System1 Revenue Drops but Profits Rise

MR and ad company System1 Group has reported a 5% decline in revenue to £13.18m (2017/18: £13.82m) in its interim results for the six month period ended 30th September. However, underlying pre-tax profits rose 28% to £1.08m.

Formerly known as BrainJuicer Group PLC, System1 Group combines the firm's MR business with its ad agency, with a focus on behavioural science. The company is making a 'significant investment' (£1.59m to date) in a new business line, 'Ad Ratings', which will provide predictive next-day ratings of any new advert and the past twelve months' advertising performance of any brand and company. The new product is part of an initiative to create a more competitive business after the firm suffered a 68% decline in profits in its full-year results in June.

In the most recent period, gross profit also fell 5% (3% in constant currency terms) to £10.80m. Excluding Ad Ratings, underlying pre-tax profit grew 74% to £1.92m from £1.10m a year earlier. Gross profit was up 30% in Continental Europe, but declined by 5% in the UK, 22% in Asia Pacific, and 16% in the Americas. Administrative costs were cut to £9.7m from £10.6m the previous year - partly because the firm reduced its headcount by 19% to 140 employees from 172 the year before.

Commenting on the results, CEO John Kearon (pictured) said: 'We are excited about our new Ad Ratings service based on our tried and tested core IP - for its future potential both to support the existing consulting business, and to provide a new scalable revenue stream. Meanwhile we believe that as our new product configurations and more competitive pricing take hold, our existing business will continue to stabilise and in time return to growth'.

Web site: www.system1group.com .