Sysgroup Regulatory News (SYS)

20 April 2020

SysGroup plc

("SysGroup" or the "Group")

Trading and COVID-19 Update

SysGroup PLC (AIM:SYS), the multi award-winning Managed IT Services and Cloud Hosting provider, is pleased to provide a trading update for the year ended 31 March 2020, together with an update on the impact of the COVID-19 virus.

Group trading performance

The Group's trading for the year is in line with the Board's expectations, with performance underpinned by high levels of recurring revenue. 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.

As we enter the new financial year, the Group will continue to benefit from its high levels of recurring revenues, underpinned by a robust balance sheet. Our services are mission critical to our customers, particularly in the current environment and we have worked tirelessly to ensure their business continuity and support new working practices.

Impact of COVID-19 and outlook

Our number one priority is the health and wellbeing of our team and their families whilst continuing to support our customers. Our business continuity plans have been successfully implemented and remote working facilitated across our operations.

The world has undergone material change and SysGroup is already innovating. We are adapting to new ways of working and educating our customers by sharing our experiences with them. We are immensely proud of how our team has adapted overnight and has continued to support our customers, a small number of whom are experiencing significant business disruption.

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.

Adam Binks, Chief Executive Officer, commented:

"I am delighted with the progress that we have continued to make throughout the course of the FY20 period and on behalf of the entire Board, I would like to thank our team for their continued hard work.

COVID-19 is, and will continue to be, a challenging time for many and our priority remains the welfare of our team and their families. The Group is well placed to benefit from its strong levels of recurring revenue and excellent levels of cash generation however we remain mindful of the potential impact to trading in the coming months.

The importance of workplace technology services has become even more prominent as a result of the COVID-19 pandemic and we are focused on supporting our customers through this period of global change, whilst positioning the business to take advantage of any commercial opportunities that may arise."

About SysGroup

SysGroup is a leading provider of Managed IT Services, Cloud Hosting, and expert IT Consultancy. The Group delivers solutions that enable clients to understand and benefit from industry leading technologies and advanced hosting capabilities. SysGroup focuses on a customer's strategic and operational requirements - enabling clients to free up resources, grow their core business and avoid the distractions and complexity of delivering IT services.

The Group has offices in Liverpool, London, Newport, Bristol and Telford.

For more information, visit http://www.sysgroupplc.com