On-hold IT projects hits SysGroup revenues

In a trading update ahead of its full-year results, Liverpool IT and cloud services business SysGroup is upbeat for its prospects despite an expected fall in annual revenues. Tony McDonough reports

Adam Binks
Adam Binks, chief executive of SysGroup in Liverpool


Liverpool IT and cloud services business SysGroup says it expects full-year revenues to decline for the second year in a row with customers deferring major IT projects due to the pandemic.

However, the Exchange Flags-based firm has issued an upbeat trading assessment ahead of results for the 12 months to March 31 which it is scheduled to publish on Monday, June 20.

SysGroup is listed on the stock market’s Alternative Investment Market (AIM) and says it expects adjusted EBITDA (an alternative measure of profitability) of £2.8m which is in line with market expectations.

Its statement added: “This is despite the expected decline in revenue compared to the prior period, as customers continued to defer spending on enhanced IT projects.

“The adjusted EBITDA performance reflects the underlying strength of our business with strong operational management and the full-year benefit of acquisition synergies, supported further by the quality of our managed services revenues and sustainable margins.”

Last year SysGroup reported revenues for the year to March 31, 2021, of £18.1m. This was 7% down on the £19.5m achieved in the previous year. The company achieved a pre-tax profit of £210,000. 

At that time, chief executive Adam Binks said the results demonstrated the “resilience” of the business against the backdrop of the COVID-19 pandemic. In the latest statement he hailed the “robust” performance of the business, and added: “We have started to see the first green shoots of recovery in customer spending.”

Earlier this month, SysGroup announced the acquisition of Truststream Security Solutions, a provider of managed cyber security services based in Edinburgh, in a deal worth up to £8m. It is paying £4.8m up front for the business rising by a further £3.075m over a 24-month period.

In Tuesday’s statement it added its was ending its financial year with £3m of net cash – ahead of market expectations. It added: “Encouragingly, during the latter part of H2 FY22, we have started to see enhanced trading conditions with both new and existing clients.

“While not yet at pre-pandemic levels, customers are once again starting to feel confident to commit to spending on enhancements to their essential IT services.

“Coupled with the acquisition of Truststream, which has added further capabilities to our managed security service offering, the group is well positioned to deepen its existing client relationships and is looking forward to the future.”

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