REG - System1 Group PLC - PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAR 2023
01/08/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230801:nRSA8145Ha&default-theme=true
RNS Number : 8145H System1 Group PLC 01 August 2023
1 August 2023
System1 Group PLC (AIM: SYS1)
("System1" or "the Group" or "the Company")
Preliminary results for the year ended 31 March 2023
System1 Group, the marketing decision-making platform, announces its unaudited
preliminary results for the year ended 31 March 2023.
Highlights
2023 2022
("FY23") ("FY22") Change**
Management Basis* £m £m %
Platform Revenue ("Predict & Improve") 17.4 12.4 40%
Other Revenue (Bespoke consultancy) 6.0 11.7 -48%
Total Revenue 23.4 24.1 -3%
Gross profit 19.7 20.2 -2%
Adjusted operating costs (18.9) (19.2) -1%
Adjusted profit before taxation 0.8 1.0 -24%
2023 2022 Change**
Statutory Basis £m £m %
Revenue 23.4 24.1 -3%
Gross profit 19.7 20.2 -2%
Operating costs (19.3) (19.6) -1%
Other operating income 0.3 0.3 18%
Profit before taxation 0.7 0.9 -23%
Tax charge (0.3) 0.0 n.m
Profit for the financial year 0.4 0.9 -58%
Diluted earnings per share 3.2p 7.4p
* Adjusted Operating Costs exclude impairment, interest, share based payments,
bonuses and commissions, severance costs and government grants. Adjusted
figures exclude items, positive and negative, that impede easy understanding
of underlying performance. See note 4 to the consolidated financial statements
for further information.
** Year-on-year percentage change figures are based on unrounded numbers.
· Growing sales momentum: H2 Platform Revenue £9.8m 29% up on H1
£7.6m
· Full-year platform Revenue £17.4m, up 40% year-on year
representing 74% of group revenue (FY22: 52%)
· Non-platform bespoke consultancy revenue increased slightly in H2
ending the year at £6.0.
· Gross profit margin improved in H2 resulting in an 84.2% margin
for the year, higher than in FY22 (83.8%)
· Adjusted Operating Costs, statutory operating costs and headcount
all 1% lower than in FY22
· £4m cash investment in platform, products and IP, of which
£1.2m capitalised, £0.2m amortised (FY22: nil, nil). TYX platform fully
automated across all 3 product groups with additional features
· US IP Litigation settled out of court in June 2023
· Net cash £5.7m at 31 March, £2.5m revolving credit facility
fully repaid in November 2022
Commenting on the Company's results, James Gregory, Chief Executive Officer,
said:
"The business delivered a strong second half year and created momentum that
has carried through into FY24 with profitable growth across our platform
offering. We are relentlessly executing the plan outlined in the strategic
review with a go-to-market strategy aimed at winning with the world's largest
businesses; new product channels (digital and audio) amplified by new
partnerships, all spearheaded by a realigned executive team and John Kearon
leading the charge on US growth."
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 Chief Executive Officer
Chris Willford, Chief Financial Officer
Canaccord Genuity Limited Tel: +44 (0)20 7523 8000
Simon Bridges / Andrew Potts
BUILDING MOMENTUM
FY23 has truly been a year of 2 halves as we have moved from a period of
design and transition to one of relentless commercial execution. This shone
through in our second-half performance. H1 delivered revenue of £10.5m down
15% vs prior first half year, while we addressed the underlying structural
issues in the US that had caused revenue to decline there in FY22 and started
a thorough strategic review of the whole group and how best to grow the
business to create shareholder value. With renewed strategic focus in H2, we
delivered £12.9m revenue, up 10% vs the second half of FY22, as we executed a
refined go-to-market strategy, with a realigned Executive team and clarity of
mission.
While total revenue was down for the year (-3% vs FY22), we saw improving
platform growth of 34% H1 FY23 vs prior year and 45% in H2 FY23 vs prior year,
up 40% for FY23 vs prior year as a whole. This was driven by 44% growth in our
data (Predict Your) products and 23% growth in our data-led consultancy
(Improve Your) offer. In 3 years, we have built out a £17m platform business
that provides automated, accurate predictions and world class improvement
insights across the advertising, innovation and brand tracking universe.
We continued investment in developing the platform and product suite, as well
as investing in our sales and marketing functions to build out the growth
engines of the business, while ensuring costs were held flat (at £19m) and
gross profit margin was up (to 84.2%). With the core Test Your Ad, Test Your
Idea and Test Your Brand product suite fully automated by May 2022, we
increased the breadth of the offer to cover all marketing channels (Digital
and Audio were recently added to the TV, Print and Outdoor advertising
offering). A year of focussed fame building, amplified by new partnerships
resulted in strong growth in the number of new platform clients in FY23 (net
increase of 31), and new revenue (net increase of £5m, of which £3m was from
clients recruited in FY23).
The strategic review offered the business a moment to reflect and refine its
strategy, clarifying how our customers of today and the future buy marketing
predictions and insights and ensuring we have the capability, structure and
focus to deliver these. We have increased the volume of the voice of the
customer in our decision making; we are clear on how our understanding of
emotions drives business profit, allowing us a unique way in to work with
Chief Marketing Officers in the world's largest advertisers compared with
traditional market research agencies. We are dedicated to creating a
performance-based culture, relentlessly focussed on execution against our
strategy.
As I've recently taken on the role of CEO, I am indebted to the support and
trust of our staff, executive team, board and shareholders who have backed our
refined go-to-market strategy as well as the continued partnership of our
suppliers and commitment of our industry-leading customers. Personally, I am
also incredibly thankful for continued wise-counsel and support from John
Kearon, throughout the transition this year as we look to take System1 to the
next level of continued, repeatable and sustainable business growth.
PROGRESS ON STRATEGIC REVIEW INITIATIVES
In FY23, we undertook a thorough strategic review, considering the best
options for growing the business and increasing shareholder value. The Review
validated our existing successful focus on automated 'Test Your' and 'Improve
Your' services for testing and improving creative content, including all forms
of advertising and product innovations, underpinned by our world-leading IP,
brand tracking and the TYA Premium (formerly AdRatings) database. We set out
clear objectives on areas of specific focus.
CLARITY ON THE UNIQUE SELLING PROPOSITION
System1 offers unmatchable predictiveness alongside market-beating speed and
value. We translate the language of creativity, into the language of business
- money! Measuring emotion underpins everything we do, which is why we can be
so predictive.
We have built our product, platform and data-led consultancy offer on clear
IP, that understands and evaluates how emotion translates to business
performance and ultimately profit. We have tested over 175,000 ads, ideas and
brands, through over 12.5 million surveys in over 75 markets, culminating in
measurement of over 27 million emotional responses. Our data science team
works continuously with our product teams to ensure we create and retain high
levels of predictiveness across all products.
Predictiveness alone is not enough, which is why we have automated the
platform that powers our products and data-led consultancy, allowing us to
offer incredible speed, with predictions provided in under 24 hours, and at a
price point that is competitive.
We know this is why customers come to System1 in the first instance, and why
they remain for years as they see the ROI (Return on Investment) on their
marketing investments.
INCREASED FOCUS ON NON-TV FORMATS
While TV remains crucial to any marketer, digital marketing spend now accounts
for over 50% of global advertising spend and campaigns are more omnichannel
than ever before. So we have built our offering to cover the full breadth of
advertising campaigns, offering testing for Digital and Audio, alongside our
existing offer of TV, Print and Outdoor. We have also created new partnerships
for these offers, to build credibility, increase fame and also provide direct
access to a large, targeted client base.
TARGET THE WORLD'S LARGEST ADVERTISERS WITH THE AIM TO GENERATE RECURRING AND
REPEATABLE REVENUE STREAMS
We are fortunate to already work with many of the world's largest advertisers
and have learnt how to embed System1 as a fundamental part of their marketing
and creative process. Recognising the scale and size of these opportunities,
we are focussed on becoming the partner of choice to all large advertisers,
who have both capacity and funding to test at scale and the capability to use
the predictions and insight to design and improve marketing campaigns and
product development.
We recognise at the same time the opportunity that could exist to target the
long tail of marketing spend, across a very large number of small businesses
and have the ability to serve this market through our automated self-serve
platform. We can also leverage our partnerships with media platforms such as
LinkedIn or ITV to speak directly with these business without heavy investment
in SEO, SEM and above the line marketing. However, the current market price
point for testing, alongside the capability of these smaller businesses to use
predictions and insights prevent it from being a likely short-term opportunity
for revenue generation for System1.
WORK WITH COMMERCIAL PLATFORM AND MEDIA PARTNERS TO REDUCE CUSTOMER
ACQUISITION COSTS AND PROVIDE SCALE AND FAME
We have a clear business model to ensure that our partnerships with global
media platforms, creative agencies, industry partners and professional service
firms is successful.
1. Partnerships provide credible fame with global reach.
Our new partnerships are focussed on increasing global presence in specific
channels and each launched with joint thought leadership content to promote
the partnership and grow System1's fame.
- Pinterest (digital advertising in Europe)
- Finecast (addressable TV advertising US, UK, Canada, Australia)
- Teads (mobile advertising US and UK)
- JCDecaux (out-of-home advertising US and UK)
2. Partnerships provide direct or indirect access to a large customer
base.
This access can be formal and direct, such as our partnership with LinkedIn,
where we are part of the LinkedIn B2B Edge programme, helping LinkedIn grow
its advertising revenues by increasing the effectiveness of the advertisers on
their platform.
This can also be informal, such as our partnership with ITV, where we jointly
host events to promote our thought leadership, directly to the ITV customer
base.
The value we bring to our partners is our ability to help them increase the
spend of their customers on their platforms, or through their businesses. The
value they bring us is increased credibility, amplification of fame and access
to the world's largest marketing spenders.
SIGNIFICANTLY INCREASE THE FOCUS ON US GEOGRAPHIC MARKET
The US has historically been the largest business for System1 and remains the
largest opportunity for growth. A whopping US$321bn of advertising spend is
forecast in 2023, 43% of global advertising market spend, as well as the US
accounting for 53% of global market research expenditure.
FY23 was a year of re-establishing our team and presence in the US, as we
brought in new leadership with Jason Chebib appointed GM Americas and John
Kearon being in the US to lead our new business team. We have seen this now
kick in to deliver a promising pipeline of new business prospects. Good
progress was made in Q4 where we won new mandates from 3 of the country's 25
biggest advertising spenders, including the largest. In H2 the US delivered
its highest half year of revenue since FY21, and standard product revenue
increased by 23% for the year as a whole.
We have set up a new US advisory team that will amplify our fame and provide
introductions to the business, as well as local market advice. The role of the
advisory team will be to help the Company grow revenue quickly in the US. The
team will be led by Jon Bond, founder of New York agency Kirshenbaum &
Bond and now active in the MarTech space. Noah Brier, a New York digital
leader, will also be on the team. He is the founder of BrXnd.ai, co-founder of
Variance and Percolate and one of the leading talents in the US MarTech space.
We are in discussions with other prominent US sector specialists to join this
team.
OUTLOOK
FY24 has started promisingly, continuing the momentum of revenue growth and
new wins from H2 FY23. We expect the growth in platform revenue to continue,
which taken together with the levelling out of revenue in bespoke consultancy,
should lead to overall revenue growth in FY24. The launch of TYA Digital and
TYA Audio products early in FY24 has increased TYA's addressable market. The
new global partnerships provide access to prospective customers, thereby
increasing our reach. One year in, our US commercial team is making good
progress and we are continuing to focus marketing and business development
investment in the US. We have signed 3 new global mandates for world-leading
advertisers already this year and are excited about the prospects in the
pipeline.
Once more, thank you to our staff whose daily efforts are the energy behind
our business, to our customers for their commitment to delivering marketing
that works and to our shareholders for their support as we deliver on the
potential of the business.
JAMES GREGORY - CEO
Financial Review
Overview
2023 2022 Change Change**
£m £m £m %
Platform Revenue ("Predict & Improve") 17.4 12.4 4.9 40%
Other Revenue (Bespoke consultancy) 6.0 11.7 (5.6) -48%
Total Revenue 23.4 24.1 (0.7) -3%
Direct Costs (3.7) (3.9) (0.2) -8%
Gross profit 19.7 20.2 (0.5) -2%
Adjusted operating costs* (18.9) (19.2) (0.3) -1%
Adjusted profit before taxation* 0.8 1.0 (0.2) -24%
Statutory profit before taxation 0.7 0.9 (0.2) -23%
Tax credit/(charge) (0.3) 0.0 (0.3) nm
Statutory profit for the financial year 0.4 0.9 (0.5) -58%
*All figures in the Financial Review are presented in millions rounded to one
decimal place unless specified otherwise. Percentage movements are calculated
based on the numbers reported in the financial statements and accompanying
notes. Adjusted Cost and Profit figures are as defined in the Highlights
section.
** Year-on-year percentage change figures are based on unrounded numbers.
KPIs
2023 2022
Platform Revenue % total Revenue 74 52
Platform Revenue growth % 40 na
Gross Profit % Revenue 84.2 83.8
Adjusted EBITDA £m (1) 1.8 2.1
Adjusted EBITDA % Revenue 8 9
"Rule of 40" (2) 48 na
Free cash flow(3) (3.1) 2.5
Net cash £m 5.7 8.7
(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
Revenue performance
Platform revenue rose by £4.9m (40%) in the year to £17.4m with particularly
strong growth in automated ad-testing revenues. Predict Your platform revenue
rose 44% fuelled by the continued success of Test Your Ad. Improve Your
platform-led consultancy revenue increased by 23%. Overall platform revenue
represented 74% of total revenue in FY23, compared with 52% in the previous
year. In line with recent trends, other revenue, primarily bespoke
consultancy, fell £5.6m year on year as customers continued to adopt the
standard platform products, and the company focussed its resources on the TYX
platform-based product suite.
The Communications product group, including Test Your Ad, grew by £0.9m (6%)
year-on-year, notably in the UK and the US. Communications revenue, including
ad-testing, accounted 68% of all revenue in FY23 (FY22: 62%) Brand tracking
revenues increased by £0.4m (13%) helped by wins in the Americas and APAC.
Innovation revenues were down in all regions, £2.0m (35%) lower overall than
the previous year, with the launch of Test Your Idea arriving too late in the
year to reverse the trend. The geographic spread of the business remained
similar to the previous period. The Americas region grew for the second
consecutive year helped by a buoyant LatAm performance, and the UK again
showed double-digit growth year on year. Continental Europe was affected,
particularly in the first half of the year, by customers' budgetary response
to the Ukraine invasion and associated economic shocks.
Expenditure
Total expenditure fell by £0.4m versus last year, with direct costs and
administrative expenses each £0.2m lower. The reduction in direct costs was
due partly to lower sales volume and partly to improved cost management, with
gross profit margin rising to 84.2% from 83.8%.
Adjusted operating expenditure
The company invested an additional £0.7m in customer acquisition costs,
mainly additional employee costs in Sales and Marketing, and a further £0.4m
in IT development in order to accelerate the development of the platform.
Adjusted operating costs featured increased investment in the sales, marketing
and IT development teams. These investments in platform revenue growth were
funded by reductions totalling £1.0m in operational expenses including
savings in outsourced services and the capitalisation of £1.2m platform
development costs. Travel and entertaining expenditure increased by £0.3m
from a very low base with the return of international travel after two years
of restrictions caused by the Covid pandemic.
Other expenditure
Other expenditure comprises expenditure items and charges/credits which are
excluded from adjusted operating expenditure. Other expenditure was broadly
unchanged year on year with a £0.4m reduction in the share-based payment
charge being offset by the non-repetition of a prior-year credit relating to
IFRS16 lease impairment reversal, and reductions in sabbatical provision
releases and government innovation grant funding.
Profit before taxation
Adjusted profit before taxation for the year of £0.8m was £0.2m lower than
the previous year owing to the flow through of slightly lower sales volumes.
Likewise, statutory profit before tax of £0.7m was £0.2m lower than last
year.
Tax
The Group's effective tax rate increased from -1% (tax credit) to 44%. This is
due mainly to the impact of R&D tax credits (£0.5m recognised in FY22,
£nil in FY23). R&D claims for FY22 and FY23 are in progress, but are yet
to be approved and have not been recognised in the financial statements.
Funding and liquidity
Cash net of debt reduced from £8.7m to £5.7m during the year, with the
outflows concentrated in H1 reflecting continued investment in the TYX
platform and customer acquisition costs during a period of reduced customer
demand in Europe following Russia's invasion of Ukraine. A further £0.1m was
spent on repurchasing shares in H1 before the programme was suspended ahead of
the Group's review of strategic options in the autumn. Operating cash flow
trends improved in H2 in line with revenue and profitability, the latter being
helped by improved gross margins and lower year-on-year adjusted operating
costs. The Group repaid in full a £2.5m revolving credit facility in
November after reviewing the outlook for interest rates and the expected cash
requirements and replaced it with an as-yet unutilised overdraft facility.
Some £4.0m cash was invested in product innovation and development in the
year, related primarily to the TYX marketing predictions platform, development
of new intellectual property, automated prediction products and the TYA
Premium (formerly AdRatings) database.
Litigation
On 27 September 2021, the Company filed a complaint for trademark infringement, unfair competition and deceptive trade practices at the United States District Court Southern District of New York against System1 LLC ("LLC"), since renamed System1 Inc., an omnichannel customer acquisition marketing provider, over their infringing use of the mark "SYSTEM1". On 30 June 2023 the Company announced that a settlement had been reached with LLC. The parties have signed a global agreement which governs the co-existence of their respective use of the "System1" mark in connection with their operations. As part of this agreement, the Company is receiving a fixed undisclosed payment payable in instalments. The parties have agreed to keep further detail of their agreement confidential.
CHRIS WILLFORD - CFO
Consolidated Income Statement (unaudited)
for the year ended 31 March 2023
Note 2023 2022
£'000 £'000
Revenue 3 23,410 24,097
Cost of sales (3,692) (3,898)
Gross profit 3 19,718 20,199
Administrative expenses (19,203) (19,383)
Other operating income 340 289
Operating profit 855 1,105
Finance expense (136) (160)
Profit before taxation 719 945
Income tax (expense)/credit (315) 10
Profit for the financial year 404 955
Attributable to the equity holders of the Company 404 955
Earnings per share attributable to equity holders of the Company
Basic earnings per share 5 3.2p 7.4p
Diluted earnings per share 5 3.2p 7.4p
Consolidated Statement of Comprehensive Income (unaudited)
for the year ended 31 March 2023
2023 2022
£'000 £'000
Profit for the financial year 404 955
Other comprehensive income:
Items that may be subsequently reclassified to profit/(loss)
Currency translation differences on translating foreign operations 227 342
Other comprehensive profit for the period, net of tax 227 342
Total comprehensive income for the period attributable to equity holders of 631 1,297
the Company
Consolidated Balance Sheet (unaudited)
as at 31 March 2023
Registered company no. 05940040
Note 2023 2022
£'000 £'000
ASSETS
Non-current assets
Property, plant, and equipment 1,162 2,054
Intangible Assets 1,396 382
Deferred tax asset 203 292
2,761 2,728
Current assets
Contract assets 102 198
Trade and other receivables 6,344 4,492
Income tax receivables 55 -
Cash and cash equivalents 5,719 11,174
12,220 15,864
Total assets 14,981 18,592
EQUITY
Attributable to equity holders of the Company
Share capital 132 132
Share premium account 1,601 1,601
Merger reserve 477 477
Foreign currency translation reserve 423 196
Retained earnings 5,974 5,857
Total equity 8,607 8,263
LIABILITIES
Non-current liabilities
Provisions 353 432
Lease liabilities 362 1,417
715 1,849
Current liabilities
Provisions 101 77
Lease liabilities 1,094 1,091
Borrowings - 2,500
Contract liabilities 764 991
Income taxes payable - 267
Trade and other payables 3,700 3,554
5,659 8,480
Total liabilities 6,374 10,329
Total equity and liabilities 14,981 18,592
Consolidated Statement of Cash Flows (unaudited)
for the year ended 31 March 2023
Note 2023 2022
£'000 £'000
Net cash used in/generated from operations (87) 4,098
Tax paid (541) (63)
Net cash used in/generated from operating activities (628) 4,035
Cash flows from investing activities
Purchases of property, plant, and equipment (30) (79)
Purchase of intangible assets (1,225) (59)
Net cash used by investing activities (1,255) (138)
Net cash flow before financing activities (1,883) 3,897
Cash flows from financing activities
Interest paid (136) (161)
Property lease liability payments (1,052) (1,218)
Purchase of own shares (135) (567)
Repayment of borrowings (2,500) -
Net cash used by financing activities (3,823) (1,946)
Net (decrease)/increase in cash and cash equivalents (5,706) 1,951
Cash and cash equivalents at beginning of year 11,174 9,008
Exchange gain on cash and cash equivalents 251 215
Cash and cash equivalents at end of year 5,719 11,174
Office lease costs are not included within "Net cash flow before financing
activities" (the Company's key cash flow performance indicator). "Net cash
flow before financing activities", adjusted for office leases, known by the
Company as "Operating cash flow" is shown below:
2023 2022
£'000 £'000
Net cash flow before financing activities (1,883) 3,897
Net cash flow for property leases (1,115) (1,307)
Operating cash flow (2,998) 2,590
Consolidated Movements in Net Cash/(Debt)
Cash and cash equivalents Borrowings Lease liabilities Total
£'000 £'000 £'000 £'000
At 1 April 2022 11,174 (2,500) (2,508) 6,166
Cash flows (5,706) 2,500 1,051 (2,155)
Non-cash charges
Interest on lease liabilities - - (64) (64)
Exchange and other non-cash movements 251 - 65 316
At 31 March 2023 5,719 (0) (1,456) 4,263
Consolidated Statement of Changes in Equity (unaudited)
for the year ended 31 March 2023
Note Share capital Share premium account Merger reserve Foreign currency translation reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 31 March 2021 132 1,601 477 (146) 5,170 7,234
Profit for the financial year - - - - 955 955
Other comprehensive income:
- currency translation differences - - - 342 - 342
Total comprehensive income - - - 342 955 1,297
Transactions with owners:
Employee share options:
- value of employee services - - - - 299 299
Purchase of treasury shares - - - - (567) (567)
At 31 March 2022 132 1,601 477 196 5,857 8,263
Profit for the financial year - - - - 404 404
Other comprehensive income:
- currency translation differences - - - 227 - 227
Total comprehensive income - - - 227 404 631
Transactions with owners:
Employee share options:
- value of employee services - - - - (153) (153)
Purchase of treasury shares - - - - (134) (134)
At 31 March 2023 132 1,601 477 423 5,974 8,607
Notes to the Consolidated Financial Statements
for the year ended 31 March 2023
1. General information
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, England, 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 market
research data and insight services. The Chief Executive's Statement and the
Finance Review provide further detail of the Group's operations and principal
activities.
The unaudited summary financial information set out in this announcement does
not constitute the Group's consolidated statutory accounts for the years ended
31 March 2023 and 2022. The results for the year ended 31 March 2023 are
unaudited. The statutory accounts for the year ended 31 March 2023 will be
finalised on the basis of the financial information presented by the Directors
in this preliminary announcement and will be delivered to the Registrar of
Companies in due course. The statutory accounts are subject to completion of
the audit and may also change should a significant adjusting event occur
before the approval of the Annual Report.
The statutory accounts for the Group for the year ended 31 March 2022 have
been reported on by the Group's auditor and delivered to the Registrar of
Companies. The auditor's report on those accounts was unqualified and did not
include references to any matter which the auditors drew attention by way of
emphasis without qualifying their report and did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
The unaudited summary financial information set out in this announcement have
been prepared using the accounting policies as described in the 31 March 2022
audited year end statutory accounts and have been consistently applied. The
preliminary announcement for the year ended 31 March 2023 was approved by the
Board for release on 1 August 2023.
2. Basis of preparation
The Group has prepared its consolidated financial statements in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006 and applicable law. The consolidated financial
statements have been prepared under the historical cost convention.
The preparation of financial statements in accordance with International
Financial Reporting Standards ("IFRS") requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Group's accounting policies.
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("the Functional Currency"). The consolidated financial
statements are presented in Pounds Sterling (GBP), which is the Company's
functional and presentation currency. The financial statements are presented
in round thousands unless otherwise stated.
3. Segment information
The financial performance of the Group's geographic operating units
("Reportable Segments") is set out below.
2023 2022
Revenue Revenue
£'000 £'000
By location of customer
Americas 9,428 9,043
United Kingdom 8,895 7,918
Rest of Europe 3,741 5,463
APAC 1,346 1,673
23,410 24,097
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.
Consolidated balance sheet information is regularly provided to the Executive
Directors (the Chief Decision-Making officers) while segment balance sheet
information is not. Accordingly, the Company does not disclose segment balance
sheet information here.
2023 2022
Revenue Revenue
£'000 £'000
By product type
Predict Your (data) 14,060 9,747
Improve Your (data-led consultancy) 3,311 2,683
Standard (platform) revenue 17,371 12,430
Other consultancy (non-platform) 6,039 11,667
Total revenue 23,410 24,097
By product group
Communications (Ad Testing) 15,879 14,955
Brand (Brand Tracking) 3,669 3,295
Innovation 3,862 5,847
23,410 24,097
As the Company is domiciled in the UK, its consolidated non-current assets,
other than financial instruments and deferred tax assets are as follows:
2023 2022
£'000 £'000
Non-current assets
United Kingdom 2,204 1,846
Rest of world 354 590
2,558 2,436
4. Reconciliation between Operating Costs and Adjusted Operating Costs
2023 2022
£'000 £'000
Administrative expenses 19,203 19,383
Finance expense 136 160
Total operating costs 19,339 19,543
Less: Adjusting items
Impairment - (235)
Compensation for loss of office 39 81
Bonus and commissions expense 453 268
Share-based payment expense (171) 270
Other interest expense 73 70
Other staff costs (82) (211)
Trademark litigation 111 150
423 393
Adjusted operating costs 18,916 19,150
5. Earnings per share
2023 2022
Profit attributable to equity holders of the Company, in £'000 404 955
Weighted average number of Ordinary Shares in issue 12,698,398 12,863,257
Basic earnings per share 3.2p 7.4p
Profit attributable to equity holders of the Company, in £'000 404 955
Weighted average number of Ordinary Shares in issue 12,698,398 12,863,257
Share options 12,888 12,881
Weighted average number of Ordinary Shares for diluted earnings per share 12,711,286 12,876,138
Diluted earnings per share 3.2p 7.4p
Basic earnings/(losses) per share is calculated by dividing the profit or loss
attributable to equity holders of the Company by the weighted average number
of Ordinary Shares in issue during the year.
Diluted earnings/(losses) per share is calculated by adjusting the weighted
average number of shares outstanding assuming conversion of all dilutive share
options to Ordinary Shares. Options are included in the determination of
diluted earnings per share if the required performance thresholds would have
been met based on the Group's performance up to the reporting date, and to the
extent that they are dilutive.
Employee options of 1.3 million (2022: 1.2 million) have not been included in
the calculation of diluted EPS because their exercise is contingent on the
satisfaction of certain criteria that had not been met at 31 March 2023.
6. Dividends
The Company did not pay an interim dividend in the year ended 31 March 2023
and does not propose the payment of a final dividend.
No dividends were paid to directors in the years ended 31 March
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR MZGFNLMGGFZMRecent news on System1
See all newsREG - System1 Group PLC - Trading Update
AnnouncementREG - System1 Group PLC - Trading Update
AnnouncementREG - System1 Group PLC - Presentation via Investor Meet Company
AnnouncementREG - System1 Group PLC - Interim Results
AnnouncementREG - System1 Group PLC - Change of Auditor
Announcement