Cloud Hosting

Liverpool-based cloud hosting firm SysGroup said trading is in line with expectations, in an update for the year ended March 31, this morning.

The group, based in the citys Exchange Flags, said its performance was underpinned by high levels of recurring revenue and it expects to report revenue growth of 53% to around 19.5m, compared with 12.8m a year ago, with adjusted EBITDA increasing by 99% to approximately 2.8m, up from 1.4m in 2019.

This has been supported by the contributions of the acquisitions of Certus IT Limited and Hub Network Services in the year, as well as the benefits of operational efficiencies.

Recurring revenues now represent 77% of the groups total revenue, against 74% the previous year, as the group continues to focus on the provision of end-to-end managed IT services.

As at March 31, 2020 the groups cash balance was 3m, with net cash of 500,000 on a pre IFRS 16 basis.

The groups balance sheet is supported by total facilities of 5m expiring in 2024.

The facilities consist of a 1.75m term loan which currently has 300,000 of headroom and a 3.25m revolving credit facility. 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 it enters the new financial year, the group says it will continue to benefit from its high levels of recurring revenues, underpinned by a robust balance sheet.

It says its services are mission critical to its customers, particularly in the current environment and it has worked tirelessly to ensure their business continuity and support new working practices.

During the COVID-19 pandemic, SysGroup said its business continuity plans have been successfully implemented and remote working facilitated across its 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.

It added: 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.

Chief executive Adam Binks said: 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.

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Cloud hosting firm anticipating strong revenue and EBITDA improvements - The Business Desk