Slide 1: Financial Results
Financial Results Six months ended 30 September 2017 system1group.com
Slide 2: Leading exponent of behavioural economics and System 1 thinking
Leading Founded in 1999 exponent of behavioural Floated on AIM in December 2006 at £1.08 per share economics and system 1 thinking Long term track record of profitable organic growth and strong cash flow in marketing and Operating in 10 countries research 170 employees 200 + large (mainly consumer g
Slide 3: After successful year last year, highly disappointing H1 this year
Finished 2016/17 on the front foot ● Core Quant System1 products all growing well After successful ● Established Ad Agency and moving into marketing services (not just research) year last year, ● Market as a whole increasingly embracing System 1 thinking highly disappointing H1 However, H1 results h
Slide 4: 9% Gross Profit decline caused heavy PBT fall
Gross profit (£m) main top-line performance indicator 30 25 9% Gross Profit 20 Revenue down 10% (12% in constant currency) decline caused 15 10 Gross profit down 9% (12% in constant currency) heavy PBT fall 5 Profit before tax down to 70% due to large 0 2012 2013 2014 2015 16/17 17/18 fixed-cost bas
Slide 5: Gross Profit Decline due to Innovation
Product mix – gross profit £m Most of the business from our core 4 products Brands and comms: Ad Testing, Brand Tracking Ad Testing & Brand Tracking Innovation: Predictive Markets, Concept Testing Gross Profit Predictive Markets Decline due to Concept Testing Brands and comms Ad Testing and Brand Tr
Slide 6: Gross profit down in most markets and underlying causes similar
Gross profit down in most markets and underlying causes similar Gross profit Operating profit US £5.20m -11% £2.59m -25% Gross profit split UK £2.40m -18% £0.91m -36% Australia Continental Europe £2.23m -3% £1.11m -7% Asia Brazil Asia £0.62m +28% £0.14m +115% US Brazil £0.29m -56% £(0.13)m -140% Con
Slide 7: Costs increased in large part due to investment in US and Ad Agency
2017/18 2016/17 Growth Costs increased Research overheads £9.40m £7.81m +20% in large part due to investment in Advertising Agency overheads £0.37m £0.15m +147% Investment in US Increased headcount and senior US and Ad Underlying overheads £9.77m £7.96m +23% hires on back of consistently Agency stro
Slide 8: Cash position remains solid
Cash position Cash Flow Returns to shareholders remains solid Small operating cash outflow Returned £4.05m Pre-financing cash flow £0.60m to shareholders so far the year Final and Special Dividends Finished the period with £3.50m cash and no debt 2017/18 interim dividend 1.1p Maintaining dividend in
Slide 9: Marketing that Makes a Difference & Zero Waste… Re-engineering our products
Marketing that Makes a Difference & Zero Waste… Re-engineering Core our products Prediction standardised scalable low cost Consultancy fast high margin Creativity System1 Research System1 Agency Core Prediction predicts which ads, concepts or other marketing creative will make a difference Research
Slide 10: Outlook …
Outlook … New Chapter following rebranding to System1 not started as hoped However the decline has been a catalyst for re-engineering products Increased potential for large work programmes and margin uplift But: in a period of change, and with normal limited visibility, more cautious than usual on s
Slide 11: Financial Results
Financial Results Twelve months ended 31 March 2017 system1group.com