REG - System1 Group PLC - Interim Results
03/12/2024 07:00
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RNS Number : 4965O System1 Group PLC 03 December 2024
Press Release
3 December 2024
System1 Group PLC (AIM: SYS1)
("System1" or "the Group" or "the Company")
Unaudited interim results for the six months ended 30 September 2024
System1 Group the marketing decision-making platform www.system1group.com
(http://www.system1group.com/) announces its unaudited interim results for the
six months ended 30 September 2024 ("H1", "H1 FY25").
Statutory Basis H1 H1 Change**
FY25 FY24*
£m £m %
Platform 16.7 10.9 53%
Non-Platform 1.6 2.4 -31%
Total Revenue 18.3 13.3 38%
Gross Profit 16.0 11.7 37%
Operating Costs (13.7) (10.9) 26%
Other Operating Income* 0.3 0.2 35%
Profit before Taxation 2.6 0.9 176%
Income Tax Expense (0.8) (0.3) 167%
Profit for the Period 1.8 0.6 180%
Diluted Earnings per Share 13.8p 4.9p 182%
* FY24 restated to align with full-year FY24 accounting for sublease income
- see Note 3
** Percentages and totals are based on numbers rounded to £'000s
H1 Highlights
· Platform revenue grew 53% on H1 FY24 to £16.7m and represented 91% of total revenue (H1 FY24: 82%). Total revenue increased by 38%.
· Strong total revenue growth in the USA (+79%), and UK (+38%).
· 161 new platform clients in H1 FY25 (H1 FY24: 136) providing £3.3m of additional revenue.
· Platform Net Revenue Retention(3) of over 120%.
· Gross profit margin in line with FY24 at 87.3% (H1 FY24: 87.8%).
· Benefits of operational gearing and our scalable business model showing through: profit before tax up 176% to £2.6m (H1 FY24: £0.9m).
· £2m additional discretionary investment in the next 18 months
aimed at building our position in America and revitalising System1's
Innovation proposition.
· Average H1 headcount up 12% to 160 (H1 FY24: 143).
· Share based payments credit of £0.1m.
· £0.3m free cash outflow in H1 (H1 FY24: inflow of £0.6m). Cash balance of £8.9 as at 30 September 2024 (31 March 2024: £9.6m; 30 September 2023: £6.3m).
· Diluted and basic earnings per share up 184% to 13.8p and 13.9p respectively (H1 FY24 diluted and basic earnings per share: 4.9p).
Current Trading & Outlook
· The Company is trading in line with market expectations, including
the impact of the additional investment expenditure to be incurred in the
second half of the fiscal year(2).
· The third quarter has begun well, and at this stage we recognise that
there may potentially be some revenue upside compared to current market
expectations and we will provide further guidance as appropriate with the Q3
Trading update in early February 2025.
System1 CEO James Gregory commented:
"The first half has played out in line with our plan with strong platform
growth and good progress in the USA, over 160 new client wins and improved net
revenue retention with existing clients. System1 has a significant opportunity
to increase revenue both in America and within the Innovation market segment
and we have already begun a £2m additional discretionary investment programme
over the next 18 months to target medium-term revenue growth in these areas".
(1) Adjusted Profit is Profit before Taxation excluding share-based payments.
(2) For the purpose of this announcement, the Group believes market consensus
for FY25 to be Revenue of £36.5m, and Adjusted Profit before Tax(1) of
£4.4m.
(3) NRR is calculated as H1 FY25 Revenue excluding new clients divided by H1
FY24 Revenue.
Further information on the Company can be found at www.system1group.com
(http://www.system1group.com/) .
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.
For further information, please contact:
System1 Group PLC Tel: +44 (0)20 7043 1000
James Gregory, CEO
Chris Willford, Chief Financial Officer
Canaccord Genuity Limited Tel: +44 (0)20 7523 8000
Simon Bridges / Andrew Potts/ Harry Rees
Interim Statement
Financial Performance
KPIs H1 FY25 H1 FY24*
Platform Revenue as a % of Total Revenue 91 82
Platform Revenue growth % 53 44
Gross Profit % Revenue 87.3 87.8
Adjusted EBITDA £m* (1) 3 1.6
Adjusted EBITDA % Revenue 16 12
"Rule of 40" (2) 69 56
Free cash flow(3) -0.3 0.6
Net cash £m 8.9 6.3
(1) Statutory profit before taxation + share-based payments + interest,
depreciation and amortisation.
(2) Platform Revenue growth % + Adjusted Group EBITDA % Group Revenue.
(3) Cash flow after interest and before debt raising/reduction,
buybacks/dividends.
*H1 FY24 restated to align with full-year FY24 accounting for sublease income.
Revenues Sep-24 Sep-23
Revenue Revenue
Restated**
£'000 £'000
By location of customer
USA 6,353 3,555
LatAm 1,171 1,193
United Kingdom 7,767 5,610
Rest of Europe 2,097 2,182
APAC 945 765
18,333 13,305
By product variant
Data ("Predict Your") 13,365 9,036
Data-led consultancy ("Improve Your") 3,334 1,902
Platform revenue 16,699 10,938
Other consultancy (non-platform) 1,634 2,367
18,333 13,305
By product group
Communications (Ad Testing) 15,874 10,377
Brand (Brand Tracking) 1,148 1,420
Innovation 1,311 1,508
18,333 13,305
Total revenue increased by 38% on H1 FY24 to £18.3m and Platform revenue grew
53% to £16.7m and represented 91% of total revenue (H1 FY24: 82%). Within
Platform revenue Data increased by 48% from £9.0m to £13.4m and Data-led
consultancy by 75% from £1.9m to £3.3m. In the US total revenue increased
by 79% to £6.4m and platform revenue increased by 114% to £5.6m. UK and APAC
continued to grow strongly, up 38% and 24% respectively on the comparable
prior-year period. LatAm was flat year-on year, and Continental Europe was 4%
lower due mainly to lower bespoke consultancy revenue and a weaker Euro than
in H1 FY24.
Ad testing (Comms) revenue increased by 53% to £15.9m. Brand was 20% down on
H1 FY24 to £1.1m due to the runoff of a bespoke brand-tracking contract in
the UK. The Innovation product group fell by 13% over the same period to
£1.3m and is now the subject of significant and accelerated investment as we
set about revitalising it.
Our fame-building, products and partnerships helped the Company to win 161 new
platform clients in H1 (H1 FY24: 136), providing £3.3m in revenue (H1 FY24:
£2.4m, FY24: £8.2m). Noteworthy initiatives in H1 included:
· The Extraordinary Cost of Dull
(https://system1group.com/the-extraordinary-cost-of-dull) research in
collaboration with Peter Field and Adam Morgan was showcased on the main stage
at the Cannes Festival and became the second-most downloaded report in System1
history;
· Uncensored CMO (https://uncensoredcmo.com/) interviews with
US-based leading voices, including Scott Galloway;
· The Greenprint USA (https://system1group.com/greenprint) and The
Greenprint Brazil (https://system1group.com/the-greenprint-brasil) ,
(https://system1group.com/the-greenprint-brasil) a guide on how to effectively
incorporate sustainability messaging in advertising
· System1 Chief Innovation Officer Orlando Wood, Sir John Hegarty
and The Garage launched Advertising Principles Explained
(https://advertisingprinciplesexplained.com/) (a.p.e.), an advertising
effectiveness course that will engage with System1 clients and prospects
New business wins in the US delivered £1.3m of revenue in H1 and included:
· A large, California-based multi-billion revenue enterprise
software company;
· A challenger brand family that focuses on improving the health
and lifestyles of both people and their pets;
· A large, global investment management firm with US$20 billion in
annual revenue
In the UK and Europe new business flow was also strong with over 100 new
clients onboarded in H1 delivering over £1.5m of revenue, including:
· A global social media platform;
· A travel technology platform; and
· An online food delivery company
Net Revenue Retention (NRR) improved in H1 to over 120% for platform revenue
and over 110% overall, due to strong growth in the US and UK. (NRR is
calculated as H1 FY25 Revenue excluding new clients divided by H1 FY24
Revenue).
Gross profit margin decreased slightly from 87.8% in H1 FY24 to 87.3%, and
remained in line with FY24 and comfortably above our 85% benchmark.
Operating Costs increased by 26% versus H1 last year due to increased
investment in headcount to target growth, increased spend on marketing, a 68%
increase in variable pay from a much lower base in H1 FY 2024, and adverse
currency effects arising principally on the US dollar.
Overall average headcount increased by 12% to 160 FTE owing to recruitment in
the Sales and Operations teams to secure and service business growth.
We are investing £2m in additional discretionary investment in the next 18
months aimed at building our position in America and revitalising System1's
Innovation proposition, covering recruitment of additional personnel,
marketing and further IT development costs, and we believe we need to continue
to invest in growth to grow shareholder value.
Tax
The Group has recognised a tax charge of £0.8m in the six months to 30 September 2024 (H1 FY24: tax charge of £0.3m). The H1 FY24 figure included a receipt of £0.2m in respect of R&D tax credit claims in the UK. In October 2024, the group submitted an R&D claim for c.£0.3m. Subject to approval by HMRC, the R&D benefit will be offset against profits in the UK.
Earnings Per Share
Diluted and Basic Earnings per Share improved to 13.8p and 13.9p respectively
from an H1 FY24 Diluted and Basic earnings per share of 4.9p, in line with the
increase in post-tax profits in H1 FY25.
Cash
The Group ended the period with cash balances of £8.9m (H1 FY24 £6.3m, FY24:
£9.6m). Free cash flow after property lease costs and interest income
amounted to an outflow of £0.3m in the first half, reflecting the payment of
£2.6m in bonuses and commissions relating to FY24. (H1 FY24: free cash inflow
of £0.6m).
Dividend
The final dividend for FY24 (£0.6m) was paid on 18 October. As previously
announced, the Board's policy is to declare a final dividend only and there is
therefore no proposed interim dividend.
Balance Sheet
Total equity increased to £12.1m (31 March 2024: £10.6m), arising from the
year-to-date post-tax profit of £1.8m partially offset by a £0.2m loss on
foreign currency reserves caused by the revaluation of bank and debtor
balances at 30 September 2024. Intangible assets have decreased by £0.1m as a
result of amortisation charges of £0.3m slightly exceeding the additional
capitalisation associated with further development of the platform.
Current Trading & Outlook
Despite a difficult economic environment in some key markets, and challenging
conditions for media owners and advertisers, we believe System1 can continue
to grow profitably by gaining market share from large incumbents that we
believe have less predictive products.
The Company is trading in line with market expectations(2), including the
impact of the cost of additional investment to be incurred in the second half
of the fiscal year. The third quarter has begun well, and at this stage we
recognise that there may potentially be some revenue upside compared to
current market expectations, and we will provide further guidance as
appropriate with the Q3 Trading update in early February 2025.
James Gregory Chris Willford
Chief Executive Officer Chief Financial Officer
Condensed Consolidated Income Statement
for the 6 months ended 30 September 2024
Note Sep-24 Restated
Sep-23
£'000 £'000
Revenue 4 18,333 13,305
Cost of sales (2,319) (1,620)
Gross profit 16,014 11,685
Administrative expenses (13,751) (10,940)
Other operating income 264 196
Operating profit 2,527 941
Finance income 41 4
Finance expense (14) (20)
Profit before taxation 2,554 925
Income tax expense (796) (298)
Profit for the period 1,758 627
Attributable to the equity holders of the Company 1,758
627
Earnings per share attributable to equity holders of the Company
Basic earnings per share 5 13.9p 4.9p
Diluted earnings per share 5 13.8p 4.9p
CONDENSED Consolidated Statement of Comprehensive Income
for the 6 months ended 30 September 2024
Sep-24 Sep-23
£'000 £'000
Profit for the period 1,758 627
Other comprehensive income:
Items that may be subsequently reclassified to profit
Currency translation differences on translating foreign operations (190) 57
Other comprehensive income for the period, net of tax (190) 57
Total comprehensive income for the period attributable to equity holders of 1,568
the Company
684
CONDENSED Consolidated Balance Sheet
as at 30 September 2024
Registered no. 05940040
Note Sep-24 Mar-24
£'000 £'000
ASSETS
Non-current assets
Property, plant, and equipment 8 718 225
Intangible assets 9 1,510 1,578
Deferred tax asset 174 151
2,402 1,954
Current assets
Contract assets 204 180
Finance lease receivables - 85
Trade and other receivables 7,428 7,261
Cash and cash equivalents 8,852 9,610
16,484 17,136
Total assets 18,886 19,090
EQUITY
Attributable to equity holders of the Company
Share capital 12 132 132
Share premium account 1,601 1,601
Merger reserve 477 477
Foreign currency translation reserve 161 351
Retained earnings 9,692 8,007
Total equity 12,063 10,568
LIABILITIES
Non-current liabilities
Lease liabilities 11 202 66
202 66
Current liabilities
Provisions - 6
Lease liabilities 11 431 280
Contract liabilities 978 1,137
Income taxes payable 830 470
Trade and other payables 4,382 6,563
6,621 8,456
Total liabilities 6,823 8,522
Total equity and liabilities 18,886 19,090
CONDENSED Consolidated Statement of Cash Flows
for the 6 months ended 30 September 2024
Note Sep-24 Restated
Sep-23
£'000 £'000
Net cash generated from operations 13 815 1,896
Tax paid (434) (252)
Net cash generated from operating activities 381 1,644
Cash flows from investing activities
Purchases of property, plant, and equipment 8 (53) (38)
Purchase of intangible assets 9 (261) (500)
Net cash used by investing activities (314) (538)
Net cash flow before financing activities 67 1,106
Cash flows from financing activities
Interest received 41 4
Interest paid (14) (20)
Property lease liability payments (430) (533)
Net cash used by financing activities (403) (549)
Net (decrease)/increase in cash and cash equivalents (336) 557
Cash and cash equivalents at beginning of period 9,610 5,719
Exchange gain on cash and cash equivalents (422) 5
Cash and cash equivalents at end of period 8,852 6,281
Sep-24 Sep-23
£'000 £'000
Net cash flow before financing activities 66 1,106
Net cash flow for property leases (444) (553)
Operating cash (outflow)/inflow (378) 553
Consolidated Statement of Cash Flows (continued)
for the 6 months ended 30 September 2024
Consolidated Movements in Net Cash/(Debt)
Cash and cash equivalents Lease liabilities Total
£'000 £'000 £'000
At 1 April 2023 5,719 (1,456) 4,263
Cash flows 557 553 1,110
Non-cash charges
Interest on lease liabilities - (20) (20)
Exchange and other non-cash movements 5 1 6
At 30 September 2023 6,281 (922) 5,359
Consolidated Movements in Net Cash/(Debt)
Cash and cash equivalents Lease liabilities Total
£'000 £'000 £'000
At 1 April 2024 9,610 (346) 9,264
Cash flows (336) 444 108
Non-cash charges
Interest on lease liabilities - (14) (14)
New lease liabilities - (758) (758)
Disposal of lease liabilities - 42 42
Exchange and other non-cash movements (422) - (422)
At 30 September 2024 8,852 (632) 8,220
Consolidated Statement of Changes in Equity
for the 6 months ended 30 September 2024
Share capital Share premium account Merger reserve Foreign currency translation reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2023 132 1,601 477 423 5,974 8,607
Profit for the period - - - - 627 627
Other comprehensive income:
- currency translation differences - - - 57 - 57
Total comprehensive income - - - 57 627 684
Transactions with owners:
Employee share options:
- value of employee services - - - - 40 40
At 30 September 2023 132 1,601 477 480 6,641 9,331
At 1 April 2023 132 1,601 477 423 5,974 8,607
Profit for the period - - - - 2,033 2,033
Other comprehensive income:
- currency translation differences - - - (72) - (72)
Total comprehensive income - - - (72) 2,033 1,961
Transactions with owners:
Employee share options:
- value of employee services - - - - - -
At 31 March 2024 132 1,601 477 351 8,007 10,568
At 1 April 2024 132 1,601 477 351 8,007 10,568
Profit for the period - - - - 1,758 1,758
Other comprehensive income:
- currency translation differences - - - (190) - (190)
Total comprehensive income - - - (190) 1,758 1,568
Transactions with owners:
Employee share options:
- value of employee services - - - - (105) (105)
- deferred tax credited to equity - - - - 32 32
At 30 September 2024 132 1,601 477 161 9,692 12,063
Notes to the Condensed Consolidated Financial Statements
for the 6 months ended 30 September 2024
System1 Group PLC (the "Company") was incorporated on 19 September 2006 in the
United Kingdom. The Company's principal operating subsidiary, System1 Research
Limited, was at that time already established, having been incorporated on 29
December 1999. The address of the Company's registered office is 4 More London
Riverside, London, UK SE1 2AU. The Company's shares are listed on the AIM
Market of the London Stock Exchange ("AIM").
The Company and its subsidiaries (together the "Group") provide predictive
marketing data and market research consultancy.
The Board of Directors approved these interim financial statements for the six
months ended 30 September 2024 for issuance on 3 December 2024.
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006 and is
unaudited. The Group's latest statutory financial statements were for the year
ended 31 March 2024 and these have been approved by the Board of Directors and
filed with the Registrar of Companies. These accounts, which contained an
unqualified audit report under Section 495, did not include a reference to any
matters to which the auditor drew attention by way of emphasis of matter and
did not contain a statement under Section 498 (2) or (3) of the Companies Act
2006.
1. Basis of Preparation
This condensed consolidated interim financial information has been prepared in
accordance with UK adopted IAS 34 Interim Financial Reporting and on the going
concern basis. The Board reviews the performance of the Group monthly, and
senior management has a weekly assessment of sales revenue. The Group also
prepares and reviews cash flow forecasts and is confident that the going
concern assessment remains appropriate. The results presented in this report
are unaudited and they have been prepared in accordance with the recognition
and measurement principles of UK-adopted International Accounting Standards
that are expected to be applicable to the financial statements for the year
ending 31 March 2025 and on the basis of the accounting policies to be used in
those financial statements. The condensed consolidated financial statements do
not include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the Group's annual
financial statements, being the statutory financial statements for System1
Group plc, as at 31 March 2024, which have been prepared in accordance with UK
adopted International Accounting Standards with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The preparation of financial statements in accordance with UK-adopted
International Accounting Standards ("UK-adopted IFRS") requires the use of
certain critical accounting estimates.
2. Principal accounting policies
The principal accounting policies adopted are consistent with those of the
financial statements for the year ended 31 March 2024.
3. Prior period restatement
During the year ended 31 March 2024 the Group determined that the sublease of
its former New York office, previously accounted for as a right-of-use asset,
should have been presented as a finance lease receivable. The following table
summarises the impact of the prior period reclassification on the financial
statements of the Group. There is no impact on basic or diluted earnings per
share.
Consolidated income statement Restated As previously presented
H1 2024 H1 2024
£'000 £'000
Administrative expenses 10,940 11,070
Other income 196 330
Finance income 4 -
Increase/(decrease) in profit for the half year - -
Notes to the Condensed Consolidated Financial Statements
for the 6 months ended 30 September 2024
4. Segment Information
The financial performance of the Group's geographic operating units
("Reportable Segments") is set out below*.
Sep-24 Sep-23
Revenue Revenue
Restated**
£'000 £'000
By location of customer
USA 6,353 3,555
LatAm 1,171 1,193
United Kingdom 7,767 5,610
Rest of Europe 2,097 2,182
APAC 945 765
18,333 13,305
*Segmental revenue is revenue generated from external customers and so
excludes intercompany revenue and is attributable to geographical areas based
upon the location in which the service is delivered.
**Segment revenues have been restated to present USA and LatAm as separate
business units, consistent with the information presented to the Executive
Directors.
Consolidated balance sheet information is regularly provided to the Executive
Directors while segment balance sheet information is not. Accordingly, the
Company does not disclose segment balance sheet information here.
Sep-24 Sep-23
Revenue Revenue
£'000 £'000
By product variant
Data ("Predict Your") 13,365 9,036
Data-led consultancy ("Improve Your") 3,334 1,902
Platform revenue 16,699 10,938
Other consultancy (non-platform) 1,634 2,367
18,333 13,305
By product group
Communications (Ad Testing) 15,874 10,377
Brand (Brand Tracking) 1,148 1,420
Innovation 1,311 1,508
18,333 13,305
Notes to the Condensed Consolidated Financial Statements
for the 6 months ended 30 September 2024
5. Earnings Per Share
Sep-24 Sep-23
Profit attributable to equity holders of the Company, in £'000 1,758 627
Weighted average number of Ordinary Shares in issue 12,685,858 12,678,929
Basic earnings per share 13.9p 4.9p
Profit attributable to equity holders of the Company, in £'000 1,758 627
Weighted average number of Ordinary Shares in issue 12,685,858 12,678,929
Share options* 30,103 12,823
Weighted average number of Ordinary Shares for diluted earnings per share 12,715,961 12,691,752
Diluted earnings per share 13.8p 4.9p
6. Headcount
The average number of staff employed by the Group during the period was as
follows:
Sep-24 Sep-23
No. No.
Sales and marketing 54 50
Operations 50 39
IT 30 32
Administration 26 22
160 143
7. Dividends
The Company did not pay dividends in the six months ended 30 September 2024
and 30 September 2023. The Company does not propose the payment of an interim
dividend. On 18 October 2024 the Company paid a final dividend of £634,454
(5p per share) in respect of the year ended 31 March 2024, including £140,912
paid to the Company's Directors.
Notes to the Condensed Consolidated Financial Statements
for the 6 months ended 30 September 2024
8. Property, Plant, and Equipment
Right-of-use assets Furniture Computer hardware Total
and fixtures
£'000 £'000 £'000 £'000
Cost at 1 April 2023 1,244 11 206 1,461
Additions 175 - 97 272
Disposals (1,245) (11) - (1,256)
Foreign exchange (2) - - (2)
Cost at 31 March 2024 172 - 303 475
Depreciation at 1 April 2023 466 10 172 648
Depreciation charge for the year 645 1 56 702
Disposals (1,089) (11) - (1,100)
Foreign exchange 2 - (2) -
Depreciation at 31 March 2024 24 - 226 250
Carrying amount 31 March 2024 148 - 77 225
Cost at 1 April 2024 172 - 303 475
Additions 758 - 53 811
Disposals (79) - - (79)
Foreign exchange (15) - (4) (19)
Cost at 30 September 2024 836 - 352 1,188
Depreciation at 1 April 2024 24 - 226 250
Depreciation charge for the period 226 - 38 264
Disposals (40) - - (40)
Foreign exchange (2) - (2) (4)
Depreciation at 30 September 2024 208 - 262 470
Carrying amount 30 September 2024 628 - 90 718
Notes to the Condensed Consolidated Financial Statements
for the 6 months ended 30 September 2024
9. Intangible assets
Development costs Software Total
£'000 £'000 £'000
Cost at 1 April 2023 1,225 525 1,750
Additions 736 - 736
Cost at 31 March 2024 1,961 525 2,486
Amortisation at 1 April 2023 101 253 354
Amortisation for the year 423 131 554
Amortisation at 31 March 2024 524 384 908
Carrying value at 31 March 2024 1,437 141 1,578
Cost at 1 April 2024 1,961 525 2,486
Additions 261 - 261
Cost at 30 September 2024 2,222 525 2,747
Amortisation at 1 April 2024 524 384 908
Amortisation for the period 282 47 329
Amortisation at 30 September 2024 806 431 1,237
Carrying value at 30 September 2024 1,416 94 1,510
The only software asset as at 31 March and 30 September 2024 is the Group's
finance and operations system that was brought into use October 2020.
Development costs relate to costs capitalised for the development of the "Test
Your" platform (carrying value £358k; March 2024: £509k), which completed
during the year ended 31 March 2023, and the Supply Chain Automation platform
(carrying value £1,030k; March 2024: £930k), which enables System1 to
interface (via API) with multiple suppliers of panel respondents, was
completed during the period ended 30 September 2024. Development costs in
respect of completed projects are tested for impairment where impairment
indicators exist. No indicators exist at 30 September 2024 (31 March 2024:
none). Development costs in respect of ongoing projects are tested for
impairment at each reporting date. The carrying value of the assets in each
case are assigned to their respective cash generating units for the purposes
of assessing future cashflows. The principal assumptions used in the forecasts
were the timing and amount of future revenues and cost savings, which were
derived from the latest forecasts approved by the Board. Following the
assessment, the Board have determined that no impairment of assets is required
as at 30 September 2024 (31 March 2024: £nil). The headroom in the impairment
review exceeds the carrying value of the asset.
Notes to the Condensed Consolidated Financial Statements
for the 6 months ended 30 September 2024
10. Finance lease receivables
Sep-24 Mar-24
£'000 £'000
Amounts receivable under finance leases
Year 1 - 94
Year 2 - 94
Total undiscounted lease payments - 94
Unearned finance income - (29)
Net investment in lease - 85
Finance lease receivables related to the sublease of the Group's previous
office in New York, which expired in July 2024. There were no variable
payments within the lease arrangement. At each reporting date the Group
estimates the loss allowance on finance lease receivables. No amounts were
past due at 30 September 2024 or 31 March 2024.
11. Borrowings
The analysis of the maturity of lease liabilities is as follows:
Sep-24 Mar-24
£'000 £'000
Within one year 443 291
Later than 1 but no later than 5 years 204 68
More than 5 years - -
Minimum lease payments 647 359
Future finance charges (14) (13)
Recognised as a liability 633 346
The present value of finance lease liabilities is as follows:
Sep-24 Mar-24
£'000 £'000
Within one year 431 280
Later than 1 but no later than 5 years 202 66
More than 5 years - -
633 346
On 22 February 2023, the Company entered into an Overdraft Facility with HSBC.
The facility of up to a maximum of £1,500,000, is secured over the Company's
trade receivables, and incurs interest at 3% above the Bank of England base
rate on drawn balances. The facility has no fixed end date and can be
cancelled by either party at any time. During the period ended 30 September
2024, the Company has not drawn any amounts under the facility, and no amounts
have been drawn to the date of the signing of these financial statements
(amounts drawn in the year ended 31 March 2024: £nil).
Notes to the Condensed Consolidated Financial Statements
for the 6 months ended 30 September 2024
12. Share Capital
The share capital of System1 Group PLC consists of fully paid Ordinary Shares
("Shares") with a par value of one penny each. All Shares, excluding Treasury
Shares, are equally eligible to receive dividends and the repayment of capital
and represent one vote at the Annual General Meeting.
Sep-24 Mar-24
No. £'000 No. £'000
Allotted, called up, and fully paid ordinary shares 13,226,773 132 13,226,773 132
At 1 April and at 30 September
Sep-24 Mar-24
Treasury shares Weighted average exercise price per share Treasury shares Weighted average exercise price per share
No. Pence No. Pence
Shares held by Treasury
At 1 April 547,844 547,844
Transfer of shares to satisfy options exercise (10,144) - - -
At 30 September 537,700 547,844
13. Net Cash Generated from Operations
Sep-24 Sep-23
£'000 £'000
Profit before taxation 2,554 925
Depreciation of property, plant, and equipment 264 337
Amortisation and impairment of intangible assets 329 246
Profit on disposal of property, plant and equipment (2) -
Interest (received)/paid (27) 16
Share-based payment expense (105) 40
Increase in contract assets (24) (69)
Decrease in finance lease receivables 85 129
Increase in trade and other receivables (167) (219)
(Decrease)/increase in trade and other payables (2,182) 432
(Decrease)/increase in contract liabilities (158) 32
Decrease in provisions (6) (29)
Exchange differences on operating items 254 56
Net cash generated from operations 815 1,896
Notes to the Condensed Consolidated Financial Statements
for the 6 months ended 30 September 2024
14. Expenses by Nature
Sep-24 Sep-23
£'000 £'000
Employee benefit expense 7,139 6,391
Employee benefit expense - variable pay 1,891 1,124
Other research and development costs 538 697
Capitalised development costs - gross of amortisation (261) (500)
Depreciation, amortisation, and impairment 593 583
Lease expense related to short term leases 63 115
Net foreign exchange losses 429 74
Third party direct costs (sample, translation, data processing) 2,319 1,620
Indirect delivery costs 465 387
Other expenses 2,894 2,068
16,070 12,560
15. Reconciliation between Profit Before tax and Adjusted EBITDA:
Sep-24 Sep-23
£'000 £'000
Profit Before Tax 2,554 925
Add:
Share-based payment (credit)/expense* (131) 52
Adjusted Profit Before Tax 2,423 977
Finance income (41) (4)
Finance expense 14 20
Depreciation 264 337
Amortisation 329 246
Adjusted EBITDA 2,989 1,576
*Share-based payment expenses include the associated cost of the provision for employer's social security.
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