Disposal of SME Business and Board Changes

18 July 2016

SysGroup plc

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

Disposal of SME Mass Market Business

and

Board Changes

SysGroup plc (AIM: SYS), the managed services and cloud integrator, today announces the agreement to sell 100% of the business and assets of its SME mass market business, operated by Daily Internet Services Ltd ("Daily"), to a subsidiary of Host Europe Group ("HEG") (the "Purchaser") for a total consideration of circa £2.7m in cash, subject to adjustment (the "Transaction"). The Transaction is due to complete on Friday 22^nd July 2016.

As a result of the Transaction, SysGroup's financial function will be transferred to Liverpool.  Julie Joyce, who has been the Group's Chief Financial Officer since 2007, is based in Nottingham at Daily's offices. Consequently, Julie has indicated to the Board her desire to step down from her executive role in the Group. Julie will therefore resign from the Board and her role as Chief Financial Officer with effect from 15 August 2016. The Board is pleased to announce the appointment of Michael Hogan as Chief Financial Officer with effect from 15 August 2016. Julie will remain with the Group until 31 January 2017 to ensure a smooth transition.

Disposal of Daily's business

SysGroup has agreed the sale of its SME mass market business, which comprises the brands Daily Internet, Evohosting and NameHog to HEG for a total consideration of £2,735,727, subject to adjustment in respect of advance receipts / payments with an initial reduction of £465,519 resulting in a cash payment on completion of £2,270,158. 

The sale of the SME mass market business will enable SysGroup to focus exclusively on the higher value Managed Services market in line with the Company's stated strategy. The scale, capabilities and reach of the Company's Managed Services business were recently increased by the acquisition of System-Professional Ltd ("Sys-Pro").

For the year ending 31 March 2016 Daily generated revenues of £2.25 million and adjusted EBITDA of £0.55 million.

The Group's current cash position following receipt of the proceeds from the Transaction is £4.1 million. The cash position takes into account the net proceeds of the recent placing but prior an additional payment of excess working capital due to the vendors of Sys-Pro, which is expected to be approximately £0.3m.

The proceeds from the sale of the SME mass market business will go toward accelerating the integration of Sys-Pro into the Group, driving organic growth within the Group as well as providing the financial flexibility to undertake further acquisitions within the Managed Services space.

Appointment of Michael Hogan as CFO

Michael Hogan joins the board of SysGroup as Chief Financial Officer. Michael has over 10 years' experience working within the technology sector in director level finance roles.

Michael began his career at KPMG where he gained valuable industry experience on client secondments. In 2005 Michael was appointed as CFO of Fasthosts Internet Group where he completed the trade sale of Fasthosts to United Internet AG. Following his five years at Fasthosts, Michael joined Livedrive Internet Limited as Finance Director and managed the business through from start-up to trade sale to j2 Global Inc. Before joining SysGroup, Michael worked as Finance Director at UKFast.net Limited, a privately owned managed hosting business and as CFO at Triptease Limited, a venture capital backed business to business SaaS provider.  

Departure of Julie Joyce as CFO and from the Board

Julie Joyce will step down as CFO and from the board of SysGroup on 15 August 2016 and will leave the employ of the Group on 31 January 2017.  The Board would like to thank Julie for her valuable contribution over the years and services to the Group.

Chris Evans, CEO of SysGroup, commented: "We are delighted to announce the appointment of Michael Hogan to our board. As CFO, Michael will greatly strengthen our management capabilities and his extensive transactional experience will be invaluable to SysGroup as we continue to build our Managed Services business.

"The disposal of Daily is a significant development for the Group, enabling us to focus our efforts on our core Managed Services business, which recently underwent a transformational expansion with the acquisition of Sys-Pro. The Managed Services industry is undergoing rapid growth as organisations increasingly seek cloud delivery of services. Dedicating our full focus on Managed Services will therefore maximise our ability to capture this growth going forward."

For further information please contact:

Additional Information:

The following information is disclosed under Schedule 2 (g) of the AIM Rules.

(i)     Michael Peter Hogan is 45, is currently a director or partner of:

Michael Hogan has confirmed that there is no other additional information to be disclosed under Schedule 2 (g) of the AIM Rules

About SysGroup

SysGroup is a leading provider of Cloud Hosting, Managed Services and expert IT Consultancy. The Group delivers solutions that ensure clients understand and benefit from industry-leading technologies and advanced hosting capabilities.  The SysGroup team focuses on a customer's strategic and operational requirements - enabling them to free up resources, grow their core business and avoid the distractions and complexity of delivering IT services.

The Group has offices in Liverpool, Coventry, London and East Sussex.

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