SysGroup revenue falls despite steady trading

Managed IT services provider SysGroup reported a steady first-half trading performance in an update on Wednesday, with notable growth in high-value managed IT services revenue.

The AIM-traded firm said that growth was partially offset, however, by lower value-added resale (VAR) sales, resulting in a slight decrease in overall group revenue compared to the same period last year.

For the half-year, SysGroup expected to report revenue of £10.96m, down from £11.32m year-on-year.

Additionally, the company said it anticipated reporting adjusted EBITDA of £1.56m, compared to £1.68m in the prior year.

As of the end of the period, SysGroup’s gross cash stood at £1.98m, down from £4.22m at the end of the first half of the 2023 financial year.

That decrease was attributed to various factors, including payments made to satisfy the Truststream year one earn-out, the acquisition of 2,076,394 ordinary SysGroup shares now held in treasury, and the settlement of the former CEO’s contractual terms.

The net debt at the end of the period was £3.43m, an increase from £1.92m, with the figure excluding future contingent consideration of £1.84m, compared to £2.93m in the prior year.

In addition to the trading update, SysGroup announced key appointments to bolster its senior management team.

The board said the appointments were part of its strategy to focus on delivering an end-to-end data solution.

It said the newly appointed executives included Heinrich Koorts as chief revenue officer, formerly of Softcat; Ross Humphrey as chief AI officer, formerly of JP Morgan and Rebura; Paul Sullivan as chief technology officer, previously with SysGroup and Truststream; and Wendy Baker as general counsel and company secretary, formerly of Scapa Group.

“During the past six months, we have assessed the market opportunities and our competitive position,” said executive chair Heejae Chae.

“We recognise that most companies today are grappling with how to leverage artificial intelligence (AI).

“Whilst the potential benefits are compelling, it is not clear to many as to what these benefits are and how they can achieve them.”

Chae said companies were looking for a partner to help them build a compelling business case for AI, as well as help them achieve data maturity in a cost-efficient way as they modernised their existing platform.

“We believe the most effective way to deliver such a result is to provide an end-to-end data solution including data engineering, networking, storage, analytics and, of course, security.

“Leveraging our existing capabilities, we will invest in our operational capability and put the building blocks in place to become the partner of choice in the AI adoption journey.

“We look forward to expanding further on our strategy when we publish our half year results.”

At 1242 GMT, shares in SysGroup were down 10.11% at 40p.

Reporting by Josh White for Sharecast.com.