LONDON (ShareCast) - (Sharecast News) - Online market research agency System1 Group updated the market on its trading for the financial year ending in March on Thursday, reporting that after single-digit growth in the first half, followed by modest further progress in the third quarter, trading in the final quarter to date had been disappointing.
The AIM-traded firm put that performance down to the ongoing transition of sales talent, and subsequent disruption and decline in ad hoc revenue from smaller clients.

It said that, given the limited visibility in some areas, it was difficult to predict the full year outturn, but the board said it believed gross profit would be "slightly down" compared to the prior year.

"The company continues to invest heavily in its AdRatings database, sales talent, digitisation and automation, in support of its increasing emphasis on advertising effectiveness," the board said in its statement.

"Underlying overhead costs, excluding share-based payments and AdRatings, are expected to increase 4% to 6% over the 2020 financial year."

System1 said the lower-than-expected gross profit and increased costs were expected to result in a normalised 2020 profit before tax, which excludes share-based payments and AdRatings, which is "materially below" current market expectations.

"At the same time AdRatings, now rebranded 'Test Your Ad', is starting to show its commercial promise," the board said in its statement.

"As part of ITV Media's objective to 'get people to fall back in love with advertising', they have chosen System1 as their partner in rating the 'nation's favourite ads' and helping advertisers to create more of them - starting with a UEFA Euro 2020 Competition to select the best sporting Ad, with the winner awarded a free advertising slot in the half-time break of the final match."

The company said it currently held £4.2m in cash, and had no debt, adding that in line with its approach to capital allocation, it was intending to conduct a share buyback programme of up to £1.5m of its shares, following its normal post year-end trading update in April.

That would be by way of market purchases.

System1 said it would provide a further update nearer the time, adding that any share buybacks would be made under the existing authority the company had in place.

At 1051 GMT, shares in System1 Group were down 23.28% at 222.5p.

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