System1 Group (LSE:SYS1) — Annual General Meeting

0:00 Good morning, and welcome to the SYSTEM1 GROUP PLC annual general meeting. Throughout this recorded meeting, attendees will be in a listen only mode. Questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand corner of your screen. The company may not be in a position to answer every question received during the meeting itself however the company can review all questions submitted today and publish responses where it's appropriate to do so. I'd now like to hand you over to Rupert Howell, Chairman. The notice of the meeting was sent to you in accordance with the articles of association of the company unless there are any objections I will take the notice as read. Thank you. Before we start the formal business of the meeting I'll explain briefly the procedures we will follow. You've been requested to submit questions electronically and those have already been addressed or will be addressed in due course. Today at the end of the meeting there will be an additional opportunity to ask questions.

0:49 For those in the room when posing a question please introduce yourself and mention if you're a member or a representative. John come on in. Thank you. We've only just started because we had a technical fault which I'm sure was delighted with your delay. For those in the room when posing a question introduce yourself and mention if you're a member or representative. For those joining remotely please route your questions via the investor meet company platform if it's working. We appreciate brevity to give everyone a voice remember only questions from members representatives or proxies will be permitted. You've also been asked to submit your votes before today those who did not do so but are eligible to vote will be invited to vote by way of a poll once each resolution is read out. Please be reminded that those joining remotely are not able to vote. To ensure we capture all shareholders perspectives we will conduct a poll on each resolution today.

1:42 As part of today's AGM we'll be voting on two new matters that require your support. Firstly the appointment of auditors. Following the resignation of RSM UK Audit LLP as announced on the 12/06/2023 the board appointed Hayes McIntyre LLP as the company's new auditor after a comprehensive and competitive tender process. We now seek your approval to confirm this appointment. Secondly, the approval of the final dividend. We are asking shareholders to approve a final dividend of 5p per ordinary share for the financial year twenty twenty three-twenty twenty four. If approved, this dividend will be paid on 10/18/2024 to all ordinary shareholders on the register as of 09/27/2024.

2:27 Your support on these matters is appreciated. I'm appointing Link Group, the company's registrars to act as scrutineers. When you registered your attendance here today you would have been given a poll card which the shareholders and proxies President of the meeting should complete and sign as indicated. In the case of corporate shareholders the poll card should be completed by their authorised representatives present at the meeting or by their proxy. If a voter is both a shareholder and a proxy for another shareholder or if you are attending as a proxy or representative of more than one shareholding please use separate poll cards. On your poll cards there are three options for each resolution. You can vote for the proposed resolution against the proposed resolution or you may withhold your vote. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against a resolution.

3:19 Please complete your poll card by ticking the appropriate box next to the relevant resolution depending on how you wish to cast your vote. Once all votes have been taken on the resolution please would you sign the poll card and hand it to the representative of Link Group who will be coming around to collect the poll cards. Should you require any further assistance our registrars will be happy to help you. I can confirm I have been appointed proxy in respect of 8,497,325 shares.

3:49 Resolution one is the resolution to receive the report of the directors and the accounts of the company for the financial year twenty threetwenty four. I formally propose Resolution one as an ordinary resolution. In accordance with good practice I will let you know how shareholders who have submitted proxies have voted. Shareholders have submitted proxies in relation to Resolution one as follows: shares in favour 8,497,325 shares against zero shares withheld zero. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card. I will now close the vote. The poll is now closed. Resolution two is the resolution to approve the Director's remuneration report as sent to members with the notice of this meeting.

4:40 I formally propose Resolution two as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution two as follows: shares in favour 8,494,007 shares against $10.40 shares withheld 2,278. This resolution is now put to the meeting to vote please would you tick the appropriate box on the poll card. I will now close the vote. The poll is now closed. In accordance with the articles of association all directors are retiring and are offering themselves for re election. Resolution three is the resolution to re elect John Kieran as a director of the company. I formally propose resolution three as an ordinary resolution.

5:30 Shareholders have submitted proxies in relation to resolution three as follows: Shares in favour 8,495,922 shares against zero shares withheld $140.03. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card?

5:53 Will now close the vote. The poll is now closed. Resolution four is the resolution to re elect Sophie Tompkins who is a non executive director. I formally propose Resolution four as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution four as follows: shares in favour 8,495,882 shares against 40 shares withheld $140.03. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card? Will now close the vote. The poll is now closed. Resolution five is the resolution to re elect Chris Wilford as a director of the company. I formally propose Resolution five as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution five as follows: Shares in favour: 8,495,922 shares against: zero shares withheld $140.03.

6:53 This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card? I will now close the vote. The poll is now closed. Resolution six is the resolution to re elect Rupert Howell as Non Executive Director. I formally proposed Resolution six as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution six as follows: Shares in favour 8,495,922 shares against zero shares withheld $140.03. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card? I will now close the vote. The poll is now closed. Resolution seven is the resolution to re elect Philip McRae who is a non executive director.

7:40 I've formally proposed Resolution seven as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution seven as follows: shares in favour 8,495,522 shares against 400 shares withheld $140.03. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card? I will now close the vote. The poll is now closed. Resolution eight is the resolution to re elect Conrad Boner who is a non executive director. I formally propose Resolution eight as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution eight as follows: shares in favour 8,495,922 shares against zero shares withheld $140.03.

8:29 This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card. I will now close the vote. The poll is now closed. Resolution nine is the resolution to re elect James Gregory as a Director of the company. I formally proposed Resolution nine as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution nine as follows: shares in favour 8,495,922 shares against zero shares withheld $140.03. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card? I will now close the vote. The poll is now closed. Resolution 10 is the resolution to reappoint Hayes McIntyre LLP as auditors of the company and to authorise the directors to determine the auditors remuneration.

9:17 Following the tender, Hayes McIntyre LLP have been appointed as the new auditors with effect from 12/06/2023. The Companies Act 2,006 requires you to reappoint our auditors and to approve the manner of determining their remuneration. I formally proposed Resolution 10 as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution 10 as follows: shares in favour 8,495,247 shares against zero shares withheld 2,078. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card? I will now close the vote. The poll is now closed. Resolution 11 is the resolution to declare a final dividend of 5p per ordinary share for the financial year twenty twenty threetwenty four to be paid on 10/18/2024 to holders of ordinary shares on the register of members of the company at the close of business on 09/27/2024.

10:14 I formally propose resolution as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution 11 as follows: shares in favour 8,497,325 shares against zero shares withheld zero. This resolution is now put to the meeting to vote. Would you please tick the poll card? Will now close the vote. The poll is now closed. Resolution 12 is the resolution to authorise the directors to allot relevant securities subject to the provisions as set out in the notice. I formally propose Resolution 12 as an ordinary resolution. Shareholders have submitted proxies in relation to Resolution 12 as follows: shares in favour 8,495,207 shares against $14.43 shares withheld $6.75.

11:01 This resolution is now put to the meeting to vote. Would you please tick the appropriate box on the poll card? I will now close the vote. The poll is now closed. We now come to the special business of the meeting. Resolution 13 is the special resolution to allow the company to disapply shareholders' pre emptive rights on the issue of new shares subject to the provisions as set out in the notice. I formally propose Resolution 13 as a special resolution. Shareholders have submitted proxies in relation to Resolution 13 as follows: shares in favour 8,495,207 shares against 2,118 shares withheld zero. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card?

11:47 I will now close the vote. The poll is now closed. Resolution 14 is a special resolution to allow the company to disupply shareholders' preemptive rights on the issue of new shares in connection with an acquisition or specified capital investment subject to the provisions as set out in the notice. I formally propose Resolution 14 as a special resolution. Shareholders have submitted proxies in relation to Resolution 14 as follows: Shares in favour: 8,495,207 shares against: fifteen eighteen shares withheld: 600. This resolution is now put to the meeting to vote. Please would you tick the appropriate box on the poll card? Will now close the vote. The poll is now closed. Resolution 15 is a special resolution to allow the company to purchase its own shares subject to the provisions as set out in the notice. I formally propose Resolution 15 as a special resolution.

12:41 Shareholders have submitted proxies in relation to Resolution 15 as follows: shares in favour 8,055,322 shares against 2,003 shares withheld 440,000. This resolution is now put to the meeting to vote please would you tick the appropriate box on the poll card. I will now close the vote. The poll is now closed. We'll be pleased to hear that Resolution 15 was the final resolution of the AGM and concludes the formal business of the meeting. Thank you for joining us here in the room and remotely. The directors genuinely appreciate your continued support and look forward to seeing you all again in 2025. Please would you now sign the poll card and hand it to the representative of Link Group who will be coming round to collect the poll cards.

13:30 The final results of the voting will be published via RNS later today. We'll also publish the results on our website as soon as practicable. We will now open the floor to questions from those who've been kind enough to join us. So any questions? Go for it Maynard and then we'll take some remotely. I need a microphone? There apparently are hidden microphones Maynard. So first thing is well done on the year. The The company's much better shape than it was two years ago or even last year. I'm pleased about the recovery and the dividend as well which is helpful. It's good stuff. So we talked last year about the short term bonus scheme.

14:17 The short term bonus scheme, has that made a difference to the senior management this year? Yes. So the very short answer is yes. One of the things I felt was really missing in the company was short term incentives to drive the sales process. And it also gives us flexibility on our cost base if we don't hit targets because obviously it's very much variable and was based on huge stretch targets. And I'm delighted to say it worked brilliantly. There is no other word for it. I'll ask James to just add a bit from the perspective of the senior employees.

14:52 But we believe as a forward, we've now got the beginning to get the balance right between short term and longer term incentives for an organisation such as this. And I think as a board again we felt very strongly that they in the right balance two years ago and we've got it right now. And also thank you for your comment about the dividend. I personally am very pro dividend because I think it shows the company is performing well and it is rewarding shareholders short term as well as long term. And why shouldn't you get those rewards just as the management does? James do you want to add to that or is that? I think very well put the

15:35 I think it's been a as you said it's been a good year and we look forward to kind of continuing to drive that growth forward and it's nice for people to be able to share in that journey and really that's what you feel, you feel a united team, united business behind a common goal and I think the short term reward is a way of being able to cement that. I looked at the annual report for this year, the previous Previous year. This latest annual report. There doesn't seem to be a short term senior management bonus scheme mentioned for this FY '25. No. Is that the case? No, there is, I think. So the annual report includes the disclosures in respect of the year upon which it was reporting. There is into

16:15 FY 2024, 2025, so the current year we're in, there is a similar mix of fixed remuneration, variable short term in year remuneration and the existing long term incentive scheme. So there is a similar balance between It's very similar. Okay. So is that based on the same because last the previous year or the last year, Just Card was based on profit before tax. Is it the same

16:42 It's sort of based on very clearly the numbers have changed and the targets and objectives have changed, but a very similar structure in terms of it being aligned with the financial performance of the business. Yes, very much so. Chris, have we got just to give a may not have breathed, have we got any questions from outside that are coming in? Are we okay at the moment? No, not too many coming in, in fact not any coming in. So back to you now. And Shaun indeed, so if you've got any questions. I will chip it out with my own seriousness.

17:14 Go on, come on. So looking looking at the annual report, there's I think variable pay increased by £2,800,000 last year versus gross profit of an extra 6.4. Mhmm. So are we saying that for this year or if there's an extra 6.4 of gross profit, staff will collect £2.8 extra for this coming year. No. I don't think we're saying that because it isn't a strictly linear relationship between gross profit. So for example, the variable pay, which includes executive directors, but the general workforce and specifically commercial staff, so people with sales incentives, their incentives will be very much aligned to their on target earnings, their salary.

17:59 So they may have a potential of earning 30% or 50% or 80% of salary and that whilst it's linked to financial performance is not a distribution of a share of gross profit. So they don't they don't have that linear relationship aligned with the calculation you've just you've just expressed. And I think it's also worth saying that the the targets are stretching

18:22 because we want to carry on having a good performance. Sorry, James, do you want to add something? No, I was going say the reason it went up by £2,800,000 year on year is the previous year performance wasn't anything like a strong as it goes from zero for or I think it was 400,000 the previous year for very moderate performance to over 3,000,000 in total for excellent performance. And if the level of performance improvement is similar this year versus last year, you can expect a similar level of payout, not double the payout. That's the key thing. This question has come up quite a Not double metric. This is not new information in the market, but just to clarify.

19:04 I'll shift to non. So switching to some of your strategies, your future growth. About five years out, it's long enough for it to be sort of forward planned and the direction you've shifted quite significantly into your new system analysis, which is heavily reliant on the database, which you've got a comparative advantage in. Having spoken to a couple of people in the industry, I understand a lot of consolidated databases out in The US and other countries. How much of a comparative advantage is that database?

19:44 How can you sustain it versus those consolidators in the market? And specifically in The U. S. But also globally, and how much does that play into your medium and longer term growth? Okay. I'll give you a sort of start and then hand over to James on this one. You'll be pleased to know that we're spending all day tomorrow for a Strategy Day as a board where we are going to fine tune because one of the things I think you may remember me saying at my first AGM is we were going to institute a regular strategy review rather than leave it until it was absolutely needed. So we are reviewing all of this again tomorrow but we're really on the right track. The database is truly unique and we're finding even in The US it is gaining astonishing traction.

20:35 And we are still tiny, relatively speaking, The US with a huge amount of potential there. We are beginning to get known, but were unknown. And in the way this market transacts, you're not known, it's very hard to break into big companies. But we're starting to break into huge companies like Pfizer and various others. Because what we have is a database. It's over 80,000 now, isn't it? What's the database of ads? Significantly, it'll be in It is 80,000. 80,000 tests. No, not all in The U. S, but we've got category by category. The U. S. Now is growing rapidly. As you know, one our strategic focuses was to grow our U. S. Business. We actually had one quarter this year when The US exceeded The UK and Europe, which I think is a fantastic sign.

21:32 It's growing brilliantly in The US. So the database is growing rapidly. It's the quality of the database that makes the difference. There's lots of people who can give you a competitive reel of ads. Let's say you're a grocery business in The US. There's plenty of suppliers that can give you

21:49 every grocery ad that's been done in the last five years. There's nobody else at the moment who can tell you how well those ads have done. And we can. We've got enough volume to make that meaningful. But clearly, our challenge constantly because the bigger that database, the more efficient it is. But it's the quality of the database, not just the size of it that I think makes a difference. But James, pick up on the data because it's a very good question. I've got one more question because one thing I picked up on, you've hit the zeitgeist on it, is the emotional connection of these ads. Correct. So that's a difficult one to pick up, but if you've got a But that's our whole modus operandi. Yeah. I got that part. But how are you deepening and strengthening the moat, so to So as we say, we test nearly every ad that airs in The US and in The UK, have done historically and will continue to do going forward.

22:48 I think as you said, it's the jewel in the crown, it underpins everything so when we're winning new business, part of our leading pitch is the fact that we're able to not just help people understand how well they're doing, but how well they do comparatively. So compared to their competitors to the norms in their area to other categories which might be of interest as well. So it really underpins all of our big

23:07 commercial effort, it underpins all of our thought leadership, all of our marketing and our fame fame growth which comes alongside it. So it has been a big investment of the business and will continue to be at sort of at similar levels as we go forward. I mean it fundamentally underpins everything we do. I guess in terms of the defensibility, we are, as we said, as Rupert mentioned, the only people in the business who measure how people feel when they are watching an ad And we're able to not only understand how they feel, but translate that into predictive outcomes. And that is the special source of SYSTEM1, and that's what we've got to keep special. We continue to build upon. It underpins each of our products, whether they be our Test Your Ad, whether it's our Test Your Innovation or your Test Your Brand and we'll continue to be going forward. Can I go back to LTIPs?

23:57 Yes, go on then. Please do. Phil's favourite subject. And also if you want to like Yes. We've talked about stretching target. So the LTIPS, you talked about what's the work on the design of the next next version of it. So what what is the board thinking now at the altitudes going to fill? Yeah. It it the thinking comes back to the balance of remuneration and the balance of incentives between fixed and variable and between short term and long term. And the change that we made that you referenced in 2024 was to have a previously prior to 2024, the structure was very much around fixed and long term variable. So having rebalanced it, we get the opportunity after March 25 to put in place a new long term incentive scheme. We've been we've had the scheme that was approved by shareholders in 2021 in place for some time.

24:53 And the achievement of it and the performance of the business have become slightly unaligned in terms of market performance conditions and but more importantly, nonmarket performance conditions. Actually, the market performance condition at GBP 4 share price, I think we're all very pleased to have surpassed by some way.

25:13 The work will move towards is looking towards a more traditional structure in the balancing of short and variable term, but also cognizant of the fact we've got a rapidly growing entrepreneurial business with a I think I'm still allowed to make comments like a a young workforce. And we want the right balance of incentives that drives them. So that work is underway. We know we will put that scheme to shareholders for approval when we have it. I don't think if you look at the list of characteristics of the old scheme, I think they're Page 42, don't quote me on that, it's 41, 42 of the annual report for the 2021 scheme. There aren't many of those characteristics you won't see in the new scheme, but I guess, importantly, the targets, both market conditions and nonmarket conditions, are what we're going to focus on. And actually, they will flow somewhat from the strategy meeting tomorrow when we look at what the business should be achieving over three years, five years.

26:19 What's attractive to shareholders is the revenue targets for this LTIP, minimum is GBP 45,000,000, which is another 50% from where you were last year. And then AGA is your threshold, threshold, which should be magnificent if you get to AGH. Indeed. Look, and I think the sitting here today,

26:38 one can, with hindsight, can look back at the targets that were set in 2021. And clearly, we're all aware of the performance in 2021 and 2022. But that sets the business some way back from the trajectory that would have been needed to achieve those. What we want to set is the right incentive to both motivate and retain the management team to deliver the long term strategy. We need that, therefore, to be both stretching and challenging, but also achievable so that it remains an incentive to them. And that's a delicate balance to get right, but therefore, I think you'll a range as we did before, probably not such an extreme range between thresholds and counter stretch performance. So may water

27:30 it down, obviously, the thresholds of the I wouldn't use the phrase watering it down. Clearly, we start from a different place. We start from a very different place, and we start with a track record over the last couple of years of understanding what revenue growth we can achieve. So it will be with those in mind.

27:49 Yes, I wouldn't I'm not here to make their life easy, I won't be watching them down in that sense. And I don't think the rest of the board wants to either. No, definitely not. I mean but it's also you said we've got a young entrepreneurial team. We've got a really fabulous team. You could argue in some cases overqualified for a business of our size and we want to keep them. And the way you keep them is by making the work enjoyable, that's the first and foremost thing, and then secondly making sure both short term and long term incentives are achievable. I've been involved in too many LTIPs in my life, Maynard, which are just ridiculous, they are zero incentive because nobody thinks you've a cat in hell's chance of making On the other hand, if they're too soft then that's ridiculous from a shareholder perspective. So it's a tough balance to achieve, but we've got somebody very experienced in Phil leading this effort and Sophie also has done a lot of help. Just to relay, yeah, I've, been on something like eight or nine remuneration committees, in the last few years, so

28:51 I'm a very frequent cross check. So we're very careful to get that balance right. But they but you're right. Mean, they realism is important. Yeah. So to the they send that message to shareholders, what your ambitions are. You've kept that ATH or I think it was 'nineteen, can't remember the name ATH, right. For many years. Says to say, think tragically maybe we could get to PTO. Well, maybe. But I think the important thing, Menard, is there's a difference between I'm not being too rude finger in the air ambitions and actually stuff based on a practical analysis of the reality of the situations we face and the markets we face. I mean, could say, right, I want to be a £100,000,000 business, we'll make that delta.

29:39 It's a pointless thing to do because nobody in the company believes it.

29:43 And what they do believe now is almost anything is achievable because we've shown them a few years in a row that we can achieve things that people previously thought wasn't achievable. And I think that's the key. How do we keep that momentum? How do we keep that incentive going? And that means it's a balance as we said, we'll be bringing it to shareholders obviously for their approval. We've got a question from the outside, is that right Chris? Yes, there's a pretty straightforward question about when we're next going to update the market because it's been noted we did not do a trading update today. There will be a trading update on first half year's trading week commencing October 21. And we should put that in the RNS today as well so that that is out there. Reason we

30:30 updated two years ago was we were in the middle of a pretty crucial vote about the future of the company. So we felt that was appropriate to put out an RNS on the day. And the reason we put an RNS out with the AGM last year is we were well ahead of expectations and couldn't wait three weeks.

30:49 So thank you for that one. Next question. Yes. So it's a similar question but from a different angle. So I've noticed that you've you've culturally shifted in the direction of how you, as you said, the strategy is done more regularly, the the structure of the organisation, the the visionary is possibly stepped back and let the operations run whereas his visionary magic is still sown. So you've put those structures in place which are very important to the growth of the company. Can you tell us a little bit more about that? Because that was, in my opinion, one of the reasons things sort of went slightly squid with earlier. Well, I think yes, so the thing about this business is that if you stand still, go backwards.

31:37 So you've got to find ways of moving forward. And I think what was happening was people were getting mixed up in the company when I first joined it between kind of the short term and long term goals. So things were getting in each other's way. And what we had to what we had to do was to restructure the business so that we had a machine driving the business on a day to day basis. A machine that needed a bit of tweaking actually in The UK. It was a pretty good machine in The UK but was frankly a very poor machine in North America and is now a first class machine it looks like because it's still early days in North America.

32:18 But it would be a huge mistake if we didn't constantly think about how we were going to innovate and keep the product and services moving forward. And that's where sparing his blushes, John is a genius because he's the guy who invented this in the first place and who can see where this market is going. So what John is doing is heading up effectively like an innovation lab, where we're looking at how AI is going to impact on our business because it will inevitably impact on our business whether that's in terms of you know AI respondents being added to human respondents when you're doing research, whether it's AI devising new innovation ideas alongside the client that you then test with human beings. There's all sorts of things that John's working on.

33:07 And we need that constant flow of innovation into the business as well because otherwise we will lose our lead that we currently have intellectually and in terms of IP against

33:22 our competitors. But meanwhile, James and Chris and the team are driving the business forward day in day out and that's what's made the difference to our performance is that understanding that you have to have a different focus if you like on the short and medium term and the longer term. And that so far is working really well and long may it continue to do so. To kind of build on that one and it's a slight tangent but I'm kind of getting the vibes possibly wrongly that acquisition may be in the air And for, just from the you know, you've opened up the the share roster to, to what have you. And this is a very, culture driven organic type business.

34:10 And being an excellent investment banker, I'm always averse to the sirens of a bolt on acquisition making a wonderful situation. So statistically,

34:23 it doesn't always work, should we say. What reassurance sort of do you give out where actually you've got this nice magic sauce and you've got you're a minion in in in North America and you're starting to have a footprint in in Europe. So you have a lot of opportunity out there. And actually, you're going to be focusing on

34:46 the prospects going forward rather than the allure of a rapid bolt on that will be Good question. And I'll let Sophie expand also on it. But the answer is you're getting the wrong part. There's not acquisitions. That's fine. I'd like to be wrong. No, There are definitely not acquisitions yet. As you may know, two years ago when we faced the EGM, one of the pressures we were under from that shareholder group was that we weren't doing enough acquisitions or M and A or whatever. And we actually did take a really proper look at our supply chain and so on, saying were there obvious bolt on acquisitions that would secure things like the supply chain rather than be a diversion. And there was nothing. I mean there was nothing that it made any sense for us to look at. Now that doesn't mean that somebody wouldn't turn up tomorrow that might make a lot of sense. So we've constantly got an eye on it, but it's not in the air. But Sophie, know you Well, just to add that I'm also a former investment banker, so I'm also very cautious about acquisitions.

35:49 I've been seeing a lot of them fail over the years. So it would be a very, very high hurdle, shall we say, on many fronts to make it worthwhile. But the other there's corollary to your point, which is absolutely correct. The potential for us, particularly in North America, is huge.

36:10 And it's really interesting because we had a sort of nascent operation there that was sort of bubbling along and doing sort of bits and bobs. But putting the right team in place, what they've been able to achieve in a year is truly spectacular. So the first thing you worry about is is that repeatable? And then the second thing you think is well hang on, if they're that good and the opportunity is there and we've got less than 1% of the market, what could we achieve? And the answer is I think a huge amount and big part of the discussion tomorrow is how much do we invest in building the teams in North America because it's the world's biggest market by a long way for what we do. And we're really good at what we do, and yet we've only scratched the surface. Absolutely right.

36:58 Chris, any more from outside? Yes. There was a question about a discussion of competitive threats, which we've covered. I don't know if there's anything else that needs saying on that. Well, it's a big part of what we're doing tomorrow is we do this on a regular basis, but a big deep dive tomorrow in all our competitors. What are they actually doing? What they say they're doing? Because a lot of them say they can do what we do but they can't or they're useless at it. So it's really important though that we don't get complacent about that because they're not stupid people and eventually they'll get better at what they do, particularly when they start playing around with AI. So we're doing a very deep dive. We've got about a third of tomorrow is looking at every single competitor in great detail.

37:44 So people can be reassured that we're not taking our eye off that ball. Any more, Chris? Yes, there are quite a few. There's one about how big can SYSTEM1 be in five years' time? Gosh, well I can't answer that today or even after tomorrow because, but what we can do is to start to get an indication I think of what our ambition should be, which I think is a slightly different thing. What I don't want us to do, because I think it's a mistake, is to sort of pick a number out of the air and to chuck it out there. Because it's just a false god. What you've got to do I think is to look at what you do, what market share you've got, what you need to grow your market share and then at the end of the day you add all that up and you come up with a sensible and achievable number that everybody can believe in.

38:35 And the only answer I can give is there's no reason why SYSTEM1 shouldn't be two or three times the size it is. What the time frame of that is, we will you know we will see particularly over the next year because we've had a stellar year from a poor and low base, let's be honest. We've had a stellar year and a half. Can we do that again this year? Know, and I'm not giving away any secrets to say we're doing okay at the moment. If we were doing way better than okay we'd be making an early announcement. If we were doing worse than okay we'd be making an early announcement. So we're doing well you know this is good. But where's the ceiling? It's really hard to say but we certainly should be a lot bigger than we are and we're going to be.

39:22 Chris, any more? And then I'll go back to the Again, we've touched on some of this. There's a is a question of one's answering but not answering at the same time because he doesn't want us to disclose too much of our competitors. But it's about what we're doing to raise it, maintain and grow our competitive moat and our distinctive IP. Well, I think I sort of answered that before by saying what we're investing in our innovation lab led by JK on making sure that our IP stays as sharp as possible and actually that we develop and grow it and apply it to other areas. Because the truth of the matter is, and I've known this throughout my career in marketing and media, is that human beings are emotional creatures.

40:09 And we constantly try and make them rational creatures and they're not. And So when you're measuring people's rational response to things, it's mostly a waste of time because actually people will tell you what they think you want to hear or they're trying to be really helpful. When they're trying to be really helpful what they do is bring you back to what they already know, to the average. And in the world of marketing comms the average is a waste of money. You've got to be better than average. So the way you become better than average is finding how you touch people emotionally so that they behave in the ways you want them to behave. And that's what we measure and do and help companies provide. And I just think you know that is where the growth potential lies, that's where our future lies, that's where product development will that's how we build and develop our IP. We've a magic source, but like every recipe, have to constantly update it, keep up with the market trends, keep up with some of the fashions.

41:08 But I can't see us ever moving away from where what we're about is understanding the emotional response to communications and ideas and being able to help clients predict the effectiveness of those communications and ideas that they're going to pursue. That's what we do. That's what we do. Any more questions, Geoff? On that particular note, do you envisage being able to, should we say more than you currently do, tweak that emotional response and so sort of almost have the levers to help people within that sector. Because if you do that That's kind of what John's doing and working on. I'll ask your flight mate. He's the evil scientist that is going to tweak your emotions.

41:57 That's exactly one of the topics we're looking at is how can you use in a because AI is a let's not get distracted too much by AI. The only sensible thing I've ever read about AI is if you make a bet on it you're going to lose all your money because everything will change every day. So we're not making a bet on it. What we're doing is looking at ways it can tweak and enhance tweak to use your word and enhance how you generate those emotional responses and how you measure them and how you even improve the predictability of what those communications are about. That's what we're working on. Maynard, any more? Just on the M and A point, dare I say I think you may be more of a target for M and A than you might.

42:43 Certainly when our share price was as low as it was there were one or two people who thought we might be interesting. We're a little bit more expensive now. There's an interesting you mentioned about assessing all the competition during your strategy day tomorrow. I don't expect you to read off all the competitors you have, but it would be useful for shareholders to know some sort of summary as to what you found during this competitive analysis. Is that fair enough to sum it up? If you're using a couple of sort of headlines without being company specific, if that's I mean just to reassure shareholders that you are unique in the marketplace and you're doing a deep dive in all competitors, it would be useful to know actually you've done a deep dive in an RNS, you've evaluated the sector, nobody's doing what you're doing. I mean, I think you're right.

43:33 The headline is that we are the unique people using emotion to measure the predictiveness of outcomes of, as you say, content ideas. Like, that that is that is quite clear out there from looking across. It's always worth me saying that although we're doing all this with the boards of particular data, Mary, like, the the sales team and our product teams have the daily sort of conversations in terms of what's happening on the market, what are the defense cards, what are the opportunity sort of battle cards you might have to be able to have a conversation with the customer, for example. You see two real spectrums in there, so you've got traditional market research players and then you've got sort of like the rise of the platforms and people who sort of are hybrids across the two. I think what we have is a great offer is the ability to operate with the platform underneath so we can operate at speed, at great value and create that great predictive outcomes on a consistent basis, but it's also underpinned by the full leadership that you tend to have maybe in the more of the market research space. So I think we've got a great offering to be able to defend across both of those parts.

44:31 Any more? Just going back to that question about how big the company could be in five years, that's the LTIP? That's LTIP. That's your board decision. You'll see when we bring the LTIP to you, but it will be based, Maynard, on proper analysis, not a finger in the air. Not to distract your growth prospects, but you have not mentioned the Far East. I know the Far East historically has been a very poor pair for marketing in that side. But do you envisage that being maybe a future? Yeah, mean we have operations. So we have operations that run out of our Singapore office and also through Australia, which cover that area. We do we've actually been seeing sort of more of a positive uptick over recent times in that space.

45:23 We are I think in particular if you look out to Australia because it's very aligned to the thought leadership that underpins the same things we see in The UK or in The US. But we've actively said that in terms of growing the business, the two growth centers are going to be The US and The UK and as we win global businesses in that, you do need to be able operate in at scale. So from, as you say, from Asia, from South America, etcetera. So we are able to offer coverage in over 80 markets with offices in 13 countries to cover that. We have a new leader in Australia who's We have Yeah, we've promoted internally a new sort of commercial leader who's running our APAC team, doing an absolute stellar job. She's been with the business for a few years, did a great job and is leading the team to a really strong performance this year. So we're not ignoring it. May not? I'm going back to the LTIP now.

46:12 Do you need an LTIP? Because you've done really well in the last year with the short term cash bonuses. What's the majority of the stay? In principle I think you do and I'll tell you why. As I said a lot of it's to do with the nature of the senior employees in the company who are quite entrepreneurial and very ambitious. Some of them could in different circumstances sort of go off and then do their own thing, their own businesses. And not many of them are cash rich and can therefore become shareholders. So what you have to do is to I think what the LTIP is, is in a sense for those people it's a proxy for being a shareholder because that's how people think of it. Whether that's exactly correct or not is not the point. How people think of it short term is like bonus.

47:06 The truth is it's not a bonus, it's a sales incentive reward. LTIP long term is like I'm sort of benefiting alongside shareholders. That's how people think of it. Because you know not many people are in the position where they've got enough free cash nowadays to become shareholders and or we don't have sort of massive option pools and so on. That's why we need not to. The performance of the company last year was really good and the structure of the bonuses, short term bonuses changed. The short term Well the short term helped drive that. I mean I don't think it was just the short term incentive scheme, I think it was a fantastic management team and an executive alongside them with that short term incentive scheme, I think, really did drive the performance last year.

47:59 But we're very open in our communications with the executive as a board. And you know they know that we're looking at a new LTIP and it's really important. It's really important to them. All of them have asked the question. Mean quite a few of them might not really understand what an LTIP really is but they have this notion of yeah, this is great. I'm enjoying the work. I'm getting well remunerated if I perform really well. But you know, if we grow the company three, four, five times, you know, where's my longer term reward for being a big part of that? And the answer is the LTIP. Yeah. I'd briefly add two things to that. That talks about motivation and incentivization, but there's also retention. And a long term scheme has, much more capability to retain people for the long term rather than saying, we had a great year this year. I can't say it's having a great year next year, so I'm out of here. Yeah. And the other one is the balance between short term and long term decision making.

48:58 We want that to be aligned with shareholders' kind of long term vision for the business, not focus very much on a short to solely on a short term, you know, how how much can I get in bonus in the next twelve months, maybe to the detriment of the long term of the business? So And long term retention, I'd say, is very important to corporate stability as well in terms of planning and having that forward stability. Any more, sorry? We've got one more. There is one more slightly speculative question, which we may or may not have viewed. If the government, the UK government, remove relief for aim shares for inheritance tax, would you consider listing elsewhere? Presumably outside The UK and not another.

49:47 I I think that, you know, as a board, we have to always keep that option on the table. FAME has served us well right now, but, obviously, we have aspirations to to grow, and then we probably need to evaluate that whether or not even the rules have changed. Certainly it's something we've talked about rather than studied in-depth, we'd always keep that on the table. Any more there before we go back to the room for the last questions? Maynard? Can I ask a question to Jill? You can ask him anything you like. What do you think of the company's progress in the past? Morning, Maynard. I think it's great. I mean, really, Can you put a microphone on, John? Yes. Thank you. That's it. Rather than boom operatically.

50:35 Exactly. I think the progress is very delightfully visible. You know, James and Chris and the management team, the exec, I mean, they're they're rolling. They are firing. And although I think I was positioned as the visionary, I mean James has real vision as well along with the exec. The board have been terrific. Not supportive but also holding us to account So you'll be glad to hear there is the right balance tension with that. And frankly I'm in my happy place inventing.

51:21 I would also though add, credit to John who held the fort while we changed things in North America. A lot of people ask what John was doing in North America. He basically stopping potential collapse and did a fantastic job of just holding the fort while we made and found the changes that we needed to make in North America. Once we got the new team in place, that enabled John to come back home and to do what we always wanted him to do medium long term which is to be our inventor. I think he's quite happy actually if you look at it. I'm very happy. Can I just follow-up because you appear on the Capital Markets Day webinars? Why is that? Because James and Chris, I mean, just do it brilliantly. I mean, they've taken it on. I think that's one example of how, you know, we have split up the roles rather than all doing everything and, leave me being a mad inventor, more of which to come or much of which hopefully to come.

52:31 Any more gents? I was going ask you about your attendance of just nine board meetings. Are you part time now? Because it's 12 board meetings. Annual report says you attended nine. The pay has been reduced by 30%. Are you part time? Well, and credit to him for no, because it wasn't for going part time. John took a pay cut because he was stepping down as chief Executive and doing a different job. And I thought that was beyond noble of him. And the only time anybody's missed a board meeting is because if they've been in North America and the timings have all been wrong. I'd much rather John was to in fact, was one you missed when you were with Rolex. I'd much rather he was with a So the three board meetings you were with? It was when he was in North America. When he was in North America. I don't believe anybody's missed a board meeting when they've actually been physically able to attend. When I'm I'm, enthused and excited, I don't think part time would be an accurate description.

53:37 Your thought is obsessive. And your thought is a different impression. That's a slightly mistaken impression that needs very much full time. Don't worry. Any more chaps? Yeah, I've got a few more, sorry. Go on. No, you're right. Okay, so in the annual report there's a new section in the risk section called conflicts of interest. It says below board level the company reviews senior employees outside interests on a case by case basis, ensure no detriment to the company arises. So it sounds like maybe Orlando plus a few others, have they got side hustles now where you're investigating? So that's referring to two people in particular. So Orlando is running educational courses alongside, which is one of our best new business tools because basically he's indoctrinating a whole new generation of young marketing people into his thinking and therefore the ways of SYSTEM1.

54:38 And part of the deal we have with Orlando is that we have numerous places on every course that we can introduce specific clients to so it's actually a win win situation. Something that he wanted to do as we've given him time off before to write books that have helped our business So it's like sharing his time doing this educational package which is helping us build our business. And then with John, who does the uncensored CMO podcast, that is again our single best new business tool because, again, every single it's the he's the most I believe it's the most followed marketing podcast in the world now, somebody told me. I don't know if that's true, but that's what I was told. He certainly has hundreds and thousands of listeners and followers. And if you ever listen to it, and you should because it's jolly good, he doesn't ever fail to get a SYSTEM1 plug into it. And the other thing we do with that is key clients and so on, we get them as guests on the show which flatters them because they think they're CMO of global renown and we use it as a new business tool.

55:43 It's an absolute win win situation and James manages those very closely and those are the only two as far as I'm aware. Yeah. But the floor around those four days John's still full time. Yeah. John's still full time. As we say, it's a it's a very clearly sort of from our perspective directly with this tool, but it operates in the brilliant space of actually being seen as to not be a system one tool because it's the untended CMO branding and concept it has with it. It allows us to reach out to markets where you couldn't. I mean, for example, at Cannes, the the marketing festival earlier this year, John was on stage as the untended CMO. We were the only market research or market research platform business who was on the main stage. No one else was. Orlando was also on stage because they because they are able to have those presences. So there is a massive value they bring to the business. I think that the risk of managing the conflict of interest is always ensuring that we are both aligned, and again, that's part of my job. The only research company that has ever been on the main stage. But he gets on stage purely because of his podcast Exactly.

56:43 Whereas Yeah. They wouldn't they wouldn't let us on the stage, but he can then He can go slightly Oh, yes. Well well, many of our competitors might might pay to sponsor or to host a speech. We don't we don't pay anything. We we've been invited to take twice up onto the main stage and look forward to hopefully being on later in the new year. Next. There was an excellent presentation you did on the cost of dough, which was it's very worth watching if you haven't seen it. I'm still gonna catch up on all these podcasts. Final questions. On on the website now, there's a presentation that the the executives gave in Boston to the Canaccord Growth conference there. So what was your reaction to American investors to this small UK business? I think it was genuinely positive, could sort of carry in the room back there, but I think one of the quotes that we were told is we were one of the most booked up people over there, which is good to see because we had a good story to tell people like looking at businesses that are on a good journey and want to understand where they are on that journey and whether it's a good time to invest.

57:50 I think the other bit of feedback we had was that being invited over from The UK meant that you must have a story to tell because you've been selected to go over when the majority of presentations would be from a US team. It was great. We met some great people, had some great conversations, some good learning from ourselves in terms of the market because as we talked about just beforehand, The US market is different from The UK market, be that from our customers, be it from our investor base as well. So it's good to learn and understand, but it was a very good time well spent. Okay. American investors may value the business highly. Can be quite excited to American investors. I think if we carry on making the progress we're currently making in The US, we could get quite a lot of interest. And I agree with you, intrinsically they'd probably value it higher.

58:42 I'm not putting words in your mouth. Compound growth rates are still very high. Last year was sort of up 44% comes to mind, but that could be just the additional number of customers. And this year, even if it's half that, that's still a good return and a compound rate at that level is also a good return. Is that the juice and the I won't use the word spin, but the excitement that you are sort of enticing them with? So not only is it a good niche that you are pushing through, but it's one with solid prospects, you have automated the growth, you have targeted people, you're always on a systematic and sustainable growth model. Okay. CMO community is not fast.

59:31 They talk to each other quite a lot. So it's a flywheel again. If you can start making progress, people start recommending. We don't quite do member get member yet, but no doubt that's something we might talk about tomorrow. But what happens is they start talking to each other. We have been invited to marketing forums, whatever the technical word, where you start to spread the word. So yes obviously if you are growing and people are starting to hear about you that helps, there's no question about that. But the thing that if we come right back to two years ago when we talked about strategy review, in the end this is a very human decision to appoint a company like SYSTEM1.

1:00:20 It's not done online, it is not done remotely. You have to build your relationships and one of the key reasons we took the time to find the right management team in The US because the previous management team were brilliant people in many ways, brilliant strategists, brilliant marketing people. What they weren't is people who understood how you build relationships and convert that into sales. And that's what we needed. It's still a very personal decision by a CMO. CMOs have told me many, many, many times over the years that they spend perhaps 10% at most of their time on advertising and communications. But it's the 10% they enjoy more than anything else by a hundredfold and therefore they spend a disproportionate time on it and they spend much more personal capital on it. It's not something they delegate down to the fifth layer down in the chain.

1:01:17 And that's why you have to build the relationships with the CMOs. It's why uncensored CMO is an important tool for us. It's why fame matters because like all human beings we're celebrity obsessed and you know we're moved by fame. And that's the strategy we're pursuing and that's what's working. So yeah it does matter you get that kind of momentum building it makes a big difference. Okay. Maynard, any more? Gentlemen, thank you. Thank you everybody. That brings us to the end of our Q and A session unless there's any other questions from the floor. Or Chris, have you got any more? No? It concludes today's meeting. A special thanks to you two for taking the effort to join us today. It's always good to have questions and get a bit of discourse going. Thank you very much. Take care. That is the end of the meeting. Thank you. Thank you to the board for updating attendees today. On behalf of the board of SYSTEM1 GROUP PLC we'd like to thank you for attending today's annual general meeting and good morning to you all.