System1 strong after rebrand and accounting date shift

System1 - the company formerly known as BrainJuicer - updated the market on its trading for the 12 months to 31 March on Wednesday.

The AIM-traded firm had previously announced a change to its year-end from 31 December to 31 March, with the updated being the first for the financial reporting period adopting the new year-end date.

It announced unaudited financial results for the 12 month period ended 31 December 2016 on 9 February, and confirmed it would be announcing unaudited financial results for the 12 months to 31 March, and audited financial results for the 15 month period to 31 March, on 15 June.

“The company has continued to trade strongly since December 2016,” its board claimed in a statement.

“For the 12 month period ended 31 March 2017, vs the 12 months to 31 March 2016, revenue grew by some 27% to approximately £33m and gross profit - our main top line performance indicator - has grown by some 29% to approximately £27m.

“Excluding the impact of exchange rate movements the increase in revenue was approximately 13% and gross profit was some 15%.”

System1 said the growth rates were similar to those for the 12 month period ended 31 December 2016, as were the product mix and geographic split .

The company said it incurred the costs related to its name change to System1, and the associated significant re-branding exercise, during the period since 31 December 2016.

“Nevertheless pre-tax profit for the 12 month period ended 31 March 2017 is expected to be around £6.2m, representing 25% growth over the pre-tax profit for the 12 month period ended 31 March 2016, and in line with expectations.

“The company continues to be highly cash generative.

“Since 31 December 2016, it has paid annual employee bonus payments relating to the 12 months ended 31 December 2016 - totalling £2.4m - and yet had a cash balance of £8.3m as at 31 March 2017 - up from £7.8m as at 31 December 2016.”

The board added that System1 has no debt.

It launched its new name and rebrand on 1 April, with the board saying that marked the start of a “new chapter”.

It said it built the business by applying “behavioural science” to predicting profitable marketing.

“Behavioural science is based on the conviction that people use instinct, intuition and emotion to make most decisions.

“This is known as ‘System 1’ thinking.

“Having adopted the System 1 approach to market research and launched the System 1 advertising agency - System1 Agency - we are now adopting the System1 name across the business.”

The company said it would have System1 Agency to produce profitable marketing and System1 Research to predict it and, the board believed, would be well positioned to help clients move towards what it called ‘five-star marketing’ and the growth that would come with it.