Final Results (correction)

About this update from System1 Group Plc

[{"type":"text","content":"\n \n The following announcement replaces the announcement released under RNS number 8843U on 3 July 2024 at 7:00am, which includes a correction to note 6 Segmental Analysis and to the second paragraph of the Financial Review section \"Revenue performance\", as follows: \n   \n   \n \n \n \n \n \n \n \n \n \n \n \n \n Note 6 Segmental Analysis \n                                                                                                                         \n Previous \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n Revenue \n \n \n Revenue \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n By product group \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Communications (Ad Testing) \n \n \n \n \n \n   \n \n \n   \n \n \n     22,775 \n \n \n     15,879 \n \n \n \n \n Brand (Brand Tracking) \n \n \n \n \n \n   \n \n \n   \n \n \n       4,066 \n \n \n       3,669 \n \n \n \n \n Innovation \n \n \n \n \n \n   \n \n \n   \n \n \n       3,178 \n \n \n       3,862 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n     30,019 \n \n \n     23,410 \n \n \n \n \n   \n Corrected \n \n \n \n \n By product group \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Communications (Ad Testing) \n \n \n \n \n \n   \n \n \n   \n \n \n     22,775 \n \n \n     15,879 \n \n \n \n \n Brand (Brand Tracking) \n \n \n \n \n \n   \n \n \n   \n \n \n       3,178 \n \n \n       3,669 \n \n \n \n \n Innovation \n \n \n \n \n \n   \n \n \n   \n \n \n       4,066 \n \n \n       3,862 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n     30,019 \n \n \n     23,410 \n \n \n \n \n   \n Financial Review \n   \n Previous \n The Communications (Comms) product group, including Test Your Ad, grew by £6.9m (43%) year-on-year, notably in the UK, Europe and the US. Communications revenue, including ad-testing, accounted for 76% of all revenue in FY23 (FY22: 68%) Brand tracking revenues increased by £0.4m (11%), and Innovation revenues were down by, £0.7m (18%). \n   \n Corrected \n The Communications (Comms) product group, including Test Your Ad, grew by £6.9m (43%) year-on-year, notably in the UK, Europe and the US. Communications revenue, including ad-testing, accounted for 76% of all revenue in FY23 (FY22: 68%) Innovation revenues increased by £0.2m (5%), and Brand Tracking revenues were down by £0.5m (13%). \n \n \n   \n   \n System1 Group PLC (AIM: SYS1) (\"System1\" or \"the Group\" or \"the Company\") \n   \n Financial results to 31 March 2024 \n   \n   \n System1 Group the marketing decision-making platform www.system1group.com announces its results for the twelve months ended 31 March 2024 (\"FY24\"). \n   \n   \n Highlights \n \n \n \n \n \n \n \n 2024 \n(\"FY24\") \n \n \n 2023 \n(\"FY23\") \n \n \n \nChange** \n \n \n \n \n Results for the year \n \n \n £m \n \n \n £m \n *Restated \n \n \n % \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Platform Revenue (\"Predict & Improve\" ***) \n \n \n 24.8 \n \n \n 17.4 \n \n \n 43% \n \n \n \n \n Other Revenue (Bespoke consultancy) \n \n \n 5.2 \n \n \n 6.0 \n \n \n -13% \n \n \n \n \n Total Revenue \n \n \n            30.0 \n \n \n            23.4 \n \n \n  28% \n \n \n \n \n Gross profit \n \n \n            26.1 \n \n \n            19.7 \n \n \n 32% \n \n \n \n \n Operating costs \n \n \n          (23.4) \n \n \n          (18.9) \n \n \n 24% \n \n \n \n \n Other operating income \n \n \n 0.4 \n \n \n - \n \n \n nm \n \n \n \n \n Finance expense \n \n \n - \n \n \n (0.1) \n \n \n -108% \n \n \n \n \n Profit before tax \n \n \n             3.1 \n \n \n             0.7 \n \n \n 333% \n \n \n \n \n Tax charge \n \n \n (1.1) \n \n \n (0.3) \n \n \n 241% \n \n \n \n \n Profit for the financial year \n \n \n             2.0 \n \n \n             0.4 \n \n \n 403% \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n All figures in the Highlights 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. \n *   FY23 has been restated to bring it in line with IFRS 16 rules relating to sublease income on our old New York office. The restatement does not affect Profit before Taxation, but reduces FY23 Adjusted EBITDA by £0.2m. See note 3 for more information \n ** Year-on-year percentage change figures are based on unrounded numbers. \n *** Data and data-led consultancy \n \n \n \n \n Key performance indicators \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n Restated* \n \n \n \n \n \n \n \n Platform revenue growth \n \n \n 43% \n \n \n 40% \n \n \n 3% \n \n \n \n \n Number of clients \n \n \n 428 \n \n \n 297 \n \n \n 44% \n \n \n \n \n Gross profit % Revenue \n \n \n 87% \n \n \n 84% \n \n \n 3% \n \n \n \n \n Adjusted EBITDA £m 1 \n \n \n 4.4 \n \n \n 1.6* \n \n \n 175% \n \n \n \n \n Adjusted EBITDA % Revenue \n \n \n 15% \n \n \n 7% \n \n \n 8% \n \n \n \n \n Rule of 40 2 \n \n \n 57% \n \n \n 47% \n \n \n 10% \n \n \n \n \n Free Cash Flow (FCF) £m 3 \n \n \n 4.0 \n \n \n (3.1) \n \n \n 7.1 \n \n \n \n \n FCF % Adjusted EBITDA \n \n \n 92% \n \n \n (196%) \n \n \n 288% \n \n \n \n \n Net Cash £m \n \n \n 9.6 \n \n \n 5.7 \n \n \n 3.9 \n \n \n \n \n Diluted earnings per share** \n \n \n 16.0p \n \n \n 3.2p \n \n \n 404% \n \n \n \n \n Dividend per share \n \n \n 5.0p \n \n \n - \n \n \n nm \n \n \n \n \n 1.         profit before taxation + share-based payments + interest, depreciation and amortisation \n \n \n   \n \n \n \n \n 2.         Platform Revenue growth %+ Adjusted Group EBITDA % Group Revenue \n \n \n   \n \n \n \n \n 3.         Cash flow after interest and before debt raising/reduction, buybacks/dividends \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n   \n ·      Momentum maintained - second consecutive year of 40%+ Platform revenue growth \n ·      44% increase in number of clients, with 260 wins in the year \n ·      Net Revenue Retention Rate of 100% on platform revenue \n ·      Significant double-digit revenue growth in US, UK and Europe \n ·      Gross profit margin improves by 2.8 points to 87% \n ·      Adjusted EBITDA % revenue margin rises by 8 points to 15% \n ·      £4m free cash flow; £9.6m year-end net cash \n ·      Profit before Taxation >4x higher, Profit after Taxation >5x higher than in FY23 \n ·      Diluted EPS 16.0p per share (FY23: 3.2p) \n ·      Proposed Dividend of 5p per share, equating to £0.6m. Record date 27 September 2024, payment date 18 October 2024. \n   \n   \n Commenting on the results, CEO James Gregory said: \n   \n \"Our success last year was underpinned by 260 new client wins and our scalable growth model. In the coming year we will step up investment in attracting, winning and retaining customers in order to continue our growth trajectory. The new financial year has started strongly , particularly in the US, and w e anticipate an increase of 50% in Q1 total revenue with platform revenue up 70% versus Q1 FY24. As a result we continue to expect strong double-digit revenue growth for the financial year as a whole. \"  \n   \n   \n   \n Further information on the Company can be found at www.system1group.com . \n   \n 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. \n   \n For further information, please contact: \n   \n System1 Group PLC                                                                                         Tel: +44 (0)20 7043 1000 \n James Gregory, CEO \n Chris Willford, Chief Financial Officer \n   \n Canaccord Genuity Limited                                                                              Tel: +44 (0)20 7523 8000 \n Simon Bridges / Andrew Potts/ Harry Rees \n \n   \n   \n Group Overview - System1 on a page \n   \n Who we are and why we exist \n System1 is a marketing decision-making platform business. Our target customers are the world's largest advertisers. These businesses understand that creativity is the most powerful tool for growth within their control. System1 helps them make confident creative decisions that lead to transformational business results. \n   \n What we do \n System1 predicts and improves marketing effectiveness. Our advertising and idea tests measure emotion to give our customers the most accurate predictions of the business impact of creativity.   We 'predict' (provide research results) and work with our customers to 'improve' (provide insight and consultancy on those results) advertising effectiveness, innovation effectiveness and brand effectiveness. Our unique selling point is predictiveness, translating emotion into business results. \n   \n Our products \n Our Platform offers automated fast-turnaround Data and Data-led Consultancy products for ad testing, innovation testing and brand effectiveness tracking. We can supplement the platform proposition with bespoke consultancy where this is required by our customers. Our largest customers buy both Data and Consultancy. \n   \n Where we operate \n   We run tests in 81 markets globally \n   \n Office locations include New York, Miami, Sao Paulo, Los Angeles, London, Paris, Hamburg, Rotterdam, Singapore, and Sydney. \n   \n How we operate \n   \n We are guided by our growth model \"flywheel\". We meet our customers' needs with leading propositions delivered efficiently via the platform. We build awareness of our propositions through fame-building partnerships which bring customer interest that we seek to convert and scale up. Growth in our scalable model produces improved margins which we then seek to reinvest in our people, our shareholders, and back into the business growth flywheel. The growth model is underpinned by a robust support structure and performance culture. \n \n \n   \n Chairman's Statement \n   \n My first full year as your chairman has proved both satisfying for me and rewarding for all shareholders. Led expertly by CEO James Gregory, the business grew revenue and profit before tax by 28% and 333% respectively and generated £4m free cashflow. Earnings for the year were up 403% to £2.0m, 16.0 pence per share. We began the financial year with a market capitalisation of £20 million and ended it valued at over £50 million. In light of this much-improved performance and the Board's confidence in the future, we are recommending a dividend for the year of 5.0 pence per share.     \n   \n The CEO's Statement comprehensively reviews progress towards our strategic priorities. Highlights in the past year include \n   \n ·      260 new clients acquired \n ·      Worked with 5 of the top 10 advertisers in the US and 7 out of 10 in the UK \n ·      New partnerships formed with TikTok, an American commercial broadcast television and radio network, and Effie to name but three \n ·      New customer-focused products brought to market, notably Test Your Ad Pro+, have proved our scalable customisation model \n   \n During the year we reintroduced a short-term incentive plan (STIP) for members of the executive committee and our three executive directors. We did this because in spite of the impressive turnaround in financial performance, the Long-Term Incentive Plan will likely not meet its lowest threshold even if revenue growth in the new financial year matches an exceptional FY24. The retention and reward of our key people is a mission critical priority. Going forward we favour a blend of short- and longer-term incentives for the most senior executives and will provide further detail on this in 2025. \n   \n As a board we listened carefully to the feedback from all stakeholders in the previous year and as a result  have broadened our investor relations activity, in particular improving smaller shareholders' access to management via virtual meetings. \n   \n Finally on behalf of the board I would like to recognise the immense effort that our 150 colleagues in the business make every day to meet and exceed the needs of our customers. Their efforts, guided by our new strategy, are beginning to bear fruit. \n   \n Rupert Howell \n Chairman \n \n \n   \n   \n CEO's Statement \n   \n MAINTAINING MOMENTUM \n FY24 was our first full year of execution post the 2022 Strategic Review and has exceeded expectations, although I believe we are just scratching at the surface of the opportunity facing us. System1 delivered £30m of Revenue, up 28% year on year, growing quarter on prior quarter throughout the year. This was underpinned by 43% growth in Platform Revenue (our strategic platform and products) and Profit before Taxation up by 333% on the previous year. \n   \n By putting the client at the heart of all we do, we've strongly grown our brand and client base, seeing 260 new client wins and almost doubling our client base. We are having particular success in the US where we work with the 5 of the top 10 US Advertisers (as ranked by Visual Capitalist), building on our already strong UK presence where we work with 7 of the top 10 UK Advertisers (as ranked by Statista). New client platform revenue has increased by 121% year on year to £7.5m, and platform revenue reached 82% of total revenue, providing a solid base for future growth. \n   \n We have increased our fame with global partnerships with TikTok, an American commercial broadcast television and radio network , Effie, Pinterest, Radiocentre, GroupM Nexus, JC Decaux, Roku, Aardman, OMD and Fuse alongside existing partnerships with ITV and LinkedIn. The quality of these partnerships speaks to the strength of our platform and products. We have expanded our product base, providing the ability to test across the whole marketing campaign (TV, Digital, Audio, Out of Home). Our FY25 revamped Innovation product launch to meet our customers' needs provides a focussed growth opportunity in this channel. \n   \n We have established a true performance culture, one where all members of the business are motivated to deliver top class outcomes for our clients, recently being awarded the accolade of \"The Sunday Times Best Place to Work\" in the UK. In February 2024, we strengthened our Executive Team with the addition of Mike Perlman, our new Chief Commercial Officer, running the global sales teams and based in the US. \n   \n In the coming year we will step up investment in attracting, winning and retaining customers to continue our growth trajectory. We believe we have significant headroom to grow the base of the business we have today… as well as the massive opportunity to win in the US, where we have the chance to create an Innovation offering that is as great as our Advertising offering and to continue to win with the world's largest advertisers. \n   \n I'm so proud of our staff, who have delivered a great year and look forward to seeing continued growth in the coming year. Thank you to the Board for their wise counsel and strategic guidance, to the Executive team for being extraordinary leaders and to John Kearon for his counsel and support during my first year as CEO. \n   \n Progress towards our goals & The Flywheel \n We have made strong progress and have grown the business by focussing obsessively on delivering the plan encapsulated in our flywheel. The flywheel concept builds on the four strategic goals we set out 6 years ago, taking on board the learnings from the 2022 Strategic Review. \n   \n 1.   We help the world's largest advertisers make confident creative decisions that lead to transformational business results \n Putting the customer at the heart of all we do has helped transform our business. We have a clear target market - the world's largest advertisers. We know these clients have the capacity and capability to invest in pre-testing of advertising and innovation as well invest in brand tracking. \n We know that our clients will be judged on the success of their advertising, their innovation and their brand growth. Data from over 5,000 IPA case studies shows that the biggest influence within any of these that a brand can control is creative: this has a x12 impact on the profit multiplier. But we also know from Clayton Christensen of Harvard Business School that 51% of advertising has no impact on market share growth and that 95% of new product launches fail, as brands do not harness the power of creativity. The accurate predictiveness of our tests on our platform and the expert guidance provided by our people give our clients the confidence that their products and services will be a success when launched in the market. \n And most importantly, our clients know that once launched, these adverts and innovations will drive real business results for them: growth of their brand, revenue and profit. \n   \n   \n 2.   We've created a platform and proposition … to help the world's largest advertisers make confident creative decisions \n We achieve this by measuring what matters most: emotion , that gets to your \"System 1\" response. Our IP and thought leadership have built on the work by Daniel Kahneman in \"Thinking Fast and Slow\" that sets out how System 1 thinking is fast, instinctive, emotional and drives behaviours. Our clients are clear that our ability to capture, measure and interpret emotional responses to creative content is the number one reason they buy from us, and many say that we do what no-one else in the market can do. Our platform, products and guidance are built on measuring emotion and translating that data into actionable insights that will deliver real business results. \n   \n We have focussed on our platform and product development, with expansion of the Test Your Ad product suite across FY24 and a relaunch of the Test Your Innovation product suite in early FY25. The relaunch of Test Your Innovation seeks to align the proposition better with the innovation process in the world's biggest companies. The new TYA and TYI features build on our fully automated platform, where we delight our customers and create competitive advantage with zero manual intervention and therefore, high levels of scalability. \n   \n We have been able to accelerate progress in this area with our new executive team structure working smoothly to translate our unique IP into predictions and improvements for our customers: Robyn Di Cesare as Chief Product Officer partnering with Orlando Wood, our Chief Innovation Officer to set out the vision and Mark Beard, our Chief Information Officer speedily delivering the IT development. \n   \n Test Your Ad has expanded to cover all media types from early-stage scripts to finished films, to ensure we have the fastest, most predictive, actionable products that meet our customers' needs. Alongside the TV testing, we now offer TYA for Digital, Audio, Out of Home and Print testing, allowing our customers to test full campaigns across media types. \n   \n   \n Test Your Ad Pro+ has been a game-changer as we've built the ability to deliver customer and project specific customisation in a scalable manner, through the automated platform. Following the launch in July 2023 this brings in incremental revenue with a higher price point than the Test Your Ad Pro product and has quickly become one of the top selling products. \n   \n We also refreshed data-led consultancy, to incorporate our latest thought leadership, providing an updated framework on how advertising works and recommend improvements for our clients. This has been very well received, with clients regularly siting 'highly actionable' in their feedback. \n   \n   \n With our customer-centric focus, in April 2024 we have launched a new Test Your Innovation product suite to replace Test Your Idea. This repositions the previous version in a way that better suits our clients, ensuring our products neatly follow a standard product development cycle. This exciting development will help accelerate our growth in the Innovation space in the upcoming year. \n   \n   \n We also continued our investment in growing our world-leading Test Your Ad database to over 100,000 ads, where we test every ad in the US and UK on a daily basis, creating what we believe to be the world's largest database of validated ad-effectiveness data and providing our customers with unique insight into the performance of them and their competitors. \n   \n   \n Influential Marketing Professor Mark Ritson published an article in Marketing week, showcasing how SKY use System1 pre-testing capability early in the process to predict business results in the short and long term and enable quick decision making. In the article he describes System1 as having \"come to dominate the field of pre-testing in a remarkable short period of time\". Marketing Professor Peter Field followed this with evidence from the IPA database showing that those campaigns that pre-tested did better than those that didn't and credits System1 as one of the reasons for that difference. h ttps://www.marketingweek.com/ritson-pre-testing-no-brainer/ \n   \n 3.   We're famous for predictions and improvements … that help the world's largest advertisers make confident creative decisions \n We have step-changed the volume and quality of System1 fame creation in FY24. We have worked in partnership with global industry-leading companies, which we promote through a wide range of channels, focussed primarily on the US and UK and secondarily into our other key markets in Brazil, Germany, France, Asia and Australia.   The result of this fame building activity is an increase by over 40% of leads generated in the US and UK vs FY23.   \n   \n PR - We increasingly had our voice heard on important industry topics like the 'Long and Short of It' and 'Wear Out', and around big ad occasions like the Super Bowl, Christmas and major new ad campaigns. Regular features in leading publications like Marketing Week, The Drum, Campaign, Ad Age, Adweek and more led to a year on year 69% increase in global coverage. This resulted in System1's share of voice increasing 87.5% in the US and 51% in the UK.    \n   \n Events - System1 had a big pink presence at leading industry events, some of which attract 10k plus attendees. These include ANA's Masters of Marketing, Brand Innovator's Marketing Innovation Summits, Festival of Marketing and MAD//Fest.    \n   \n Partnerships - Partnerships help drive Fame, generate co-branded thought leadership to be shared with the industry, and enable introductions to partners' clients. New partnerships solidified in FY24 include Pinterest, resulting in research on digital ads; Radiocentre, resulting in the publication of the Listen Up! ; and Aardman. New partnerships with TikTok and Effie will be highlighted with research coming in FY25.     \n   \n \"Uncensored CMO\" Podcast - FY24 has a large focus in the US with an impressive roster of guests including Professor Scott Galloway, Liquid Death's Mike Cessario, former Netflix CMO Bozoma Saint-John and Michelob ULTRA's Ricardo Marques, as well as Amazon Chief Creative Officer Jo Shoesmith, Just Eat's Susan O'Brien and GUT's Anselmo Ramos. Uncensored CMO now has listeners in 150 markets and is the #1 marketing podcast in the UK and top 20 in the US.   \n   \n Ad of the Week - Celebrates the best and most effective creative content from around the world, which engages brands and agencies and further amplifies System1's Fame. In FY24 subscribers increased by 20%.   \n   \n Thought Leadership - System1 continued to expand its thought leadership around major advertising moments like the Super Bowl and Christmas, timely topics like sustainability ( The Greenprint and The Greenprint USA ) and sports sponsorship ( The Sport Dividend ), and evergreen areas of focus like advertising effectiveness (Timeless Importance of the Show, Ritson on Advertising), media best practices ( Listen Up! ), and category insights for charity, auto, financial services and other sectors.     \n   \n 4.   We make it easy for System1 to convert the world's largest advertisers at the right time \n FY24 was a record year for new client wins, beating the previous record set in FY23, based on our platform automation and increased fame building, amplified through global partnerships. Our go-to-market strategy has seen us win well in specific sectors, such as Grocery Retailers, Big Tech and Pharmaceuticals. \n   \n We won 260 new clients, delivering £8.3m of new revenues (of which £7.5m on platform), with 33% in the US and 41% in the UK. As always, we are not permitted to name many of our clients, and new wins in the period included: Pfizer, M&S, Tesco, easyJet, Toyota, Muller, B&Q, and Just Eat. \n   \n   \n   \n We saw 90% of new revenues coming from our strategic platform suite of predictions and improvements. The power of our predict and improve offer was shown through 67% of new revenues coming from customers buying both these offerings. We are also seeing the importance of retaining a small amount of bespoke consultancy to allow us to win with the world's largest advertisers. \n   \n 5.   We scale up and are embedded throughout the world's largest advertisers \n We saw excellent levels of revenue growth, with total revenues up 28% and platform revenues up by 43%. \n We have started to make good progress in maximising revenue opportunities within our existing client base but have opportunity to make further inroads in this space. We had a Net Revenue Retention Rate on total platform revenue of 100%. \n   \n Concentration in our top 10 and top 20 clients was consistent year on year. Our top 10 clients made up 30% of revenue and our top 20 clients 45% of revenue. All of our top 20 clients in FY24 bought platform products with 78% of spend from the top 20 clients being on data and data-led consultancy. No one client in FY24 was larger than 5% of total company revenue. \n   \n   \n   \n We continue to see the majority of revenue coming from the world's largest advertisers who follow our model of test and improve, buying data and data-led consultancy. In FY24 75% of total revenue came from the 40% of the clients by number that purchased both data and consultancy. Conversely, the 51% of clients by number that purchased only data represented just 16% of Group revenue. \n   \n   \n We are starting to focus on cross-selling our comms, innovation and brand tracking product lines. In FY24, 2% of our clients bought all 3 product lines, but this contributed to 13% of total revenue. 13% of our clients bought more than one product line, contributing to 45% of total revenues for the year. \n   \n We now work with 5 of the top 10 US advertisers and 7 of the top 10 UK advertisers. \n   \n 6.   We reinvest the results of higher volumes and margins from helping the world's largest advertisers make confident creative decisions \n We grew profit before tax by 333% in FY24 and gross profit margin growth was exceptional at +3 points to 87% and ahead of our 85% long-term benchmark. \n   \n While FY24 was a prudent year of investment, we plan to invest in FY25 across our people, our platform and proposition and also reward our shareholders. \n   \n People - In the second half of FY23 we changed the way that most people in the business are rewarded by placing greater emphasis on variable pay linked to growth in the Group's gross profit. FY24 was therefore the first full year of this approach which we believe is working well. Whereas only a few colleagues received a cost-of-living increase to their salary, variable pay across the Group rose by £2.8m year-on-year as a result of significantly higher sales volumes and improved profit margins. \n   \n Platform and proposition - In FY24, we maintained our investment in our platform and proposition. Cash spend on our IT development was £2.0m alongside nearly £1.0m on TYA premium, and continued support for our partnerships and marketing. \n   \n Shareholders - Aside from the significant share price gain during the financial year, we announced in April that the Group intends to resume dividend payments and today announced a 5p per share dividend for FY24 subject to shareholder approval at the forthcoming AGM.  \n   \n   \n 7.   We have a robust support structure and performance culture that allows us to help the world's largest advertisers make confident creative decisions \n FY24 has been a strong year in building out our performance culture and we have highly motivated teams with strong retention and employee engagement. We create an environment where all colleagues can do their jobs with ease to ensure they are focussed on adding value to our clients. We monitor staff satisfaction quarterly with focus teams owning actions on the feedback provided. By removing the blockers from our teams' day-to-day lives, we have seen staff happiness reach record levels in FY24, and this was further enhanced with System1 recognised as a \"Sunday Times Great Place To Work\" in the UK for the first time. \n   \n   \n Outlook: we haven't scratched the surface of where we could get to \n FY25 is a year where we are seeking to maintain the momentum gathered in FY24 and start to spin our flywheel even faster. The new financial year has started strongly, particularly in the US, and we anticipate an increase of 50% in Q1 total revenue with platform revenue up 70% versus Q1 FY24.  As a result we continue to expect strong double-digit revenue and profit growth for the financial year as a whole .  Bespoke consultancy will likely fall as we reach the end of some long-term contracts that will not renew, however this should not significantly affect overall group revenue or profit growth. \n   \n We have three big opportunities that fill me with belief for the year ahead. \n   \n Firstly, we are making headway into the US market. Our go-to-market investment in FY24 has grown our fame, and we plan to increase this investment for the year ahead. We have strengthened the commercial teams across sales and marketing, with Michael Perlman joining as global Chief Commercial Officer, and Alex Banks as SVP Commercial Americas, leading the US and LatAm sales teams - both executives are based in the US and have significant commercial leadership experience in our industry sector. \n   \n Secondly, the relaunch of our Test Your Innovation product suite will allow us to create a revenue stream for Innovation that could eventually become bigger than our Comms revenue stream. We say this because according to ESOMAR research, the target addressable market for innovation is 4.8X that of communications at $12.02bn. \n   \n Thirdly, we've not yet maximised the revenue opportunities from the world's largest advertisers we already work with. Alongside the new business engine we have firing, we have a renewed focus on ensuring that we expand within those clients we have already won, to ensure we are in each brand and region for each of our 3 product lines (Comms, Innovation and Brand). \n   \n We recognise that we will need to invest in FY25 to deliver our growth ambitions and we have created, and are already filling or recruiting 20 new roles in FY25. As the business grew faster than expected in FY24, some of these roles are in operational and support positions to ensure we continue to deliver high quality outcomes for our clients. The other roles are investments in future growth across our commercial and marketing teams, with significant focus in the US. \n   \n Finally, thank you to all of our staff who make our flywheel spin, to our customers for making world class marketing with confidence in their creative and to our shareholders for their continued support. \n   \n James Gregory \nChief Executive Officer \n 3 July 2024 \n   \n   \n \n \n   \n   \n Financial Review \n   \n Overview \n \n \n \n \n \n \n \n 2024 \n(\"FY24\") \n \n \n 2023 ^ \n(\"FY23\") \n \n \n \nChange \n \n \n Change* \n \n \n   \n \n \n \n \n Results for the year \n \n \n £m \n \n \n £m \n Restated \n \n \n £m \n \n \n % \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Platform Revenue (\"Predict & Improve\") ** \n \n \n 24.8 \n \n \n 17.4 \n \n \n 7.4 \n \n \n 43% \n \n \n   \n \n \n \n \n Other Revenue (Bespoke consultancy) \n \n \n 5.2 \n \n \n 6.0 \n \n \n (0.8) \n \n \n -13% \n \n \n   \n \n \n \n \n Total Revenue \n \n \n            30.0 \n \n \n            23.4 \n \n \n            6.6 \n \n \n  28% \n \n \n   \n \n \n \n \n Direct Costs \n \n \n (3.9) \n \n \n (3.7) \n \n \n (0.2) \n \n \n 6% \n \n \n   \n \n \n \n \n Gross profit \n \n \n            26.1 \n \n \n            19.7 \n \n \n            6.4 \n \n \n 32% \n \n \n   \n \n \n \n \n Operating costs \n \n \n          (23.4) \n \n \n          (18.9) \n \n \n (4.5) \n \n \n 24% \n \n \n   \n \n \n \n \n Other operating income \n \n \n 0.4 \n \n \n - \n \n \n 0.4 \n \n \n nm \n \n \n   \n \n \n \n \n Finance expense \n \n \n - \n \n \n (0.1) \n \n \n 0.1 \n \n \n         -108% \n \n \n   \n \n \n \n \n Profit before tax \n \n \n             3.1 \n \n \n             0.7 \n \n \n             2.4 \n \n \n 333% \n \n \n   \n \n \n \n \n Tax charge \n \n \n (1.1) \n \n \n (0.3) \n \n \n (0.8) \n \n \n 241% \n \n \n   \n \n \n \n \n Profit for the financial year \n \n \n             2.0 \n \n \n             0.4 \n \n \n             1.6 \n \n \n 403% \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n 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. \n ^ FY23 has been restated to bring it in line with IFRS 16 rules relating to sublease income on our old New York office. The restatement does not affect Profit before Taxation, but reduces FY23 Adjusted EBITDA by £0.2m. See note 3 for more information \n * Year-on-year percentage change figures are based on unrounded numbers. \n ** Data and data-led consultancy \n   \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n Key performance indicators \n \n \n   \n \n \n \n \n   \n \n \n FY24 \n \n \n FY23 ^ \n \n \n Change** \n \n \n   \n \n \n \n \n   \n \n \n £m \n \n \n £m \n Restated \n \n \n % \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Platform revenue growth \n \n \n 43% \n \n \n 40% \n \n \n 3% \n \n \n points \n \n \n \n \n Number of clients \n \n \n 428 \n \n \n 297 \n \n \n 44% \n \n \n \n \n \n \n \n Gross profit % Revenue \n \n \n 87% \n \n \n 84% \n \n \n 3% \n \n \n points \n \n \n \n \n Adjusted EBITDA £m 1 \n \n \n 4.4 \n \n \n 1.6 \n \n \n 175% \n \n \n \n \n \n \n \n Adjusted EBITDA % Revenue \n \n \n 15% \n \n \n 7% \n \n \n 8% \n \n \n \n \n \n \n \n Rule of 40 2 \n \n \n 57% \n \n \n 47% \n \n \n 10% \n \n \n points \n \n \n \n \n Free Cash Flow (FCF) £m 3 \n \n \n 4.0 \n \n \n (3.1) \n \n \n 7.1 \n \n \n \n \n \n \n \n FCF % Adjusted EBITDA \n \n \n 92% \n \n \n (196%) \n \n \n 288% \n \n \n points \n \n \n \n \n Net Cash (£m) \n \n \n 9.6 \n \n \n 5.7 \n \n \n 3.9 \n \n \n \n \n \n \n \n Diluted earnings per share** \n \n \n 16.0p \n \n \n 3.2p \n \n \n 404% \n \n \n \n \n \n \n \n Dividend per share \n \n \n 5.0p \n \n \n - \n \n \n nm \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n \n 1.           profit before taxation + share-based payments + interest, depreciation and amortisation \n \n \n \n \n 2.           Platform Revenue growth %+ Adjusted Group EBITDA % Group Revenue \n \n \n \n \n 3.           Cash flow after interest and before debt raising/reduction, buybacks/dividends \n \n \n \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n   \n Revenue performance \n Total Revenue reached £30.0m up 28% on FY23. Platform revenue rose by £7.4m (43%) in the year to £24.8m due mainly to continued strong growth in automated ad-testing revenues. Predict Your platform revenue rose 41% fuelled by the continued success of Test Your Ad, notably the new TYA+ variant. Improve Your platform-led consultancy revenue increased by 51%, benefiting from System1's strategic focus on the world's largest advertisers. Overall platform revenue represented 82% of total revenue in FY24, compared with 74% in the previous year. Other revenue, primarily bespoke consultancy, fell by £0.8m in the year, as customers continued to adopt the standard platform products, and the company focused its resources accordingly.    \n   \n The Communications (Comms) product group, including Test Your Ad, grew by £6.9m (43%) year-on-year, notably in the UK, Europe and the US. Communications revenue, including ad-testing, accounted for 76% of all revenue in FY23 (FY22: 68%) Innovation revenues increased by £0.2m (5%), and Brand Tracking revenues were down by £0.5m (13%). The geographic spread of the business remained similar to the previous financial year.    \n   \n Direct costs \n Direct costs increased by 6% year on year on Revenue growth of 28%, reflecting a higher proportion of Platform Revenue and efficiencies in the supply chain, including further automation and new outsourcing partners. As a consequence of these improvements the gross profit margin rose by 3 points to 87%.   \n   \n Operating costs \n Total operating costs increased to £23.4m (FY23: £18.9m) due mainly to employment costs (including higher variable performance pay linked to targets), increased customer acquisition costs, lower net benefit of capitalised IT development costs, and foreign exchange translation effects on non-sterling debtors and bank accounts. Some £3.1m was invested in development and innovation during the year, related primarily to the marketing predictions platform, automated prediction products, TYA Premium database, and AI-related research and development.   \n Average employee numbers were slightly below the previous year, despite recruitment in customer facing roles in H2 that is set to continue into FY25.    \n   \n Profit before taxation \n Profit before taxation for the year of £3.1m was £2.4m higher than the previous year owing to the flow through of far higher sales volumes and improved margins, more than offsetting a 24% increase in operating costs. \n   \n Tax \n The Group's effective tax rate decreased from 44% to 35%. This is due mainly to the impact of R&D tax credits in respect of FY21 and FY22 (£0.2 m recognised in FY24, £nil in FY23). The R&D claim for FY23 is in progress, but is yet to be approved and has not been recognised in the financial statements. \n   \n Funding and liquidity \n Cash net of debt rose by £3.9m from £5.7m to £9.6m, broadly in line with the £4.0m free cash flow. £6.4m of cash was generated from operations; £0.9m was invested, including £0.7m in capitalised software development; and £1.0 was spent on property leases including imputed interest. A stronger GBP compared to FY23 year-end reduced value of non-Sterling cash balances by £0.1m.    \n   \n Dividend \n No dividend was paid during FY24. In April 2024 the Board announced its intention to resume paying dividends, in line with the existing policy to distribute 30-40% of after-tax earnings through the cycle. At this stage the Board expect this to be through the declaration of a single ordinary dividend each year alongside the Company's full year results. The Board is proposing a dividend of 5.0 pence per share for FY24 ( record date 27 September 2024) which will be put to the Group's annual general meeting on 25 September 2024 and will be payable on 18 October 2024. \n   \n Chris Willford \n Chief Financial Officer \n 3 July 2024 \n \n Principal Risks and Uncertainties \n   \n The Board is responsible for reviewing risk and regularly reviews the risks facing the Group, as well as the controls in place to mitigate potential adverse impacts. The risk register is assessed at least twice a year, but the Board's consideration of risk matters is not limited to those formal reviews. The Audit Committee reviews the effectiveness of financial controls. The Board endeavours to identify and protect the business from the big remote risks: those that do not occur very often, but which when they do, have major ramifications. The types of event that we are concerned about and seek to manage are summarised below. \n   \n \n \n \n \n Risk Area \n \n \n Potential Impact \n \n \n Mitigation \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Loss of a significant customer \n   \n \n \n Revenues and profits fall due to the loss of a large customer \n \n \n We work with more than 400 customers and work hard to earn their loyalty. Our customer base is diversified such that we have no customers contributing over 10% of revenue. \n   \n \n \n \n \n Loss of key personnel \n   \n \n \n Key personnel leave the business, taking knowledge and external relationships with them. \n \n \n We seek to ensure that System1 is as attractive to existing employees as it is to talented external recruits. Reward is competitive, and regular performance evaluation identifies individuals who may be \"at risk\". For the most senior executives, the LTIP (long-term incentive plan) and STIP (short-term incentive plan) are designed to provide a strong financial motivation to stay at System1. These incentives are reviewed periodically to ensure they remain effective. \n   \n \n \n \n \n Loss of a critical supplier \n   \n \n \n The bankruptcy, change of control or resignation of a strategic supplier leaves the Group unable to meet customer demand \n \n \n We have several mission-critical functions carried out by third-party suppliers (such as panel suppliers). For these functions, we seek to ensure we are not too reliant on any one organisation and typically have three qualified providers. We work in close co-operation with our strategic suppliers, ensuring that any issues and concerns are surfaced rapidly and resolved in partnership. \n   \n \n \n \n \n Loss of assets, data, intellectual property \n \n \n Theft of intellectual property via unauthorised or illegal access to or copying of the Company's databases, proprietary methods, and algorithms \n   \n \n \n We endeavour to protect the business from significant risks, through a combination of trademark protection; insurance; development of internal guidelines and policies; comprehensive information security programme, and our employee, customer and supplier terms and conditions. \n \n \n \n \n Litigation risk \n \n \n Legal action is taken against the Company by customers, employees, suppliers, or other stakeholders \n \n \n We endeavour to protect the business from significant risks, through our terms and conditions, trademark protection and comprehensive professional indemnity insurance. \n \n \n \n \n \n \n   \n \n \n \n \n Risk Area \n \n \n Potential Impact \n \n \n Mitigation \n \n \n \n \n Strategic risk \n \n \n Technological advances including artificial intelligence reduce the commercial viability of the Group's methodology \n \n \n The Group positions itself as \"the most predictive\" provider of information to support creative and marketing decisions. Currently a combination of real-life panel respondents and System1's methodology achieves this goal.  Our S1 Futures programme includes an exploration into how AI could transform predictive research.  \n   \n \n \n \n \n \n \n \n The Group does not compete effectively in the largest and faster-growing markets \n \n \n The Group formally reviews product and geographic markets as part of its regular strategy review. We have upweighted our presence in the US to reflect the significant opportunity in that market and are relaunching Test Your Innovation in order to improve our performance in the largest of our chosen product markets. \n   \n \n \n \n \n Operational risk \n \n \n An outage or other technical issues on our survey platform results in delays in delivering customer projects \n \n \n All our services are hosted on a secure external cloud infrastructure with multiple failover options. We continuously monitor system availability and endeavour to alert the customer to any delays on the rare occasions where there is disruption. \n   \n \n \n \n \n \n \n \n A reduction in panel data quality affects the company's reputation with key customers \n   \n \n \n We conduct both operational and strategic reviews of respondent quality in close collaboration with our approved panel suppliers and can switch provider where required via our platform API. \n \n \n \n \n \n \n \n A cyber-attack causes a material breach to our infrastructure \n \n \n Our business does not ordinarily hold non-employee personal data. Any personal data of clients' or suppliers' employees is held by System1 in compliance with the applicable legislation. We have invested in our controls (including penetration tests), processes and IT infrastructure and have held ISO 27001 accreditation covering information security since 2019. \n   \n \n \n \n \n \n \n \n The volume of change initiatives could lead to a loss of operational control \n \n \n All change initiatives are subject to project governance, and development is run on an \"agile\" methodology. The Executive Team reviews operational performance regularly providing early warning of potential deviations from plan. The Board reviews operational performance monthly and strategic direction regularly and when appropriate. \n   \n \n \n \n \n § \n \n \n A subsidiary incurs substantial losses \n   \n   \n \n \n The Group operates a highly centralised model with minimal delegation of financial authority below the Executive Directors. All bank payments and transfers have to be authorised by Group Finance. \n \n \n \n \n Financial risk \n   \n \n \n Failure to manage credit, currency, market, interest rate or liquidity risk expose the Group to losses \n \n \n Due to the straightforward nature of the business, its international cost base, the Group's strong balance sheet, and the fact that most of the Group's customers are large, credit-worthy organisations, foreign exchange and credit risks have historically proved to be modest. Further information is given in Note 8 to the financial statements. \n   \n \n \n \n \n Environmental and political risks \n   \n \n \n The Group's revenue streams could be affected by customers' decisions to reduce marketing budgets \n   \n   \n \n \n The Group trades principally in Europe and the USA and is exposed to the social and economic impacts in those regions. The 2020 Covid-19 pandemic demonstrated the Group's resilience during an economic downturn. The main exposure is to our customers' decisions on the size of market research budgets in response to external events and macroeconomic factors such as inflation and interest rate increases. \n   \n \n \n \n \n \n \n \n Shareholder relations: the Company's plans could be opposed by significant shareholders \n   \n \n \n The Company holds comprehensive investor one-on-one and group meetings in roadshows at least twice a year.  In addition, quarterly trading updates provide an opportunity to engage with shareholders and potential investors. \n   \n \n \n \n \n \n \n \n Political risk through adverse regime or regulatory change \n \n \n The territories representing the vast majority of the Group's revenue are socially, politically, and economically stable. We do not currently service clients based in Russia or Belarus, and our operations have not been directly affected by the ongoing conflicts in Ukraine or Gaza. We have a regional operations centre in Brazil where just under 10 percent of our employees are based and are comfortable that the benefits of the operation outweigh the slightly elevated risks. \n \n \n \n \n Conflicts of Interest \n   \n \n \n Directors' and employees' personal, financial or business affairs may result in situations where the company's interests are not fully aligned with their own \n   \n \n \n The Board formally records directors' interests at each meeting, and directors' new external appointments are notified as soon as is practical. \n Below board level the company reviews senior employees' outside interests on a case-by-case basis to ensure no detriment to the company arises. \n \n \n \n \n Reputational risk \n   \n \n \n Press releases or other statements from the company could include incorrect or defamatory content, adversely affecting the company's reputation with customers and other stakeholders \n   \n \n \n All trade press releases are reviewed by at least one member of the Executive. Financial releases are reviewed by at least two Board members and our Nominated Adviser. \n   \n \n \n \n \n \n \n \n Comments or articles posted by employees on social media could adversely affect the Group's reputation with customers and other stakeholders \n \n \n The Group has a social media policy which sets out employees' duty of care when posting work-related content on social media. \n \n \n \n \n \n Section 172 Report \n   \n Section 172 of the Companies Act requires the Board to take into consideration the interests of stakeholders in its decision making. This section provides information about the Board's approach to engagement with stakeholders, namely: \n ·      Customers \n ·      Talent \n ·      Investors \n ·      Suppliers \n ·      Community and Environment \n   \n In determining the Board's approach, the Board members have regard to the following: \n ·      The likely consequences of any decision in the long term \n ·      The interests of the company's employees \n ·      The need to foster the company's business relationships with suppliers, customers and others \n ·      The impact of the company's operations on the community and the environment \n ·      The desirability of the company maintaining a reputation for high standards of business conduct, and \n ·      The need to act fairly as between members of the company. \n   \n Overarching the Group's approach to all stakeholders is System1's cultural pyramid: \n   \n Customers \n Our target customers are the world's largest advertisers. The board understands the importance of forming and retaining good working relationships with its existing and target customers. \n These customers understand that creativity is the most powerful tool for growth within their control.  \n   \n 'The power of creativity for growth could be considered our industry's most fundamental reason for being. \n Creativity is a superpower'   \n Marc Pritchard, P&G Chief Brand Officer' \n   \n System1 helps these companies make confident creative decisions that lead to transformational business results.  Our advertising and idea tests measure emotion to give our customers the most accurate predictions of the business impact of creativity.  We also provide expert guidance to our customers to help them improve the effectiveness of their ad or innovation. \n \n   \n Talent \n Our primary focus is on attracting, growing, and retaining world class talent to drive and deliver against our strategy, with a culture of healthy performance. To achieve this, we embed structures that promote equal opportunity and guard against discrimination. We are proud of being an inclusive organisation - our culture is founded on principles of inclusion such as feedback, honesty, and creativity. \n   \n How we engage with our talent \n We have cultural values (Customer Commitment, Creativity, Collaboration and Conviction) as well as a set of team behaviours known as TIDE, which describe how we work together. \n   \n Truth - always tell the truth… and tell it early \n Intent - always assume good intent…yet resolve issues \n Debate - Debate… Decide & Unite \n Elephant - Don't allow 'elephants' in the room...yet be empathetic in dealing with them \n   \n   \n This helps to ensure that employees understand the behaviours expected of them and allow us to operate a high trust environment, which is linked to business success. We embed our values and behaviours by the following: \n 1.   Introducing them to all employees during their onboarding programme, as part of a 1Welcome afternoon, chaired by the CEO and Chief People Officer \n 2.   Making them a consistent part of all company communications and \n 3.   Celebrating examples of best practice with awards on our Town Halls. \n   \n We conduct quarterly employee input surveys which are reviewed by the Board. These use our FaceTrace methodology to capture how employees feel about working at System1, along with reasons. We also ask them what is working well, what could be improved and add a topical question. We hold follow up discussions with each team across the business, chaired by the team leaders and the HR team to agree improvements, actions and owners. \n   \n In addition to monthly Town Hall meetings with all staff, we also hold monthly senior management forums and run monthly workshops with managers. These meetings give us the opportunity to connect across the business at different levels, share and cascade updates and celebrate success - including System1 Value Awards, where employees are nominated by colleagues and are recognised for working according to our values. \n   \n We pay fairly - there is no discrimination across any factor - we ensure this by using benchmarking data and conducting annual salary reviews by individual and across roles, and there is a structured approach to career and professional development across the business, based on departmental and cross-company leadership frameworks, to ensure there is clarity and consistency in our expectations and performance ratings. We have a strong learning and development culture. We encourage employees to plan their development using the support and resources we provide (including internal training programs, professional certifications and MBA sponsorships). We advertise roles internally and promote inter departmental opportunities. \n   \n   \n Talent engagement outcome \n   \n We continue to develop our hybrid virtual working approach, working closely with managers and all employees to maximise productivity, creativity and happiness. We believe in a healthy performance culture and use the below model to guide us in achieving this. \n   \n We are continuously evolving our engagement tools, based on feedback and measures. \n   \n In October 2023 we introduced automated, mandatory 360 feedback for all employees and in March 2024 we launched department and behaviour frameworks, both of which have been very well received and provide useful input for development planning. \n   \n In April 2024 we adopted a Flexible Holiday policy, following a successful trial in FY24. This builds on our Flexible Working approach and Flexible Benefits platform and provides our employees with increased autonomy when it comes to choosing how they work and rest. \n   \n We continue to find it very important to regularly bring people together in person, to share updates and build relationships, to complement the time spent working remotely. We run 1derful Wednesday events to encourage employees to socialise together in the office and hold regional and all-company Strategy meetings half yearly. \n   \n Investors \n The most visible way that the Company takes the interests of equity investors into consideration is through the high level of share ownership on the Board. In addition, the Group Executive Team members' interests are aligned through their participation in a long-term incentive plan. \n   \n The Company encourages two-way communications with all its shareholders and responds quickly to requests or queries received. Larger investors and potential investors are invited to meet management after the full-year and interim results. We also run virtual meeting and presentations via InvestorMeetCompany, an investor engagement platform which we use for capital markets days, group meetings of investors after full year and interim results, and the annual general meeting. In addition, the Company maintains regular contact with its principal bank to ensure that it is kept informed of the Company's performance and prospects. \n   \n Communication is primarily through the Company's website and the Annual General Meeting where participation is encouraged so that the Board may answer questions. All shareholders have at least twenty-one clear days' notice of the Annual General Meeting. \n   \n All shareholders will receive a copy of the Annual Report. We encourage the use of electronic copy but still produce a very small quantity of hard copies for investors who request them. The interim report is available online via the Company's website. \n   \n The Group seeks advice from its Nominated Advisor, Canaccord on all formal shareholder communications and relies on their services to arrange the twice-yearly investor \"roadshows\". \n   \n Suppliers \n We work with a small number of trusted suppliers and operate on a strong partnership basis. As outlined in the Principal Risks and Uncertainties section on page 16, the loss of a critical supplier could leave the Group unable to meet customer demand, therefore the Board has regard to the importance of fostering good relationships with our suppliers to promote the success of the Group. Our approach is centred on lean principles and continuous quality improvement, with weekly and monthly meetings to review service levels, KPIs and resolve issues. We share data between teams to ensure that there is one view of our partnership metrics. \n   \n Our key delivery suppliers include: \n ·      MAP Marketing Research provides us with survey programming and project management services \n ·      Toluna , Prodege and NetQuest provide us with market research panel respondents to complete our surveys \n ·      Datawise provides us with bespoke data processing and charting services on our non-standard deliverables \n ·      Intonation provides us with translation services (forward translation of questionnaires and back translation of respondent verbatim) \n   \n Community \n ESG Strategy \n This year, we have launched a new ESG Strategy, driven by a steering committee formed of Executive and Senior Managers in Talent, Legal and Finance departments and with sign off from the Board. \n   \n Environment \n We understand the importance of tackling carbon emissions. Although System1's operations fall outside of manufacturing and are primarily online, they are not entirely carbon-neutral. System1 has partnered with Greenly, a leading carbon emissions company. With their support, we have developed a comprehensive plan to measure, reduce and offset our carbon footprint. \n   \n The journey with Greenly began with an assessment of System1's emissions across the entire value chain, from daily operations to supply chain logistics. We determined that our emissions are most prevalent in Scope 3 - emissions from the activities by those System1 indirectly affects in our value chain. \n   \n Throughout 2022, System1 registered 0.066 KGCO23/GBP, which is slightly lower than the median of our competitors within the sector at 0.070 KGCO23/GBP (based on 61 companies). In particular, our commuting figures are lower than average, driven by the high number of remote team members. \n   \n There are areas for improvement as well. Travel outside of commuting to work remains higher than average. Our outsourcing strategy contributes to a higher-than-average figure for services purchased, as expected. \n   \n With Greenly's expertise and guidance, System1 is implementing solutions to reduce emissions, including: \n   \n ·      Updated travel policy to encourage employees to take trains rather than planes where possible \n ·      A more rigorous approval process for external conferences, to promote local travel only \n ·      Global annual event held in the UK (where we have most employees) to reduce the need for flying \n ·      Second annual event held regionally, to avoid the need for most employees to fly \n ·      Switched to least data-intensive formats for our marketing assets \n ·      Provision in our road map to include a clause that asks our suppliers to conduct mandatory carbon reporting and target a 3% reduction, at the time of contract renewals in new contracts \n ·      Continue to extend lifespan of IT equipment (extended from 3 to 4 years in 2022) \n   \n As a result of the efforts of all stakeholders, System1's recommendations and actions are predicted to decrease our emissions by 2% - 2.5% of total emissions against turnover per year. \n   \n Social \n   \n Under the second pillar, we have focused on infusing System1's HR strategy with values of social responsibility and inclusivity. This includes reviewing existing social initiatives, like employee benefits, community engagement programs, and diversity and inclusion efforts, as well as analysing Satistraction surveys containing employee feedback on the impact of existing social initiatives. \n   \n The following recommendations were agreed, which will be actioned with the support of our employee resource groups: \n   \n ·      Training - extend bias training to entire company and conduct bi-annually \n ·      Local communities - commit to reinforcing that employees can participate in at least 1 Look Out volunteering initiative per year \n ·      Diversity policy - review at least annually and ensure accuracy \n ·      Health & Safety - have a dedicated and trained global health & safety rep \n ·      Communication - communicate the ESG strategy via 1Hub (Sharepoint) so all employees are aware of what we do and our goals \n   \n \n \n   \n Governance \n   \n The third and final pillar is focused on governance and owned by our legal and finance leaders. The governance goals for FY25 are to: \n   \n ·      Annually review existing governance structures and practice in light of industry standards and regulatory requirements \n ·      Continue to provide regular training to board members and decision-makers in the business to ensure all are well equipped \n ·      Continually assess risk management procedures - to ensure they effectively identity, assess and mitigate risks in alignment with corporate objectives and regulatory expectations \n ·      Further strengthen stakeholder engagement - strategies to enhance communication and collaboration with stakeholders, employees, customers and the wider community \n ·      Regularly monitor compliance - collaborating closely with key stakeholders, including the Senior Independent Non-Executive Director, and regularly review compliance with all relevant laws, regulations, and internal policies, taking corrective action as necessary \n ·      Evaluate board performance periodically - conducting an annual evaluation of the board's performance to identify areas for improvement and ensure its composition aligns with the company's strategic direction \n ·      Review and update policies and procedures - systematically review and update governance policies and procedures to reflect changes in the legal and regulatory environment, as well as evolving best practices \n ·      Oversee Technology and Cybersecurity - regularly assess the effectiveness of technology use and cybersecurity measures in protecting company assets and information, including staff training \n ·      Succession planning - maintain a comprehensive succession plan for key executive and board positions to ensure long-term leadership continuity \n   \n On behalf of the Board \n   \n   \n   \n   \n   \n Chris Willford \n Chief Financial Officer \n 3 July 2024 \n \n \n   \n Group Directors' Report \n   \n Review of the business and future development \n   \n The Chairman's Statement, CEO's Statement, the Financial Review, the Section 172 Report, Principal Risks and Uncertainties, and the Corporate Governance Report set out: \n ·      the issues, factors and stakeholders considered in determining that the Directors have complied with their responsibilities under section 172 of the Companies Act 2006 (Corporate Governance Review); \n ·      the methods used to engage with stakeholders and understand the issues to which the Directors must have regard under section 172 of the Companies Act 2006 and the effect on the Company's decisions and strategies during the year (Corporate Governance Review); \n ·      the way that management view the business (Group Overview, Chairman and CEO's statements, Financial Review); \n ·      its strategy, positioning, and objectives (Group Overview, Chairman and CEO's statements). \n ·      its historic financial performance (Chairman and CEO's statements, Financial Review); \n ·      an assessment of its future potential (Group Overview, Chairman and CEO's statements, Financial Review); \n ·      its key performance indicators (Financial Review); and \n ·      its key business risks (Principal Risks and Uncertainties). \n   \n Dividends \n The Company did not pay a dividend in the year ended 31 March 2024 and proposes to pay a dividend of 5.0p per share. \n   \n Directors \n The following individuals served as directors of the Company, System1 Group PLC, during the year and up to the date of approval of the financial statements: \n   \n James Gregory          (Executive)                 \n John Kearon              (Executive) \n Chris Willford             (Executive)                 \n Conrad Bona              (Non-Executive)          \n Rupert Howell             (Non-Executive)          \n Phillip Machray           (Non-Executive)          \n Sophie Tomkins         (Non-Executive) \n   \n The Remuneration Committee Report sets out directors' interests in the shares of the Company. \n   \n Share capital \n At 31 March 2024, the Company had 13,226,773 Shares in issue (2023: 13,226,773) of which 547,844 were held in treasury (2023: 547,844). The treasury shares will be used to help satisfy the requirements of the Group's share incentive schemes. \n   \n \n \n   \n   \n   \n Substantial shareholders \n As at 31 May 2024, the Company was aware of the following significant interests in the ordinary issued share capital of the Company. \n \n \n \n \n   \n \n \n No. \n \n \n % Voting shares \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n John Kearon \n \n \n 2,818,235 \n \n \n 22.2 \n \n \n \n \n BGF Investment Management Limited \n \n \n 880,000 \n \n \n 6.9 \n \n \n \n \n Stefan Barden \n \n \n 853,554 \n \n \n 6.7 \n \n \n \n \n Kestrel Investment Partners \n \n \n 674,000 \n \n \n 5.3 \n \n \n \n \n Herald Investment Mgt \n \n \n 595,111 \n \n \n 4.7 \n \n \n \n \n Lombard Odier Asset Mgt \n \n \n 528,476 \n \n \n 4.2 \n \n \n \n \n Ennismore Fund Mgt \n \n \n 523,012 \n \n \n 4.1 \n \n \n \n \n University of Notre Dame Du Lac \n \n \n 500,000 \n \n \n 3.9 \n \n \n \n \n Motley Fool Asset Mgt \n \n \n 479,670 \n \n \n 3.8 \n \n \n \n \n AXA Investment Mgrs \n \n \n 457,128 \n \n \n 3.6 \n \n \n \n \n   \n Financial risk management \n The Group's activities expose it to the following financial risks. Further assessment of financial risks is outlined in Note 8 to the Consolidated Financial Statements. \n   \n Credit risk \n We manage credit risk on a Group basis, arising from credit exposures to outstanding receivables and cash and cash equivalents. Since the majority of the Group's customers are large blue-chip organisations, the Group rarely suffers a bad debt. The Group's cash balances are held, in the main, at HSBC Bank. \n   \n Market risk - Foreign exchange risk \n In addition to the United Kingdom, the Group operated in the United States, Rest of Europe, Brazil, Singapore, and Australia during the period and was exposed to currency movements impacting commercial transactions and net investments in those countries. Management endeavours to match the currencies in which revenues are earned with the currencies in which costs are incurred. So, for example, the US operation generates most of its revenue in US dollars and incurs most of its costs in US dollars also. \n   \n Liquidity risk \n The Company monitors its cash balances regularly and holds sufficient cash in immediately available current accounts to minimise liquidity risk. The Company has an overdraft facility with HSBC. \n   \n Other risks \n Management do not consider price risk or interest rate risk to be material to the Group. \n   \n Capital risk management \n The Group manages its capital to ensure that it can continue as a going concern while maximising its return to shareholders. The Company has a £1.5m secured overdraft facility with HSBC. To the date of the signing of these financial statements, no amounts have been drawn under the overdraft facility. The Group has not entered any derivative contracts. \n \n \n   \n   \n Going concern \n As noted in Principal Risks and Uncertainties, and in note 3 to the consolidated financial statements, the Directors have considered financial and operational risks in the prevailing economic climate and marketing industry trends in the going concern assessment. In addition to the mitigating actions taken by the Company to address these risks, the Directors have closely monitored the performance of the Group throughout the year, noting the £9.6m cash balance at year-end and the availability of a £1.5m overdraft facility (which has not been drawn to date). \n   \n The Group has reviewed its financial forecasts for the 12 months from the approval of these financial statements, flexing sensitivity analysis scenarios with external and internal inputs that would represent the Group's central forecast and various downturn scenarios. \n   \n Accordingly, after making appropriate enquiries, at the time of approving the financial statements the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for at least 12 months from the approval of these financial statements. For this reason, the Directors continue to adopt the going concern basis in preparing the Company and Group financial statements. \n   \n Research and development \n The Company's Labs and IT Development teams are involved in the development and validation of new market research methods and products. \n   \n Employees \n The Group maintains fair employment practices, attempts to eliminate all forms of discrimination and to give equal access, and to promote diversity. Wherever possible we provide the same opportunities for disabled people as for others. If an employee were to become disabled, we would make every effort to keep them in our employment, with appropriate training where necessary. \n   \n Health and safety policies \n The Group does not have significant health and safety risks and is committed to maintaining high standards of health and safety for its employees, visitors, and the public. \n   \n Directors' indemnities \n Directors' and officers' insurance cover has been established for each of the Directors to provide cover against their reasonable actions on behalf of the Company. The indemnities, which constitute a qualifying third-party indemnity provision as defined by Section 234 of the Companies Act 2006, remain in force for all current Directors. All relevant information known to the Directors has been relayed to the appointed auditor. \n   \n   \n Disclosure of information to auditors \n The directors are responsible for the maintenance and integrity of the corporate and financial information included on the System1 Group PLC website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. \n   \n In the case of each Director in office at the date the Directors' report is approved: \n ·      so far as the director is aware, there is no relevant audit information of which the Group's and Company's auditors are unaware; and \n ·      they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Group's and Company's auditors are aware of that information. \n   \n On behalf of the Board \n   \n   \n   \n Chris Willford \n Chief Financial Officer \n 3 July 2024 \n \n \n Statement of Directors' Responsibilities \n   \n The directors are responsible for preparing the Group Strategic Report, Group Directors' Report, and the financial statements in accordance with applicable law and regulations. \n   \n Company law requires the directors to prepare Group and Company financial statements for each financial year. The directors have elected under company law and are required by the AIM Rules of the London Stock Exchange to prepare the group financial statements in accordance with UK-adopted international accounting standards and have elected under company law to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including Financial Reporting Standard 101 \"Reduced Disclosure Framework\". \n   \n The Group financial statements are required by law and UK-adopted international accounting standards to present fairly the financial position and the financial performance of the Group and Company. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. \n   \n Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. \n   \n In preparing each of the Group and Company financial statements, the directors are required to: \n a.   select suitable accounting policies and then apply them consistently; \n b.   make judgements and accounting estimates that are reasonable and prudent; \n c.   for the Group financial statements, state whether they have been prepared in accordance with UK-adopted international accounting standards; \n d.   for the Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the Company financial statements; \n e.   prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. \n   \n The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. \n   \n The directors are responsible for the maintenance and integrity of the corporate and financial information included on the System1 Group PLC website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. \n   \n   \n On behalf of the Board \n   \n   \n   \n Chris Willford \n Chief Financial Officer \n 3 July 2024 \n \n \n   \n Corporate Governance \n   \n Governance \n   \n System1 understands how vital good governance is for achieving our business goals and sustainability targets. We will share more about our approach to governance in later sections of this report. \n   \n We know that good governance is key for our Group's success. It benefits everyone involved with our Group - not just our shareholders, but our employees, clients, and partners too. That is why we have built a governance structure that makes sure our decisions are transparent, responsible, and uphold the highest ethical standards. \n   \n We are committed to ongoing review and refinement to make sure we manage risks effectively and stay compliant with laws and regulations. \n   \n Our Board of Directors is central to our governance structure. It consists of individuals with a wide range of skills and experiences. They provide critical oversight, strategic counsel, and informed decision-making, ensuring our commitment to the highest ethical standards is never compromised. \n   \n Employee engagement and development form a crucial part of our governance strategy. Our significant investment in ongoing professional development ensures our team is equipped with the latest industry knowledge, skills, and best practices to deliver exceptional market research and insights to our clients. \n   \n As we move forward, we are committed to maintaining and improving our governance standards and to promoting a culture of responsibility, integrity, and excellence throughout System1. \n   \n   \n As an AIM-listed company, System1 adheres to the ten principles of the Quoted Companies Alliance (QCA) Corporate Governance Code. The QCA Code identifies ten principles that underpin growth in long-term shareholder value, encompassing an efficient, effective and dynamic management framework accompanied by good communication to promote confidence and trust. \n   \n \n Deliver growth \n \n \n \n \n \n Establish a strategy and business model to promote long-term value for shareholders \n \n \n Our strategy is to grow the platform-based predictions business and achieve economies of scale \n \n \n See Group Overview page 4 and CEO's Statement page 6 \n \n \n \n \n Understand and meet shareholder needs and expectations \n \n \n The CEO and CFO communicate regularly with investors at half-yearly results roadshows \n \n \n Visit system1group.com/investors for further information \n \n \n \n \n Take into account wider stakeholder and social responsibilities and their implications for long-term success \n \n \n The preferences of customers, employees, suppliers, community as well as investors inform our decision making \n \n \n See Section 172 Report page 19 and system1group.com/investors \n \n \n \n \n Embed effective risk management, considering both opportunities and threats, throughout the organisation \n \n \n The Board is responsible for setting risk appetite and tolerance. The Executive manages risk day to day \n \n \n See Principal Risks and Uncertainties page 16 and Board Effectiveness page 38 \n \n \n \n \n   \n \n Maintain a dynamic management framework \n \n \n \n \n \n Maintain the Board as a well- functioning, balanced team led by the Chair \n \n \n The Board has two Committees: Audit Committee; and Remuneration Committee. The composition and experience of the Board is reviewed in the Board Evaluation. \n All Directors recognise the need to commit sufficient time to fulfil the role. This requirement is included in their letters of appointment. The Board is satisfied that the Chair and Non-executive Directors devote sufficient time to the Group's business. \n \n \n See Corporate Governance pages 36 and 37 \n \n \n \n \n Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities \n \n \n The Board members have the appropriate ranges of skills and experience, covering, Sales & Marketing, Technology, Finance, Governance and Sustainability \n \n \n See Board experience pages 39 to 41 and Board Effectiveness page 38 \n \n \n \n \n Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement \n \n \n The Board carries out an annual effectiveness review assess its strengths and areas for development and improvement \n \n \n See Corporate Governance page 34 and Board Effectiveness page 38 \n \n \n \n \n \n \n   \n \n \n \n \n Promote a corporate culture that is based on ethical values and behaviours \n \n \n The culture of System1 is guided by the core \"TIDE\" values \n \n \n See Section 172 Report page 20 \n \n \n \n \n Maintain governance structures and processes that are fit for purpose and support good decision making by the Board \n \n \n The Board is satisfied that the delegated authorities and budgetary processes in the company are adequate to support its strategic growth plans. The Board regularly considers the need to adapt and improve processes in line with the growth of the entity including any associated investment in tools and resources. \n \n \n See Board of Directors pages 39 - 40 and system1group.com/investors \n \n \n \n \n   \n \n Build trust \n \n \n \n \n \n Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders \n \n \n The investors section of our website includes our Annual Report, results, presentations, notice of AGM and results of the AGM and general meetings. \n \n \n See Remuneration and Audit Committee reports on pages 42 and 45 and system1group.com/investors for further information \n \n \n \n \n   \n Strategy \n All directors are familiar with the market in which the Group is operating, the Group's value proposition, and its strategic intent. \n   \n The Board actively participates in setting, and regularly reviewing, the strategy of the business, and is responsible for ensuring that the Company's business model is, and remains, aligned to the achievement of its strategic objectives. The Company sets out its strategy within the Strategic Report section of its Annual Report and Accounts. \n   \n Risk management \n The Board reviews the risks facing the business on a regular basis. The identified principal risks and uncertainties are those outlined in the Strategic Report. \n   \n The Board is responsible for the Group's system of internal controls and risk management, and for reviewing the effectiveness of these systems. These systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and to provide reasonable, but not absolute assurance against material misstatement or loss. \n   \n The key features of the Group's internal controls are described below: \n ·      clearly defined organisational structure with appropriate delegation of authority; \n ·      comprehensive budgeting programme with an annual budget approved by the Board; \n ·      regular review by the Board of actual results compared with budget and forecasts; \n ·      regular reviews by the Board of full year expectations; \n ·      detailed budgeting and monitoring of costs incurred on the development of new products; \n ·      a limited number of Directors and Executives authorised to commit the company to legal agreements or make payments; \n ·      regular reviews of customer and employee feedback; \n ·      information security controls (for which the Company has obtained ISO 27001 accreditation). \n   \n The Board take measures to review internal controls and embed risk management procedures on an ongoing basis and implement metrics and objectives to monitor the business as part of a continuous improvement programme. \n   \n Corporate culture \n The Group endeavours to maintain a culture built on integrity. To surface unethical or deceitful behaviours, it promotes openness amongst its employees, provides channels for employees to feedback concerns to the Executive Directors and the Board (such as anonymous employee feedback surveys, and confidential whistle-blowing channels), and conducts exit interviews. Further information on System1's culture and values can be found in the Section 172 Report. \n   \n The Board of Directors \n The Board comprised three Executive Directors and four independent Non-Executive Directors, including the Non-Executive Chairman for the year ended 31 March 2024. The membership of the Board is set out in the Group Directors' Report. We believe that the directors have the mix of leadership, marketing and financial skills and experience necessary to oversee the Group and deliver its strategy for the benefit of the shareholders over the medium to long-term, and this mix is regularly under review as strategy develops. The composition of the Board is set out on pages 39 to 40 and is intended to achieve a balanced range of personal qualities and capabilities, and to support the Company's commitment to promoting gender equality and diversity. The biographical details of the directors are presented below. \n   \n The Board operates an induction programme for new Non-Executive Directors. The Board reviews its AIM obligations with its Nominated Advisor annually and endeavours to keep up with best practice governance via QCA seminars and training material. All directors can access the Company's advisors and obtain independent professional advice at the Company's expense in performance of their duties as directors. \n   \n During the year, the Remuneration Committee sought advice from external consultants on board and senior management remuneration. Neither the Board nor the respective committees have sought other external advice on any significant matter during the year. The Audit Committee works with the Company's auditor, Haysmacintyre LLP. The Board liaises regularly with the Company's Nominated Advisor, Canaccord Genuity to ensure compliance with AIM Rules. \n   \n   \n The Board considers each of the Non-Executive Directors to be independent, for the following principal reasons: \n ·      they all have served on the Board for less than ten years; \n ·      their remuneration is not material in the context of their financial circumstances; \n ·      they have no executive role; \n ·      they each own an immaterial number of shares in the Company in the context of their financial circumstances; \n ·      they are not related to any of the Executive Directors; and \n ·      they have no material conflict of interest given their other roles and business activities. \n   \n   \n \n \n   \n The Board schedules regular monthly meetings during the year, except for August, and additional ad hoc meetings as required. All Directors can allocate sufficient time to the Group to discharge their responsibilities fully. In recent times, we have embraced a hybrid approach to our board and committee meetings, conducting them both virtually via Microsoft Teams as well as in person at our central London location. The number of regular meetings that each director attended during the financial year is set out below: \n   \n \n \n \n \n   \n \n \n Board \n \n \n Audit Committee \n \n \n Remuneration Committee \n \n \n \n \n \n \n \n (12 meetings) \n \n \n (3 meetings) \n \n \n (2 meetings) \n \n \n \n \n Rupert Howell \n \n \n 12 \n \n \n 3 \n \n \n 2 \n \n \n \n \n Sophie Tomkins \n \n \n 12 \n \n \n 3 \n \n \n 2 \n \n \n \n \n Phil Machray \n \n \n 12 \n \n \n 3 \n \n \n 2 \n \n \n \n \n Conrad Bona \n \n \n 12 \n \n \n 3 \n \n \n 2 \n \n \n \n \n James Gregory \n \n \n 12 \n \n \n 2* \n \n \n 1* \n \n \n \n \n John Kearon \n \n \n 9 \n \n \n -* \n \n \n -* \n \n \n \n \n Chris Willford \n \n \n 12 \n \n \n 3* \n \n \n 1* \n \n \n \n \n \n \n \n \n \n \n \n \n \n *by invitation \n \n \n \n \n   \n Matters reserved for the Board \n The Board discusses and reviews all matters and issues which are important to the business. Certain decisions are reserved for the Board, which include: \n ·      approval of the Group's long-term objectives and strategy; \n ·      approval of the annual operating and capital budget, and any material changes thereto; \n ·      extension of the Group's activities into new business or geographic areas; \n ·      changes to the Group's capital structure and/or major changes to corporate structure, including acquisitions, disposals, and investments; \n ·      approval of interim and annual reports, and regulatory or non-routine shareholder communications; \n ·      approval of significant changes in accounting policies or practices; \n ·      approval of share buybacks, dividends and dividend policy; \n ·      assessment of the effectiveness of risk and control processes. \n   \n Matters referred to the Board are considered by the Board as a whole and no one individual has unrestricted powers of decision. Where directors have concerns which cannot be resolved in connection with the running of the Group or a proposed action, their concerns would be recorded in the Board Minutes. This course of action has not been required to date. \n   \n The provisions on engagement with stakeholders including shareholders, employees and customers are dealt within the Section 172 Report on pages 19 to 25. \n   \n Appointment of Directors \n The Board formally approves the appointment of all new Directors. Each year at the Annual General Meeting, all Directors retire by rotation and are subject to re-election. \n \n \n   \n   \n Remuneration Committee \n The Remuneration Committee is responsible for determining the specific remuneration and incentive packages for each of the Company's Executive Directors and keeping under review the remuneration and benefits of all senior executives. Its members are: \n   \n Philip Machray - Chairman of the Remuneration Committee \n Conrad Bona \n Rupert Howell \n Sophie Tomkins \n   \n The Remuneration Committee's role and responsibilities are to: \n ·      review and approve the remuneration and incentive schemes of Executive Directors, including pension rights, other benefits, and any compensation payments, ensuring that no Director is involved in any decisions as to their own remuneration; \n ·      review and approve the level and structure of remuneration and incentive schemes for senior management; \n ·      select, appoint, and set the terms of reference for any remuneration consultants who advise the Committee; \n ·      approve the payments to Directors under any performance-related pay or share schemes operated by the Group; \n ·      ensure that contractual terms on termination of any Director are fair to the individual and the Group, that \n ·      failure is not rewarded and that the duty to mitigate loss is fully recognised; \n ·      approve any major changes in employee benefits structures throughout the Group; \n ·      approve the policy for authorising claims for expenses from the Directors. \n   \n The Remuneration Committee schedules two formal meetings per year and meets at other times as necessary. The Remuneration Committee may invite any of the executive directors to attend meetings of the Remuneration Committee. The Remuneration Committee may use consultants to advise it in setting remuneration structures and policies. It is exclusively responsible for appointing such consultants and setting their terms of reference. \n   \n The Annual Statement from the Remuneration Committee Chair is set out in the Remuneration Committee Report on page 45. \n \n \n   \n Audit Committee \n The Audit Committee is responsible for ensuring the financial performance of the Group is properly monitored and reported on to shareholders, reviewing the Group's financial systems and controls, and overseeing the Group's risk management. Its members are: \n   \n Sophie Tomkins - Chair of the Audit Committee \n Conrad Bona \n Rupert Howell \n Philip Machray \n   \n The Au...

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