SysGroup looks ahead of pandemic-hit FY

Managed services provider (MSP) SysGroup is encouraging investors to look to the future as it delivers full-year numbers that included a drop in revenues.

The firm shared numbers for the year ended 31 March, with revenues dropping by 19% to £14.75m from £18.13m last year. Pre-tax profits improved by 192%, reaching £0.60m.

In his comments to investors, SysGroup chair Michael Edelson said that the numbers were not a fair reflection on where the company had got to over the course of its past financial year.

“The financial performance of SysGroup over the past year, whilst highly credible, does not represent the wider progress made. Revenue decreased as expected due to the impact of the pandemic, but through strong management the Group was able to deliver an Adjusted EBITDA performance in line with management’s expectations coupled with stronger than expected cash generation, while also investing in the business to prepare it for future growth,” he said.

That reference to investments included completing Project Fusion, the firm’s unified systems platform, and the migration to SysCloud 2.0, the Group’s cloud platform, which went fully live last month.

The business also sealed a couple of acquisitions during the fiscal year – Truststream and Orchard – as it looked to expand geographical coverage, increase recurring revenues and to add more skilled staff to the Group's roster.

“They signal our ongoing commitment to the Group’s buy and build strategy and to act as a consolidator in a highly fragmented market. The pandemic and associated lockdowns subdued activity, but we are starting to see increasing levels of M&A activity in our sector and are confident that further opportunities will present themselves,” stated Edelson.

Recurring revenues also improved in the year, moving up from 79% to 87% of the total revenues coming into the business.

Adam Binks, CEO of SysGroup, also echoed that the firm had not fared badly in terms of adjusted EBITDA performance and cash generation, despite the pandemic.

“We have invested to drive future growth while maintaining prudent financial discipline throughout the business. Operationally, the Group is ideally placed to take advantage of conditions as they begin to normalise and we have started to see the early green shoots of such a recovery,” he said.

“The acquisitions of Truststream and Orchard added further customers, expertise and geographical reach, and demonstrate our ongoing commitment to be consolidators in this highly fragmented market.

“M&A activity in our sector is picking up and we believe there will be further opportunities that we can take advantage of during the course of this year. With a clear strategy for both organic and inorganic growth, the board is confident in the future,” he added.

Binks said that the firm remained committed to a strategy of becoming a leading MSP with a reputation in the security and hosted cloud areas, and had the knowledge and funds to continue to make that happen.