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System1 prepares shareholders for disappointing results
Marketing services group System1 updated the market on its trading for the 12 months ended 31 March on Wednesday, which it described as "disappointing".
The AIM-traded company changed its year-end last year, and its previous audited financial statements related to the 15 months ended 31 March 2017.
To ensure like-for-like comparisons, percentage changes in its trading update were calculated using, as the base, unaudited results for the 12 months ended 31 March 2017, the board confirmed.
System1 said its gross profit declined by some 18% to £22.2m, which it had since responded to with new product offerings and reductions in its cost base.
After 8% growth in overhead costs in the first half, overhead costs over the year as a whole declined by around 2%.
"This decline in overhead costs is due in part to a decline in share-based payments, following the sharp fall in the company's share price over the last 12 months, from £0.7m last year to approximately £0.1m this year, and in part to a reduction in employee bonuses from £2.3m last year to less than £0.1m this year," the board said in its statement.
"It also reflects a reduction in headcount over the second half."
As a result, the company said it now expected profit before tax to be in the range of £1.6m to £2.0m for the year.
"The company returned £4.2m to shareholders by way of dividends during 2017/18, and yet still had a healthy net cash balance of £5.7m at 31 March 2018."
System1 said it would announce its audited financial results on 1 June.