System1 Group Regulatory News (SYS1)

System1 Group PLC (AIM: SYS1)

formerly BrainJuicer Group PLC

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

Financial results to 31 March 2017

System1, the international marketing and market research agency, today announces its results for the 15 month period ended 31 March 2017.

As previously announced the Company has changed its year-end from 31 December to 31 March, and this is the first financial reporting period adopting the new year-end date.

In order to show how the Company has performed over this 15 month period compared to prior 12 month periods, the Company has produced pro forma unaudited financial results for the 12 months ended 31 March 2017, and will also draw on the unaudited financial results for the 12 months ended 31 December 2016 (previously announced, on 9th February 2017). Wherever mentioned, "2016/17" refers to the 12 months to 31 March 2017 and "2015/16" refers to the 12 months to 31 March 2016; "2016" refers to the 12 months to 31 December 2016 and "2015" refers to the 12 months to 31 December 2015.

Growth over the 12 months ended 31 March 2017

Growth over the 12 months ended 31 December 2016

Cashflow

Dividends

In view of the strong results and cash position, the Board is proposing to pay the following in August 2017:

15 month period ended 31 March 2017

Growth percentages for the 15 month period ended 31 March 2017 are not presented due to the lack of comparability. For completeness and in accordance with FRC guidelines, absolute figures for the 15 month period are included below:

Commenting on the Company's results, John Kearon, Chief Executive Officer of System1, said:

"Last year's strong results were a great finish to Chapter 1 of the company's growth and the perfect set up for Chapter 2, as System1. During our first 16 years, as BrainJuicer, we built an international business challenging the market research industry - testament to which is being voted, 'Most Innovative Company' for the 6th year in a row.

In the next Chapter of growth, as System1, we're aiming to build a far bigger business challenging the marketing services industry, by being better able to produce and predict marketing that achieves profitable growth.

In the short term, trading during Q1 of our new financial year has been a little slower than we expected and we are investing in some senior hires in the US, but we remain confident of making further progress over the year as a whole."

The Company can be found at www.system1group.com.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further information, please contact:

CHAIRMAN'S STATEMENT

The period covered by this report to shareholders, the 15 months ended 31 March 2017, has been eventful and demanding, but ultimately successful for your Company.

The change in our financial year end, from December to March, was flagged and explained in my statement in the 2015 Annual Report. One short-term consequence of the change is that, in order to facilitate comparison with both prior and future periods, we have produced more sets of numbers than usual. These are summarized in the Business and Financial Review, which begins on page 8, and in the 5 Year Summary on page 15, and have been produced in the interests of transparency.

Importantly, whichever comparative period you focus on, the business overall has performed strongly. Profits have risen sharply, benefiting from a combination of double digit underlying gross profit growth and the translation benefit of Sterling weakness. For the 15 months ended 31 March 2017, the Company generated revenue of £39.00m, gross profit of £32.06m, profit before tax of £7.23m, and fully diluted earnings per share of 35.9p. The business has once again been highly cash generative. Reflecting these factors, the Board is proposing both a major increase in our final dividend and a substantial special dividend.

Our share price has been extremely strong. As I write the shares are trading at around 860 pence, compared with just 357 pence at the beginning of 2016, an increase of some 141%. It is worth remembering that the Company's shares were initially floated, in December 2006, at just 108p, and that since then some 63 pence per share has been returned to shareholders by way of ordinary and special dividends.

The decision to change the name of the business, with effect from 1st April 2017, from BrainJuicer Group PLC to System1 Group PLC, was taken after much debate, but the positive reaction, both internally and from clients, has reinforced our belief that the change was both appropriate and well timed. The BrainJuicer name served us very well since the business was established in 2000. However, we feel that System 1 is more in keeping with where we are now, and where we intend to get to.

The change marks the start of a new phase for the Company. We have built our business by applying Behavioural Science to market research techniques. Behavioural Science is based on what psychologists have termed "System 1" thinking - the system of the mind which operates automatically and quickly with little or no effort. Having from the Company's inception espoused the System 1 approach to market research, and having last year launched our advertising agency, System1 Agency, we have now adopted the System1 name across the business.

John Kearon, our Chief Executive Officer, and James Geddes, Chief Financial Officer, will review System1's performance over the 15 months to March 2017 in the sections which follow this Chairman's Statement. I would, however, like to highlight some developments which I consider particularly significant for the long-term growth and direction of the business.

In February 2017, we announced that Alex Hunt, who had headed our successful business in the Americas since 2015, was to lead our market research business worldwide and join the Board of Directors. Alex, who is 35, joined the Company in 2009, becoming co-head of the US business in 2012. The US business has grown strongly over recent years to become by some way our largest profit centre in terms of geography, and Alex's promotion is very well deserved.

In early 2016, we launched our new creative advertising agency, System1 Agency. This is an exciting development, which sits alongside and indeed complements our market research activities, and we anticipate that System1 Agency will generate a new business stream for us over time. Start-up costs so far have been as budgeted.

The product mix within our market research business has continued to evolve quite markedly. Revenue is now predominantly generated by fast growing, quantitative products, such as Ad Testing and Brand Tracking. We have repeatedly, and with good reason, highlighted the poor short-term revenue visibility of our business. While this remains a feature, one benefit of the change in our revenue mix is that products such as those mentioned above are not only easier to grow and scale, but also provide greater revenue visibility than most of the others in our repertoire.

With an eye firmly on the longer-term future, I would also highlight the greater emphasis which we are now placing on graduate recruitment and development. During the course of 2016, 17 recent graduates joined us (and remained with us after their probationary periods), primarily in London and in the US. Our training programmes have been substantially revamped over the last couple of years, and together with our increased intake this bodes well for the business down the line.

Finally, I would as ever like to express my gratitude to all of our employees for their hard work and commitment. Particular thanks on this occasion go to all of those involved in ensuring that the change in year end and the major re-branding process triggered by our change of name went as smoothly as possible, and without the business missing a beat. A great many sleeves were rolled up, and to very good effect.

Ken Ford

Chairman

CHIEF EXECUTIVE OFFICER'S STATEMENT

One Chapter ends, the second begins…

Since we started in January 2000, we have been at the forefront in applying Behavioural Science to understanding how people really make decisions. At the heart of this "System 1" thinking is the notion that people use instinct, intuition and emotion in nearly all of their choices. We have pioneered the use of System 1 thinking to produce and predict marketing that always drives profitable growth.

The result has been strong double-digit growth and being voted, "Most Innovative Company" for the 6th year in a row by our industry peers (Greenbook Research Industry Trends Report).

During our first 16 years as BrainJuicer, we built an international business challenging the market research industry and in the next 16, as the System1 Group, we're aiming to build a far bigger business challenging the marketing services industry.

To that end, we launched our System1 Advertising Agency in January 2016, to build fame for our clients and the Group. At the heart of the Agency proposition is our ability to accurately predict profitable advertising. Coupled with a low fixed cost, "Hollywood" model of freelance, award-winning creatives, we guarantee at least a 3-Star ad i.e. the top third of all ads - a 1st in the industry. System1 Agency delivered on this promise with its first work for Specsavers and Merck Pharmaceuticals and is working with a number of multinationals on campaigns to be aired in 2017. After an encouraging start, we're building out our network of creatives and establishing System1 Agency in Continental Europe and America.

The Research business performed well, led by the US, now our biggest single market, with Continental Europe also growing strongly and Australia doing extremely well in the first year of setting up a permanent office there. The only disappointments were the UK and our China and Singapore region which declined. Across all of our regions, having shut our qualitative research arm the year before and focussed the teams on selling our core-four System1 research products, we grew 27% in revenue and profit before tax over 25% with the benefit of currency movements (12 months ended 31 March 2017 vs 12 months ended 31 March 2016).

A key driver of the Research business growth was our System1 Tracking product, launched the previous year, which grew extremely well, as did our System1 Ad Testing product. The two products are often bought together and usually have sole supplier status, which has doubled the proportion of "Ongoing" business (versus "Ad Hoc" projects) over the last year. We're aiming to continue increasing the proportion of 'Ongoing' business to further improve both our margins and visibility.

The other core System1 innovation testing products also delivered double digit growth in aggregate. In contrast, our more conventional, lower margin, non-core products declined, as we expected, and represented just 13% of the business (in the 12 months to 31 March 2017). With our core-four research products now accounting for the majority of the business and growing well, the longer-term outlook for continued growth looks encouraging.

We continue to attract some of the brightest to work at the Company and work hard to create a challenging and rewarding culture for staff to work in. Our Graduate Recruitment scheme is proving an excellent way to ensure we have the talent the business needs to grow.

There is a major system change afoot in the industry based on the adoption of Behavioural Science. This is a change we have led for many years and we aim to be a major beneficiary of the switch-over in the coming years. In research terms, this means a switch from predominantly System 2 techniques that have held sway for decades, measuring people's rationalisations, to System 1 techniques measuring people's emotions and instincts and which predict which marketing will be more profitable, in a way System 2 research never did.

To enhance our position as the leading provider of System 1 approaches, we took the bold decision to rename ourselves, System1 Group PLC. Within the Group, we have System1 Agency to produce and System1 Research to predict marketing that drives profitable growth.

We are about to launch a book of the same name, System1: Unlocking Profitable Growth which is already getting a tremendous response from those we've asked to review it. The book shows how businesses can achieve profitable growth by devising their marketing for System 1 decision-making. It reveals how designing for System 1 can unlock success across innovation, advertising, brand building and shopper marketing. Here's a summary and a few of the quotes we've received. The book will be available as an online flipbook at www.system1group.com and in print from Amazon UK and US, shortly:

1. Decision-Making: We Think Much Less Than We Think We Think

2. Innovation: Fluent Innovation = 80% Familiar + 20% New

3. Advertising: The More People Feel, The More People Buy

4. Branding: Fame, Feeling & Fluency Drive Profitable Growth

5. Shopper: Moving Power Not Stopping Power Drives Sales

"A brilliant summary of what we now know about the fast, unconscious drivers of most customer choice and their implications for marketers."

Professor Paddy Barwise, Emeritus Professor of Management & Marketing, London Business School

"Just as 'nothing in biology makes sense except in the light of evolution', nothing in marketing makes sense except in the light of evolutionary psychology. By placing marketing - at last - on solid psychological foundations, this book will not only make you better at your job, it will also make you better at explaining it to everyone else."

Rory Sutherland, Vice Chairman, Ogilvy & Mather Group, Author of Wikiman & TED Speaker

"This book sets out with daring clarity the simple psychological principles that every marketer needs to know about to build their brand. It's the modern marketer's handbook - an inspirational read."

Gemma Greaves, Chief Executive at The Marketing Society

"At Specsavers we have long understood the link between advertising that speaks to the heart - and profitable brand growth. System1 Agency's approach and guarantee speaks directly to those marketing leaders who want a more emotional System1 approach to their Advertising, but need the hard evidence to prove it will deliver. Very powerful new thinking."

Richard Holmes, Group Brand Director, Spec Savers

"A must have guide to understand and leverage the power of emotion in Marketing. Years of hands on real world experience, crafted and distilled into a simple to read, but incredibly powerful book. Max your Marketing!"

Giles Jepson, Kraft Heinz European Chief Marketing Officer

"System1 takes the apocryphal lament, 'half my marketing is wasted, I just don't know which half' and shows companies how every penny of their marketing best contributes to profitable growth. Though written for marketers, CEOs and CFOs will thoroughly enjoy the demystification of marketing and knowing exactly how it best contributes to the company's bottom-line."

Stefan Barden, FTSE 250 and Private Equity CEO who has led award-winning marketing teams

Thank you for your continued support.

John Kearon

Chief Executive Officer

BUSINESS AND FINANCIAL REVIEW

The Group has changed its year-end to 31 March and this first set of financial statements adopting the new year-end date is for the 15 month period ended 31 March 2017. To enable prior period comparisons, we are also reporting pro forma unaudited results for the 12 month period ended 31 March 2017 and comparatives for the 12 month period ended 31 March 2016 (referred to here as 2016/17 and 2015/16 respectively) and these are set out on pages 16 to 20. The unaudited results have been prepared using the same accounting policies and procedures as the audited results.

The Group previously reported a strong set of unaudited financial results for the 12 months ended 31 December 2016, with revenue up 24% (15% in constant currency), gross profit, our main top line indicator, up 27% (15% in constant currency), and profit before tax up 38%.

Performance over the three months since then (January to March 2017) has continued in a similar vein with similar year-on-year growth rates.

The growth percentages in the table above are against the comparable prior year period. Comparative figures for the 12 months ended 31 December 2015 and 31 March 2016 are contained in the five-year summary on page 15.

The Group incurred significant costs relating to its name change (to System1) and the associated re-branding, during the period since 31 December 2016. Nevertheless, pre-tax profit in 2016/17 was £6.28m, representing 25% growth over that in 2015/16, and slightly higher than the £6.20m for the 12 months to 31 December 2016.

The growth percentages in the table above are against the comparable prior year period. Comparative figures for the 12 months ended 31 December 2015 and 31 March 2016 are contained in the five-year summary on page 15.

The business generated strong cash flow over the 15 month period. Cash at 31 March 2017 was £8.27m, up from £6.37m at 31 December 2015. The Group has no debt. The Company plans to return a significant amount of this cash to shareholders by way of dividends, and is proposing a final dividend of 6.4 pence per share and a large special dividend of 26.1 pence per share, payable in August 2017 (subject to shareholder approval).

At a more detailed level, there is little to add to the commentary on growth trends in the review that we reported within the Group's results for the 12 months ended 31 December 2016, since those trends broadly continued in the January to March 2017 period.

The review that follows is therefore in large part drawn from that one. To enable meaningful prior period comparisons, the growth percentages below tend to be for the 12 month period ended 31 March 2017 compared to the equivalent 12 month period ended 31 March 2016, unless stated otherwise, but are nevertheless illustrative of the performance of the business over the whole 15 month period.

The return to double digit revenue growth follows a two-year period of flat revenues while our Juice Generation qualitative business and Behavioural Consultancy services were being de-emphasised. These services are no longer material to the Group and revenue is now predominantly generated by our faster growing core quantitative products. These can broadly be classified into: (i) those which help clients with their communication programmes and branding, and our main products here are Ad Testing and Branding Tracking; and (ii) those which help clients with their innovation, and our main products here are Predictive Markets and Concept Testing.

Ad Testing and Brand Tracking have performed well, with gross profit increasing by 88% in 2016/17 (compared to that in 2015/16). These products represented 43% of our business in 2016/17, and much of this business is Ongoing in nature (as opposed to Ad Hoc). They have delivered strong growth over a number of years now, with approximately 42% compound annual growth in gross profit over the last five years (using 2011/2012 as the base). We introduced a new framework for successful brand-building in 2015 ("Fame, Feeling & Fluency"), and this has helped propel the growth. Whilst 2016/17 growth rates are encouraging, we should point out that they were driven to some degree by significant isolated client wins. Such wins are not regular or predictable, so we need to exercise caution in forecasting future growth.

Gross profit from our innovation services (Predictive Markets and Concept Testing) grew by 22% in the 2016/17 (compared 2015/16). Predictive Markets, our largest single product (32% of our business in 2016/17) grew 19% (compared to 2015/16). This was achieved despite pricing pressure, which we have been addressing with a lower cost and cheaper-to-deliver "express" version of the product. We have also developed a "Fluent Innovation" framework to better express the value of Predictive Markets in guiding innovation.

In terms of geography, gross profit in the US business grew 48% in 2016/17 (27% in constant currency), and that after several years of double digit growth. The US is now our largest market by a significant margin, making up 43% of our total gross profit in 2016/17. In Continental Europe we grew gross profit by 56% in 2016/17 (36% in constant currency), rebounding strongly after a decline in 2015. Our Brazilian business was flat (18% decline in constant currency). This is a relatively small part of our business but nevertheless an important one, working closely with our US Miami office in serving clients across the LATAM region. In the UK, our second largest market, gross profit declined by 5% due to market competitiveness and sharp declines in two large clients for specific reasons associated with those two clients. In one of these, for example, a large multi-year programme of work had come to a natural end. The UK business supports our smaller offices, and in 2016, provided the resources for our entry into the Australian market where we have made an encouraging start. Gross profit in our Singapore and China region declined 8% (20% in constant currency) in 2016/17, despite growth in the 12 months ended 31 December 2016. This was due to worse than usual trading in the January to March 2017 period, but we believe this was a temporary decline and that it will bounce back.

We have shut down our small Indian operation due to lack of scale, the small project sizes inherent in that market, and the bigger opportunities identified in our other markets.

In early 2016, we launched our new creative Advertising Agency, System1 Agency. We invested £0.31m in the calendar year 2016 in the form of operating losses, in line with what we had planned. During the three months to 31 March 2017, System1 Agency generated £0.12m in gross profit and incurred an £0.02m operating loss, and for the 12 months to 31 March 2017, £0.26m in gross profit and a £0.2m operating loss. Potential clients have given positive feedback, and we remain hopeful that this will generate a new business stream for us over the long term, and further strengthen our Ad Testing and Brand Tracking market research services.

We appointed a senior executive to develop the Advertising Agency business in Continental Europe in January 2017 (the former head of our Continental Research business) and plan to break-even in Europe as a whole over the 2017/18 financial year. We are investing in setting up in the US, in the appointment of a senior executive to develop the business there.

Underlying overheads (i.e. overheads before bonus, System1 Advertising Agency start-up costs, other one-off costs, and share-based payments) grew 11%, and total overheads grew 30% over 2016/2017.

The growth percentages in the table above are against the comparable prior year period.

The biggest cause of the increase in total overheads was our employee bonus which increased from a negligible amount in 2015/16 to £2.22m in 2016/17 (plus a further £0.08m within System1 Agency overheads). Bonuses ranged from a maximum of 20% of salary for most of our employees up to a maximum of 50% of salary for the management team.

The main determinant of bonuses is the Company's operating profit, and for this reason we have started labelling bonuses "Profit Share" internally, and shall start to do so externally also.

System1 Advertising Agency overheads were £0.46m in 2016/17. This new business generated £0.26m of gross profit, leaving the £0.20m operating loss, mentioned above.

Share based payments increased from £0.14m in 2015/16 to £0.75m in 2016/17 due to anticipated vesting of the current Executive Director LTIP. The re-branding costs of £0.21m were mainly in connection with our new website and other marketing collateral and were largely incurred in the three months from January to March 2017. There were no other particularly large or unusual costs in 2016/17 (or indeed over the full 15 month period ended 31 March 2017).

Our effective tax rate increased from 32% in 2015/16 to 36% in 2016/17 (35% for the 15 months to 31 March 2017 as a whole) due to the higher proportion of profit from the US and Continental Europe where corporation tax rates are higher than in the UK. This dampened growth of profit after tax. The Company repurchased 693,813 shares (plus a further 198,311 of option shares) during the 15 month period, and this has helped our earnings per share. Diluted earnings per share grew 22% in 2016/17 to 31.1p per share.

Cash flow continues to be strong, with operating cash flow (before financing) of £6.60m in 2016/17, up from £2.61m in 2015/16, representing 164% of profit after tax (144% over the 15 month period as a whole).

Cash return to shareholders

The Company paid dividends of £2.05m and repurchased £3.14m of shares and option shares (net of exercise price) in the 15 month period to 31 March 2017, and intends to continue to return surplus cash to shareholders via a mix of dividends and share buy backs, depending on share price, on an ongoing basis. The Company paid an interim dividend of 1.1 pence per share in October 2016, and is proposing a final dividend of 6.4 pence per share payable in August 2017. The total interim plus final dividend of 7.5 pence per share for the period would be £0.92m, representing 61% growth over that for the year ended 31 December 2015. In addition, the Company is proposing a special dividend of 26.1 pence per share, payable at the same time as the final dividend. The final and special dividend would together amount to £3.99m.

Outlook

We had six macro objectives at the start of 2016: continue the momentum in the US business; grow in our other regions as we have done in the US; grow gross profit by more than headcount (in percentage terms); major on core products (and continue to de-emphasise non-core services); set up System1 Advertising Agency; experiment with Zappistore (which is a low cost "do-it-yourself" means for clients to buy our products via the Zappistore website). Apart from our experiment with Zappistore, which has not yet delivered the new revenue stream that we had hoped, and notwithstanding inconsistent performance across our geographic regions, we are pleased with progress against each of the objectives. Our objectives over the next financial year are similar. In support of our US ambitions, in particular, we are investing in some senior hires on both the Research and Agency sides of the business.

We will continue to focus on our core products, particularly Ad Testing and Brand Tracking where we are beginning to get a foothold in large clients. These products are comparatively easy to grow and scale, and they also provide more revenue visibility than our other products.

Nevertheless, our business still remains predominantly Ad Hoc, with limited revenue visibility, and as always we need to acknowledge that we cannot predict with very much certainty how revenue growth will unfold over the coming financial year. Trading during Q1 of our new financial year has been a little slower than we expected, but we remain confident of making further progress over the year as a whole.

From a longer-term standpoint, we re-branded the business to present a unified theme across our market research and new advertising agency businesses, and to reflect our Behavioural Science prominence. We view this as the start of a new Chapter in the life of the Company, as we seek to guide clients more pro-actively towards profitable marketing and building their brands.

James Geddes

Chief Financial Officer

BUSINESS RISK REVIEW

The key risk to long-term value creation is competitive pressure leading to lack of take-up of our services by large clients in favour of alternative providers. Our competitors are very much larger than us with access to significantly greater resources. Furthermore, we do not have overt technological barriers preventing competitors from encroaching into our space.

Nevertheless, we believe that our know-how in applying Behavioural Science to marketing, the products and services that we've developed and refined over many years, our large normative databases of survey results, and the reputation of the predictive power of our services would be difficult for competitors to replicate.

Over the shorter-term, the key risk is lack of revenue visibility, and the fairly high peaks and troughs of business with clients which are very much larger than ourselves. The growth of our Brand Tracking and Ad Testing services will help here, as these services tend to give us more revenue visibility and stability. Nevertheless, we will likely have to accept continued volatility in underlying business for some time.

In other respects, we have relatively little exposure to significant short-term shocks. We do not attempt to manage all risk out of the organisation, but instead provide our teams with a high degree of autonomy and actively encourage our people to be entrepreneurial.

Having said that, we take risk seriously. We endeavour 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 such event that we are concerned about and seek to manage are:

· loss of a significant client;

· loss of key personnel;

· loss of a critical supplier;

· material adverse event leading to significant loss of property, software, or data, or an adverse legal claim;

· systemic tax or legal compliance error;

· major outage in our survey platform;

· cyber-attack causing a material breach in our IT infrastructure.

Loss of a significant client.  This is a significant risk, and we do not take it lightly, with the percentage of business from our largest client in the 15 months to 31 March 2017 at 9% of revenue (12 months to 31 December 2015: 7%). We therefore go to considerable lengths to monitor service quality and seek client feedback.

Loss of key personnel. The loss of a senior member of the team would have a negative impact on the business. However, we do not view the business as being overly dependent on any one individual. As with many growing businesses, we place significant demands on our people, and we are therefore at risk of staff turnover. However, the work environment is stimulating and we place emphasis on our culture and the way we work.

Loss of a critical supplier. We have several mission-critical functions carried out by third party suppliers (such as panel suppliers). For these functions, we have endeavoured to ensure we are not overly-reliant on any one organisation.

Material adverse event leading to a significant loss of property, software, or data, or an adverse legal claim. We cannot guarantee that all eventualities are covered, but nevertheless have continued to endeavour to protect the business from significant risks, through a combination of: comprehensive professional indemnity insurance; information security, particularly with regard to client confidentiality and personal data (see below); and sufficient focus on legal protections, for example through our terms and conditions.

Systemic tax or legal compliance error. We are a small business with a small finance and legal team based in the UK. Yet we operate in a number of different jurisdictions and in some cases, have to deal in relatively complex tax and regulatory environments. Were we to make a small systemic error which did not surface for a number of years, the cumulative impact to correct the error could be significant. However, we endeavour to keep our tax and legal affairs simple and straightforward, and within our budgetary constraints, carefully select the best professional advisors that we can find.

Major outage in our survey platform. Were there to be a major outage in our survey platform due, for example, to capacity constraints or a security breach, we could be prevented from building surveys, collecting data and downloading results. This may result in significant delay in delivering client projects with a consequential loss of revenue, reputational damage, and the costs of remedying the situation. We have suffered relatively minor outages from time to time, but none has led to significant financial loss.

Cyber-attack causing a material breach in our IT infrastructure. Were a cyber-attack to succeed in infiltrating our IT infrastructure, unauthorised persons could access confidential information (particularly personal data) held within our systems, putting us in breach of our confidentiality obligations, and potentially losing access to key information or files. This is a critical risk, particularly in the current environment. Nevertheless, there are a number of mitigating factors. Our business does not ordinarily hold a great deal of personal data. For example, we do not have a panel of respondents (but instead use third party suppliers to reach consumers). Due to the nature of a marketing services business, the confidential information we hold is not as commercially sensitive as that for businesses in other industries (financial services or healthcare, for example). We invested in tightening our controls, processes and IT infrastructure and have recently obtained ISO 27001 accreditation covering our information security.

The Company is also exposed to the usual financial risks (such as credit, foreign exchange and liquidity risks), as set out in the Director's Report on page 23. However, due to the straightforward nature of the business, the Company's strong balance sheet, and the fact that most of the Company's clients are large, well-known organisations, these risks are relatively less important.

5 YEAR SUMMARY£000 unless specified otherwise

*Share buy-backs are net of stock option proceeds. In 2014, the amount includes £1,239,000 for the cash-settling of part of the Company's long-term incentive plan.

PRO FORMA RESULTS

for the 12 months ended 31 March 2017

Introduction

With the Company's change of year end to 31 March 2017, the audited financial statements on pages 41 to 81 are for the 15 month period ended 31 March 2017.

In order to aid comparisons with prior 12 month periods, the Company has produced unaudited pro forma financial results for the 12 month period ended 31 March 2017, together with comparatives for the 12 month period ended 31 March 2016.

These unaudited pro forma financial results comprise: (i) consolidated income statement; (ii) consolidated cash flow statement; (iii) segment information.

PRO FORMA RESULTS

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the 12 months ended 31 March 2017

Earnings per share attributable to equity

holders of the Company

All of the activities of the Group are classed as continuing.

PRO FORMA RESULTS

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

for the 12 months ended 31 March 2017

PRO FORMA RESULTS

UNAUDITED SEGMENT INFORMATION

for the 12 months ended 31 March 2017

The financial performance of the Group's geographic operating units ("Reportable Segments") for the 12 months to 31 March 2017 (unaudited) is set out below:

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. Segmental operating profit excludes allocation of central overheads relating to the Group's Operations, IT, Marketing, HR, Legal and Finance teams and Board of Directors.

The split of business by research solution is set out below.

A reconciliation of total operating profit for Reportable Segments to total profit before income tax is set out below.

STRATEGIC REPORT

The Chairman and CEO statements, the Business and Financial Review, the Business Risk Review, and the 5 year summary (which include the Company's key performance indicators) on pages 3 to 15 set out:

· the way that management view the business;

· its strategy, positioning, and objectives;

· its historic financial performance;

· an assessment of its future potential;

· its key performance indicators; and

· its key business risks.

These form part of this Strategic Report.

ON BEHALF OF THE BOARD

James Geddes

Chief Financial Officer

14 June 2017

DIRECTORS' REPORT

Change of name

The Company changed its name from BrainJuicer Group PLC to System1 Group PLC on 24 March 2017.

Review of the business and future development

The Chairman's and CEO statements, the Business and Financial Review, and the Business Risk Review on pages 3 to 14 set out a review of the business's performance and an assessment of its future development.

Dividends

The Company has paid and proposes to pay the following dividends:

The Company paid the 2016 interim and special dividends on 20 October 2016 to shareholders on the register as at 30 September 2016. The final dividend for 2015 was paid on 11 May 2016 to shareholders on the register as at 1 April 2016. The Company proposes to pay a 2017/2018 special dividend of 26.1p in August 2017 (at the same time as the 6.4p 2016 final dividend).

Directors

The following are the current directors of the parent company, System1 Group PLC, and each served throughout the period, with the exception of Alex Hunt, who was appointed to the Board on 1 April 2017.

John Kearon (executive)

James Geddes (executive)

Alex Batchelor (executive)

Alex Hunt (executive)

Ken Ford (non-executive)

Robert Brand (non-executive)

Graham Blashill (non-executive)

The Remuneration Report on pages 28 to 35 sets out directors' interests in the shares of the Company.

Share capital

Changes in the share capital of the Company during the year are given in note 10 to the financial statements. As at 8 April 2017, the Company was aware of the following significant interests in the ordinary issued share capital of the Company.

Financial risk management

The Group's activities expose it to the following financial risks to a small degree.

Credit risk

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 clients 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.

Market risk - Foreign exchange risk

In addition to the United Kingdom, the Group operates in the United States, Continental Europe, Brazil, China, Singapore and Australia and is exposed to currency movements impacting future 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, its US operation generates most of its revenue in US dollars and incurs most of its costs in US dollars also. Management does not believe that there would be any long-term benefit in endeavouring to manage currency risk further, and in order to avoid the cost and complexity does not deal in hedging instruments.

Liquidity risk

The Company monitors its cash balances regularly and holds its cash in immediately available current accounts to minimise liquidity risk. The Company had an undrawn standby credit facility with HSBC of £2m which expired on 25 February 2017. In light of the Company's strong cash flow generation, it chose not to renew.

Other risks

Management do not consider price risk or interest rate risk to be material to the Group.

Capital risk management

The Company manages its capital to ensure that it is able to continue as a going concern while maximising its return to shareholders. The Company's capital structure consists of cash and cash equivalents and share capital. The Group has no borrowings and is not subject to any externally imposed capital requirements. The Group has not entered into any derivative contracts.

Going concern

After making 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 financial statements.

Research and development

The Company's Labs team is involved in the development and validation of new market research methods and products centred on Behavioural Science.

Purchase of own shares

During the period the Company transferred 439,403 Ordinary Shares ("Shares") (with an aggregate nominal value of £4,394, representing 3.3% of the called up share capital of the Company) out of treasury to satisfy the exercise of employee share options over 439,403 shares, for cash consideration of £395,000. The Company subsequently repurchased 892,124 Shares (with an aggregate nominal value of £8,921, representing 6.7% of the called up share capital of the Company) for cash consideration of £3,536,000.

At 31 March 2017, the Company had 13,226,773 Shares in issue (31 December 2015: 13,223,762) of which 961,989 were held in treasury (31 December 2015: 509,268). The treasury shares will be used to help satisfy the requirements of the Group's share incentive schemes.

Employees

The Group maintains fair employment practices, and attempts to eliminate all forms of discrimination and to give equal access. 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 him or her in our employment, with appropriate training where necessary.

Health and safety policies

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 general public.

Directors' indemnities

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.

Auditor

The Company will be seeking shareholder approval to reappoint its auditor, Grant Thornton UK LLP, at its Annual General Meeting.

ON BEHALF OF THE BOARD

James Geddes

Chief Financial Officer14 June 2017

CORPORATE GOVERNANCE REPORT

The Board is committed to high standards of corporate governance, which it considers a pre-requisite to support the growth and ambitions of the Group. Whilst it is not a requirement for companies listed on AIM to comply with all the provisions in the UK Corporate Governance Code 2014, the Board takes the Code seriously. The Group also places particular importance on the guidelines issued by the Quoted Companies Alliance for Companies.

The Group does not comply with the UK Corporate Governance Code 2014. The Directors believe that full compliance is not practicable for a group of the Company's size and at its stage of development. This report sets out the procedures and systems currently in place and explains why the Board considers them effective.

The Board of Directors

The Board comprised three executive directors and three independent non-executive directors during the 15 month period ended 31 March 2017. We believe that the directors have the necessary mix of skills and experience to oversee the company. Their biographical details are presented on pages 36 and 37.

The Board meets formally 11 times a year and discharges its responsibilities through a management team who hold formal and informal meetings as would be expected in a group of the Company's size. During the 15 month period ended 31 March 2017, it met formally 14 times.

Ken Ford is Chairman of the Group and John Kearon its Chief Executive Officer. John is also the founder and a significant shareholder. His role centres on formulating the Group's strategy and driving its commercial development. The Board's three non-executive directors act as a sounding board and challenge the executive directors both at monthly Board meetings and on a regular and informal basis. Matters referred to the Board are considered by the Board as a whole and no one individual has unrestricted powers of decision. There are procedures and controls, including a schedule of matters that require the Board's specific approval. This schedule includes:

· the Group's strategy and long-term objectives;

· extension of the Group's activities into new territories;

· significant capital expenditure beyond that budgeted;

· changes relating to the Group's capital structure, including debt-raising, reduction of capital, share issues and buy-backs;

· reporting, internal control systems and risk assessments;

· nominations for Board and Committee appointments; and

· other senior management appointments.

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.

The directors can obtain independent professional advice at the Company's expense in performance of their duties.

Each year at the Annual General Meeting, one-third of directors are required to retire by rotation, provided all directors are subject to re-election at intervals of no more than three years. This year Ken Ford and James Geddes are scheduled to retire by rotation and have each confirmed their willingness to be put forward for re-election at the 2017 Annual General Meeting. In addition, Alex Hunt's appointment to the Board of Directors on 1 April 2017 will also be put shareholders for approval at the 2017 Annual General Meeting.

Non-executive directors

The three non-executive directors are independent of management. The terms and conditions of the non-executive directors' appointments are available for inspection at the Company's registered office.

Remuneration Committee

The Remuneration Committee membership and a summary of its terms of reference are on page 35.

Audit Committee

The Audit Committee aims to support the creation of long-term value for shareholders. The Committee comprises Robert Brand (Chairman), Graham Blashill and Ken Ford, the three non-executive directors. Robert Brand has relevant financial experience. If required, the Committee is entitled to request independent advice at the Company's expense in order for it to effectively discharge its responsibilities.

The Committee's main role and responsibilities can be found on the company's website, and currently are to:

· monitor the integrity of the financial statements of the Group;

· review the Group's internal financial controls and risk management systems;

· make recommendations to the Board, for it to put to the shareholders for their approval in relation to the appointment of the external auditor and to approve appropriate remuneration and terms of reference for the external auditor;

· discuss the nature, extent and timing of the external auditor's procedures and discussion of external auditor's findings;

· monitor and ensure the external auditor's independence and objectivity and the effectiveness of the audit process;

· develop and implement policy on the engagement of the external auditor to supply non-audit services;

· report to the Board, identifying any matters in respect of which it considers that action or improvement is required; and

· ensure a formal channel is available for employees and other stakeholders to express any complaints in respect of financial accounting and reporting.

The Committee is scheduled to meet twice in each financial year and at other times if necessary. In respect of the 15 months to 31 March 2017, meetings were held in September 2016, March 2017 and June 2017. The Audit Committee Chairman met separately with the external audit partner in advance of these meetings. The current auditors were appointed in 2003.

The Group does not currently have an internal audit function, which the Board considers appropriate for a group of System1's size.

Internal control procedures

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.

The key features of the Group's internal controls are described below:

· clearly-defined organisational structure with appropriate delegation of authority;

· comprehensive budgeting programme;

· regular reviews of forecasts;

· a limited number of directors and executives authorised to make payments and commit the company to legal agreements;

· regular reviews of client and employee feedback;

· information security controls (for which the Company has obtained ISO 27001 accreditation).

The Board in conjunction with the Audit Committee reviews the Group's internal control system on a periodic basis. The Board seeks to ensure risk assessment procedures and responses are continuously improved.

Communications with shareholders

The Board recognises the importance of regular and effective communication with shareholders. The primary forms of communication are:

· annual and interim statutory financial reports and associated investor and analyst presentations and reports;

· announcements relating to trading or business updates released to the London Stock Exchange;

· regular investor meetings.

Meeting attendance

The number of regular meetings that each director attended is set out below:

*attendance by invitation.

On rare occasions a board member may attend by phone to accommodate overseas travel arrangements.

REMUNERATION REPORT

Annual statement from the Remuneration Committee chair, Graham Blashill

Dear shareholder,

The Remuneration Committee sets the strategy, structure and levels of remuneration for the executive directors and reviews the remuneration of senior management, to ensure alignment of objectives and incentives throughout the business in pursuit of the Group's stated objectives.

This Remuneration Report is split into two parts:

· The directors' remuneration policy sets out the Company's policy on directors' remuneration, in particular the four-year long term incentive plan ("LTIP"), and the key factors that were taken into account in setting the policy. The directors' remuneration policy is not subject to a shareholder vote at the 2017 AGM, since the main variable element (the LTIP) was approved by shareholders at a General Meeting on 22 March 2017.

· The annual report on remuneration sets out payments and awards made to the directors for the 15 month period to 31 March 2017.

There are three elements in director remuneration:

· Base salary

· LTIP

· Benefits

Historically, the Company's LTIPs have been established in three to four year cycles. The previous LTIP covered the three financial years ended 31 December 2016 and vested on 30 April 2017 (the "Previous LTIP"). Its primary performance targets were based on the three-year EPS growth over the period 2013 to 2016, with a share price underpin. The next LTIP was established in February 2017 and will vest on 12 August 2021 (the "Current LTIP"). Its primary performance targets are based on gross profit, with profit after tax and share price underpins.

We endeavour to keep our director remuneration arrangements simple and correlated to increases in long term business growth. As a small Company we are also acutely aware of the dilutive impacts of equity awards, and when designing our LTIPs, we ensure that vesting only occurs when there is a substantial increase in shareholder value (after accounting for the dilution).

The Company consulted with shareholders in designing the Current LTIP, and prior to implementing it, obtained shareholder approval at a General Meeting on 22 March 2017.

For levels below the participants in the LTIP, the remuneration comprises:

· Base salary

· Bonus (which we term "profit share")

· Benefits

Profit share for most people is up to a maximum of 20% of annual salary. The executive directors and other senior executives who participate in an LTIP forego annual profit share (bonuses).

The committee regularly reviews the appropriateness of remuneration across the group and is satisfied that an appropriate reward structure exists below Board level to recognise and retain our top talent.

We have had a stable membership of both the Board and the Remuneration Committee and there were no changes to its composition during the 15 months to 31 March 2017. The Remuneration Committee were the three non-executive directors of the Group. At 31 March 2017, the Board comprised three executive directors and three non-executive directors. Alex Hunt, head of the Research business, was promoted to the Board as an executive director on 1 April 2017 (just after the financial period end).

Graham Blashill

Chair, Remuneration Committee

Directors' remuneration policy

Introduction

The policy described in this part of the Remuneration Report is intended to apply for four years beginning in the 2017/18 financial year, and covers executive directors and a small number of other senior managers ("Executives").

The Committee considers the remuneration policy annually to ensure that it remains aligned with business needs and is appropriately positioned relative to the market. However, there is no intention to revise the policy more frequently than every four years.

The Committee has based the Executive reward structure on the long term organic growth strategy of the business. If successful, this will deliver significant shareholder value, and Executive rewards are designed to correlate with the key driver of that value (top line growth).

Fixed annual elements - including salary, pension and benefits - are to recognise the responsibilities and leadership roles of our Executives and to ensure current and future market competitiveness. Long-term incentives are to motivate and reward them for making the Company successful on a sustainable basis.

Base salary and benefits

Base salary is paid in 12 equal monthly instalments during the year. Salaries are reviewed annually and any changes are effective from the beginning of the Company's financial year (which in future will be 1st April). Benefits comprise money purchase pension contributions of up to 6% of salary, private medical and dental insurance, life insurance and long term disability insurance.

Long term incentive plan

(i) Previous LTIP

The Previous LTIP covered the three-year period to 31 December 2016. The participants were the three executive directors and they were each awarded 197,040 zero priced stock options under the plan. They did not receive any annual profit share nor any other bonus, short term incentive award or other equity award during the three-year life of the plan. The plan was subject to performance targets, and 59.16% of the options vested on 30 April 2017.

The primary performance target was undiluted EPS and it grew over the period of the plan by 19% pa after the Committee adjusted for the start-up losses in establishing the System1 Advertising Agency. There was a share price underpin of £5.051 per share, measured during the month of April 2017, and this was exceeded considerably. The 19% EPS growth resulted in the 59.16% of stock options vesting. As a result, each of the three participants' vested zero priced options under the plan amount to 116,568 of stock options. There is a further one year lock-in period on these option shares (to 30 April 2018) before they may be sold. Unvested options under the plan have lapsed.

(ii) Current LTIP

Following the maturity of the Previous LTIP, the company introduced the Current LTIP in March 2017. It was approved by shareholders at a General Meeting in March 2017 and covers the four-year period ending 31 March 2021.

The awards have taken the form of zero-cost stock options (and conditional shares for the sole US participant). They were granted to Executives on 22 March 2017 and will vest on 12 August 2021 provided the Company achieves performance targets in the Company's 2020/2021 financial year. The performance targets are based on gross profit growth (the Company's main top line performance indicator), with profit after tax and share price underpins.

The Company is aiming to grow strongly over the next four years, and the performance targets and vesting levels have been set with growth levels of between 10% and 30% pa in mind. At the 20% pa growth level, the gross profit would more than double over the four-year period. The specific vesting levels are set out in the following table.

There will be proportionate vesting if gross profit grows at between 10% and 20% pa or between 20% and 30% pa.

No awards will vest unless profit after tax ("PAT") in 2020/21 has grown by at least 10% pa over four years and the average share price of the Company during July 2021 is at least £9.945 (30% higher than the share price on the award date). For the higher levels of vesting triggered by gross profit growth above 20% pa, the PAT underpin increases to 20% pa growth.

For the purpose of these performance targets PAT in both the base year and the measurement period is calculated before deducting share-based payments (to avoid any circular argument problem when performing the calculations). The base year is the 12 months ended 31 March 2017.

The gross profit and PAT targets are designed to relate to organic growth, and the Committee has the right to adjust the targets if a material acquisition or other corporate event occurs (and will ordinarily exercise such right).

There are three executive director participants (James Geddes, Alex Batchelor, Alex Hunt) and four senior manager participants (Rod Connors, Mark Johnson, Orlando Wood, Horace McDonald). John Kearon, CEO, has indicated to the Committee that due to his near 30% shareholding, any further increase would be inappropriate.

Instead in recognition of his strategic leadership role to achieve the growth targets, he will qualify for an annual bonus of between 25-75% of annual salary in the event that gross profit growth is between 10-30% pa (using the 12 months ended 31 March 2017 as the base year), subject to the above profit after tax and EPS underpins.

There will be no other equity-based incentive scheme or reward for the Executives, during the four-year life of the Current LTIP.

Executives do not participate in the Company's annual profit share scheme, which at their level would be up to 50% of salary, and have no other short-term incentive plan. This is to ensure decision-making focus is primarily on achieving long-term growth. Therefore, over the period to March 2021, the only remuneration that Executives will receive will be base salary and benefits (with the exception of the CEO bonus), unless the Remuneration Committee determine awards in exceptional circumstances (at their sole discretion).

Dilution

Vested stock options are set out below.

Unvested options comprise options granted under the Current LTIP. The Current LTIP options will lead to incremental dilution when they vest in August 2021 of up to 9.2% of the Company's voting shares as at 31 March 2017 if the performance targets are fully met (30% annual compound gross profit growth target and 20% pa annual compound growth profit before tax target over four years) and if the £9.945 share price threshold is exceeded during July 2021.

The Committee views the incremental potential dilution levels arising from the Current LTIP as reasonable in the light of the corresponding growth levels that would have been achieved to trigger them. The potential increase in shareholder value will be significant, even after accounting for the dilution.

Non-executive directors

Non-executive directors do not participate in any of the Company's incentive arrangements nor do they receive any benefits. Their fees are reviewed periodically and set by the Board as a whole.

Remuneration of all employees

All employees are entitled to base salary, benefits, and (providing not also an Executive) a discretionary annual bonus. Since January 2012 equity awards have not been granted to employees who are not Executives.

The annual discretionary bonus is more in nature an annual profit share as its main determinant is the size of the overall pot, which is based on the profit before tax generated by the business. The bonus pot is allocated to the different teams based on team performance, and team leaders sub-allocate their share of the pot to their employees based on individual performance. The bonus range for most employees is 0-20% of salary, and this increases for more senior people.

Director service contracts and policy on payment for loss of office

Each of the executive directors have service contracts. The agreements include restrictive covenants which apply during employment and for a period of 12 months after termination. John Kearon's agreement can be terminated on six months' notice in writing by either the Company or by John. James Geddes' and Alex Batchelor's agreements can be terminated on 12 months' notice in writing by the Company and six months' notice by the employee.

Annual report on remuneration

Remuneration for executive directors

12 months ended 31 December 2016 (and 2015)

15 months ended 31 March 2017 (audited)

The executive directors received no profit share (bonus) for the 15 month period ended 31 March 2017 or the 2015 financial year.

The executive directors have received the following salary increases with effect from 1 January in each year:

The executive directors have not received any stock options or other equity awards other than under the Company's LTIP arrangements as set out in the directors' remuneration policy.

Directors' interests in shares and options

Directors' interests in the shares of the Company are shown below.

Directors' interests in options over shares of the Company are shown below.

* The options denoted by a single asterisk were granted under the Previous LTIP, as described in the directors' remuneration policy. They were granted in two tranches of 137,040 and 60,000 option shares (totalling 197,040) to each director. They were subject to performance conditions, under which 116,568 of each director's options vested on 30 April 2017. The remaining 80,472 of each director's options lapsed.

** The options denoted by a double asterisk were granted under the Current LTIP, as described in the directors' remuneration policy. None of these vest until 12 August 2021.

There were no equity awards or vesting of options other than under the LTIPs as set out in the directors' remuneration policy.

Fees for non-executive directors

The non-executive directors received fees, but no other benefits, as follows.

The non-executive directors did not receive an increase in their fees in either 2016 or 2015.

Remuneration Committee

The Remuneration Committee comprises the three non-executive directors: Graham Blashill (Chairman), Robert Brand and Ken Ford. The Committee is responsible for:

· determining the remuneration and incentive packages for each of the Company's executive directors;

· reviewing and approving the remuneration and benefits of senior management;

· reviewing and making recommendations to the Board on the design of remuneration structures and levels of pay and other incentives for employees of the Group;

· reporting to the Group's shareholders in relation to remuneration policies applicable to the executive directors.

The Committee may invite the Chief Executive Officer and the Chief Financial Officer to attend meetings of the Remuneration Committee. The Chief Executive Officer is consulted on proposals relating to the remuneration of the Chief Financial Officer and Chief Operating Officer and of other senior executives of the Group. The Chief Executive Officer is not involved in setting his own remuneration.

The Committee may use remuneration consultants to advise it in setting remuneration structures and policies. The Committee is exclusively responsible for appointing such consultants and for setting their terms of reference.

BOARD OF DIRECTORS

Ken Ford - Non-Executive Chairman

Ken Ford joined System1 Group in 2008 as non-executive Chairman. He was previously CEO of Teather and Greenwood stockbrokers and other past directorships include Morgan Grenfell and Aberdeen Asset Management. He is a past Chairman of the Society of Investment Analysts and the Quoted Companies Alliance (QCA). He is currently non-executive Chairman of gear4music (Holdings) plc, Nakama Group plc, Scientific Digital Imaging plc and Team Lewis PR, and a fellow of the Chartered Securities Institute.

Robert Brand - Non-Executive Director and Chairman of the Audit Committee

Robert Brand joined System1 Group in 2012 as a non-executive Director. He began his career in 1977, initially as a research analyst and subsequently as Managing Director of UK Equity research at BZW, then the investment banking division of Barclays Bank. In 1990 he joined Makinson Cowell, a capital markets advisory firm, as a director and partner. Over a period of 18 years he advised a range of FTSE 100 and FTSE 250 companies, focusing on their link with institutional investors. He retired in 2008.

Graham Blashill - Non-Executive Director and Chairman of the Remuneration Committee

Graham Blashill joined System1 Group in 2012 as a non-executive Director. He was previously a main board director of Imperial Tobacco Group plc (a FTSE 100 company) where he spent the majority of his career. He joined W.D.& H.O. Wills (a division of Imperial Tobacco) in 1968, and became Managing Director Imperial Tobacco UK in 1995. In 2003, he became Regional Director for Western Europe, and in 2005 was appointed Group Sales and Marketing Director responsible for Imperial Tobacco's global trading operations.

John Kearon - Chief Executive Officer

John founded the Company in 1999, and remains its largest shareholder. Previously he founded innovation agency Brand Genetics, which invented new products and services for large consumer companies. Before this, he was a planning director at Publicis (the leading advertising agency), having started his career at Unilever where he rose to become a senior marketer at Elida Gibbs. His role in establishing and developing the Company made him Ernst & Young's "Emerging Entrepreneur of the Year" in 2006.

James Geddes - Chief Financial Officer

James Geddes joined System1 Group in 2003 as CFO. He is a Chartered Accountant, has a diploma in Corporate Treasury Management, and is a graduate of Harvard's executive programme. He was previously Executive Director of Corporate Finance at MediaOne (a US telecoms company), and CFO of Iobox (an early stage technology company backed by Morgan Stanley Capita, and sold to Telefonica), having started his career at Deloitte.

Alex Batchelor - Chief Operating Officer

Alex Batchelor joined System1 Group in 2010 as COO. He started his career at Unilever and after 7 years moved to Saatchi & Saatchi as Planning Director and then to Interbrand, becoming Managing Director. He returned to the client side as Vice President Global Brand at Orange, Marketing Director at Royal Mail and Chief Marketing Officer at TomTom. He is a former Chairman of The Marketing Society, a Fellow of the Society and was a member of its managing board for over 10 years, and is also a Fellow of the Marketing Academy.

Alex Hunt - President Research (joined the Board of Directors from 1 April 2017)

Alex Hunt joined System1 Group in 2009 as a Vice President in the Group's US business. He was promoted to head the Group's America's business in 2015, and from 1 January 2017 to lead all client facing teams in the Group's Research business globally. Before joining the Group, he began his career at Millward Brown, part of the WPP group, working across a range of large CPG, media, financial and retail clients in both the UK and US. He is a regular speaker at marketing and insights industry events as well as at several US business schools.

DIRECTORS' RESPONSIBILITY STATEMENT

The directors are responsible for preparing the Strategic Report, Directors' Report, the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs) and the parent company financial statements in accordance with FRS 101 Reduced Disclosure Framework. 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 and profit or loss of the Company and Group for that period. In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgments and accounting estimates that are reasonable and prudent;

· state whether applicable IFRSs and United Kingdom Accounting Standards in respect of the group and parent company financial statements respectively, have been followed, subject to any material departures disclosed and explained in the financial statements;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the preven-tion and detection of fraud and other irregularities.

The directors confirm that:

· so far as each director is aware, there is no relevant audit information of which the Company's auditor is unaware; and

· the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemina-tion of financial statements may differ from legislation in other jurisdictions.

James Geddes

Company Secretary and Chief Financial Officer

14 June 2017

INDEPENDENT AUDITOR'S REPORT

to the members of System1 Group PLC (formerly BrainJuicer Group PLC)

We have audited the financial statements of System1 Group PLC (formerly BrainJuicer Group PLC) for the period ended 31 March 2017 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity, the company balance sheet and company statement of changes in equity and the related notes. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 101 "Reduced Disclosure Framework".

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities set out on page 38, the directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 March 2017 and of the group's profit for the period then ended;

· the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

· the information given in the Strategic Report and Directors' Report for the financial period for which the group financial statements are prepared is consistent with the group financial statements;

· the Strategic Report and Directors' Report has been prepared in accordance with applicable legal requirements.

Matter on which we are required to report under the Companies Act 2006

In the light of the knowledge and understanding of the group and parent company and its environment obtained in the course of the audit, we have not identified any material misstatements in the Strategic Report and Directors' Report.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit

Jeremy Read

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Milton Keynes

14 June 2017

CONSOLIDATED INCOME STATEMENT

for the 15 months ended 31 March 2017

Earnings per share attributable to equity

holders of the Company

The notes on pages 46 to 69 are an integral part of these consolidated financial statements.

All of the activities of the Group are classed as continuing.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 15 months ended 31 March 2017

The notes on pages 46 to 69 are an integral part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEET

as at 31 March 2017

Registered company no. 05940040

The notes on pages 46 to 69 are an integral part of these consolidated financial statements.

These financial statements were approved by the directors on 14 June 2017 and are signed on their behalf by:

John Kearon, Director James Geddes, Director

CONSOLIDATED CASH FLOW STATEMENT

for the 15 months ended 31 March 2017