Cloud hosting group sees clear skies of recovery as market begins to normalise

Liverpool-based Cloud hosting provider, SysGroup, said it is starting to see normalisation of market conditions following the pandemic, and anticipates further acquisition possibilities, following two recent additions to the group.

The business announced its annual results today, for the year to March 31, 2022, which revealed a fall in revenues, but a sizeable improvement in pre-tax profits.

Sales of £14.75m compared with £18.13m the previous year, but pre-tax profits soared 192% to £600,000, which chief executive Adam Binks said reflected the strength of the group’s business model.

Adjusted EBITDA of £2.82m was slightly down on last year’s £2.91m figure.

Net cash stood at £2.99m, up from £1.88m a year ago.

During the reporting period the group completed its project to deliver a unified platform of systems, ‘Project Fusion’, which has resulted in significant benefits across all operations.

It achieved the successful migration to SysCloud 2.0, the group’s multi-tenanted cloud platform which went fully live in May 2022, delivering higher client performance and group efficiency with greater capacity from less physical space.

A unified sales and marketing hub opened in Manchester with a number of highly targeted campaigns planned for fiscal year 2023 to drive new customer engagement and continue to build its sales pipeline, and customer approval scores were comfortably ahead of the 97% target throughout the entire year.

Also, its office rationalisation completed with a refurbishment programme delivered in Newport and closure of theTelford site, which will generate a small operational saving.

In the first quarter of the current financial year, the business acquired Edinburgh-based Truststream Security Solutions – a fast-growing provider of cyber security solutions which enhances SysGroup’s security services and gives the group a presence in Scotland from which to grow, and Independent Network Solutions, trading as Orchard Computers, further enhancing the group’s presence in the South West region and complementing its South Wales based operations.

Both acquisitions are expected to be immediately earnings enhancing.

Adam Binks said: “The adjusted EBITDA performance and strong cash generation in a year when turnover was impacted by COVID highlights the strength of our business model.

“We have invested to drive future growth whilst maintaining prudent financial discipline throughout the business. Operationally, the group is ideally placed to take advantage of conditions as they begin to normalise and we have started to see the early green shoots of such a recovery.”

He added: “The acquisitions of Truststream and Orchard added further customers, expertise and geographical reach and demonstrate our ongoing commitment to be consolidators in this highly fragmented market.

“M&A activity in our sector is picking up and we believe there will be further opportunities that we can take advantage of during the course of this year. With a clear strategy for both organic and inorganic growth, the board is confident in the future.”

And he revealed: “Towards the end of the last financial year we began to see the green shoots of recovery for new business, with existing clients beginning to engage on projects and an increasing pipeline of opportunities from new potential clients.

“Whilst these are still early days and we must remain cautious, I am confident that we will see improvements to both revenue and EBITDA performance in this new financial year.”