Feel more: Buy more. Results Presentation | Year ended 31 December 2015 BrainJuicer Group PLC Feel more: Buy more system1agency.com @system1agency
Leading Our five golden rules of exponent famous 5-Star communication of behavioural 1. We think much less than we think we think economics and (fast feelings drive decisions, slow thinking rationalises the reasons) system-1 thinking 2. Those who tell the best stories rule the world (the human mind is a story processor not a logic processor) in marketing and 3. Your buyers mostly buy other brands and occasionally buy yours research (growth comes from gaining a repertoire among more people) 4. Focus on new buyers because loyalty comes free (you don’t increase your brand’s share by targeting existing users) 5. Fame, Feeling and Fluency drive famous 5-Star Marketing (fortune follows fame | feel more buy more | recognition speeds decision) BrainJuicer Group PLC 2
Building our core, Strong underlying momentum System1 agency expanding our 17% growth in core products Setting up our new creative agency repertoire and (Ad Testing, Brand Tracking, Predictive based on system-1 Markets) extending our availability Fame | Feeling | Fluency Zappistore Significantly enhanced our Ad Testing Starting to sell light automated and Brand Tracking positioning and versions of our products online offerings (www.zappistore.com) Focus on Ongoing 85% of our business now “Juicy” so moving focus to “ Ongoing ” regular repeat business BrainJuicer Group PLC 3
Financial Results BrainJuicer Group PLC 4
Gross profit (£m) main top-line performance indicator 25 Revenue up 2% 20 H2 Top op-line flat but Gross profit up 4% 15 H1 strong profits and 10 Overhead costs up 4% cash flow 5 Operating profit up 6% 0 Profit before tax up 5% 2008 2009 2010 2011 2012 2013 2014 2015 Profit after tax up 5% Operating profit (£m) Diluted EPS up 7% 5 4 H2 Cash conversion 89% of PAT H1 3 Cash £6.37m and no debt 2 Changing financial year end to 1 March 2017 0 2008 2009 2010 2011 2012 2013 2014 2015 BrainJuicer Group PLC 5
Juicy Quantitative Products – gross profit £m 20 Ad Testing & Brand Tracking Predictive Markets 15 Lack of overall Other growth masks Juicy Quant Products growing and scalable 10 particularly three core products … strong growth in Ad Testing & Brand Tracking – building brands 5 Predictive Markets – directing innovation core products 0 2011 2012 2013 2014 2015 Ad Testing & Brand Tracking lead to Ongoing work sole supplier status and regular usage Twist and Juice Gen – gross profit £m 20 Significantly enhanced Ad Testing and Brand Twist Tracking in 2015 15 Juice Gen (Qualitative) Fame | Feeling | Fluency approach to brand building 10 5 0 2011 2012 2013 2014 2015 BrainJuicer Group PLC 6
Mixed fortunes geographically Reflecting client ups and downs more than systemic issues Gross profit split Gross profit Operating profit UK £6.73m - 1% £4.53m - 6% Brazil US £7.76m + 21% £4.42m + 19% Asia Continental Europe £3.13m - 9% £1.62m - 3% UK Continental Asia £1.49m - 12% £0.56m - 30% Europe Brazil £1.14m + 11% £0.62m + 120% US Total £20.25m + 4% £11.75m + 4% Central Costs £(7.21)m + 3% Operating profit £4.55m + 6% BrainJuicer Group PLC 7
2015 2014 Growth Gross profit £20.25m £19.41m 4% Cost before bonus up 11% Cost increase Higher than gross profit growth due to one-off Cost pre bonus £(15.64)m £(14.03)m 11% mitigated by costs (£0.32m) and Juice Gen savings not Bonus £(0.06)m £(1.08)m NM flowing through until 2016 bonus reduction Operating profit £4.55m £4.30m 6% Reduced bonus Total overheads (after bonus) up 4% Overhead costs – £m Capacity to scale several times current size 20 without CAPEX and without costs growing as much as gross profit 15 Bonus Consistent effective tax rate 10 33% in 2015 vs 32% in 2014 Cost pre bonus Higher than UK tax rate (~20%) due to higher 5 US taxes and disallowable costs 0 2015 2014 BrainJuicer Group PLC 8
Strong cash flow Cash Flow Returns to shareholders and returning it to shareholders Pre-financing cash flow has been at Over the last 5 years, returned £5.17m least 78% of profit after tax every year in dividends and £3.56m in share buy- over the last 5 years backs And was 89% of profit after tax in In 2015 £0.54m in dividends and 2015 £0.93m buy-backs Finished year with £6.37m cash and Plan on continuing in the same vein in no debt future Plus £2m committed overdraft facility (put in place as contingency in case of acquisition) BrainJuicer Group PLC 9
Fame | Feeling | Fluency BrainJuicer Group PLC 10
Fame Feeling Fluency If a brand comes readily to mind, If people feel good about a brand, If people recognise a brand people perceive it to be a good they perceive it to be a good quickly, they perceive it to be a choice choice good choice Explains current market share Predicts future market share Reduces price sensitivity Fortune follows fame Feel more buy more Recognition speeds decision BrainJuicer Group PLC 11
System1 creative agency Feel more: Buy more BrainJuicer Group PLC 12
1 2 3 We only develop We source the best creative We guarantee everything we System1 work talent available anywhere deliver will work The most effective ideas don’t Using BrainJuicer’s behavioural- Rather than fixed creative teams, we persuade, they seduce manage a Network of Creative based testing methodologies, we Networks can predict the success of new ideas Our work is based on a fundamental In an Uber- era, there’s incredible principle from the behavioural sciences that the more a consumer creative talent out there - and we All ideas are pre-tested before they feels for a brand, the more a have found a great new way to tap are presented to clients, and then consumer will buy into it tested again once they are produced We don’t speculate with anything, System1 only produces creative For each creative challenge we brief and we don’t stop creating until we work that translates emotion into 4 creatives/teams/boutiques who brand growth best fit the brand and challenge achieve success And of course – we lead the process every step of the way BrainJuicer Group PLC 13
System 1 vs System 2 BrainJuicer Group PLC 14
System 1 vs vs System 2 BrainJuicer Group PLC 15
Summary BrainJuicer Group PLC 16
Continuing the Expanding our Extending our momentum repertoire availability Core innovation screening and brand Utilising behavioural science insights Adding our products to an online building services growing and Fame | Feeling | Fluency to portal. Inexpensive, fast and highly consistently and strongly establish System1 creative agency scalable Fame | Feeling | Fluency significantly Now creating (as well as measuring) enhances brand building services brand building communications (Ad Testing and Brand Tracking) Ad Testing and Brand Tracking driving ongoing regular repeat work BrainJuicer Group PLC 17
Feel more: Buy more. Results Presentation | Year ended 31 December 2015 BrainJuicer Group PLC Feel more: Buy more system1agency.com @system1agency
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