SysGroup shares jump on 'strong' trading performance

Managed IT service provider SysGroup reported a “strong” trading performance in its first half on Wednesday, despite a “challenging” macroeconomic environment.

The AIM-traded firm noted the successful acquisitions of Truststream and Orchard earlier in the year, saying in the trading update that the integration of both were progressing “well”.

Its board said it was pleased with the performance of both companies to date, and was already seeing early signs of the potential cross-sell benefits.

As a result, the group said it expected to report revenue for the first half of £11.32m, up from £7.58m year-on-year, and adjusted EBITDA of £1.67m, up from £1.34m, and both in line with current market expectations.

Additionally, SysGroup said it finished the half-year with a “healthy” gross cash balance of £4.22m, up from £3.47m, and a net debt position of £1.92m, swinging from net cash of £1.96m.

Looking ahead, the group said it had maintained its trading momentum with its sales pipeline continuing to grow, while the investment made in 2022 in its new Manchester sales and marketing hub was starting to materialise.

The board said that, while there was still progress to be made, the team was now at “full complement” and was making “good” progress.

It said customers were still relying on SysGroup as a “critical supplier” of managed IT services, with its teams “as committed as ever” to deliver its services.

The need for managed IT services remained prevalent, and as businesses increasingly looked to invest in technology to increase efficiencies and improve margins, SysGroup said it was “ideally placed” to capitalise on a growing market opportunity.

“I am pleased with the progress that we have made in the first half,” said chief executive officer Adam Binks.

“To have delivered a revenue and adjusted EBITDA performance in line with current market expectations, despite the numerous macro-economic challenges, is testament to the resilience of our strategy and hard work of our team.

“The benefits of the recent Truststream and Orchard acquisitions are already clear and the enlarged customer base is fully engaged in understanding what additional support we can provide from our enhanced service offering.”

SysGroup said it would publish its half-year results for the six months ended 30 September on 21 November.

At 1121 BST, shares in SysGroup were up 10.93% at 22.74p.

Reporting by Josh White for Sharecast.com.