Liverpool IT firm SysGroup sees 53% revenue growth

Liverpool-based IT services and cloud hosting firm SysGroup plc said on Monday it expects to report revenue growth of 53% to about £19.5 million for the year ended March 31, 2020, with adjusted EBITDA increasing 99% to around £2.8 million.

The news came in a trading update together with an update on the impact of the COVID-19 virus.

“The group’s trading for the year is in line with the board’s expectations, with performance underpinned by high levels of recurring revenue,” said SysGroup.

“The group expects to report revenue growth of 53% to c.£19.5m (FY19: £12.8m) with adjusted EBITDA increasing by 99% to c.£2.8m (FY19: £1.4m) supported by the contributions of the acquisitions of Certus IT Limited and Hub Network Services Limited in the year, as well as the benefits of operational efficiencies.

“Recurring revenues now represent 77% of the group’s total revenue (FY19: 74%) as the group continues to focus on the provision of end-to-end Managed IT Services.

“As at 31 March 2020 the group’s cash balance was £3.0m with net cash of £0.5m on a pre IFRS 16 basis.

“The group’s balance sheet is supported by total facilities of £5.0m expiring in 2024.

“The facilities consist of a £1.75m term loan which currently has £0.3m of headroom and a £3.25m revolving credit facility (RCF).

“The RCF is currently undrawn, providing the group with additional available liquidity to execute on acquisition opportunities that may arise as a result of this unprecedented period of uncertainty.”

On the impact of COVID-19 and the outlook for the firm, SysGroup said: “Whilst we have not experienced any immediate impact from the COVID-19 pandemic, we are cognisant that we are likely to be affected as it continues.

“Our ability to mobilise our sales teams, technical engineers and consultants will of course be restricted during the period of lockdown.

“It would also not be unreasonable to expect a delay to customers committing to major asset refreshes and contract renewals until they have established the impact of COVID-19 to their own businesses.

“Given the current uncertainty, the group does not believe it is prudent to provide guidance on the financial year to 31 March 2021 at this stage.

“We will continue to provide shareholders with updates as the situation progresses.”