REG - SysGroup PLC - Acquisition of Truststream Security Solutions Ltd

SysGroupAnnouncement

05/04/2022 07:00

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RNS Number : 2284H  SysGroup PLC  05 April 2022

The information contained within this announcement is deemed by the company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of the domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018 (as amended) ("UK
MAR"). Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to be in the
public domain.

 

5 April 2022

 

SysGroup plc

("SysGroup" or the "Company" or the "Group")

 

Acquisition of Truststream Security Solutions Limited

New Banking Facilities

 

SysGroup plc (AIM:SYS), the multi award-winning managed IT services, cyber
security and cloud hosting provider, is pleased to announce the acquisition of
100% of the issued share capital of Truststream Security Solutions Limited
("Truststream"), a leading provider of managed cyber security services based
in Edinburgh ("the Acquisition"). The Acquisition has been funded from the
Group's existing cash resources supported by a new revolving credit facility
provided by Santander.

 

Highlights

·    Acquisition of Truststream, a fast growing provider of managed cyber
security services based in Edinburgh, for an initial cash consideration of
£4.8m and a maximum earn out consideration of up to £3.075m over a 24 month
period.

o  Truststream generated unaudited revenues of £3.2m and EBITDA of £0.8m in
the year to 30 September 2021.

·    The Acquisition will be funded from the Group's existing cash
balance and a new revolving credit facility of £8.0m, further details of
which are set out below.

·    The Acquisition further enhances SysGroup's service offering and is
complementary to the Group's core expertise and key areas of focus. In
addition, the Acquisition will enable the Group to further strengthen its UK
presence by opening up Scotland as an attractive hub for the Group.

·    Recent investments in SysGroup's business systems and infrastructure
are expected to enable Truststream to be integrated seamlessly into our single
pane of glass business intelligence platform.

·      The Acquisition is expected to be immediately earnings enhancing.

 

Acquisition

 

Information on Truststream

Established in 2011, Truststream is one of the UK's fastest growing providers
of professional and managed cyber security services. The global managed
security services market is forecast to grow by a CAGR of 7.9% through to
2027(*). Truststream has a strong and growing client base across both the
private and public sectors and is one of the UK's leading providers of
security transformation services. Its offering covers all aspects of cyber
security from analysis and threat detection, through protection architecture
and implementation, to incident response and ongoing 24/7 support and
training. Truststream has built long term sustainable relationships with key
vendors and is identified as a leading partner of choice for market leading
vendors by Gartner. Truststream has a number of relevant security
accreditations, including ISO 9001 and ISO 27001.

 

In the year ended 30 September 2021, Truststream generated unaudited revenues
of £3.2m (an increase of 61% year-on-year), EBITDA of £0.8m (an increase of
128% year-on-year) and profits before tax of £0.8m. Truststream enjoys high
levels of recurring revenue which is supported by solid customer and vendor
relationships; in its year ended 30 September 2021, Managed IT services
comprised 63% of total revenues. Its net assets at 30 September 2021 were
£0.4m.

 

The Company believes that there are significant cross selling opportunities
between the client bases of both SysGroup and Truststream and that the
expanded service offering will present an attractive proposition for both
existing and prospective clients.

 

Acquisition terms

SysGroup has agreed to acquire 100% of the issued share capital of Truststream
from Paul Sullivan, Bryan Thomson and others on a cash-free debt-free basis
for an initial consideration of £4.8m in cash and a further deferred cash
earn-out consideration payable following the first and second anniversary of
the transaction of up to £3.075m, subject to the achievement of certain
maintainable EBITDA performance targets in the first and second 12 month
periods following the completion of the acquisition. Paul and Bryan will
continue in their current roles as part of the wider SysGroup team for a
minimum period of two years.

 

New Banking Facilities

 

The Company has re-financed its existing term loan facility of £1.75m and its
undrawn acquisition revolving credit facility of £3.25m and replaced both
with a new £8.0m revolving credit facility with Santander to provide
additional financial flexibility for the Group. The new banking facility has a
term of five years with covenants that will be tested quarterly relating to
total net debt to Adjusted EBITDA leverage and minimum liquidity. The Group
has drawn down £4.5m against the new facility towards the funding of the
Truststream Acquisition.

 

Adam Binks, Chief Executive Officer, commented:

"I am delighted to announce the acquisition of Truststream. The addition of
Truststream to the Group further supports our stated strategy to become the
leading provider of managed IT services to the UK mid-market. The business
strongly complements our existing portfolio of services and has high levels of
recurring revenue.

In addition, cyber security remains a key priority for businesses of all sizes
as threats become both more prevalent and more harmful. Our end-to-end
offering means that we can help companies navigate the forever evolving
technological landscape and provide best of breed solutions backed by the
highest quality of ongoing security, monitoring and support.

 

Our investment in the Group's systems and infrastructure over the last few
years means that we have the platform in place to be able to scale SysGroup
and will continue to identify further complimentary acquisition opportunities
in line with our stated strategy.

 

I'm excited to welcome the Truststream team and look forward to working with
them all as part of the enlarged Group."

 

 

*Source - "Managed Security Services Market Outlook to 2025: Global Report" by
Research and Markets

 

 

 For further information please contact:

 SysGroup plc                              Tel: 0151 559 1777

 Adam Binks, Chief Executive Officer

 Martin Audcent, Chief Financial Officer

 Zeus (Nomad and Broker)                   Tel: 0161 831 1512

 Dan Bate

 James Edis
 Alma PR (Financial PR)

 Josh Royston                              Tel: 07780 901 979

 Matthew Young

 

 

About SysGroup

SysGroup is a leading provider of managed IT services, cloud hosting, cyber
security and expert IT consultancy. The Group delivers solutions that enable
clients to benefit from industry leading technologies and delivers managed
solutions with security, compliance and governance from the core. 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 managing IT services.

 

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

 

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

 

 

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