Sysgroup (LSE:SYS) — Interim results for the period ending 30 September 2022

0:01 Good morning, ladies and gentlemen, and welcome to the SYSGROUP PLC Interim Results Investor Presentation. The company may not be in a position to answer every question received during the meeting itself. However, the company review your questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to Adam Vinks, CEO. Good morning.

0:33 Thanks, Mark. Good morning, everybody. First of all, I just wanna apologize that, we're not on on camera today. So for the first time after two and a half years, we're we're back out on the road on a a real life roadshow, meeting investors and potential investors once again. So, unfortunately, we've not got our our great video conferencing equipment with us, but, know, I'm sure you're you're sick of the look of both Martin and I anyway. So that aside, let's let's get, cracking. So thanks for joining us today to listen, to our update for the first half of our f y twenty three period. For those of you that are new to the company, new to SYSGROUP, I'm Adam Binks. I'm the chief executive officer.

1:22 I've been here at the business since 2014. I originally joined as a COO, and I took over as chief executive in April 2018. And Martin joined me lastly in that year in July 2018 as CFO joining me from NCC Group. So, you know, that that's us, and we'll we should move on. So, look, again, for those of you that have joined us plenty of times in the past, I apologize for sounding like a broken record, but I'm sure we've got some new faces on the call that will want an introduction to the business. So, look, we are an an award winning managed IT services provider, with specialisms in cloud hosting and managed security services.

2:15 We've got six offices across the country, so we've got a nice spread and coverage of the of The UK operating as far as our newly acquired trust stream business up in in Edinburgh, right down to Newport in South Wales, and then, obviously, our head office is in in Liverpool. Again, those of you that have heard the story before, you'll know about our new sales and marketing hub Manchester, which I'll talk a little bit more about later on. And then we've obviously got operations in in Bristol and in London as well. I've kinda changed the the way we present the the numbers. So we're looking at forecast numbers on the the left hand side as part of this corporate overview slide. So these are forecasts as put out in the market yesterday by by our broker, So, you know, we're on a on a run rate of 20,000,000 plus revenue, a business which will deliver 3,300,000 of adjusted EBITDA.

3:13 We're servicing over 900 customers in the in the mid market, 99% UK based. We've got a 120 team members based across those six offices, across the country. So, yeah, you know, thinking previous periods, around the COVID pandemic time, our headcount had reduced slightly. We were probably back up to what is a good number, for this size of business. And, obviously, we operate the business on a twenty four seven, three sixty five basis with with with real people in in real offices, around the clock to service our customers as and when they need us. That's a big selling point for for SYSGROUP and for other businesses that provide true twenty four seven cover.

4:01 It's essential these days. You know, being a managed service provider, it's it's not easy to set up, an MSP and and just become one overnight. Demonstrated through the partnerships and accreditations that you'll see on screen here. And, actually, I've got a bit of a slide on it. I'll talk more to it later on as we move through the deck. But partnerships are key for new prospects and existing customers assessing our abilities to to utilize and implement, technology, on their behalf in order to run their systems. So, like, in in terms of a general overview of SYSGROUP's capabilities, as I said earlier, we have specialisms in in cloud hosting and managed security services.

4:56 So cloud hosting is the is the real focus for SYSGROUP. But as an MSP, obviously, we can support the rest of the IT architecture, that sits around and outside of the data center that many businesses utilize every day, you know, right from connectivity through to end user support, and even procurement of hardware. But our focus is to use technology to transform people's businesses and bring them into the cloud, whether that be our own SYSGROUP 2.0, offering, which sits in in data set in our data centers sorry, not our own data centers, but our colocated data centers.

5:43 Or whether it starts to take them into, the public cloud, be it Microsoft Azure or Amazon Web Services, we also have skill sets that, cover both of those technologies. And, actually, the real shift that that we're seeing these days, and when people implement technology, correctly, it's usually a hybrid of the two. So we'll use a public cloud solution, you know, where it's right to do so. And, actually, they've got a service offering, that really supports a customer need. However, the the stuff that isn't right, fact client applications, for example, legacy ERP systems, which many, many businesses still use and aren't really cloud ready, and right for the public cloud, You know, we'll host them on our on our SYSGROUP platform, which is obviously a a great sell and easier to manage for for SYSGROUP.

6:44 So just to go into a little bit more detail on what we do, some of you may have seen this slide before. It all got a bit complicated. It had grown legs and arms. We we've kinda condensed it down into something that's a bit more, digestible.

7:00 And, actually, later on, I'll I'll talk more about a project that we've got happening internally to to streamline this stuff even more. But as I said, you know, our specialisms sit within cloud hosting and managed security, but, obviously, we have all of the ancillary services that go around supporting those technologies. And the key for SYSGROUP as a managed service provider is that, is that word manage. So we we don't want to just provide you with the service. We wanna provide you with the service and manage it for you so we have an ongoing relationship. That's why we're underpinned so well with contracted monthly recurring revenue.

7:47 And that all comes from our our managed services business, be it connectivity, be it backup and Doctor, infrastructure, and even consultant consulting services in some scenarios. So, you know, as you can see, we've got quite an arsenal of, services that we can provide to our customers. People typically businesses typically want a one stop shop solution. They don't wanna have to reach out to multiple providers when they've got a technical problem and have them all blaming each other as to whose responsibility it is. So, you know, as we've moved through our acquisition journey over the last four or five years, we've built up a portfolio now where we truly can provide end to end managed services to our customers.

8:37 And then in terms of our customers, you know, we're our sweet spot is it really is in that mid market. But we've also got some fantastic well known names on the on the customer list. And I think this is probably the the the first time I I've I've shared the customer list. I think it was a request from, one of our institutional investors, on the last roadshow. So, you know, we don't do everything for all of these, which is a good thing because that means we've got white space opportunity. That means we've got upsell opportunity. We can go on, and we can take more wallet share from some of these customers that you can see on the screen. You know, I'd love to be reporting that we provide all of our services, to all of these people right now, but it never is the case. It'll never end up the case, but we're working towards selling them as much we possibly can.

9:33 And then just who we do it with, I said in the first slide, when I was showing the corporate overview, isn't it a real importance around who our technology partners are. When you go through a prospecting process or you pitch into a new client, even existing clients, they wanna understand, that you as an MSP are truly invested with your technology partners. So it's not just as simple as putting these logos, on a presentation, and and showing them, you know, we have to go through quite vigorous processes to get the accreditations from our vendor partners, and that consists of commitments in terms of sales numbers.

10:22 It consists of training our technical teams to their standards and also training our sales teams and our marketing teams from a commercial point of view in order to be able to advertise the service or the solution as well as talk commercially and then in a sales scenario about the solution. So, you know, we're invested in the partners just as much as they're invested in us. And, again, as I say, when you go through a a prospecting scenario, people are looking for us to have these logos, either at the bottom of our our presentation or on our website, and they know once we're able to use these badges that we're truly invested with these partners and actually were were experts in the field.

11:11 So, look, that's a brief overview on on SYSGROUP. Again, apologies to those of you that have heard it a million times before, but I hope anybody new on the call enjoyed it. I'll move on now into, the period under review being our our first half of the f y twenty three period. So, you know, 49% increase in h one revenue. I'll call it out straight away. It's largely acquisition driven. As you'll know, we did two deals, right at the beginning of April, so the very start of this period. There is a small single digit amount of organic growth, that that's in there across the group, which is great, you know, despite the fact that the the economy is really, really challenging right now. We are still managing to sell to to our existing customers and and even a few net new ones.

12:03 Profitability adjusted EBITDA has increased 25%. I'll let Martin talk to that when he gets onto his slides. Both the acquisitions, Truststream and Orchard, they're both doing well. We've worked really, really hard to integrate as much of those businesses as we can so far. And, actually, all of the major milestones that we wanted to achieve, which we set out, back at the start of financial year, being people integration, CRM integration, and financial integration, that's all been completed. Those of you that know the story about our Manchester office, which is our centralized sales and marketing hub, which we opened in June last year, we've now got that fully resourced. In the last month or two, we we recruited the final person to come into that office. It's not making a contribution yet. We are starting to see some green shoots, but, you know, we we we forecasted it to be impactful twelve to eighteen months away as those people get in up to speed, and we battle through the economic challenges of of building further pipeline.

13:09 We've expanded our presence in Edinburgh. We've opened up a new Edinburgh office, to support the the growth in the trust stream business that we acquired. We're gonna be investing in our cybersecurity offerings that are delivered from that location. So we've moved to slightly bigger premises. And we've also launched a project internally, which I alluded to earlier, what's known as project simplify, which I'll I'll take you through in a bit more detail later on. But for now, I shall hand over to mister Aldson to take us through the numbers. Yeah. Thanks, Alan. Okay. So we're just on the financial highlights slide, so you can just see the headlines here. A lot of this, I'll I'll cover in a bit more detail on the following slides where we talk about the income statement, the the balance sheet, and the cash and net debt position.

13:55 But, essentially, we report in a very strong h one period in f y twenty three. So as Adam mentioned, it's it's mainly acquisition led. So we acquired Truststream and and Orchard in April, which is, when our half year started. So, a good revenue performance. We're very pleased with how those businesses are performing, over these first six months. I'll talk about the the the revenue mix more on the next slide, but it's quite a key component for understanding our revenue and our GM. So let me just leave that to to the next slide. But, essentially, that has shifted. In terms of the same period last year, we're at 86% managed recurring income. That shifted 75% this half year, but that was, entirely expected when we made the acquisitions. And in fact, we messaged that, I think, back in June.

14:45 Adjusted EBITDA is exactly on track where where we expected it and wanted it to be at the half year. So, again, a good sign that, things have have sort of played out in this this six month period as we expected. The, we're pleased with the adjusted EPS. That's that's a good number for us at the half year. It's good to show the progression on that. The basic loss per share, again, I I'll I'll be able to explain on the next slide because, clearly, we've got some exceptional costs and and higher amortization, which I'll explain on on the next one. And and equally net debt, I'll I'll cover separately. So in in terms of the income statement, and, again, I'm conscious that there there's probably people who've joined us who who are new to SYSGROUP.

15:30 Our revenue Adam Adam's talked to you a little bit about the services we do in terms of those seven types. In terms of a, if you like, an accounting side to that, we we have two segments for revenue. One is managed IT services, and one is value added resale. Just as a very quick brief on on what they mean, managed IT services is contracted income. What that means to us is something that's between twelve months and three year contract terms, and typically covers things like the cloud hosting, the managed services, disaster recovery, security. So that's where customers have have signed up to a a longer term contract. We build them on a monthly basis. We in fact, we typically build them monthly in advance or quarterly in advance, which which goes some way to kind of explain a little bit on the cash conversion, which I'll I'll cover separately as well.

16:22 Value added resell. So for us, this is once we provide managed services to customers, we we found they typically want us to procure licenses and hardware for them as well. So this is thinner margin. So hardware typically, you know, this could be buying service for them. It could be for sort of the old on premise sort of model. Those can typically be sort of 25% margin pieces for one off procurement. We recognize the the the revenue and the cost as a one off sale and equally licenses as well, which again will be at that margin level. Managed IT services, as as you probably have gathered from our announcement, is typically around 60 to 65% margin. The reason reason why I can't explain that is it goes a little way to explain a bit of about revenue mix and gross margin in terms of last period against this period.

17:16 So Truststream and Orchard both have higher proportions of value added resells than than the legacy SYSGROUP business. We we knew that when we bought them that that they've been good businesses for us to buy, but it has moved our revenue mix back to actually the model we're operating a couple of years ago. During the pandemic years, as companies and customers were not spending money on asset refreshes, we actually found the managed services were becoming a higher proportion around the sort of late eighties. It's now reverted back to 75%, 25% model, which which if you go back in our our numbers, you'll find we have two or three years ago. In terms of gross margin mix, both Truststream and and Orchard have slightly, lower gross margins, which we I'll say we knew when we were, diligence in them and and ended up buying them.

18:07 That's the prime reason for moving from 60% to 50%. You've So a revenue mix angle where you've got more value added resale at that 20 margin side, and you've got a business model element of the acquisitions coming through. That's we I'll probably expect GM maybe to tick up. It kinda depends on our bar performance in h two. It's kind of too early to say where where that'll end up, but it wouldn't surprise me if if GM ticked up to 51, 52%, by the end of the year. In terms of rest of the p and l, I I I always say this. I I think we've got a pretty simple, p and l and, if you like, balance sheet position. Overheads are predominantly, people costs. So around $33,200,000. 3,200,000 of of overheads is people based.

18:56 You can see that we've had an increase of 700 k from the same period last year. That's entirely, obviously, due to the two new companies coming into the businesses. We have given pay rises, you'll be pleased to know, as well. At the start of the year, we made those in April every year. And and, actually, one thing probably to add here because it's typically a question that comes up around recruitment is last year, I think everyone, for all businesses, and certainly we're including this, found recruitment very difficult. It's a really challenging year last year. It has eased somewhat this year. So our recruitment this year has been a lot better, which is good to see. I went I went to an adjusted EBITDA. You you can see that for yourself, which is is good growth from our perspective. We're happy with that. The in terms of the below the line items, we're we're not CapEx intensive.

19:45 You'll find on the cash flow slide when I come to it, we've spent about 100 k this year, which is, yeah, generally for general, cyclical, internal business, IT equipment. Amortization of intangibles naturally has gone up because we've made the two acquisitions. You'll find a similar cost level, in in h two. Exceptional items, predominantly professional fees, as you'd expect from the acquisitions, and we've incurred about 100 k of integration and restructuring costs in h one. Orchard is very well integrated already. We've worked really quick on that one. Truststream, we we'll be working on more in h two. We're pleased how they've gone so far. Finance costs, I just wanna call out this one just just in in terms of the increase in that number.

20:34 About a 120 k of that is bank loan interest. It's not the full $2.40. We've now got about a 100 k of cost going through that $2.40 number, which is noncash or or or let's say sort of one off cash, and that relates to the loan arrangement fee being amortized. But, also, you'll find on our contingent consideration for Truststream, you have to do a a discounting calculation on it. So that 80 k is is a a discounted charge going through the p and l. So, yeah, I think that's probably as much I'll go through on the on the p and l. I think it's pretty straightforward to understand, and and we'll certainly give you a shape of what we'd expect in h two as well. So just in terms of the balance sheet, again, if I was just to just describe our balance sheet to to someone new, I I just think it's entirely understandable.

21:26 There's nothing strange in this balance sheet. It's very simple. At the top end, clearly, we've we've we've done an m and a. We've done m and a over a good five or six years, so we've got an intangible asset in goodwill, that that sort of increases with each acquisition. And the increase you can see there against 03/31/2022, is for trust stream and auction acquisitions. Property, plant, and equipment. I've mentioned we're not we don't spend loads on CapEx. You might wonder why, in that case, we've gone up 700,800 k, but we've renewed, a couple of property leases in in h one. And, if if you know about your IFRS 16 standards, you have to capitalize, property lease rentals as right of use assets. So mainly, that's, property renewals.

22:13 Working capital, all all balances have increased. That is bringing interest stream and orchard balances. In terms of working capital management, we we target twenty five debtor days. I say we we're able to do that because we do invoice in advance, whether it's monthly, quarterly, etcetera. I mean, new acquisitions haven't altered that, so that's a good position for us. I guess in terms of the new what you you're seeing as new on that balance sheet, you'll see contingent consideration. If you add those two numbers together, that's around that's 2,900,000. That's 3,100,000 full contingent consideration liability for the TrustStream acquisition, and then the 200 k, discounted against it to bring it to 2.9. We've included that liability in at the full value. We TrustStream's performing very well.

23:03 When we come to the year end, we'll obviously know how they've performed fully in that in that first twelve months post acquisition, and we'll be able to refine that continued consideration liability to what exactly what we expect to pay. The earnout's over two years, just to be clear, so there's a year one and a year two. Hence, the in in two different places. The bank loan, I'll I'll cover separately, I think, on the cash and net debt position.

23:28 But all in all, I think it's it's a well controlled balance sheet from my perspective. So just talking about cash flow and net debt. Again, just as an overview, SYSGROUP is a is a a good strong cash generator. Our operating cash level, we we generate strong levels of cash. We target 80 to 90% cash conversion. You'll see that this half year, we we managed a a very good 120%. I I don't get overexcited about that. I mean, that's that's a good number clearly to achieve, and and well done credit control too. But some of that is due to having advanced payments from customers for value added resell deals where the related supplier payment is gonna fall into, October.

24:15 The reality is come year end, I'd expect us to be around 90 to a 100, which will be a very good result and and as expected. CapEx, again, last year, why have we come down from last year? Last year, we had a couple of office refurbs in our Newport and Manchester offices. So we had a slightly higher spend in in the comparative period last year. This year is probably slightly below what where we'd expect, but even so, $100,150 isn't far off what what we should be spending. Acquisitions. Probably just worth mentioning this again to people who might be new on this. The Orchard acquisition, which was the the acquisition in our in Bristol, was a £1,000,000 consideration that was paid out of existing cash balance. So we we generated that cash to buy the business.

25:01 Truststream was purchased with a new 8,000,000 RCF facility we have with Santander that was agreed in April, and we drew down £4,500,000 to to fund that acquisition. We also used 850 k of our own cash resources. I think that's probably broadly I mean, you can see in the interest line that that gives you a truer picture of the the the cash element, but, of of course, I mean, you've also got some lease interest cash flows going through there as well. In terms of net debt, we we hold a very strong working cash balance, 4,200,000. The the bank loan is the RCF with Santander, so we've got 2,800,000 headroom remaining in that facility.

25:53 Net net debt, we've moved into a net debt position from net cash at the end of last year, obviously, through making the two acquisitions. And a contingent consideration, as I mentioned, is is for a two year earn out for trust stream, which I'm sure we'll have another look at it at the year end and see what what liability that needs to be. It's it's a strong SYSGROUP's a a good cash generator is is really my message here. We're we're well within our our banking covenants, and both Adam and I really take a a pretty sensible conservative view on where we wanna be against any, debt positions. So we're we're managing this pretty well, generating cash to, continue to invest. Adam, do you want to Very good. Thank you.

26:42 Right. Just I alluded earlier, in the highlights slide to a new project that we've launched internally, known as Project Simplify.

26:57 So Project Simplify is basically an initiative within our business, to do exactly what it says on the tin, simplify things. And, actually, I'm gonna tie this in kinda to one of the questions that we've got come through on the q and a so far. I tend to leave them till the end. But one of the questions is, what what what would we say gives us our competitive edge? Now it's a it's a great question because it's always a difficult one to answer. You know, look, there there are many businesses in the managed services space that all offer the same services and solutions, but package them up differently.

27:43 I think what gives us our competitive edge is our consultative approach. So we we've always prided ourselves on on tackling the sales, sales cycle from a consultative aspect. And what that actually means is by sometimes refusing to do business with a new prospect who isn't prepared to pay for our time to get us over the initial hurdle of understanding what they've got so we can tell them what they need. Now we've obviously grown the business through a number of acquisitions over the last three or four years. And, actually, you know, our service offering, our solution offering has grown arms and legs, and elements of it have grown fingers and toes as well.

28:36 You know, I showed or sorry. When I talked about the the product the solution slide earlier, in terms of our service offering, we used to show it in a very different way. Those of you can remember that kind of spider diagram, where where it was growing exponentially. And that's kind of made us realize that, actually, whilst we've got this great, suite of products and services and solutions that we can offer to our business, we probably need to present that in a bit of a better way and a more consultative way to our customers and to our prospects.

29:11 So we brought in, an external agency to help us understand, you know, from the outside looking in where we we have our own successes. And what we're gonna do over the next sort of four, five months in time or or all going well in time for the beginning of the new financial year is we're we're not gonna rebrand the business, but we're gonna change our image completely and move away from that of a technology driven company, that is trying to present solutions through the use of product names into that of a true consulting services provider that just happens to have a a huge suite of technology services and solutions to back up what we say we can do.

30:03 So we're gonna revamp our entire go to market messaging. We're gonna refresh our branding and our website. So we'll change the look and feel and just, you know, down the bottom right hand corner of that slide, that's a brief preview of what it may look like. It's still in its very early stages at the moment. But we're also gonna bring this message right through our business, so we're gonna do a big launch internally, to all of our teams, you know, right from sales through finance, marketing, and all the technical teams that we've got. So, actually, we've got everybody on the same page understanding, that what we wanna do is run a consultative process with our customers, but we wanna keep it simple. It's really important these days, to keep things simple for a buyer.

30:51 I think when people have things presented to them in a simple fashion, it really, really helps their decision making process. You know? And if they want to get more into the technical details, we will have that information available. We'll be able to take our customers and our prospects as deep into the journey as they'd like to go from a from a technical perspective. But I think revamping to with a a fresh image coming out in f y twenty four, as I say, driven by consultancy, is gonna be a really good thing for us as we move through what's gonna be a difficult economic landscape. So just before we we get towards the end, I just thought I'd give an update on both Truststream and Orchard.

31:42 So, you know, as I said earlier, both acquisitions have been great for us. If I had my time again, I'd buy both businesses again. There's nothing that I regret about either of them, and I'm sure Martin feels the same way. You know, we've done a lot of work on integration, and that's come through Project Fusion, which we've run over the last couple of years to unify all of our systems onto a single pane of glass operating system. You may have heard me talk about this before, but one of the key things for us to do pretty much immediately after acquisition is what I call people integration. So, you know, the biggest risk in any deal is losing good people. People are adverse to change. They, they panic despite the fact we tell them, you know, nobody's job is at risk.

32:36 On the day of acquisition, people still get nervous, and and you find that you may lose the odd good person along the way. So one one of the things that we do, is we do people integration really, really quickly. So we send our people and culture team into into the site or sites that we've acquired, And then we get, we get those employees transferred over to to the actual PLC. So by the time they reach their next payroll date, they're actually paid by SYSGROUP PLC. And I've always said, you you work for who pays your salary. So when you see that appear on your bank statement, when people see that appear on the bank statement, they know they're part of the the SYSGROUP team straight away.

33:22 And that's really helped us with staff retention on our acquisitions. You know, we get everybody in in in our branded jumpers and T shirts and whatnot to to get them feeling involved straight away. And we expose them to the wider business as well and the opportunities that exist within the wider business. So people integration is always one of the the the secrets to our success and and key things for us to deliver on in the in the initial stages of of the integration process. Obviously, I mentioned before, we've moved the Edinburgh team into a bigger office. So we knew when we were when we were buying the business that they'd outgrown their existing space. We've opened up a a shiny new office, which is just costing us a little bit more than the the existing cost that was already in the business, for that office.

34:12 But that's a SYSGROUP branded office as part of the integration process as well. Again, helps with, with the people integration. We've got the team working from that office now five days a week, in fact, across, the vast majority of our business. We've got almost everybody back in the office working five days a week, which I think is really, really important for not just SYSGROUP, but for any business. I think businesses that are still operating on a a work from home model and and actually discouraging people to come into the office will will start to suffer long term, as they they miss out on on the collaboration and innovation from their teams. Trust stream has been doing a great job of delivering contracts and renewing existing contracts, some big names in the student loans company, Tesco Bank, DVSA.

35:03 These are all businesses that we're hoping to upsell our managed, IT services to in the future. And, you know, one of the biggest drivers that we we had with buying the Orchard business, you remember me saying back in June, you know, Orchard was typically below our normal deal size, but we we got it for a pretty good value. And actually, one of the key reasons why we bought it was for the people to strengthen the Southwest operations that we've already got. And that's proved to be really, really good for us and is working out well. And actually, with majority of those people in the Bristol office, now going between there and the Newport office and working across the customer base, across the group, which is a fantastic achievement for us.

35:52 So just to wrap up before we, we move into a couple of questions, you know, SYSGROUP's got a business model which is, I use both words, proven and sustainable. Despite the revenue impact that we saw through COVID, I think, you know, the technology or the use of technology that most companies were adopting in order to sometimes just keep the lights on or or just manage to move forward in the pandemic. And us being a part of helping with that, it really solidifies our position and demonstrates that that we're still very, very relevant. And, you know, as we move through the next set of challenges that that we've got in front of us, Businesses know they need to invest in technology. They know they need to outsource in order to to do it well and do it right.

36:43 So they rely on businesses like SYSGROUP in order to help take them on that on that journey to, you know, protect their own margins. You know, the use of technology really does help protect margin for businesses, and and we'll find that businesses are gonna be exploring those options more and more. And we're seeing some of that in our existing pipeline discussions now. So that's really good for us. As I said, acquisitions have been great for us. It'll create some good upsell and cross sell potential. I know everybody says that. It's the most difficult thing to do, but it definitely exists because we've seen the white space analysis on those base on the bases. So we know that we'll have some opportunity coming out to them in the future.

37:31 As Martin quite rightly talked about, we're hugely cash generative. I think it's really important that we're turning our our profits into cash. You know, that's a great metric to be monitoring, and and we're doing well at that. M and A is still on our radar. It's not the easiest thing to do at the moment, but, you know, we're well and truly committed to being a con and I'm sure somebody will ask me the question of how we're going to finance deals moving forward, but I'll head that one off straight away with it will depend on what the opportunity looks like at the time, and also what the landscape looks like. So, look, all that said, we're confident in delivering against the the full year guidance that's out there. It's not gonna be easy by any means, but both Martin and I, and the other 118 members of the team here that support us every single day are working hard to continue to delight our customers and and sell more to them.

38:34 Mark, back over to you. That's great. Thank you, Adam. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of the screen. Just while the guys take a few moments to review those questions submitted already, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your Investor Me company dashboard. Adam, as you'll see, you've received a number of questions from investors throughout your presentation. So firstly, thank you to everybody for your engagement this morning. Maybe if I may, I'll just hand back to you. And if I could ask you just to read out the questions and where appropriate give a response, and then I'll pick up from you at the end. Yeah. Fabulous. Thanks, Mark. So the first question, probably kinda just answered in my my closing statement there, but I'll read it out anyway. What appetite do you have for further acquisitions?

39:25 And in an ideal world, what would you look to add to the business? So we've definitely still got an appetite for acquisitions. 100%, we're we're committed to delivering on our m and a strategy. In terms of what we'd like to add, it's quite a varied question. More of the same to give us scale. But, actually, we are looking beyond the realms of just the IT services that we that we offer, potentially looking around all the types of businesses that go deeper into the application or a bit heavier on the consulting services side of things. But that's probably about as much as I could say on that for now, so hopefully that answers your question.

40:16 And then the second question is, also, are all your acquisitions fully integrated and delivering delivering in line with your expect expectations? Again, hopefully, I've covered some of that in the in the presentation. Other questions came in early on. The acquisitions both the acquisitions that we made, in April are largely integrated in line with the milestone objectives that we set out earlier in the year. So the important things, people, finance, CRM. We've still got some technology integration to do, and that's happening throughout the course of h two. Probably will overlap into into the first half of f y twenty four, but that's you know, it's not noticeable really to customers of the outside world and doesn't impact our business operations.

41:12 Key things to get integrated are always customer management, finance, so we own the billing relationship, and we can we can get on with that very, very quickly. And, obviously, as I mentioned earlier, is people integration. And just in case, you're talking about prior acquisitions that have been done, before this reporting period, the answer to that is yes. Everything's a 100% in integrated. Also, even the corporate stuff in terms of hive ups into a single trading entity. So at the 03/31/2022, we were operating as a single trading entity, which is SYSGROUP PLC Limited. We've since added to that with the acquisitions being the Truststream HoldCo and and the Orchard holdco.

42:02 The end of this financial year, we'll hive up Orchard into the SYSGROUP trading company, but we'll probably do it in another eighteen months for Truststream because of the earn out. So hopefully, that covers that off. Another question which, I was kinda joining into earlier on, how have your main competitors performed over the comparable period, and what would you say what would you say gives you an edge? So I think I've I've answered the edge bit already. In terms of our own competitors, obviously, you know, we we look at the ones that we can, the publicly quoted guys. It's easy to get the numbers from and and have to report in the same time frames as what we do. The answer is we've probably all performed roundabout the same. I mean, we're a bit smaller than the two main ones.

42:59 So, actually, that's probably given us a bit a bit of an advantage to be able to to grow a little bit easier rather than having to maintain the the huge revenue numbers that those guys have got. But I think, you know, it's public information as to who they are. I suggest you you do your own due diligence and and take a look yourself and do the comparisons. And then we've got what should we expect in terms of new flow over the next six months. I'm guessing that's supposed to say news flow. I don't know. It's got me that question. Do you mean from the press or do you mean from SYSGROUP? In terms of news flow, if the question is, are we expecting any surprises?

43:49 I'm certainly not. Mark Martin certainly isn't. You know, we'll be putting another trading update out in in early April. You know, we'll we'll be complying with our normal regulatory requirements to put out any news flow that that were mandated to do so on, so significant contract wins. I think the the question is alluding to are we expected to do a profit warning, but the answer is no. So, you know, hopefully, I've covered that off for you. And then the final question, last but my no means least, is is there any scope for expanding overseas? I suppose there is scope to do so. Are we focused on doing that at the moment? Probably not.

44:37 We're we're still very keen to grow our position in The UK market and focus on The UK market without the need to worry about foreign exchange risk or foreign regulation laws and whatnot. However, all of that said, if there was a fantastic opportunity that made absolute sense for the shareholders for us to deliver, an opportunity that was overseas, then by all means, we'd look at it. That's great. And that concludes our questions. Yeah. You have, Adam. Thank you very much indeed. You've taken all the questions from investors, so thank you very much indeed. If any further questions do make themselves available, I'll obviously show you those after today's meeting. Adam, I know investor feedback is important to you and to the company, and I'll shortly redirect those on the call to give you their thoughts and expectations.

45:27 But before doing so, I wonder if I may just ask you for a few closing comments before I redirect them for their feedback. Yeah. Sure. Look, I'd just like to thank everybody for taking the time to come and join us and listen to us once again. It really is appreciated. And as Mark said, that investor feedback is is absolutely invaluable to us and always drives us for the next session. So if you if you could take the time to just answer those couple of questions, I'd be most grateful as with Martin. But thank you very much for joining us, and I'll speak to you all again at the next reporting period. That's great. Adam, Martin, thank you once again. Ladies and gentlemen, please, can I ask you not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations? This may take a few moments to complete, but I'm sure it'll be greatly valued by the company.

46:13 On behalf of the management team at SYSGROUP, we'd like to thank you for attending this morning's presentation. That now concludes today's session. Good morning to you all.