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Covid hits SysGroup revenues
Managed service player suffers revenue drop but reveals robustness of the operation, which is set for future growth
The pandemic impacted managed service player SysGroup’s full-year numbers, with the firm reporting a 7% decline in revenues for the 12 months ended 31 March.
During the year there were lockdowns, restrictions and circumstances that many will be hoping were a one-off caused by Covid-19, and the firm is taking the view that the fundamentals of the business are sound and the future will be different.
“I’m pleased to report that the business has performed well over the past year, given the significant challenges posed by a full 12-month period of lockdown restrictions,” said Adam Binks, CEO of SysGroup. “Improved adjusted EBITDA and increased net cash, despite ongoing investment for the future, reflect our high levels of recurring revenues, strong operational controls and cash flow generative model.”
The firm reported a 2% climb in recurring revenues as a percentage of the total, with the level now reaching 79%. Adjusted EBITDA was also up by 4% year-on-year to £2.91m. Revenues for the fiscal year declined by 7% and came in at £18.13m.
The firm was also able to renew a 36-month contract with its largest managed hosting customer and was able to embed and bring together some of its previous acquisitions, Certus IT and HNS, into a single trading entity. Since the end of March, the firm has cut the ribbon on a base in Manchester and renovated its Newport office as it looks to getting staff back at their desks.
“As lockdown restrictions ease and greater economic certainty returns, I have no doubt that investment into IT will be a major priority for many business leaders, as the pandemic has made our industry more relevant than ever,” said Binks.
“With a clear market focus and with the operational developments made over the past year, SysGroup is well placed to take advantage of this anticipated growth,” he said. “The strength of our balance sheet coupled with our supportive investor base will also enable us to continue to be a consolidator in a fragmented, growing market, and I look forward to the future with confidence.”
SysGroup has become known for its strategy of using acquisition as a means of expanding the operation, and in his statements as chairman accompanying the results, Michael Edelson touched on future prospects in that area.
“No further acquisitions were made during the year but we remain very much committed to our stated strategy of being a consolidator in a hugely fragmented market,” he said. “We are in a strong position to make accretive acquisitions with committed debt facilities, a strong cash position and a supportive institutional shareholder base.”
“Whilst we have continued to seek out complementary acquisitions during lockdown, we have maintained our discipline and only focus on quality assets that meet our strict acquisition criteria,” said Edelson.
“As we begin to come out of the pandemic and are once again able to meet with potential vendors face to face, we are confident that the pipeline of opportunity will pick up, with anticipated changes to Capital Gains Tax fuelling this further.”