RNS Number : 0035I
System1 Group PLC
30 November 2022
 

Press Release

30 November 2022

 

System1 Group PLC (AIM: SYS1)

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

 

Unaudited interim results for the six months ended 30 September 2022

 

System1 Group announces its unaudited interim results for the six months ended 30 September 2022 ("H1") and provides an update on its strategic review (the "Review").

 



Sep-22

Sep-21

Change**



£m

£m

%

Management Basis*

 









Revenue


 10.5

           12.4

-15%

Gross Profit


 8.5

           10.4

-18%

Adjusted Operating Costs


 (8.9)

           (9.1)

-2%

Adjusted (Loss)/Profit before Taxation


 (0.4)

            1.3

-131%






Statutory Basis

 









Revenue


 10.5

           12.4

-15%

Gross Profit


 8.5

           10.4

-18%

Operating Costs


 (8.6)

           (9.2)

-6%

Other Operating Income


 0.1

            0.1

-15%

Profit before Taxation


 0.0

            1.3

-100%

Income Tax Expense


 (0.2)

           (0.2)

15%

(Loss)/Profit for the Period


 (0.2)

            1.1

-119%

Diluted Earnings per Share


(1.7p)

8.8p





 

* Adjusted Operating Costs exclude impairment, interest, share based payments, bonuses, severance costs, and government support. Adjusted figures exclude items, positive and negative, that impede easy understanding of underlying performance.

 

** Percentages and totals are based on numbers rounded to £'000s

 

H1 Highlights

·    Data revenue (Test Your Ad, Test Your Brand, Test Your Idea) grew 38% on H1 last year to £6.2m and represented 59% of total revenue.

·    New product launches in the period: Test Your Idea (TYI) automated early-stage innovation testing and Test Your Ad Static.

·    85 new data customers in H1 (of which 11 TYI), 155 repeating data customers (who purchased data products during the previous financial year)

·    Gross profit margin 81.5% (H1 2021/22: 83.9%).

·    Adjusted Operating Costs reduced by 2% (Statutory down 6%); average H1 headcount up 4% to 152 (H1 2021/22: 146).

·    £0.4m Adjusted operating loss; break even statutory profit before tax.

·    £0.2m Tax charge in the period related to non-UK subsidiaries.

·    £6.6m Net Cash as at 30 September 2022 (31 March 2022: £8.7m).

·    Diluted and basic loss per share (1.7p) (H1 2021/22 diluted and basic earnings per share: 8.8p).

 

Current Trading & Outlook

·    Second half of the year has started well, and we expect H2 revenue to exceed H1.

·    Board is mindful of the current economic environment, particularly in Europe.

·    Higher H1 exit run-rate for expenditure, combined with exchange rate and inflationary pressures are likely to increase expenditure and erode profitability in H2.

Strategic Review - Introduction

 

On 31 August the Board announced a review of its strategic options for growing the business and increasing shareholder value. Today we provide an update on progress. The Review has validated our existing successful focus on automated 'Test Your' and 'Improve Your' services for testing and improving creative content, including all forms of advertising and product innovations, underpinned by our world-leading IP, brand tracking and Ad Ratings database. 

 

·    Our Unique Selling Proposition is 'Predictiveness', offered at market beating speed and value.

·    We will focus increasingly on automated testing of digital ad formats to generate growth, as well as continuing to support TV, Audio, Print and Outdoor formats.

·    We will continue to target the world's largest advertisers with the aim to generate greater recurring and repeating revenues.

·    In addition, significantly increase our focus on commercial partnerships with major ad platforms/media owners such as LinkedIn and ITV. These platforms provide the Company with access to multiple advertisers at significantly reduced customer acquisition costs.

·    Furthermore, we will target advertising & media agency groups, such as Omnicom/BBDO, and professional service firms who provide advertising effectiveness advice to multiple clients, with a view to including our 'Test Your' and 'Improve Your' products in their suite of service recommendations, again reducing customer acquisition costs.

·    We will significantly increase our focus on the US market which offers the greatest potential for rapid growth given the size of its advertising and digital media owner marketplace.

·    In terms of financial metrics, our goal is to become a 'Rule of 40' company, whereby we will target the sum of our data revenue growth rate and adjusted EBITDA margin to be in excess of 40%, delivering a value enhancing blend of growth and return. In the near future the balance will favour Data revenue growth, as demonstrated in the 38% year-on-year increase in H1.

·    In line with the focus on Data revenue growth, we are cancelling the £1.5m buyback tender offer announced in June, in order to provide more growth capital for the business.

 

 

Strategic Review - Personnel Changes

·    John Kearon, currently Founder and CEO, will become Founder & President from 1 December, with the priority task of securing new business and partnership opportunities in the US, where he will spend most of the first half of 2023. John will no longer act as CEO but will remain a director of the Company.

·    James Gregory, currently COO, will be appointed CEO from 1 December to lead the execution of the new strategy, complete our digital transformation and scale the business. He will be appointed to the Board at the earliest opportunity following completion of the usual regulatory procedures, and a further announcement will follow in due course.

·    The Board will seek to appoint an adviser in the US with expertise in digital media to assist with the development of growth plans in that area. The search for this individual is underway with an appointment expected in Q1 2023.

·    More broadly, the Company will seek to retain, find, and develop the people who can execute our growth plans, with particular emphasis on the US partnerships and digital.

 

Strategic Review Longer-Term Objectives

·   Longer-term our ambition is to attract small business customers with a self-serve product, but in the short to medium term we will reach this customer segment via commercial partners such as LinkedIn.

·   Our Test Your and Improve Your products would suit a SaaS business model and, longer term, a subscription revenue model is highly attractive to us. Any transition to this, however, will only be when we have lowered our customer acquisition costs; and in agreement with our customers to transact that way. Importantly, our tech platform is already capable of handling such a switch.

·   We are close to the completion of our joint Artificial Intelligence project with the University of Warwick and will launch the second phase after publishing the results of phase one.

 

 

Strategic Review - Next Steps

·    We will provide an update as and when there are further developments.

·    Information on implementation of the Strategic Review will be presented at a Capital Markets Day on 28 February 2023.

 

 

 

 

System1 Founder and CEO John Kearon commented:

 

"Our transformation to a digital/data-led business is well underway, and the Review has identified opportunities to leverage our platform and extend our reach via commercial partnerships. We believe the US market offers us the greatest opportunity, which is why I am going to spend more time there to focus on new business. I am delighted that James Gregory has agreed to succeed me as CEO - he is the ideal person to deliver the new strategy for the benefit of all stakeholders.

 

System1 now has the opportunity to 'punch above our weight' - we are global industry thought leaders with a superb, proven suite of products. We outperform our competitors on the key measure of 'predictiveness' as well as on speed and cost. We have a great client list - but we need to grow it a lot more, take the opportunity to do more business with all our customers and expand our routes to market. That way we will grow our revenues significantly, have much more recurring and repeating activity, and significantly grow the value of the business. The System1 team is energised and excited to pursue the growth opportunities ahead of us".

 

Further information on the Company and the implementation of the Strategic Review to follow at 28 February Capital Markets Day.

 

Further information on the Company can be found at 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


John Kearon, Founder and CEO

Chris Willford, Chief Financial Officer






Canaccord Genuity Limited (Nominated Adviser & Broker)

Tel: +44 (0)20 7523 8000

Simon Bridges / Andrew Potts


 



 

Interim Statement

 

 

Financial Performance

The continuing decline in our complex consultancy products (44% down on H1 last year) led to headline revenue being down by 15%, despite encouraging progress in our "Test Your" product suite (Data) which increased by 38% to £6.2m and now Data revenue represents just under 60% of company revenue. We had 240 Data customers in H1, of which 85 were new. The Innovation product group saw the biggest relative decline in total revenue versus last year, reflecting the later availability of an automated solution (TYI launched in May) in that category. Brand grew 14% year on year due mainly to the successful launch of TYB in the Americas. By region, the UK and Europe were affected by customers' budgetary response to the Ukraine invasion and associated economic shocks. The market in the Americas has been stronger; the sales performance in that region was due mainly to a rebuild from ground up on the US sales force, and the performance in recent months is encouraging.

 

Adjusted Operating Costs decreased by 2% versus H1 last year due mainly to the capitalisation of £0.7m platform-related development costs (H1 2021/22: nil). Development costs related to specific products in the prior 2 years were expensed. Employment costs rose as planned and increased progressively in sales, marketing and IT and development as we pursued our plans to scale up through partnerships and our automated testing platform. Overall average headcount increased by 4% to 152 FTE with growth in Sales and IT offset by reductions in operations. Statutory operating costs fell by 6% and include the favourable impact of exchange rate movements on non-sterling bank balances.

 

Intellectual Property 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".

 

In October 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 line with the recommended practice in the US legal system, we are about to commence a period of mediation in advance of further court proceedings.

 

Also in October 2022, 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.

 

Tax

The Company has recognised a tax charge of £0.2m in the six months to 30 September 2022 (H1 2021/22: tax charge of £0.1m), due to the distribution of trading profits in overseas jurisdictions which cannot be offset against trading losses elsewhere. In the prior H1 period, a £0.5m tax credit was recognised in respect of R&D claims.

 

Earnings Per Share

Diluted and Basic Earnings per Share fell from 8.8p to a loss per share of 1.7p, in line with year-to-date losses.



 

 

Cash

The Company ended the period with cash balances of £9.1m, £6.6m net of borrowings (H1 2021/22: £7.5m). Operating cash flow before debt financing and after all property lease costs amounted to an outflow of £2.6m in the first half.

 

Balance Sheet

Total equity increased to £8.5m (31 March 2022: £8.3m), with the year-to-date after-tax loss of £0.2m being more than offset by the increase in the foreign exchange reserve due to the weakening of Sterling across the period. Intangible assets have increased by £0.6m as a result of the capitalisation of certain platform development costs. The Company's borrowings consist of a £2.5m revolving credit facility that has been in place since February 2020.

 

Current Trading & Outlook

Whilst the second half of the year has started well, and we expect H2 revenue to exceed H1, the Board is mindful of the current economic backdrop particularly in Europe. The higher H1 exit run-rate for expenditure, combined with exchange rate and inflationary pressures are likely to increase expenditure and erode profitability in H2.  We now have the platform and human capital to serve a significantly bigger revenue base and are focused on growing from this point to deliver superior returns to our shareholders.

 

 

John Kearon

Founder and CEO


Chris Willford

Chief Financial Officer

 



 

Condensed Consolidated Income Statement

for the 6 months ended 30 September 2022

 


Note

Sep-22

Sep-21

 


£'000

£'000





Revenue

3

          10,496

          12,355

Cost of sales


           (1,946)

           (1,983)

Gross profit

3

          8,550

          10,372





Administrative expenses


           (8,696)

           (9,124)

Other operating income


                 224

                 85



 


Operating profit

 

            78

            1,333





Finance expense


               (84)

               (80)



 


(Loss)/Profit before taxation

 

            (6)

            1,253





Income tax expense


             (204)

             (122)





(Loss)/Profit for the period

 

            (210)

            1,131





Attributable to the equity holders of the Company

 

            (210)

            1,131





Earnings per share attributable to equity holders of the Company

 







Basic (loss)/earnings per share

4

(1.7p)

8.8p

Diluted (loss)/earnings per share

4

(1.7p)

8.8p

 



 

CONDENSED Consolidated Statement of Comprehensive Income

for the 6 months ended 30 September 2022

 



Sep-22

Sep-21

 


£'000

£'000





(Loss)/profit for the period

 

       (210)

          1,131





Other comprehensive income:

 



 

Currency translation differences on translating foreign operations

            447

         92

Other comprehensive income for the period, net of tax

            447

         92





Total comprehensive income for the period attributable to equity holders of the Company

       237

            1,223





 



 

CONDENSED Consolidated Balance Sheet

as at 30 September 2022

 

Registered no. 05940040

 


Note

Sep-22

Mar-22

 


£'000

£'000





ASSETS

 



Non-current assets

 



Property, plant, and equipment

7

       1,660

       2,054

Intangible assets

                 8

          977

          382

Deferred tax asset


          265

          292



       2,902

       2,728

Current assets

 



Contract assets


          151

          198

Trade and other receivables


       5,492

       4,492

Cash and cash equivalents


     9,064

       11,174



     14,707

     15,864





Total assets

 

     17,609

     18,592





EQUITY

 



Attributable to equity holders of the Company

 


Share capital

10

          132

          132

Share premium account


       1,601

       1,601

Merger reserve


          477

          477

Foreign currency translation reserve


          643

         196

Retained earnings


       5,694

       5,857

Total equity

 

       8,547

       8,263





LIABILITIES

 



Non-current liabilities

 



Provisions


          364

          432

Lease liabilities

9

       965

          1,417



       1,329

       1,849

Current liabilities

 



Provisions


          97

          77

Lease liabilities

9

       1,110

       1,091

Borrowings

9

2,500

2,500

Contract liabilities


          1,042

          991

Income taxes payable


          249

          267

Trade and other payables


       2,736

       3,554



       7,733

       8,480



 


Total liabilities

 

     9,062

     10,329

Total equity and liabilities

 

     17,609

     18,592





 



 

CONDENSED Consolidated Statement of Cash Flows

for the 6 months ended 30 September 2022

 


Note

Sep-22

Sep-21

 


£'000

£'000





Net cash (used in)/generated from operations

11

      (1,297)

      1,501

Tax (paid)/received


        (187)

        377

Net cash (used in)/generated from operating activities

 

      (1,484)

      1,878





Cash flows from investing activities

 



Purchases of property, plant, and equipment

7

         (3)

         (72)

Purchase of intangible assets

             8

         (654)

         (53)

Net cash used by investing activities

 

       (657)

       (125)



 


Net cash flow before financing activities

 

      (2,141)

      1,753





Cash flows from financing activities

 



Interest paid


         (84)

         (80)

Property lease liability payments


       (433)

       (599)

Purchase of own shares


(135)


Net cash used by financing activities

 

       (652)

       (679)





Net (decrease)/increase in cash and cash equivalents

 

      (2,793)

      1,074





Cash and cash equivalents at beginning of period

 

      11,174

      9,008

Exchange gain/(loss) on cash and cash equivalents


       683

       (38)





Cash and cash equivalents at end of period

 

    9,064

    10,044







Sep-22

Sep-21

 


£'000

£'000





Net cash flow before financing activities


      (2,141)

      1,753

Net cash flow for property leases


       (468)

       (644)

Operating cash flow


      (2,609)

      1,109





 



 

Consolidated Statement of Cash Flows (continued)

for the 6 months ended 30 September 2022

 

 

Consolidated Movements in Net Cash/(Debt)



Cash and cash equivalents

Borrowings

Lease liabilities

Total

 


£'000

£'000

£'000

£'000







At 1 April 2021

 

      9,008

    (2,500)

    (2,575)

     3,933

Cash flows


      1,196

             -

        644

     1,840

Non-cash charges






Interest on lease liabilities


             -

             -

        (45)

        (45)

New lease liabilities


             -

             -

      (459)

      (459)

Exchange and other non-cash movements


       (160)

             -

            -

      (160)

At 30 September 2021

 

    10,044

    (2,500)

    (2,435)

     5,109

 

Consolidated Movements in Net Cash/(Debt)



Cash and cash equivalents

Borrowings

Lease liabilities

Total

 


£'000

£'000

£'000

£'000







At 1 April 2022

 

      11,174

    (2,500)

    (2,508)

     6,166

Cash flows


      (2,793)

             -

        478

     (2,315)

Non-cash charges






Interest on lease liabilities


             -

             -

        (45)

        (45)

New lease liabilities


             -

             -

      -

      -

Exchange and other non-cash movements


       683

             -

            -

      683

At 30 September 2022

 

    9,064

    (2,500)

    (2,075)

     4,489



 

Consolidated Statement of Changes in Equity

for the 6 months ended 30 September 2022

 



Share capital

Share premium account

Merger reserve

Foreign currency translation reserve

Retained earnings

Total

 


£'000

£'000

£'000

£'000

£'000

£'000

 








At 1 April 2021

 

        132

      1,601

        477

       (146)

      5,170

      7,234

 








Profit for the period


            -

             -

            -

            -

      1, 131

      1,131

Other comprehensive income:








- currency translation differences


            -

             -

            -

          91

            1

          92

 







 

Total comprehensive income

 

        -

-

-

91

1,132

      1,223

 








Transactions with owners:








Employee share options:








- value of employee services


            -

             -

            -

            -

          17

          17

 








At 30 September 2021

 

        132

      1,601

        477

        (55)

      6,319

      8,474

 








At 1 April 2022

 

        132

      1,601

        477

       196

      5,857

      8,263

 








Loss for the period


            -

             -

            -

            -

      (210)

      (210)

Other comprehensive income:








- currency translation differences


            -

             -

            -

          447

            -

          447

 







 

Total comprehensive income

 

        -

      -

        -

        447

      (210)

      237

 








Transactions with owners:








Employee share options:








- value of employee services


            -

             -

            -

            -

          182

          182

Purchase of own shares






(135)

(135)

 








At 30 September 2022

 

        132

      1,601

        477

        643

      5,694

      8,547

 








 



 

Notes to the Condensed Consolidated Financial Statements

for the 6 months ended 30 September 2022

 

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 Alternative Investment 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 2022 for issuance on 30 November 2022.

 

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 2022 and these have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain an emphasis of matter paragraph and any statement under Section 498 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 Group is mindful of the current economic backdrop in Europe, and the Board continues to review the performance of the Group monthly, and senior management has a weekly assessment of sales revenue and gross profit. The Group also prepares and reviews cash flow forecasts and is confident that the going concern assessment remains appropriate. This financial information should be read in conjunction with the financial statements for the year ended 31 March 2022, which have been prepared under the historical cost convention.

The preparation of financial statements in accordance with International Financial Reporting Standards ("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 2022.

 

3.   Segment Information

The financial performance of the Group's geographic operating units ("Reportable Segments") is set out below.

 



Sep-22

Sep-21

 


Revenue

Gross profit

Revenue

Gross profit



£'000

£'000

£'000

£'000







By location of customer

 





Americas


      4,050

      3,262

      4,483

      3,885

United Kingdom


      3,844

      3,074

      3,980

      3,110

Rest of Europe


      1,864

      1,546

      2,906

      2,498

APAC


         738

         668

         986

         879



    10,496

    8,550

    12,355

    10,372

 

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.



 

 



Sep-22

Sep-21

 


Revenue

Gross profit

Revenue

Gross profit



£'000

£'000

£'000

£'000







By product variant

 





Data


      6,153

      4,859

      4,495

      3,826

Consultancy


4,304

3,666

7,725

6,520

Other services


39

25

135

26



    10,496

    8,550

    12,355

    10,372







By product group

 





Communications (Ad Testing)


      7,022

      5,803

      7,313

      6,178

Brand (Brand Tracking)


      1,865

      1,324

      1,632

      1,237

Idea (Innovation)


      1,571

      1,399

      3,283

      2,931

Other services


         38

           24

         127

           26



    10,496

    8,550

    12,355

    10,372

 

 

4.   Earnings Per Share


Sep-22

Sep-21

 



(Loss)/Profit attributable to equity holders of the Company, in £'000

(210)

1,131

Weighted average number of Ordinary Shares in issue

12,717,762

12,806,391

Basic (loss)/earnings per share

(1.7p)

8.8p




(Loss)/Profit attributable to equity holders of the Company, in £'000

(210)

1,131

Weighted average number of Ordinary Shares in issue

12,717,762

12,806,391

Share options*

13,000

12,299

Weighted average number of Ordinary Shares for diluted earnings per share

12,730,762

12,818,690

Diluted (loss)/earnings per share

(1.7p)

8.8p

     *The impact of share options is anti-dilutive in the current period due to the loss.

 

5.   Headcount

The average number of staff employed by the Group during the period was as follows:



Sep-22

Sep-21

 


No.

No.





Sales and marketing


          47

          39

Operations


          45

          52

IT


          38

          34

Administration


          22

          21



        152

        146

 

6.   Dividends

The Company did not pay dividends in the six months ended 30 September 2022 and 30 September 2021. The Company does not propose the payment of an interim dividend.

 

No dividends were paid to the Company's directors.



 

 

7.   Properly, Plant, and Equipment



Right-of-use assets

Furniture and fixtures

Computer hardware

Total

 


£'000

£'000

£'000

£'000







At 1 April 2021

 





Cost


       1.747

        30

         114

       1,891

Accumulated depreciation


     (402)

       (13)

        (41)

     (456)

Net book value


       1,345

          17

           73

       1,435







Net book value, at 1 April 2021

       1,345

          17

           73

           1,435

Additions

            -

           1,984

         1

           73

         2,058

Disposals

-

(196)

-

-

(196)

Foreign exchange

            -

            16

            1

            4

            21

Remeasurement of right-of-use assets


(405)

-

-

(405)

Depreciation charge for the year

        (773)

          (15)

          (71)

          (859)

Net book value, at 31 March 2022

       1,971

       4

            79

           2,054







At 31 March 2022

 





Cost


       3,555

          33

         192

       3,780

Accumulated depreciation


        (1,584)

        (29)

          (113)

        (1,726)

Net book value


       1, 971

            4

           79

       2,054







At 1 April 2022

 





Cost


       3,555

        33

         192

       3,780

Accumulated depreciation


     (1,584)

       (29)

        (113)

     (1,726)

Net book value


       1,971

          4

           79

       2,054

 






Net book value, at 1 April 2022

       1,971

          4

           79

       2,054

Additions


         -

            -

           3

         3

Foreign exchange


              99

            -

            -

            99

Depreciation charge for the year

        (450)

          (1)

          (45)

        (496)

Net book value, at 30 September 2022

       1,620

            3

           37

       1,660

 






At 30 September 2022

 





Cost


       2,139

          11

         179

       2,329

Accumulated depreciation


        (519)

        (8)

          (142)

        (669)

Net book value


       1,620

            3

           37

       1,660

 






 

In the twelve months ended 31 March 2022, the Group added a new right-of-use asset for a sublease in regard to the Company's New York Office lease asset which had been fully impaired in the previous financial year. The value of the sublease was for £740,000 of which £43,000 was a cash settlement. This in turn has led to a re-recognition of the lease liability of the head lease of £459,000 with corresponding reversal of £230,000 relating to the impairment from 30 September 2020.

 

No impairment charges or reversals have been recorded in the six months ended 30 September 2022, and there have been no substantive changes to leasehold arrangements.



 

 

8.   Intangible assets



Development costs

Software licences

Total

 


£'000

£'000

£'000






At 1 April 2021

 




Cost


       -

       464

       464

Accumulated depreciation


     -

     (46)

     (46)

Net book value


       -

         418

       418






Net book value, at 1 April 2021

       -

         418

       418

Additions


           -

 59

           59

Depreciation charge for the year

     -

          (95)

     (95)

Net book value, at 31 March 2022

       -

           382

       382






At 31 March 2022

 




Cost


       -

         525

         525

Accumulated depreciation


     -

        (143)

        (143)

Net book value


       -

           382

           382






At 1 April 2022

 




Cost


       -

         525

         525

Accumulated depreciation


     -

        (143)

        (143)

Net book value


       -

           382

           382

 





Net book value, at 1 April 2022

       -

           382

           382

Additions


654

           -

         654

Disposals


-

(1)

(1)

Depreciation charge for the year

        -

          (58)

        (58)

Net book value, at 30 September 2022

       654

           323

       977

 





At 30 September 2022

 




Cost


       654

         529

       1,183

Accumulated depreciation


        -

          (206)

        (206)

Net book value


       654

           323

       977

 





During the period ended 30 September 2022, the company has capitalised £654k of development costs in respect of three key projects: the credit platform, the notifications service and the team management system. The platforms were not complete as at the period end; therefore no amortisation has been recognised.



 

 

9.   Borrowings

In February 2020, the Company entered a 3-year revolving credit facility with HSBC. The agreement allows the Company to draw down up to £2,500,000 for the purposes of funding general corporate and working capital requirements. The facility is secured over the assets of those Group companies domiciled in the United Kingdom and the United States. The loan accrues interest at a rate of 2.5% above SONIA (Sterling Overnight Index Average) and is subject to leverage and interest covenants.

 

The analysis of the maturity of lease liabilities is as follows:



Sep-22

Mar-22

 


£'000

£'000





Within one year


      1,161

      1,147

Later than 1 but no later than 5 years

      978

         1,447

More than 5 years


             -

 -

Minimum lease payments

      2,139

      2,594

Future finance charges


       (64)

         (86)

Recognised as a liability

      2,075

      2,508





The present value of finance lease liabilities is as follows:







Sep-22

Mar-22

 


£'000

£'000





Within one year


      1,110

      1,091

Later than 1 but no later than 5 years

      965

         1,417

More than 5 years


 -

 -



      2,075

      2,508

 

10.  Share Capital

The share capital of System1 Group PLC consists only of fully paid Ordinary Shares ("Shares") with a par value of one penny each. All Shares are equally eligible to receive dividends and the repayment of capital, and represent one vote at the Annual General Meeting.

 



Sep-22

Mar-22

 


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-22

Mar-22

 


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


        487,151

 

        510,421


Purchase of treasury shares


          60,693

 

        158,674


Transfer of shares to satisfy options exercise

         -

            -

      (181,944)

             -

At 30 September


        547,844

 

        487,151


 



 

 

11.  Net Cash Generated from Operations



Sep-22

Sep-21

 


£'000

£'000





Profit before taxation

 

     (6)

     1,253

Depreciation of property, plant, and equipment

        496

472

Amortisation and impairment of intangible assets

          58

47

Loss on disposal of property, plant, and equipment

            -

-

Interest paid


          84

          80

Share-based payment expense


          182

          17

(Increase)/decrease in contract assets


        47

        (18)

(Increase)/decrease in trade and other receivables

      (1,001)

(588)

Increase/(decrease) in trade and other payables

        (819)

277

Increase/(decrease) in deferred income

        51

(22)

(Decrease)/increase in provisions


          (65)

          89

Exchange differences on operating items

      (323)

(106)



     (1,297)

     1,501





12.  Post Balance Sheet Events

On 31 August 2022 the board announced a review of its strategic options for growing the business and increasing shareholder value. The initial findings of the review are reported at the front of this document.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR BKCBQNBDBKDB