Transformed SysGroup aims to be lead AI partner for business
AIM listed technology company SysGroup delivered revenue of £22.71m (FY23: £21.65m), an increase of 5% on the prior year, but saw pre-tax losses increase to £6.75m as margins were dented by higher supplier costs.
The business is shifting its strategy from cyber security towards a comprehensive AI solution for SME businesses, which the chairman cautioned would be “a J curve” rather than a straight line.
Gross margin declined to 46% (FY23: 50%) due to unmitigated supplier cost increases combined with a change in product mix
The annual results to the year ending June 2024 saw the company point towards “adjusted EBITDA” of £2.01m (FY23: £3.13m).
The company said trading for the year has been “strong” with revenues increasing 5% to £22.7m driven by a significant 14% increase in the second half of the year compared to the same period in FY23.
The company, which has offices in Bristol, Edinburgh, London, Manchester and Newport, also secured its largest contract in its history, totalling £2.2m of revenue over three years.
Heejae Chae, Executive Chairman, SysGroup Group, said: “Over the past year, the Group has completely transformed its strategy, execution and leadership. Since acquiring a 14% share and becoming the Executive Chairman, we have repositioned the Company as the preferred technology partner for Small Medium Businesses in their AI and digital transformation efforts. AI will have a significant impact on businesses and represents a key opportunity for transformation. Our goal is to guide SMBs through the complex AI value chain and support their transformation journey from start to finish.”
He added: “We raised £11.2 million through an oversubscribed equity raise to accelerate our growth and innovation. We have invested in additional R&D resources, including offshore capabilities in India and Eastern Europe. In order to showcase the impact of AI transformation, we are implementing 31 use cases internally to transform SysGroup to demonstrate the benefits of AI. This will allow us to serve as a live case study of best practices for our customers and achieve significant productivity gain. Additionally, we are actively seeking complementary acquisitions to expand our technical capabilities and customer base.
“I am very excited about the Company’s potential and future prospects. AI will be the transformational technology of our generation and will continue to gather momentum as the technology improves and benefits are crystallised. As with any innovation, its adoption will not be a straight line and will follow a J-curve. Our mission is to inform and support British SMBs which accounts for 99.2% of total business population in this journey.”
However, in this morning’s statement to the stock market the company admits to an error relating to Managed IT services direct expenses not being recognised for the year ended 31 March 2023 within the subsidiary: SysGroup Trading Limited.
Expenses were recognised as prepayments rather than in the statement of comprehensive income. The total impact of this error is to increase cost of sales by £193,678 and to decrease prepayments (shown within Trade and other receivables) by the same amount.
There is no impact on comparative earnings per share as a result of this correction.
