System1, the marketing services group, today releases the following Trading Update for its financial year ended 31 March 2019 (2018/19).
2018/19 saw our Consultancy business, which comprises mainly our market research activities, together with a small advertising agency, stabilising after a difficult 2017/18. Gross Profit, the Company’s main top-line performance measure, was slightly down for the year as a whole at £22m (-1%). Despite continued pricing pressure, Gross Profit in the second half of the year was 4% ahead of that achieved in H2 2017/18.
Operating Costs were tightly controlled and, excluding the Company’s investment in its new Ad Ratings service, were some 9% lower than in 2017/18 as the Consultancy business achieved higher levels of efficiency.
As a result, System 1 has generated underlying Pre-tax profits for the year, excluding Ad Ratings, share based payments and a one-off business rates rebate, of around £3.7m, approximately 80% higher than in 2017/18.
During 2018/19 System1 invested heavily in the development of its new Ad Ratings subscription service. Ad Ratings enables clients to compare the effectiveness of their advertisements with that of competitors, and to correlate advertising effectiveness with media spend. Total investment during 2018/19 has been £3.1m, of which some will be expensed and some capitalised. We continue to refine and enhance the new service, which is being trialled by a number of clients. Looking forward, we plan to continue investing in the product, and to launch at scale during 2019/20.
Despite this high level of investment, System1’s financial position remains strong. At the year end the Company had a cash balance of £4.3m (31 March 2018: £5.7m), and no debt.
The Company can be found at www.system1group.com.