Disappointments continue for recently-minted System1 Group

Marketing services group System1 reported a 10% revenue decline in its first half on Friday, to £13.82m, or 12% at constant currency.

The AIM-traded company said gross profit fell 9% in the six-month period to £11.39m, or 12% in constant currency, while profit before tax plummeted 70% to £0.85m.

Profit after tax was off 70% at £0.54m, with fully diluted earnings per share declining 69% to 4.2p.

The firm held £3.50m cash as at 30 September, down from £8.27m at the start of the year, and carried no debt after paying dividends of £4.05m during the period.

It confirmed it would maintain its interim dividend at 1.1p.

“Life as System1 Group has not started as hoped,” said CEO John Kearon.

“However the decline in revenue has been a catalyst in accelerating the re-engineering of our product portfolio.

“We are in a period of change, and with our normal limited revenue visibility we are more cautious than usual on our short-term outlook.”

Kearon said the encouraging signs referred to previously were continuing, but trading in the third quarter to date had not yet resulted in a pick-up in its order book.

Were the gross profit decline seen in the first half to be repeated in the second half, Kearon said profit before tax for the full year would decline by between 50% and 60%.

“Change is never easy but in a rapidly transforming market, it's the only way to get out in front and establish a new industry standard that uses our pioneering System1, decision-science products to ensure marketing that delivers profitable growth without unnecessary waste.

“Over our first 16 years, as BrainJuicer, we established a reputation as an industry innovator and built a global footprint and a hugely talented international team of nearly 200.”

Kearon said that over the next 16 years, System1 aimed to provide the “world's most progressive companies” with the means of producing marketing that consistently made a difference.

“We believe this will have been a pivotal year of change and investment in building a major new marketing services group of the future.”