SysGroup earnings end year as expected
By Josh White
Date: Tuesday 19 Apr 2022
(Sharecast News) - Managed IT service provider SysGroup said in a trading update on Tuesday that, despite external challenges over the last two years, it still expected to report adjusted EBITDA of £2.8m for the year ended 31 March, in line with market expectations.
The AIM-traded firm said that performance was despite the expected decline in revenue year-on-year, as customers continued to defer spending on enhanced IT projects.
It said its EBITDA performance reflected the underlying strength of its business, with "strong" operational management, and the full-year benefit of acquisition synergies supported by the quality of its managed services revenues and sustainable margins.
Additionally, the board noted that the group maintained its track record of "solid" cash generation, ending the financial year with £3m of net cash - ahead of market expectation.
SysGroup said during the latter part of the second half, it started to see enhanced trading conditions with both new and existing clients.
While it was not yet at pre-pandemic levels, customers were again starting to feel confident to commit to spending on enhancements to their essential IT services.
Coupled with the acquisition of Truststream, which added further capabilities to the company's managed security service offering, the group said it was well-positioned to deepen its existing client relationships.
"This is a very robust performance given the headwinds faced for a prolonged period of time," said chief executive officer Adam Binks.
"Our business has proved to be resilient which reflects both the quality of our offering and the core nature of the services that we provide.
"The strong EBITDA performance and cash generation demonstrate the operational strength and financial discipline of the group and investments in prior periods mean that we are ready to scale as conditions improve."
Binks said the company would do that both organically and through further earnings-enhancing mergers and acquisitions, as evidenced by the post-year end acquisition of Truststream Security Solutions.
"We have started to see the first green shoots of recovery in customer spending and look forward to the future with confidence."
SysGroup said it would publish its results for the 12 months ended 31 March on 20 June.
At 1155 BST, shares in SysGroup were down 0.39% at 28.89p.
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