Slide 1: System1 Interim Results
System1 Interim Results November 2020 © System1 Group PLC 1
Slide 2: Financial Performance
Financial Performance 6 months to 30 September 2020 © System1 Group PLC 2
Slide 3: Profit & Loss H1
Profit & Loss H1 Change Change 2020 2019 £m % Adjusted Revenue 10.1 13.6 -3.5 -25% Adjusted Gross Profit 8.6 11.5 -2.9 -25% Adjusted Operating Costs -8.2 -9.6 -1.4 -14% Adjusted Profit Before Tax 0.4 1.9 -1.5 -83% Statutory (Loss)/Profit Before Tax -0.4 1.4 -1.8 -126% Tax Charge/Credit 0.5 -0.5 1.0
Slide 4: Progress in Q2 on Q1
Progress in Q2 on Q1 Adjusted Gross Profit (£m) Q1 Q2 • Q1: 32% decline; Q2: 18% decline 5.7 5.7 3.9 4.7 • Quarterly average GP last year £5.3m 2019/20 2020/21 • We are currently trading ahead of Q4 20-21 (£4.4m) Adjusted Profit Before Tax (£m) 1.1 • £1.3m of the £1.5m H1 profit decline occurred in
Slide 5: H1 Gross Profit by Region
H1Gross Profit by Region 6% £m 21% 7 6.2 H1 19/20 H1 19/20 H1 20/21 £11.5m 53% 6 20% 5 4 3.1 Americas UK Europe APAC 2.6 2.5 3 2.3 2.1 10% 2 0.8 36% 0.6 24% 1 H1 20/21 £8.6m -1 Americas UK Europe APAC 30% © System1 Group PLC 5
Slide 6: H1 Gross Profit by Product Group
H1Gross Profit by Product Group 14% 31% £m 7 H1 19/20 H1 19/20 H1 20/21 £11.5m 6 5.1 19% 59% 5 3.6 3.5 4 3.4 Comms Brand Innovation Other 3 5% 1.6 2 1.3 1.2 41% 0.4 H1 20/21 1 40% £8.6m -1 Comms Brand Innovation Other 15% © System1 Group PLC 6
Slide 7: Cashflow & Funding
Cashflow & Funding H1 H1 £m 2020/21 2019/20 (Loss)/Profit before tax (0.4) 1.4 • Period-end Net Cash up £1m on H1 Tax received/(paid) 0.5 (0.2) and FY2019/20 Property lease payments (0.6) (0.6) • £0.5m R&D Tax Credit received Working capital movements (0.2) (0.6) • £0.5m under the PPP scheme: Non-ca
Slide 8: Office Portfolio Changes in 2020
Office Portfolio Changes in 2020 Office/ % of Total 2020 2021 2022 2023 2024 LA 7% Singapore 1% Paris 1% Chicago 4% Havant 2% Reduced Footprint Shoreham 1% Sao Paulo 2% Vacated/ Notice Served Rio 2% Lausanne 2% Impaired Under option Hamburg 2% Rotterdam 1% London 52% NYC 23% © System1 Group PLC 8
Slide 9: Future Reporting
Future Reporting • New finance & operations system (D365) up and running since October • Better line of sight to normalised operational performance via adjusted metrics • “Democratisation of data” inside the business • More emphasis on Data (“Blue”) v Consultancy (“Yellow”) revenue streams to align
Slide 10: Summary
Summary • Sales momentum has grown from a low Q1 base • Americas down 50pc in H1, recovering well since September • We are winning in the UK specifically -- and with Test Your Ad generally • Operating business as usual expenditure remains under control • Operating cash flow £0.5m up on H1 last year
Slide 11: Strategy, Execution & Progress
Strategy, Execution & Progress November 2020
Slide 12: Advertising, Marketing, Market Research
Advertising Marketing Market Research $42bn $900bn $1700bn Every year $900bn is spent on Advertising. Over 50% has little or no effect & yet only 0.1% is spent testing whether an Ad will work 2% Ad pre-tests $0.9bn 6% Brand-track $2.7bn 7% Idea-testing $3.1bn Future Performance © System1 Group PLC 1
Slide 13: Mission, Vision, Goal
MISSION We empower every marketer to create effective ads, launch successful new products & improve brand equity VISION Let’s be the insurgent, transform the industry, & put a dent in the Marketing universe GOAL Undisputed #1 for predicting & improving Marketing Effectiveness
Slide 14: Goal Hierarchy: sequential & progressive
Goal Hierarchy: sequential & progressive (since Sept 2018) 1. BUILD on the largest database of adverts evaluated on long term effectiveness. We use this Asset to enhance our understanding of advertising which feeds into our consultancy business. 2. BRAND this database and provide topical predictive
Slide 15: Asset
Lemon Digital | If emotional response is important on TV, it is imperative online. Asset Achtung! film “The importance of Orlando's research in an increasingly digital advertising market cannot be overstated. It should serve as a massive wake-up call to the armies of digital marketers who have preac
Slide 16: Test Your Ad
& Systemt Test Your Ad MY ADS TOPICAL ADS First Aired From: First Aired To: May 2001 Nov 2020 AD RANKINGS COMPANY VIEW oO Country: UK (9) Category: 2020 Christmas Ads (UK) (o} Sort: Dofault: Highest Star Rating © Brand: Please Solect Aldi Christmas Launch Ad 2020 (Kevin The Carrot) Aldi Ster Rating:
Slide 17: Profit Projector
Profit Projector A Brand new Test Your Ad feature is the Profit Projector. Based on inputting key Share of Market and Share of Voice data we are able to forecast your predicted future share based on the strength of your new Star rating (vs the category average). If you input agency cost, production
Slide 18: Test Your Roadmap | Major releases 20-21
Test Your Roadmap | Major releases 20-21 Q3 Q4 Q1 Q2 Q3 New RELEASE RELEASE RELEASE RELEASE UX/UI 8 9 10 11 TYB-Pro RELEASE RELEASE RELEASE RELEASE +TYB Report 5 6 6 7 TYI TYI Essential Pro © System1 Group PLC 18
Slide 19: System1 A.I. The Economics, Ideas & Initiatives
System1 A.I. The Economics, Ideas & Initiatives
Slide 20: Fame
Fame AOTW = 6 new client wins x78 Lemon Presentations (500% increase) 11 high quality articles p.m (50% increase) “System1 are special because you’ve looked at creativity in a far more detailed way. Asset You’ve balanced the creativity / media thing, Fame you’ve done it on an effectiveness basis. Ne
Slide 21: Increasing speed, value, margin & scalability
Blue ‘Predict Your’ data + Yellow ‘Improve Your’ consultancy on top Predict Your… Improve Your… New data Revenues to high-volume customers: Increased consultancy Revenues to Media Owners Agencies existing and new large clients Increasing speed, value, margin & scalability Improve Your… New ENTERPRIS
Slide 22: We do not sell custom market research
We do not sell custom market research Systemt ye avr weenen
Slide 23: 5 Reasons why you should work with us
5 Reasons why you should work with us 1. Predictive – our measures have been proven over many years to accurately predict both short & long term results in market 2. Validated – don’t take our word for it. We have validated our predictions with in market results to prove a close correlation between
Slide 24: Pricing principles
Pricing principles We price to drive aggressive market penetration via our data products Our global ratecards will be simple and completely transparent We will offer a modular approach to allow clients to flexibly deploy our data and consultancy We only ever offer price support on our data p
Slide 25: Test Your Ad | Offer specification and global Ratecard
Test Your Ad | Offer specification and global Ratecard Essential Pro Creative Guidance Premium The Essential predictors Prediction and Diagnostics Everything you need to Track company, competitors of your Ad’s success for your Ad improve your Ad’s success & category Ad effectiveness ★ n=150 Nat Rep
Slide 26: Test Your Proposition has led to increased Big-Pitch wins
Test Your Proposition has already led to increased Big-Pitch wins 2020/21 2020/21 Tech Media Financial Auto CPG Big Pitches vs. % Increase Wins 20/21 Wins 20/21 Wins 20/21 Wins 20/21 Wins 20/21 2019/20 in Win-Rate Test Your Ad x3 +64% 3 5 1 6 Test Your Brand x2 +50% 2 3 Test Your Idea Same Same 1 3
Slide 27: THE START | It started with a talk in EFF Week
THE START | It started with a talk in EFF Week …
Slide 28: THE START | Started & probably won with an Ad of the Week
THE START | Started & probably won with an Ad of the Week
Slide 29: THE START | 4 Core Markets, including Sporting Goods Category
THE START | 4 Core Markets, including Sporting Goods Category Db/Subscription 8 Campaigns a year = 75% Blue Data Sales & 25% Yellow Guidance Sales UK Sporting Goods Category Since December 2019 USA Sporting Goods Category Since December 2019 China Sporting Goods Category Since December 2019 Germany
Slide 30: Thank You
Thank You © System1 Group PLC 30