TIDMSYS
RNS Number : 0449T
SysGroup PLC
22 November 2021
22 November 2021
SysGroup plc
("SysGroup" or the "Company" or the "Group")
Half yearly results for the six months ended 30 September
2021
SysGroup plc (AIM:SYS), the multi award-winning m anaged IT
services and cloud hosting provider , is pleased to announce its
unaudited half year results for the six months ended 30 September
2021 ("H1 FY22").
Financial highlights
-- Revenue of GBP7.58m (H1 FY21: GBP9.01m)
-- Recurring Managed IT Services revenue represented 86% of total revenue (H1 FY21: 83%)
-- Adjusted EBITDA (1) of GBP1.34m (H1 FY21: GBP1.41m), in line with management's expectations
-- Adjusted profit before tax (2) of GBP0.96m (H1 FY21: GBP0.99m)
-- Statutory profit before tax of GBP0.25m (H1 FY21: GBP0.13m)
-- Adjusted basic EPS (3) of 1.5p (H1 FY21: 1.7p)
-- Basic earnings per share of 0.3p (H1 FY21: 0.2p)
-- Cashflow from operations of GBP1.14m (H1 FY21: GBP1.68m)
-- Cash of GBP3.47m at 30 September 2021 (30 September 2020: GBP3.02m)
-- Net cash (4) at 30 September 2021 of GBP1.96m (30 September 2020: GBP1.17m)
Operational highlights
-- Consistently high customer satisfaction levels maintained above 97%
-- Invested to significantly enhance the technology that powers
our multi-tenanted SysCloud 2.0 platform
-- Manchester office opened to expand northern sales and
marketing presence, and refurbishment of Newport office
-- Project Fusion has continued to deliver significant
improvements to our business operations from a unified platform of
systems across the Group; further functionality for marketing
automation, people management and reporting added in H1
-- ESG project commenced with inaugural ESG disclosure to be
included in the FY22 annual report
Outlook
-- The long-term outlook for the Group and the market remains
very positive as IT has become an increasingly important board
agenda item for businesses in the last 18 months
-- Continuing to see companies seek to move towards Cloud rather
than on-premise solutions, with the expectation that
business-critical IT projects and investment decisions will recover
strongly once there is more certainty around the economic
environment and the on-going impact of COVID-19
-- The Board remains confident that Adjusted EBITDA for the
current financial year will be in line with its expectations
Adam Binks, Chief Executive Officer, commented:
"I am pleased with the performance of the business in light of
the ongoing economic uncertainty and the Board is confident in
meeting expectations for the full year. We have a strong customer
base who rely heavily on the business critical support that we
provide and we benefit from very high levels of recurring
revenue.
"Throughout the pandemic we have focused on ensuring that our
business is optimised to take full advantage once conditions
normalise and I am delighted with the progress made. IT
infrastructure and support is integral to all businesses and as
budget confidence returns we have the right market solutions, the
right people to deliver and the right platform to scale
rapidly."
Notes
1. Adjusted EBITDA is earnings before interest, taxation,
depreciation, amortisation of intangible assets, exceptional items
and share based payments.
2. Adjusted profit before tax is profit before tax after adding
back amortisation of intangible assets, exceptional items and share
based payments.
3. Adjusted basic EPS is profit after tax after adding back
amortisation of intangible assets, exceptional items, share based
payments and associated tax,divided by the number of shares in
issue.
4. Net cash represents cash balances less bank loans, lease
liabilities and contingent consideration.
For further information please
contact:
Tel: 0151 559
SysGroup Plc 1777
Adam Binks, Chief Executive
Officer
Martin Audcent, Chief Financial
Officer
Shore Capital (Nomad and Broker) Tel: 020 7408
Corporate Finance: Daniel Bush, 4090
Iain Sexton
Corporate Broking: Fiona Conroy
Alma PR (Financial PR) Tel: 07780 901
Josh Royston / Matthew Young 979
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, Manchester
and Telford.
For more information, visit http://www.sysgroupplc.com
Overview
I am pleased to be able to report on a solid set of results with
Adjusted EBITDA in line with management's expectations of GBP1.34m
(H1 FY21: GBP1.41m), despite a reduction in turnover of 15.8% to
GBP7.58m (H1 FY21: GBP9.01m). Revenue continues to be impacted in
the short term due to the ongoing effects of the COVID pandemic.
Managed IT services contributed GBP6.50m (H1 FY21: GBP7.46m) with
Value Added Resale ("VAR") sales representing GBP1.08m of H1
revenues (H1 FY21: GBP1.54m). 86% of revenues (H1 FY21: 83%) were
derived from recurring managed IT services contracts which resulted
in a slight improvement in margins to 60.2% (H1 FY21: 59.7%). We
continue to maintain a strong balance sheet and we ended the period
with net cash of GBP1.96m (31 March 2021: GBP1.88m).
The importance of IT infrastructure and services have
undoubtedly increased significantly in prominence to now being a
standing agenda item for the majority of boards as experiences from
the last two years have highlighted how integral technology is to
business operations; specifically to support flexible working
practices. We believe that this has created a real opportunity for
SysGroup in the medium to long term and we have made significant
operational improvements in the period to ensure we are ideally
placed to benefit. In the immediate term, the pandemic has led to a
delay in spending decisions, with companies continuing to conserve
cash and make minimal operational changes until the economic
environment settles and becomes clearer.
We have continued to support our clients through what remains a
difficult environment, and I am proud of the commitment from our
entire team. The quality of their work is reflected in consistently
high customer satisfaction levels which have remained above 97%
throughout the six month period. I have also been impressed with
their desire to return to office working. The benefits of being
together can not be underestimated and it is essential for
innovation and collaboration to continue. At the same time, we
continue to fully appreciate the enhanced benefit to team members
that is offered as part of our flexible working model. This has
been enhanced by the investment we have made in refreshing and
updating our offices in Newport to create the modern working
environment that you would expect from a leading technology
company. We have also begun to populate our new northern sales
headquarters in Manchester which we believe will create a strong
base from which to target customers in the north and help to gain
market share.
We had hoped that the first half of the year would show an
increased inclination for face-to-face meetings with both existing
and prospective customers but frustratingly this has yet to
materialise. The focus has remained on virtual meetings and also
centred around existing business rather than future projects. As
doors open and as our sales team mobilises, our pipeline of
opportunity will once again bear fruit.
The strong EBITDA performance reflects disciplined management
cost control along with the synergies from prior year acquisitions,
whilst we continued to invest as required in key areas of the
business. We have also seen increased benefits from Project Fusion,
which saw the Group come together on a single unified platform.
This has led to greater oversight of sales and marketing activity,
customer support and billing. Further functionality has been added
in the first half and we have further improvements scheduled in the
remainder of the financial year. As well as improving operational
efficiency, this unified platform will enable our business to scale
and make the integration of future acquisitions easier and more
timely.
Acquisitions are an integral part of SysGroup's growth strategy.
The Board has continued to identify and evaluate opportunities
during the first six months. Whilst we have engaged in a number of
acquisition discussions with potential targets, we are committed to
maintaining our disciplined approach and applying rigorous criteria
on both quality and price. Our reputation has been built on the
quality of our services and offerings and we will not compromise,
nor will we hamper future shareholder returns by overpaying for
assets. Our balance sheet is strong, with high levels of net cash,
headroom on committed facilities and a supportive shareholder base.
As and when the right opportunities present themselves we will act
accordingly and swiftly.
Strategy
The Group's strategy remains consistent: to expand its position
as a trusted provider of managed IT services to businesses in the
UK mid-market. The Board believes that a business focused on the
provision of managed IT services offers the highest growth
opportunity, with the potential for increased margins and
longer-term contracts, thereby providing greater revenue
visibility.
To deliver against this strategy, the Group has positioned
itself as an extension of a customer's existing IT department, with
an emphasis on consultative-led sales to guide customers through
the complexities and developments in the managed IT services and
cloud hosting marketplace. Our primary purpose is to remain abreast
of developments in technology and advise our customers accordingly.
This leading role is supplemented by exceptional customer service
and support, resulting in strong client engagement and embedding
SysGroup into their organisations. The Group continues to invest in
R&D to ensure its clients are making use of the latest and best
solutions available to them whilst maintaining its vendor agnostic
approach.
Results and trading
During the period, the Group delivered revenue of GBP7.58m (H1
FY21: GBP9.01m), a decrease of 15.8%, and Adjusted EBITDA of
GBP1.34m (H1 FY21: GBP1.41m), a decrease of 5% and in line with
management's expectations.
Managed IT Services revenue was GBP6.50m (H1 FY21: GBP7.46m) and
Value Added Resale ("VAR") revenue was GBP1.08m (H1 FY21: GBP1.54m)
with a high recurring income percentage of 86% (H1 FY21: 83%).
Revenue reduced as the wider impact of COVID on the economy last
year caused companies to defer spending decisions and some
customers were forced to reduce their contracted services on
renewal, either as a result of needing to save costs to manage
their financial position or owing to the fact they had reduced
their own staff numbers therefore requiring less resources. In
managed IT services we also experienced a higher than normal level
of churn. As a result we entered this financial year at a lower
contracted income level than last year. However, we have found that
the experience of instigating business continuity plans in response
to COVID has placed IT more firmly on board agendas, with an
increased interest in cloud hosted solutions. This is a welcome
development but in the short term has led to decision makers
delaying IT spend and extending the lives of on-premise IT whilst
they consider their IT strategies for the future. The lack of tech
refresh activity also affected our VAR revenue in H1 whilst the
delays in making IT transformation decisions has affected the
conversion of the managed IT services sales pipeline. As greater
economic certainty returns we believe that managed IT services and
VAR revenue will increase although, as businesses opt to move more
towards our cloud hosted service offerings, VAR revenues are likely
to trend downward over the longer term.
Gross profit was GBP4.56m with a gross margin of 60.2% (H1 FY21:
GBP5.38m and 59.7% respectively). The slightly higher gross margin
reflects the increase in revenue mix towards recurring managed IT
services in the period. Adjusted operating expenses of GBP3.22m
were GBP0.75m below the same period last year (H1 FY21: GBP3.97m)
with costs being controlled well, augmented by the full benefit of
acquisition synergies. During the period we opened a new office in
Manchester and the lease has been recognised under the IFRS16 lease
accounting policy. We made no use of the government furlough scheme
throughout the COVID pandemic and continue to recruit high quality
candidates to support our future growth.
The Group has reported a statutory profit before tax of GBP0.25m
which compares to a profit before tax of GBP0.13m in H1 FY21.
Whilst the Adjusted EBITDA is slightly lower than H1 FY21, lower
depreciation, amortisation and share based payment charges have led
to the higher profit before tax. No exceptional costs have been
incurred in the period.
The taxation charge of GBP0.08m includes a one-time deferred tax
charge adjustment of GBP0.14m due to the corporation tax rate
increasing from 19% to 25% on 1 April 2023. This tax rate
adjustment has been recognised in full in the Half Year tax
charge.
During H1 we invested tangible capex of GBP0.48m into our
business and primarily into our office locations. We took the
opportunity to refurbish our Newport office to give our team a new
and exciting workplace to return to as well as establishing a new
presence in Manchester. We have also invested to significantly
enhance the technology that powers our multi-tenanted SysCloud 2.0
platform. The investment into SysCloud 2.0 will continue into
H2.
Project Fusion, the project to deliver a unified platform of
systems across the Group, has continued to deliver significant
improvements to our business operations. In FY21, we successfully
implemented a new and unified CRM, marketing, service desk,
projects and billing system. In H1 FY22 we have gone live with
further functionality for marketing automation, people management
and reporting. The project will continue to the end of the
financial year. Capitalised intangible costs for Project Fusion
were GBP0.15m in H1.
Adjusted basic earnings per share for H1 FY22 was 1.5 pence (H1
FY21: 1.7 pence) and basic profit per share for H1 FY22 was 0.3
pence (H1 FY21: 0.2 pence). The change in the deferred tax rate has
a negative 0.2 pence impact on the adjusted and basic earnings per
share compared to the comparative period in FY21.
The Group had a strong net cash position of GBP1.96m at the end
of the period (30 Sept 2020: GBP1.17m) and a gross cash balance of
GBP3.47m at 30 September 2021 (30 Sept 2020: GBP3.02m). No use was
made of the government's COVID loan schemes and there are no COVID
deferrals of tax payments.
Cashflow from operations was GBP1.14m (H1 FY21: GBP1.67m) and
cash conversion was 85% (H1 FY21: 124%). Working capital continues
to be managed well with debtor days remaining below the target
level of 25 days and supplier payments being made on monthly
payment runs. Corporation tax of GBP0.19m was paid in H1 (H1 FY21:
GBP0.07m) and cashflows from investing activities include GBP0.31m
of non-recurring expenditure for the refurbishment of the Newport
office and fit-out of the new Manchester office. Cashflow from
financing activities includes interest payments, which have been
re-categorised from operating activities in the Consolidated
Cashflow Statement, and bank loan repayments, which, as expected,
stepped up this financial year in accordance with the terms of the
loan agreement.
Cash conversion
We have previously reported our cash conversion ratio to include
tax and interest payments as part of operating cash but we have
made the decision to amend the calculation to be more consistent
with our listed peer group by measuring operating cashflows
generated after movements in working capital. The cash conversion
ratio is therefore calculated as cashflow from operations, adjusted
for exceptional cashflow, as a percentage of Adjusted EBITDA. This
performance measure is reported as a KPI to the Board of Directors
each month and is a key indicator of the quality of adjusted profit
as it converts into cash. In H1 cash conversion was 85% which was
as expected. Cash conversion of 124% in H1 FY21 was unusually high
due to the deferral of the Q1 VAT payment of GBP280k which was
subsequently repaid in December 2020.
Share Option Grants
In April and July 2021 respectively, the Company granted 306,000
share options to employees and 250,000 share options to senior
management under the 2018 SysGroup EMI Scheme. In June 2021, the
Remuneration Committee granted 179,675 performance shares to Adam
Binks, Chief Executive Officer, and 107,805 performance shares to
Martin Audcent, Chief Financial Officer in relation the the Group's
performance in FY21 and under the terms of the 2020 SysGroup Long
Term Incentive Plan.
Outlook
Since the onset of the global pandemic we have focused on two
key areas: firstly, supporting our customers, which our team have
worked tirelessly to achieve, and which they have done with
considerable success. Secondly, optimising all internal operations
of our business to maximise our opportunity once economic certainty
improves and trading conditions normalise. I am extremely pleased
with how we have fared against both of these objectives.
The timing of a wider recovery is outside of our control but we
have a strong customer base with high levels of recurring revenue.
We have a strong balance sheet with a very healthy cash balance
which we expect to improve further in H2 as our capex requirements
were H1 weighted. Our sales teams will be pushing even harder
during the remainder of the year and looking to increase the face
to face interactions which will see our pipeline of opportunity
begin to convert in to sales. We are committed to our acquisition
strategy but we will stick to our rigorous criteria and not be
drawn into deals which would deliver sub-optimal returns.
I am very confident that we have the right model, the right
offering, and the right team and culture to deliver strong returns
for our shareholders over the medium term and I thank them for
their continued support.
Despite the economic circumstances, we remain confident in
meeting Adjusted EBITDA expectations for the full year, coupled
with continued strong cash generation.
Adam Binks
Chief Executive Officer
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
SIX MONTHSED 30 SEPTEMBER 2021
Unaudited Unaudited Audited
six months six months year to
to to 31-Mar-21
30-Sep-21 30-Sep-20
Notes GBP'000 GBP'000 GBP'000
Revenue 2 7,580 9,007 18,131
Cost of sales (3,017) (3,629) (7,630)
Gross profit 2 4,563 5,378 10,501
Administrative expenses before depreciation,
amortisation, exceptional items
and share based payments (3,219) (3,971) (7,586)
------ ------------ ------------
Adjusted EBITDA 1,344 1,407 2,915
---------------------------------------------- ------ ------------ ------------ -----------
Depreciation of tangible assets (334) (369) (722)
Amortisation of intangible assets (615) (671) (1,294)
Exceptional items 4 - (36) (82)
Share based payments (93) (155) (504)
---------------------------------------------- ------ ------------ ------------ -----------
Administrative expenses (4,261) (5,202) (10,188)
Operating profit 302 176 313
---------------------------------------------- ------ ------------ ------------ -----------
Finance costs (52) (51) (108)
============================================== ====== ============ ============ ===========
Profit before taxation 250 125 205
Taxation (83) (30) 35
Total comprehensive profit attributable
to the equity holders of the company 167 95 240
---------------------------------------------- ------ ------------ ------------ -----------
Basic earnings per share (pence) 3 0.3p 0.2p 0.5p
Fully diluted earnings per share
(pence) 3 0.3p 0.2p 0.5p
---------------------------------------------- ------ ------------ ------------ -----------
All the results arise from continuing operations.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
Unaudited Unaudited Audited
30-Sep-21 30-Sep-20 31-Mar-21
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 15,554 15,554 15,554
Intangible assets 4,822 5,766 5,290
Property, plant and equipment 1,614 1,548 1,281
---------------------------------- ------- ----------- ---------- ----------
21,990 22,868 22,125
Current assets
Trade and other receivables 6 1,926 2,492 1,728
Cash and cash equivalents 3,469 3,021 3,473
---------------------------------- ------- ----------- ---------- ----------
5,395 5,513 5,201
Total Assets 27,385 28,381 27,326
---------------------------------- ------- ----------- ---------- ----------
Equity and Liabilities
Equity attributable to the equity shareholders of the parent
Called up share capital 494 494 494
Share premium 9,080 9,080 9,080
Treasury reserve (201) - (201)
Other reserve 2,925 2,483 2,832
Translation reserve 4 4 4
Retained earnings 8,570 8,258 8,403
---------------------------------- ------- ----------- ---------- ----------
20,872 20,319 20,612
Non-current liabilities
Lease liabilities 269 296 190
Deferred taxation 948 1,082 889
Bank loan 595 951 757
---------------------------------- ------- ----------- ---------- ----------
1,812 2,329 1,836
Current liabilities
Trade and other payables 7 2,766 3,892 2,683
Deferred income 1,291 1,238 1,549
Bank loan 389 333 416
Lease liabilities 255 270 230
---------------------------------- ------- ----------- ---------- ----------
4,701 5,733 4,878
Total Equity and Liabilities 27,385 28,381 27,326
---------------------------------- ------- ----------- ---------- ----------
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
SIX MONTHSED 30 SEPTEMBER 2021
Attributable to equity holders of the parent
Share Share Treasury Other Translation Retained Total
capital premium reserve reserve reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2020 494 9,080 - 2,328 4 8,163 20,069
Profit and total comprehensive
income for the period - - - - - 95 95
Share based payments - - - 155 - - 155
-------------------------------- --------- --------- --------- --------- ------------ ---------- --------
At 30 September 2020 494 9,080 - 2,483 4 8,258 20,319
Profit and total comprehensive
income for the period - - - - - 145 145
Share buy back - - (201) - - - (201)
Share based payments - - - 349 - - 349
-------------------------------- --------- --------- --------- --------- ------------ ---------- --------
At 31 March 2021 494 9,080 (201) 2,832 4 8,403 20,612
Profit and total comprehensive
income for the period - - - - - 167 167
Share based payments - - - 93 - - 93
--------------------------------
At 30 September 2021 494 9,080 (201) 2,925 4 8,570 20,872
-------------------------------- --------- --------- --------- --------- ------------ ---------- --------
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
---------------------- --------------------------------------------------------
Share Premium Reserve Amount subscribed for share capital in excess
of nominal values.
---------------------- --------------------------------------------------------
Treasury reserve Company owned shares held for the purpose of settling
the exercise of employee share options.
---------------------- --------------------------------------------------------
Other Reserve Amount reserved for share based payments to be
released over the life of the instruments and
the equity element of convertible loans
---------------------- --------------------------------------------------------
Translation Reserve Amount represents differences in relations to
the consolidation of subsidary companies accounting
for currencies other than the Group's functional
currency.
---------------------- --------------------------------------------------------
Retained earnings All other net gains and losses and transactions
with owners (e.g. dividends) not recognised elsewhere.
---------------------- --------------------------------------------------------
CONSOLIDATED CONDENSED STATEMENT OF CASHFLOWS
SIX MONTHSED 30 SEPTEMBER 2021
Unaudited Restated Restated
six months Unaudited Audited
to six months year to
to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
Cashflows used in operating activities
Net income 167 95 240
Adjustments for:
Depreciation and amortisation 949 1,040 2,016
Finance costs 52 51 108
Share based payments 93 155 504
Taxation 83 30 (35)
---------------------------------------------- ------------ ------------ ----------
Operating cashflows before movement
in working capital 1,344 1,371 2,833
---------------------------------------------- ------------ ------------ ----------
(Increase)/decrease in trade and
other receivables (198) 223 987
(Decrease)/increase in trade and
other payables (5) 83 (889)
Cashflow from operations 1,141 1,677 2,931
---------------------------------------------- ------------ ------------ ----------
Taxation paid (192) (69) (98)
Net cash from operating activities 949 1,608 2,833
---------------------------------------------- ------------ ------------ ----------
Cashflows from investing activities
Payments to acquire property, plant
& equipment (476) (95) (179)
Payments to acquire intangible assets (147) (246) (396)
Acquisition of subsidiary companies - (975) (975)
Net cash used in investing activities (623) (1,316) (1,550)
---------------------------------------------- ------------ ------------ ----------
Cashflows from financing activities
Payments for share buy-back - - (201)
Repayment of loan facility including
fees (189) (112) (224)
Capital/principal paid on lease liabilities (88) (144) (288)
Interest paid on loan facility (45) (41) (105)
Interest paid on lease liabilities (8) (10) (28)
Net cash from financing activities (330) (307) (846)
---------------------------------------------- ------------ ------------ ----------
Net (decrease)/increase in cash and
cash equivalents (4) (15) 437
---------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at the beginning
of the period /year 3,473 3,036 3,036
Cash and cash equivalents at the
end of the period/year 3,469 3,021 3,473
---------------------------------------------- ------------ ------------ ----------
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIX MONTHSED 30 SEPTEMBER 2021
1. ACCOUNTING POLICIES
The accounting policies used in the preparation of the unaudited
consolidated condensed financial information for the six months
ended 30 September 2021 are prepared in accordance with UK adopted
International Financial Reporting Standards ("IFRS") and are
consistent with those that will be adopted in the annual statutory
financial statements for the year ended 31 March 2022.
While the financial information included has been prepared in
accordance with the recognition and measurement criteria, in
accordance with UK adopted International Financial Reporting
Standards, these consolidated condensed financial statements do not
contain sufficient information to comply with IFRSs.
Consolidated Condensed Cashflow Statement
The consolidated condensed cashflow statement for the prior
periods have been restated to change the categorisation of interest
payments from Cashflows from operating activities to Cashflows from
financing activities. Accordingly, interest payments totalling
GBP51,000 for the six month period ended 30 September 2020 and
GBP133,000 for the year ended 31 March 2021 are now shown as
cashflow from financing activities.
Exceptional items
The Group presents as exceptional items on the face of the
Statement of Comprehensive Income those material items of income
and expense which the Directors consider, because of their size or
nature and expected non-recurrence, merit separate presentation to
facilitate financial comparison with prior periods and to assess
trends in financial performance. Exceptional items are included in
Administration expenses in the Consolidated Statement of
Comprehensive Income but excluded from Adjusted EBITDA as
management believe they should be considered separately to gain an
understanding of the underlying profitability of the trading
businesses.
Going concern
The Directors have prepared the financial statements on a going
concern basis which assumes that the Group and the Company will
continue to meet liabilities as they fall due.
The Board recognises that the whilst the Group is still trading
in an uncertain economy, the operating model remains highly
resilient with circa 85% of revenue deriving from contracted
managed IT services which are business critical service supplies to
customers. The Group has a gross cash balance of GBP3.47m, a net
cash position of GBP1.96m and continues to generate a high level of
operating cash inflow.
The Directors reviewed the Group's financial forecasts including
a downside scenario. The projected trading forecasts and resultant
cashflows, together with the confirmed loan facilities and other
sources of finance, taking account of reasonably possible changes
in trading performance, show that the Group can continue to operate
within the current facilities available to it.
The Directors therefore have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future and they continue to adopt the going
concern basis of accounting in preparing the financial
statements.
2. SEGMENTAL REPORTING
The chief operating decision maker for the Group is the Board of
Directors and the Group reports in two segments:
-- Managed IT Services - this segment provides all forms of
managed services to customers and includes professional
services.
-- Value Added Resale (VAR) - this segment provides all forms of
product and licence sales procured from supplier partners.
The monthly management accounts reported to the Board of
Directors are reviewed at a consolidated level with the operating
segments representative of the business model for growth of
recurring contract income in Managed IT Services and VAR sales as a
complementary business activity. The Board review the results of
the operating segments at a revenue and gross profit level since
the Group's management and operational structure supports these
operational segments as unified Group functions.
All segments are continuing operations and there are no
transactions between segments.
Unaudited Unaudited Audited
six months six months year
to to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
--------------------- ------------ ------------ ----------
Revenue
Managed IT Services 6,496 7,462 14,344
Value Added Resale 1,084 1,545 3,787
7,580 9,007 18,131
--------------------- ------------ ------------ ----------
Gross profit
Managed IT Services 4,329 5,049 9,594
Value Added Resale 234 329 907
4,563 5,378 10,501
--------------------- ------------ ------------ ----------
3. EARNINGS PER SHARE
Unaudited Unaudited Audited
six months six months year
to to to
30-Sep-21 30-Sep-20 31-Mar-21
Profit for the financial year attributable
to shareholders 167 95 240
Adjusted profit for the financial
period 741 823 1,744
Weighted number of equity shares in
issue 49,859,690 49,619,690 49,234,036
Weighted number of equity shares for
diluted calculation 51,786,614 51,584,007 51,811,233
Adjusted basic earnings per share
(pence) 1.5p 1.7p 3.5p
Basic earnings per share (pence) 0.3p 0.2p 0.5p
Diluted earnings per share (pence) 0.3p 0.2p 0.5p
-------------------------------------------- ------------ ------------ -----------
Unaudited Unaudited Audited
six months six months year to
to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
Profit after tax used for basic earnings
per share 167 95 240
Amortisation of intangible assets 615 671 1,294
Exceptional items - 36 82
Share based payments 93 155 504
-------------------------------------------- ------------ ------------ -----------
Tax adjustments (134) (134) (376)
Adjusted profit used for adjusted
earnings per share 741 823 1,744
-------------------------------------------- ------------ ------------ -----------
The tax adjustments relate to current and deferred tax on the
amortisation of intangible assets, exceptional items and share
based payments.
4. EXCEPTIONAL ITEMS
Unaudited Unaudited Audited
six months six months year to
to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
------------------------------------- ------------- ------------ ----------
Integration and restructuring costs - 61 82
Acquisition costs - (25) -
- 36 82
--------------------------------------------------- ------------ ----------
5. ALTERNATIVE PERFORMANCE MEASURES
Reconciliation of Operating profit Unaudited Unaudited Audited
to Adjusted EBITDA six months six months year to
to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
Operating profit 302 176 313
Depreciation 334 369 722
Amortisation of intangible assets 615 671 1,294
EBITDA 1,251 1,216 2,329
--------------------------------------------- ------------ ------------ -----------------
Exceptional items - 36 82
Share based payments 93 155 504
Adjusted EBITDA 1,344 1,407 2,915
--------------------------------------------- ------------ ------------ -----------------
Reconciliation of Profit before Unaudited Unaudited Audited
tax to Adjusted Profit before tax six months six months year to
to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
Profit before tax 250 125 205
Amortisation of intangible assets 615 671 1,294
Exceptional items - 36 82
Share based payments 93 155 504
--------------------------------------------- ------------ ------------ -----------------
Adjusted Profit before tax 958 987 2,085
--------------------------------------------- ------------ ------------ -----------------
Cash conversion Unaudited Unaudited Audited
six months six months year to
to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
Cashflow from operations 1,141 1,677 2,931
Adjustments:
Acquisitions, integration and restructuring
cashflows - 61 82
Adjusted cashflow from operations 1,141 1,738 3,013
--------------------------------------------- ------------ ------------ -----------------
Adjusted EBITDA 1,344 1,407 2,915
--------------------------------------------- ------------ ------------ -----------------
Cash conversion 85% 124% 103%
--------------------------------------------- ------------ ------------ -----------------
The alternative performance measure calculation for cash
conversion has been revised and now shows cashflow from operations,
adjusted for exceptional cashflows, as a percentage of Adjusted
EBITDA. Previously the cashflow from operations included interest
and taxation payments. The cash conversion calculation in the
comparative periods have been updated to reflect the revised
calculation.
Net cash Unaudited Unaudited Audited
six months six months year to
to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
Cash balances 3,469 3,021 3,473
Bank loans - current (389) (333) (416)
Bank loans - non-current (595) (951) (757)
Lease liabilities (524) (566) (420)
Net cash 1,961 1,171 1,880
-------------------------- ------------ ------------ -----------------
6. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
six months six months year to
to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
Trade receivables 991 1,469 916
Prepayments and accrued
income 935 1,023 812
-------------------------- ------------ ------------ -----------------
1,926 2,492 1,728
------------------------- ------------ ------------ -----------------
7. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
six months six months year to
to to
30-Sep-21 30-Sep-20 31-Mar-21
GBP'000 GBP'000 GBP'000
Trade payables 1,344 1,648 811
Corporation tax 153 237 254
Other taxes and social
security 468 992 628
Accruals 801 1,015 990
------------------------- ------------ ------------ -----------------
2,766 3,892 2,683
------------------------ ------------ ------------ -----------------
8. AVAILABILITY OF INTERIM REPORT
Copies of this report are available on the Company's website at
http://www.sysgroup.com
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END
IR PPGCAGUPGGBG
(END) Dow Jones Newswires
November 22, 2021 02:00 ET (07:00 GMT)
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