System1 Group PLC Trading Update (8803K)
27 Aprile 2020 - 08:00AM
UK Regulatory
TIDMSYS1
RNS Number : 8803K
System1 Group PLC
27 April 2020
Press Release 27 April 2020
System1 Group PLC (AIM: SYS1)
("System1", or "the Company", or "the Group")
UPDATE ON 2019/20 FINANCIAL YEAR; SYSTEM 1 RESPONSE TO COVID-19
IMPACT
System1 Group, the international online market research agency,
is today providing the following Trading Update for its financial
year to the end of March 2020, together with updates on the impact
so far of the Covid-19 pandemic and related matters.
12 MONTHS TO END-MARCH 2020
In our Trading Update released on February 6, 2020, we reported
that trading in Q4 to date had slowed. This remained the case
through the final weeks of Q4. We therefore expect Sales Revenue
and Gross Profit for Q4 to be approximately 25 % below that of the
prior year and for the financial year as a whole to be down by
approximately 2%, much as we anticipated in February.
The modestly reduced sales for the full year, together with a 1%
increase in overhead expenditure, is expected to result in a
2019/20 Profit Before Tax figure (excluding AdRatings and
share-based payments) of approximately GBP2.9m, compared with
GBP3.6m in the prior year. Whilst we acknowledge this was a
disappointing result, it does exceed our previous expectations.
Investment in AdRatings continued during the year, with
expenditure of GBP1.8m recognised in the income statement, compared
with GBP2.2m in 2018/19. In addition, an impairment charge of
GBP0.9m has been taken in relation to AdRatings development costs
in light of the continuing modest AdRatings revenues in the year
(GBP0.05m). On the strength of the industry attention received by
AdRatings, we have announced a strategic commercial partnership
with ITV, the UK's largest seller of advertising space, to support
its customers in creating ever more innovative and effective
advertising. We expect to enjoy revenues from these arrangements
although it is hard to quantify this while the Covid-19 pandemic
continues.
SYSTEM1 RESPONSE TO COVID-19 IMPACT
In response to the Covid-19 pandemic, governments across the
world have taken unprecedented actions in recent weeks to limit the
spread of the virus. These actions vary considerably by country,
and their impact varies considerably by business sector. Since the
end of the 2019/20 financial year, System1's trading has inevitably
been adversely affected by the global economic situation. The Board
has concluded that it is difficult at this stage to provide
guidance on the financial performance for the current year until a
clearer outlook emerges. The Board will keep investors updated as
the impact on the Group's performance becomes clearer.
System1's priority, as we face up to the challenge presented by
the pandemic, is to maintain a strong financial position while
safeguarding the human and intellectual capital needed to take
advantage of the what the Board believes will be substantial growth
opportunities when the global economy recovers. In accordance with
this priority, we are monitoring the trends in forward sales,
evaluating a variety of plausible revenue scenarios, and taking
decisions on our cost base when agreed trigger points are reached.
Mitigating actions to date include deferring employment costs,
reducing the number of hours paid for where the volume of work has
fallen, and taking advantage of government-backed business support
and furloughing schemes in the countries where we operate. The
Board and other senior executives of System1 have agreed to defer
20% of their salaries until further notice.
Given the emphasis on retaining cash in the current
circumstances, the Board has decided to suspend both the proposed
buyback programme of up to GBP1.5m of System1 shares as well as the
payment of a final dividend for the 2019/20 financial year. Future
returns of capital will be kept under review as the economic
situation develops. In addition, the Company arranged and drew down
a GBP2.5m revolving credit facility in March 2020, ending the year
with a gross cash balance of GBP6.6m (2019: GBP4.3m) and debt of
GBP2.5m.
At this difficult time we are working as closely as possible
with our clients, sharing the latest insights on how Covid-19 has
impacted consumer feelings and behaviour around the world and
strengthening our relationships with them. We believe this will
stand us in good stead and benefit our business when conditions
improve.
The Company can be found at www.system1group.com .
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information, please contact:
System1 Group PLC Tel: +44 (0)20 7043
1000
John Kearon, Chief Executive Officer
Chris Willford, Chief Financial Officer
Canaccord Genuity Limited Tel: +44 (0)20 7523
8000
Simon Bridges / Andrew Potts
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END
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