
|
Other
consultancy (non-platform)
|
1,634
|
2,367
|
|
|
18,333
|
13,305
|
|
|
|
|
|
By product
group
|
|
|
|
Communications (Ad Testing)
|
15,874
|
10,377
|
|
Brand
(Brand Tracking)
|
1,148
|
1,420
|
|
Innovation
|
1,311
|
1,508
|
|
|
18,333
|
13,305
|
Total revenue increased by 38% on H1 FY24 to
£18.3m and Platform revenue grew 53% to £16.7m and represented 91%
of total revenue (H1 FY24: 82%). Within Platform revenue Data
increased by 48% from £9.0m to £13.4m and Data-led consultancy by
75% from £1.9m to £3.3m. In the US total revenue increased by
79% to £6.4m and platform revenue increased by 114% to £5.6m. UK
and APAC continued to grow strongly, up 38% and 24% respectively on
the comparable prior-year period. LatAm was flat year-on year, and
Continental Europe was 4% lower due mainly to lower bespoke
consultancy revenue and a weaker Euro than in H1 FY24.
Ad testing (Comms) revenue increased by 53% to
£15.9m. Brand was 20% down on H1 FY24 to £1.1m due to the runoff of
a bespoke brand-tracking contract in the UK. The Innovation product
group fell by 13% over the same period to £1.3m and is now the
subject of significant and accelerated investment as we set about
revitalising it.
Our fame-building, products and partnerships
helped the Company to win 161 new platform clients in H1 (H1 FY24:
136), providing £3.3m in revenue (H1 FY24: £2.4m, FY24: £8.2m).
Noteworthy initiatives in H1 included:
· The
Extraordinary Cost of Dull research in collaboration with Peter Field and Adam Morgan was
showcased on the main stage at the Cannes Festival and became the
second-most downloaded report in System1
history;
· Uncensored
CMO interviews with US-based
leading voices, including Scott Galloway;
· The Greenprint
USA and
The Greenprint
Brazil,
a guide on how to effectively incorporate
sustainability messaging in advertising
· System1 Chief Innovation Officer Orlando Wood, Sir John
Hegarty and The Garage launched Advertising
Principles Explained (a.p.e.),
an advertising effectiveness course that will engage with System1
clients and prospects
New business wins in the US delivered £1.3m of
revenue in H1 and included:
· A
large, California-based multi-billion revenue enterprise software
company;
· A
challenger brand family that focuses on improving the health and
lifestyles of both people and their pets;
· A
large, global investment management firm with US$20 billion in
annual revenue
In the UK and Europe new business
flow was also strong with over 100 new clients onboarded in H1
delivering over £1.5m of revenue, including:
·
A global social media platform;
·
A travel technology platform; and
·
An online food delivery company
Net Revenue Retention (NRR) improved in H1 to
over 120% for platform revenue and over 110% overall, due to strong
growth in the US and UK. (NRR is calculated as H1 FY25 Revenue
excluding new clients divided by H1 FY24 Revenue).
Gross profit margin decreased slightly from
87.8% in H1 FY24 to 87.3%, and remained in line with FY24 and
comfortably above our 85% benchmark.
Operating Costs increased by 26% versus H1 last
year due to increased investment in headcount to target growth,
increased spend on marketing, a 68% increase in variable pay from a
much lower base in H1 FY 2024, and adverse currency effects arising
principally on the US dollar.
Overall average headcount increased by 12% to
160 FTE owing to recruitment in the Sales and Operations teams to
secure and service business growth.
We are investing £2m in additional
discretionary investment in the next 18 months aimed at building
our position in America and revitalising System1's Innovation
proposition, covering recruitment of additional personnel,
marketing and further IT development costs, and we believe we need
to continue to invest in growth to grow shareholder
value.
Tax
The Group has recognised a tax charge of £0.8m
in the six months to 30 September 2024 (H1 FY24: tax charge of
£0.3m). The H1 FY24 figure included a receipt of £0.2m in respect
of R&D tax credit claims in the UK. In
October 2024, the group submitted an R&D claim for c.£0.3m.
Subject to approval by HMRC, the R&D benefit will be offset
against profits in the UK.
Earnings Per Share
Diluted and Basic Earnings per Share improved to
13.8p and 13.9p respectively from an H1 FY24 Diluted and Basic
earnings per share of 4.9p, in line with the increase in post-tax
profits in H1 FY25.
Cash
The Group ended the period with cash balances of
£8.9m (H1 FY24 £6.3m, FY24: £9.6m). Free cash flow after property
lease costs and interest income amounted to an outflow of £0.3m in
the first half, reflecting the payment of £2.6m in bonuses and
commissions relating to FY24. (H1 FY24: free cash inflow of
£0.6m).
Dividend
The final dividend for FY24 (£0.6m) was paid on
18 October. As previously announced, the Board's policy is to
declare a final dividend only and there is therefore no proposed
interim dividend.
Balance Sheet
Total equity increased to £12.1m (31 March 2024:
£10.6m), arising from the year-to-date post-tax profit of £1.8m
partially offset by a £0.2m loss on foreign currency reserves
caused by the revaluation of bank and debtor balances at 30
September 2024. Intangible assets have decreased by £0.1m as a
result of amortisation charges of £0.3m slightly exceeding the
additional capitalisation associated with further development of
the platform.
Current Trading
& Outlook
Despite a difficult economic environment in
some key markets, and challenging conditions for media owners and
advertisers, we believe System1 can continue to grow profitably by
gaining market share from large incumbents that we believe have
less predictive products.
The Company is trading in line with market
expectations2, including the impact of the cost of
additional investment to be incurred in the second half of the
fiscal year. The third quarter has begun well, and at this
stage we recognise that there may potentially be some revenue
upside compared to current market expectations, and we will provide
further guidance as appropriate with the Q3 Trading update in early
February 2025.
|
James Gregory
Chief Executive Officer
|
|
Chris Willford
Chief Financial Officer
|
Condensed Consolidated Income Statement
for the 6 months ended 30 September
2024
|
|
Note
|
Sep-24
|
Restated
Sep-23
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Revenue
|
4
|
18,333
|
13,305
|
|
Cost of
sales
|
|
(2,319)
|
(1,620)
|
|
Gross profit
|
|
16,014
|
11,685
|
|
|
|
|
|
|
Administrative
expenses
|
|
(13,751)
|
(10,940)
|
|
Other operating
income
|
|
264
|
196
|
|
|
|
|
|
|
Operating profit
|
|
2,527
|
941
|
|
|
|
|
|
|
Finance
income
|
|
41
|
4
|
|
Finance
expense
|
|
(14)
|
(20)
|
|
|
|
|
|
|
Profit before taxation
|
|
2,554
|
925
|
|
|
|
|
|
|
Income tax
expense
|
|
(796)
|
(298)
|
|
|
|
|
|
|
Profit for the period
|
|
1,758
|
627
|
|
|
|
|
|
|
Attributable to the equity holders of
the Company
|
|
1,758
|
627
|
|
|
|
|
|
|
Earnings per share attributable to
equity holders of the Company
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
5
|
13.9p
|
4.9p
|
|
Diluted earnings per
share
|
5
|
13.8p
|
4.9p
|
CONDENSED Consolidated Statement of Comprehensive
Income
for the 6 months ended 30 September
2024
|
|
|
Sep-24
|
Sep-23
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Profit for the
period
|
|
1,758
|
627
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
Items that may be
subsequently reclassified to profit
|
|
|
Currency
translation differences on translating foreign
operations
|
(190)
|
57
|
|
Other
comprehensive income for the period, net of tax
|
(190)
|
57
|
|
|
|
|
|
|
Total comprehensive income
for the period attributable to equity holders of the
Company
|
1,568
|
684
|
|
|
|
|
|
|
|
|
|
|
CONDENSED Consolidated Balance Sheet
as at 30 September 2024
Registered no. 05940040
|
|
Note
|
Sep-24
|
Mar-24
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant, and
equipment
|
8
|
718
|
225
|
|
Intangible
assets
|
9
|
1,510
|
1,578
|
|
Deferred tax
asset
|
|
174
|
151
|
|
|
|
2,402
|
1,954
|
|
Current assets
|
|
|
|
|
Contract
assets
|
|
204
|
180
|
|
Finance lease
receivables
|
|
-
|
85
|
|
Trade and other
receivables
|
|
7,428
|
7,261
|
|
Cash and cash
equivalents
|
|
8,852
|
9,610
|
|
|
|
16,484
|
17,136
|
|
|
|
|
|
|
Total assets
|
|
18,886
|
19,090
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Attributable to equity holders of the
Company
|
|
|
|
Share
capital
|
12
|
132
|
132
|
|
Share premium
account
|
|
1,601
|
1,601
|
|
Merger
reserve
|
|
477
|
477
|
|
Foreign currency
translation reserve
|
|
161
|
351
|
|
Retained
earnings
|
|
9,692
|
8,007
|
|
Total equity
|
|
12,063
|
10,568
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
Lease
liabilities
|
11
|
202
|
66
|
|
|
|
202
|
66
|
|
Current liabilities
|
|
|
|
|
Provisions
|
|
-
|
6
|
|
Lease
liabilities
|
11
|
431
|
280
|
|
Contract
liabilities
|
|
978
|
1,137
|
|
Income taxes
payable
|
|
830
|
470
|
|
Trade and other
payables
|
|
4,382
|
6,563
|
|
|
|
6,621
|
8,456
|
|
|
|
|
|
|
Total liabilities
|
|
6,823
|
8,522
|
|
Total equity and
liabilities
|
|
18,886
|
19,090
|
|
|
|
|
|
CONDENSED Consolidated Statement of Cash
Flows
for the 6 months ended 30 September
2024
|
|
Note
|
Sep-24
|
Restated
Sep-23
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Net cash generated from
operations
|
13
|
815
|
1,896
|
|
Tax paid
|
|
(434)
|
(252)
|
|
Net cash generated from
operating activities
|
|
381
|
1,644
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
Purchases of property,
plant, and equipment
|
8
|
(53)
|
(38)
|
|
Purchase of intangible
assets
|
9
|
(261)
|
(500)
|
|
Net cash used by investing
activities
|
|
(314)
|
(538)
|
|
|
|
|
|
|
Net cash flow before
financing activities
|
|
67
|
1,106
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
Interest
received
|
|
41
|
4
|
|
Interest
paid
|
|
(14)
|
(20)
|
|
Property lease
liability payments
|
|
(430)
|
(533)
|
|
Net cash used by financing
activities
|
|
(403)
|
(549)
|
|
|
|
|
|
|
Net (decrease)/increase in
cash and cash equivalents
|
|
(336)
|
557
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period
|
|
9,610
|
5,719
|
|
Exchange gain on cash
and cash equivalents
|
|
(422)
|
5
|
|
|
|
|
|
|
Cash and cash equivalents at end of
period
|
|
8,852
|
6,281
|
|
|
|
|
|
|
|
|
Sep-24
|
Sep-23
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Net cash flow before
financing activities
|
|
66
|
1,106
|
|
Net cash
flow for property leases
|
|
(444)
|
(553)
|
|
Operating
cash (outflow)/inflow
|
|
(378)
|
553
|
|
|
|
|
|
Consolidated Statement of Cash Flows
(continued)
for the 6 months ended 30 September
2024
Consolidated Movements in Net Cash/(Debt)
|
|
|
Cash and
cash equivalents
|
Lease
liabilities
|
Total
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
At 1 April
2023
|
|
5,719
|
(1,456)
|
4,263
|
|
Cash
flows
|
|
557
|
553
|
1,110
|
|
Non-cash
charges
|
|
|
|
|
|
Interest on
lease liabilities
|
|
-
|
(20)
|
(20)
|
|
Exchange
and other non-cash movements
|
|
5
|
1
|
6
|
|
At 30 September
2023
|
|
6,281
|
(922)
|
5,359
|
Consolidated Movements in Net Cash/(Debt)
|
|
|
Cash and
cash equivalents
|
Lease
liabilities
|
Total
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
At 1 April
2024
|
|
9,610
|
(346)
|
9,264
|
|
Cash
flows
|
|
(336)
|
444
|
108
|
|
Non-cash
charges
|
|
|
|
|
|
Interest on
lease liabilities
|
|
-
|
(14)
|
(14)
|
|
New lease
liabilities
|
|
-
|
(758)
|
(758)
|
|
Disposal of
lease liabilities
|
|
-
|
42
|
42
|
|
Exchange
and other non-cash movements
|
|
(422)
|
-
|
(422)
|
|
At 30 September
2024
|
|
8,852
|
(632)
|
8,220
|
Consolidated Statement of Changes in Equity
for the 6 months ended 30 September
2024
|
|
|
Share
capital
|
Share
premium account
|
Merger
reserve
|
Foreign
currency translation reserve
|
Retained
earnings
|
Total
|
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
At 1 April
2023
|
|
132
|
1,601
|
477
|
423
|
5,974
|
8,607
|
|
|
|
|
|
|
|
|
|
|
Profit for
the period
|
|
-
|
-
|
-
|
-
|
627
|
627
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
- currency
translation differences
|
|
-
|
-
|
-
|
57
|
-
|
57
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income
|
|
-
|
-
|
-
|
57
|
627
|
684
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
Employee
share options:
|
|
|
|
|
|
|
|
|
- value of
employee services
|
|
-
|
-
|
-
|
-
|
40
|
40
|
|
|
|
|
|
|
|
|
|
|
At 30 September
2023
|
|
132
|
1,601
|
477
|
480
|
6,641
|
9,331
|
|
|
|
|
|
|
|
|
|
|
At 1 April
2023
|
|
132
|
1,601
|
477
|
423
|
5,974
|
8,607
|
|
|
|
|
|
|
|
|
|
|
Profit for
the period
|
|
-
|
-
|
-
|
-
|
2,033
|
2,033
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
- currency
translation differences
|
|
-
|
-
|
-
|
(72)
|
-
|
(72)
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income
|
|
-
|
-
|
-
|
(72)
|
2,033
|
1,961
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
Employee
share options:
|
|
|
|
|
|
|
|
|
- value of
employee services
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
At 31 March
2024
|
|
132
|
1,601
|
477
|
351
|
8,007
|
10,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April
2024
|
|
132
|
1,601
|
477
|
351
|
8,007
|
10,568
|
|
|
|
|
|
|
|
|
|
|
Profit for
the period
|
|
-
|
-
|
-
|
-
|
1,758
|
1,758
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
- currency
translation differences
|
|
-
|
-
|
-
|
(190)
|
-
|
(190)
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income
|
|
-
|
-
|
-
|
(190)
|
1,758
|
1,568
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
Employee
share options:
|
|
|
|
|
|
|
|
|
- value of
employee services
|
|
-
|
-
|
-
|
-
|
(105)
|
(105)
|
|
- deferred
tax credited to equity
|
|
-
|
-
|
-
|
-
|
32
|
32
|
|
|
|
|
|
|
|
|
|
|
At 30 September
2024
|
|
132
|
1,601
|
477
|
161
|
9,692
|
12,063
|
|
|
|
|
|
|
|
|
|
Notes to the Condensed Consolidated Financial
Statements
for the 6 months ended 30 September
2024
System1 Group PLC (the "Company") was
incorporated on 19 September 2006 in the United Kingdom. The
Company's principal operating subsidiary, System1 Research Limited,
was at that time already established, having been incorporated on
29 December 1999. The address of the Company's registered office is
4 More London Riverside, London, UK SE1 2AU. The Company's shares
are listed on the AIM Market of the London Stock Exchange
("AIM").
The Company and its subsidiaries (together the
"Group") provide predictive marketing data and market research
consultancy.
The Board of Directors approved these interim
financial statements for the six months ended 30 September 2024 for
issuance on 3 December 2024.
The financial information set out in this
interim report does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006 and is unaudited. The Group's
latest statutory financial statements were for the year ended 31
March 2024 and these have been approved by the Board of Directors
and filed with the Registrar of Companies. These accounts, which
contained an unqualified audit report under Section 495, did not
include a reference to any matters to which the auditor drew
attention by way of emphasis of matter and did not contain a
statement under Section 498 (2) or (3) of the Companies Act
2006.
1. Basis of
Preparation
This condensed consolidated interim financial
information has been prepared in accordance with UK adopted IAS 34
Interim Financial
Reporting and on the going concern basis. The Board reviews
the performance of the Group monthly, and senior management has a
weekly assessment of sales revenue. The Group also prepares and
reviews cash flow forecasts and is confident that the going concern
assessment remains appropriate. The results presented in this
report are unaudited and they have been prepared in accordance with
the recognition and measurement principles of UK-adopted
International Accounting Standards that are expected to be
applicable to the financial statements for the year ending 31 March
2025 and on the basis of the accounting policies to be used in
those financial statements. The condensed consolidated financial
statements do not include all the information and disclosures
required in the annual financial statements and should be read in
conjunction with the Group's annual financial statements, being the
statutory financial statements for System1 Group plc, as at 31
March 2024, which have been prepared in accordance with UK adopted
International Accounting Standards with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards.
The preparation of financial statements in
accordance with UK-adopted International Accounting Standards
("UK-adopted IFRS") requires the use of certain critical accounting
estimates.
2. Principal accounting
policies
The principal accounting policies adopted are
consistent with those of the financial statements for the year
ended 31 March 2024.
3. Prior period
restatement
During the year ended 31 March 2024 the Group
determined that the sublease of its former New York office,
previously accounted for as a right-of-use asset, should have been
presented as a finance lease receivable. The following table
summarises the impact of the prior period reclassification on the
financial statements of the Group. There is no impact on basic or
diluted earnings per share.
|
Consolidated income
statement
|
|
Restated
|
As previously
presented
|
|
|
|
H1 2024
|
H1 2024
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Administrative expenses
|
|
10,940
|
11,070
|
|
Other income
|
|
196
|
330
|
|
Finance income
|
|
4
|
-
|
|
Increase/(decrease) in profit for the
half year
|
|
-
|
-
|
Notes to the Condensed Consolidated Financial
Statements
for the 6 months ended 30 September
2024
4. Segment Information
The financial performance of the Group's
geographic operating units ("Reportable Segments") is set out
below*.
|
|
|
Sep-24
|
Sep-23
|
|
|
|
Revenue
|
Revenue
Restated**
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
By location of
customer
|
|
|
|
|
USA
|
|
6,353
|
3,555
|
|
LatAm
|
|
1,171
|
1,193
|
|
United
Kingdom
|
|
7,767
|
5,610
|
|
Rest of
Europe
|
|
2,097
|
2,182
|
|
APAC
|
|
945
|
765
|
|
|
|
18,333
|
13,305
|
*Segmental revenue is revenue
generated from external customers and so excludes intercompany
revenue and is attributable to geographical areas based upon the
location in which the service is delivered.
**Segment revenues have been
restated to present USA and LatAm as separate business units,
consistent with the information presented to the Executive
Directors.
Consolidated balance sheet information is
regularly provided to the Executive Directors while segment balance
sheet information is not. Accordingly, the Company does not
disclose segment balance sheet information here.
|
|
|
Sep-24
|
Sep-23
|
|
|
|
Revenue
|
Revenue
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
By product
variant
|
|
|
|
|
Data
("Predict Your")
|
|
13,365
|
9,036
|
|
Data-led
consultancy ("Improve Your")
|
|
3,334
|
1,902
|
|
Platform
revenue
|
|
16,699
|
10,938
|
|
Other
consultancy (non-platform)
|
|
1,634
|
2,367
|
|
|
|
18,333
|
13,305
|
|
|
|
|
|
|
By product
group
|
|
|
|
|
Communications (Ad Testing)
|
|
15,874
|
10,377
|
|
Brand
(Brand Tracking)
|
|
1,148
|
1,420
|
|
Innovation
|
|
1,311
|
1,508
|
|
|
|
18,333
|
13,305
|
Notes to the Condensed Consolidated Financial
Statements
for the 6 months ended 30 September
2024
5. Earnings Per Share
|
|
Sep-24
|
Sep-23
|
|
|
|
|
|
Profit
attributable to equity holders of the Company, in £'000
|
1,758
|
627
|
|
Weighted
average number of Ordinary Shares in issue
|
12,685,858
|
12,678,929
|
|
Basic
earnings per share
|
13.9p
|
4.9p
|
|
|
|
|
|
Profit
attributable to equity holders of the Company, in £'000
|
1,758
|
627
|
|
Weighted
average number of Ordinary Shares in issue
|
12,685,858
|
12,678,929
|
|
Share
options*
|
30,103
|
12,823
|
|
Weighted
average number of Ordinary Shares for diluted earnings per
share
|
12,715,961
|
12,691,752
|
|
Diluted
earnings per share
|
13.8p
|
4.9p
|
6. Headcount
The average number of staff employed
by the Group during the period was as follows:
|
|
|
Sep-24
|
Sep-23
|
|
|
|
No.
|
No.
|
|
|
|
|
|
|
Sales and
marketing
|
|
54
|
50
|
|
Operations
|
|
50
|
39
|
|
IT
|
|
30
|
32
|
|
Administration
|
|
26
|
22
|
|
|
|
160
|
143
|
7. Dividends
The Company did not pay dividends in the six
months ended 30 September 2024 and 30 September 2023. The Company
does not propose the payment of an interim dividend. On 18 October
2024 the Company paid a final dividend of £634,454 (5p per share)
in respect of the year ended 31 March 2024, including £140,912 paid
to the Company's Directors.
Notes to the Condensed Consolidated Financial
Statements
for the 6 months ended 30 September
2024
8. Property, Plant, and
Equipment
|
|
|
Right-of-use assets
|
Furniture
and fixtures
|
Computer
hardware
|
Total
|
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost at 1
April 2023
|
|
1,244
|
11
|
206
|
1,461
|
|
|
Additions
|
|
175
|
-
|
97
|
272
|
|
|
Disposals
|
|
(1,245)
|
(11)
|
-
|
(1,256)
|
|
|
Foreign
exchange
|
|
(2)
|
-
|
-
|
(2)
|
|
|
Cost at 31
March 2024
|
|
172
|
-
|
303
|
475
|
|
|
|
|
|
|
|
|
|
|
Depreciation at 1 April 2023
|
466
|
10
|
172
|
648
|
|
|
Depreciation charge for the year
|
|
645
|
1
|
56
|
702
|
|
|
Disposals
|
|
(1,089)
|
(11)
|
-
|
(1,100)
|
|
|
Foreign
exchange
|
|
2
|
-
|
(2)
|
-
|
|
|
Depreciation at 31 March 2024
|
24
|
-
|
226
|
250
|
|
|
|
|
|
|
|
|
|
|
Carrying
amount 31 March 2024
|
|
148
|
-
|
77
|
225
|
|
|
|
|
|
|
|
|
|
|
Cost at 1
April 2024
|
|
172
|
-
|
303
|
475
|
|
|
Additions
|
|
758
|
-
|
53
|
811
|
|
|
Disposals
|
|
(79)
|
-
|
-
|
(79)
|
|
|
Foreign
exchange
|
|
(15)
|
-
|
(4)
|
(19)
|
|
|
Cost at 30
September 2024
|
|
836
|
-
|
352
|
1,188
|
|
|
|
|
|
|
|
|
|
|
Depreciation at 1 April 2024
|
24
|
-
|
226
|
250
|
|
|
Depreciation charge for the period
|
|
226
|
-
|
38
|
264
|
|
|
Disposals
|
|
(40)
|
-
|
-
|
(40)
|
|
|
Foreign
exchange
|
|
(2)
|
-
|
(2)
|
(4)
|
|
|
Depreciation at 30 September 2024
|
208
|
-
|
262
|
470
|
|
|
|
|
|
|
|
|
|
|
Carrying
amount 30 September 2024
|
|
628
|
-
|
90
|
718
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Condensed Consolidated Financial
Statements
for the 6 months ended 30 September
2024
9. Intangible assets
|
|
|
Development costs
|
Software
|
Total
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Cost at 1
April 2023
|
|
1,225
|
525
|
1,750
|
|
Additions
|
|
736
|
-
|
736
|
|
Cost at 31
March 2024
|
|
1,961
|
525
|
2,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation at 1 April 2023
|
101
|
253
|
354
|
|
Amortisation for the year
|
|
423
|
131
|
554
|
|
Amortisation at 31 March 2024
|
524
|
384
|
908
|
|
|
|
|
|
|
|
Carrying
value at 31 March 2024
|
|
1,437
|
141
|
1,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost at 1
April 2024
|
|
1,961
|
525
|
2,486
|
|
Additions
|
|
261
|
-
|
261
|
|
Cost at 30
September 2024
|
|
2,222
|
525
|
2,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation at 1 April 2024
|
524
|
384
|
908
|
|
Amortisation for the period
|
|
282
|
47
|
329
|
|
Amortisation at 30 September 2024
|
|
806
|
431
|
1,237
|
|
|
|
|
|
|
Carrying
value at 30 September 2024
|
|
1,416
|
94
|
1,510
|
|
|
|
|
|
|
The only software asset as at 31 March and 30
September 2024 is the Group's finance and operations system that
was brought into use October 2020.
Development costs relate to costs
capitalised for the development of the "Test Your" platform
(carrying value £358k; March 2024: £509k), which completed during
the year ended 31 March 2023, and the Supply Chain Automation
platform (carrying value £1,030k; March 2024: £930k), which enables
System1 to interface (via API) with multiple suppliers of panel
respondents, was completed during the period ended 30 September
2024. Development costs in respect of completed projects are tested
for impairment where impairment indicators exist. No indicators
exist at 30 September 2024 (31 March 2024: none). Development costs
in respect of ongoing projects are tested for impairment at each
reporting date. The carrying value of the assets in each case are
assigned to their respective cash generating units for the purposes
of assessing future cashflows. The principal assumptions used in
the forecasts were the timing and amount of future revenues and
cost savings, which were derived from the latest forecasts approved
by the Board. Following the assessment, the Board have determined
that no impairment of assets is required as at 30 September 2024
(31 March 2024: £nil). The headroom in the impairment review
exceeds the carrying value of the asset.
Notes to the Condensed Consolidated Financial
Statements
for the 6 months ended 30 September
2024
10. Finance lease
receivables
|
|
|
Sep-24
|
Mar-24
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Amounts receivable under finance
leases
|
|
|
|
|
Year 1
|
-
|
94
|
|
Year 2
|
|
-
|
94
|
|
Total undiscounted lease
payments
|
-
|
94
|
|
Unearned finance income
|
|
-
|
(29)
|
|
Net investment in lease
|
-
|
85
|
Finance lease receivables related to the
sublease of the Group's previous office in New York, which expired
in July 2024. There were no variable payments within the lease
arrangement. At each reporting date the Group estimates the loss
allowance on finance lease receivables. No amounts were past due at
30 September 2024 or 31 March 2024.
11. Borrowings
The analysis of the maturity of lease
liabilities is as follows:
|
|
|
Sep-24
|
Mar-24
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Within one
year
|
|
443
|
291
|
|
Later than
1 but no later than 5 years
|
204
|
68
|
|
More than 5
years
|
|
-
|
-
|
|
Minimum
lease payments
|
647
|
359
|
|
Future
finance charges
|
|
(14)
|
(13)
|
|
Recognised
as a liability
|
633
|
346
|
|
|
|
|
|
|
The present
value of finance lease liabilities is as follows:
|
|
|
|
|
|
|
|
|
Sep-24
|
Mar-24
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Within one
year
|
|
431
|
280
|
|
Later than
1 but no later than 5 years
|
202
|
66
|
|
More than 5
years
|
|
-
|
-
|
|
|
|
633
|
346
|
On 22 February 2023, the Company entered into
an Overdraft Facility with HSBC. The facility of up to a maximum of
£1,500,000, is secured over the Company's trade receivables, and
incurs interest at 3% above the Bank of England base rate on drawn
balances. The facility has no fixed end date and can be cancelled
by either party at any time. During the period ended 30 September
2024, the Company has not drawn any amounts under the facility, and
no amounts have been drawn to the date of the signing of these
financial statements (amounts drawn in the year ended
31 March 2024: £nil).
Notes to the Condensed Consolidated Financial
Statements
for the 6 months ended 30 September
2024
12. Share Capital
The share capital of System1 Group PLC consists
of fully paid Ordinary Shares ("Shares") with a par value of one
penny each. All Shares, excluding Treasury Shares, are equally
eligible to receive dividends and the repayment of capital and
represent one vote at the Annual General Meeting.
|
|
|
Sep-24
|
Mar-24
|
|
|
|
No.
|
£'000
|
No.
|
£'000
|
|
|
|
|
|
|
|
|
Allotted,
called up, and fully paid ordinary shares
|
13,226,773
|
132
|
13,226,773
|
132
|
|
At 1 April
and at 30 September
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sep-24
|
Mar-24
|
|
|
|
Treasury
shares
|
Weighted average exercise
price per share
|
Treasury
shares
|
Weighted average exercise
price per share
|
|
|
|
No.
|
Pence
|
No.
|
Pence
|
|
Shares held by
Treasury
|
|
|
|
|
|
|
At 1
April
|
|
547,844
|
|
547,844
|
|
|
Transfer of
shares to satisfy options exercise
|
(10,144)
|
-
|
-
|
-
|
|
At 30
September
|
|
537,700
|
|
547,844
|
|
13. Net Cash Generated from
Operations
|
|
|
Sep-24
|
Sep-23
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Profit before
taxation
|
|
2,554
|
925
|
|
Depreciation of
property, plant, and equipment
|
264
|
337
|
|
Amortisation and impairment of intangible assets
|
329
|
246
|
|
Profit on
disposal of property, plant and equipment
|
(2)
|
-
|
|
Interest
(received)/paid
|
|
(27)
|
16
|
|
Share-based
payment expense
|
|
(105)
|
40
|
|
Increase in
contract assets
|
|
(24)
|
(69)
|
|
Decrease in
finance lease receivables
|
|
85
|
129
|
|
Increase in
trade and other receivables
|
(167)
|
(219)
|
|
(Decrease)/increase in trade and other payables
|
(2,182)
|
432
|
|
(Decrease)/increase in contract liabilities
|
(158)
|
32
|
|
Decrease in
provisions
|
|
(6)
|
(29)
|
|
Exchange
differences on operating items
|
254
|
56
|
|
Net cash generated from
operations
|
|
815
|
1,896
|
|
|
|
|
|
Notes to the Condensed Consolidated Financial
Statements
for the 6 months ended 30 September
2024
14. Expenses by Nature
|
|
|
Sep-24
|
Sep-23
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Employee benefit expense
|
|
7,139
|
6,391
|
|
Employee benefit expense - variable
pay
|
|
1,891
|
1,124
|
|
Other research and development
costs
|
538
|
697
|
|
Capitalised development costs - gross
of amortisation
|
(261)
|
(500)
|
|
Depreciation, amortisation, and
impairment
|
593
|
583
|
|
Lease expense related to short term
leases
|
63
|
115
|
|
Net foreign exchange
losses
|
429
|
74
|
|
Third party direct costs (sample,
translation, data processing)
|
2,319
|
1,620
|
|
Indirect delivery costs
|
465
|
387
|
|
Other expenses
|
|
2,894
|
2,068
|
|
|
|
16,070
|
12,560
|
15. Reconciliation between Profit Before
tax and Adjusted EBITDA:
|
|
|
Sep-24
|
Sep-23
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Profit Before Tax
|
|
2,554
|
925
|
|
Add:
|
|
|
|
|
Share-based payment
(credit)/expense*
|
|
(131)
|
52
|
|
Adjusted Profit Before Tax
|
|
2,423
|
977
|
|
|
|
|
|
|
Finance income
|
|
(41)
|
(4)
|
|
Finance expense
|
|
14
|
20
|
|
Depreciation
|
|
264
|
337
|
|
Amortisation
|
|
329
|
246
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
2,989
|
1,576
|
|
|
|
|
|
*Share-based payment expenses
include the associated cost of the provision for employer's social
security.