Good Morning and today I will be covering System1 Group, aka Brainjuicer PLC. Before that let’s summarise today other companies’ updates and results.
1). Dragonfly Investment (DRG.L) is a small investment company that is looking for an investment.
2). SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC (SYM), a global specialist in products and technologies to "make plastic smarter" is expected to report revenue of £8m, up from £6.8m. Also, profits are likely to beat market expectation and not less than £350k. Market Cap. is £22m.
3). Royal Bank of Scotland Group plc (RBS) has made an attributable profit of £1,331 million for the year to date, including a Q3 profit of £392 million. But all this would be for nothing if US persecutors were to fine them heavily for mis-selling mortgages.
System1Group (FORMERLY BRAINJUICER PLC)
Share price: £4 (down 23%)
As mentioned in their trading update, System1 Group has previously said that trading was disappointing.
Today, management reiterated their statement by saying these results were “unexpected as they were disappointing.”
Also, System1 has identified three factors causing them operational problems.
Factor 1: several significant FMCG (fast-moving consumer goods, aka retailers) clients have cut or deferred market research budgets.
Factor 2: clients moving research spend towards automated lower cost research data. (aka. Clients cutting back on quality research to save money).
Factor 3: due to rebranding, the company has too much time addressing internal issues and less time on clients, compared to normal.
Another alarmingly honest admission is: “we have little revenue visibility and significant variability in revenues from month-to-month and client-to-client.”
Financials
As you well know their financials don’t make pretty reading. H1 profit before tax has fallen to £846k from £2.8m. Then, management has warned investors to expect up to 60% fall in PBT for the full-year. Meaning that 2017’s PBT could come in at £2.8m-£3m, compared to £6.2m.
The biggest notable change is their net cash flow from operations. It saw a cash outflow of half a million, compared to net cash profit of £3.52m.
System1 continues to be a capex-light business with spending at £62k.
