System1 Group PLC (AIM: SYS1)

 ("System1", or "the Company", or "the Group")

Half Year Trading Update

In advance of its interim results announcement due at the end of November, System1 today issues an update on trading for the half year ended 30 September 2022 (H1).

Data revenue grew 38% to £6.2m (H1 last year: £4.5m) representing 59% of H1 revenue, the highest absolute six-month revenue for our automated predictions and the highest proportion of Group revenue since launching in 2020. The continued Data growth was offset by a 46% decline in consultancy from £7.9m to £4.3m. Consequently, total H1 revenue declined 15% on the comparable period last year to £10.5m from £12.4m in H1 last year, in line with management's expectations.

Gross profit fell by 18% to £8.5m (H1 last year: £10.4m) on revenue down 15% versus the comparable period last year, with the reduction in margin due mainly to region and product mix. Adjusted Operating Costs reduced by 1% to £9.0m, and the Company expects to report an Adjusted Pre-Tax Loss of £0.4m in the first half, compared to an Adjusted Pre-Tax Profit of £1.3m in H1 last year. At Statutory Pre-Tax Profit level, the Company expects to break even in the first half, down £1.3m on H1 last year.

H1 period-end cash, net of borrowings, was £6.6m, compared to £8.7m at end-March 2022, an outflow for the period reflecting the Adjusted Pre-Tax higher working capital and the repurchase of shares on market.

The Board is encouraged by the strong growth in "Test Your" Data products which now represent almost 60% of Group revenues in H1 and grew 17% compared to the preceding half year. It is clear that the transition from bespoke research consultancy to platform-based "Test Your" data is well underway, and the Board expects the drag from declining bespoke research consultancy to reduce progressively.

US Litigation

On 9 November 2021, System1 announced that it had filed a complaint for trademark infringement, unfair competition and deceptive trade practices at the United States District Court Southern District of New York against System1 LLC ("LLC") over their infringing use of the mark "System1".

Earlier this month, the U.S. District Court Southern District of New York rejected LLC's motion to dismiss the complaint which means the case will proceed as planned.

In the same week, we received positive news for the next stage in the legal case by successfully registering the mark "System1" with the United States Patent and Trademark Office for use in classes 35 and 38, matching the registrations already held in the UK, EU, and other territories.

Strategic Review

As announced on 31 August 2022, the Board is conducting a review of its strategic options for growing the business and increasing shareholder value. The Board also decided to postpone the previously planned tender offer and share buyback programme, with decisions on future returns of capital being considered as part of the overall strategic review. As previously announced, the Board intends to update the market on its strategic review alongside the interim results announcement on 30 November.

Further information on the Company can be found at 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.

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