System1's loss narrowing more slowly than expected

Though gross profit steadied over the six-month period ended 30 September, System1 reported that the process was taking place at “a slower rate” than had been expected at the beginning of the year, and the figure is expected to come in 5% below the gross profit decline of 9% to £11.4m achieved by the company in the first half of last year.

Meanwhile, other than investment in its new Ad Ratings service, the company’s operating costs are expected to have been cut by 14% over the period.

“H1 has seen substantial investment in Ad Ratings, a subscription service which will enable clients to compare the effectiveness of their historic adverts with those of competitors and to correlate advertising effectiveness with media spend. Over H1, the company has invested £1.7m in the new service,” said a statement from the company.

With a phased launch of the service due to begin towards the end of System1’s financial year, with further material investment taking place in the meantime.

Disregarding pre-Ad Ratings and share based payments, underlying first-half pre-tax profits are expected to be around £1.9m, some 73% above the £1.1m achieved in the first half of last year.

The AIM traded business said it had a “strong” financial position despite investment and the payment of a dividend during the period, with no debt and cash balance of £3.6m, compared with £5.8m at the end of March.

System1’s shares were unchanged at 198.00p at 0903 BST.