Slide 1: Interim Results
Interim Results System1 Group PLC 6 Months to 30 September 2018
Slide 2: Summary
Summary • After decline last year, results are stabilising: Gross Profit 5% decline (3% constant currency) • New product launches beginning to yield results, particularly in Innovation • Lower cost base is restoring margins: underlying PBT £1.92m (prior year £1.10m) • Significant investment in Ad Ra
Slide 3: Financials
FINANCIALS
Slide 4: P&L: separating Consulting (existing business) from Ad Ratings
P&L: separating Consulting (existing business) from Ad Ratings 2018/19 £m 2017/18 Consulting Ad Ratings Total (Existing Business) Revenue 13.18 - 13.18 13.82 Gross Profit 10.80 - 10.80 11.39 Underlying Overheads (8.88) (1.09) (9.97) (10.29) Underlying Pre-Tax Profit 1.92 (1.09) 0.83 1.10 Share Based
Slide 5: Historic context
Historic context Gross Profit (£m) 30 25 20 15 § 5% decline in Revenue (3% constant currency) 10 § 5% decline in Gross Profit (3% constant currency) 5 0 § 74% growth in Underlying Pre-Tax Profit (excluding Ad Ratings) 2012 2013 2014 2015 16/17 17/18 18/19 § 28% growth in Pre-Tax Profit (including Ad
Slide 6: Business is stabilising
Business is stabilising 10 8 § Not yet into growth but relatively flat 6 qtrly performance since beginning 2017/18. 4 § Innovation returned to growth following new product 2 launch, new pricing structure and return of client budgets (up 13%). 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 16/17 16/17 16/17 16/17 1
Slide 7: Mixed fortunes geographically
Mixed fortunes geographically Gross Profit Operating Profit H1 Gross Profit Americas £4.64m -16% £2.13m -14% UK £2.28m -5% £0.81m -11% Continental Europe £2.91m +30% £1.68m +52% APAC £0.86m -22% £0.52m -3% Total Research £10.69m -5% £5.14m +2% Ad Agency £0.11m -32% £(0.30)m NM Americas UK Continenta
Slide 8: Profit and Cost improvements
Profit and Cost improvements £m Growth § Cost improvements driven by 19% headcount reduction Operating Profit from Research & Ad Agency 4.84 +1% Central Costs (ex Ad Ratings) (2.92) -21% § Operating Profit margin improving (ex Ad Ratings, Exceptional Credit, and Share Based Payments) Operating Profi
Slide 9: Cashflow
Cashflow £m H1 2018/19 H1 2017/18 Operating Cash Flow (excluding Ad Ratings) 0.31 (0.60) Ad Ratings (£1.09 expensed; £0.50 capitalised) (1.67) Cash flow before financing (1.36) (0.60) Finance lease payments (0.02) - Dividends (0.80) (4.05) Cash movement (2.18) (4.65) Cash balance at 30 September 3.5
Slide 10: to No. 1
to No. 1
Slide 11: "Our role is to lead the business to ideas that sell more"
“Our role is to lead the business to ideas that sell more” Andrew Geoghegan Head of Consumer Planning, Diageo © System1 Group PLC 11
Slide 12: Number 1 Intellectually
Number 1 Intellectually § 1st to champion System1, behavioural science based research § 1st to champion online, self-structuring of open-ended answers (MindReader®: 50 million responses since 2000) § 1st to champion predictive accuracy of Predictive Markets (50 thousand innovations since 2004) § 1st
Slide 13: Predicting to Number 1 Commercially
to Number 1 Commercially AD AGENCY Shop window to show how it’s done Guiding CREATIVE GUIDANCE Consultancy to guide creative outputs Predicting Predict long term profitability of Adverts, PREDICTIONS Innovation, Brand Marketing Correlates Ad effectiveness & media spend by market, MASSIVE DATABASES O
Slide 14: © System1 Group PLC
© System1 Group PLC 14
Slide 15: Ad Ratings
Ad Ratings § The Company is looking to add Technology, and Digital thinking to create new products and channels to its core IP § Ad Ratings is first example § The business has historically pre-tested adverts for around £20-30k (more for multi-country studies) over a 3-4 week period § We challenged o
Slide 16: Outlook
Outlook § Market conditions remain challenging § As new product configurations and competitive pricing take hold believe business will continue to stabilise and in time return to growth § Meanwhile we will continue to keep costs under control § Looking forward to launch of Ad Ratings § Will continue
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