Final Results for the year ended 31 March 2026

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

8 July 2026

SysGroup plc

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

Final results for the year ended 31 March 2026

SysGroup plc (AIM:SYS), an advisory-led end-to-end Managed IT Service Provider focused on cybersecurity, managed services and AI-enabled operational delivery for the UK mid-market, today announces its audited results for the year ended 31 March 2026 ("FY26", the "Period" or the "Year"). 

Financial Highlights

· Group revenue increased by 8% to £22.1m (FY25: £20.5m)

· Revenue in H2 increased by 17%; on an organic basis H2 revenue grew 7%

· Managed IT services revenue grew £0.7m compared to a decline of £0.9m in previous year reversing the trend of persistent churns of the past years

· Strong growth in cybersecurity; accounts for 45% of total revenue (FY25: 40%)

· Gross margin of 47% (FY25: 49%) with the decline reflecting the increased proportion of cybersecurity, which carries a slightly lower margin

· Adjusted EBITDA1 increased 26% to £1.2m (FY25: £0.95m)

· Adjusted EBITDA1 margin of 5.4%; H2 margin of 8.3% (FY25: 4.6%)

· Strong cash generation, with gross cash of £7.7m (FY25: £8.7m) and net cash2 of £2.7m (FY25: £3.6m) after payment of £1.25m for the acquisition of Saxis Group Limited ("Saxis")

Notes:

1. Adjusted EBITDA is earnings before interest, taxation, depreciation, amortisation of intangible assets, impairment of intangibles, exceptional items, share based payments and share scheme set up costs

2. Net cash / (debt) represents cash balances less bank loans and lease liabilities

Strategic and Operational Highlights

· Driving growth through gaining greater share of customers' wallet; ACV increased 34%

· Secured a new three-year managed services contract with The Scout Association

· Acquired Saxis, a specialist in enterprise storage and data protection, for a purchase price of £1.25m in cash plus up to £0.5m in earn out consideration

· Significant revenue synergy with 30% of Saxis contracts won since acquisition from cross sell of Group's products

· AI is operationally embedded in every function of the business with measurable outcomes

· The AI-enabled restructuring programme delivered £1.2m of run-rate savings

· Significantly improved customer experience through workflow redesign and AI-enabled operational tooling

· Net Promoter Score increased 4x over two years from 8 to 32

Board changes

Owen Phillips, Chief Financial Officer, has notified the board of his intention to step down from the board with immediate effect to pursue a new opportunity, but will support the Group over the next few months to provide an orderly handover. He will be succeeded by Craig Ormesher as Interim CFO, who has served as Group Financial Controller since joining the Group in 2024. Craig was previously Group Financial Controller at LBG Media plc from 2020, after spending ten years in PwC's audit practice.

Heejae Chae, Executive Chairman, commented:

"What we have built over the past two years is not a restructured legacy MSP; it is a fundamentally different business. We have leaned fully into AI, re-engineering how the company operates from the ground up rather than bolting technology onto old processes. AI is now operationally embedded in every function of the business, cybersecurity accounts for 45% of Group revenue, and we have structurally reduced our cost-to-serve while our Net Promoter Score has increased 4x over the past two years.

FY26 shows the model working: revenue up 8%, Adjusted EBITDA up 26% and strong cash generation, all achieved in a cautious SME spending environment. This is MSP 3.0: a connected, AI-native service model that breaks the traditional link between growth and headcount. We have entered FY27 on the same trajectory as H2 FY26, and that momentum has been maintained in the early months of the new financial year. The Board remains confident of making further progress. The Board expects to exceed market expectations for FY27."

About us

SysGroup plc delivers a consultative, end-to-end GTM approach that blends expert advisory services with AI-driven data solutions. Our integrated capabilities, spanning connectivity, cloud hosting, data delivery, analytics, governance and security, enable customers to modernise and transform with confidence.

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

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

Executive Chairman's Statement

Introduction

FY26 has been a year of consolidation where all the efforts of the past two years became visible in the numbers and set the upward trajectory of sustainable, profitable growth. We have been focused on rebuilding foundations, addressing legacy challenges and building a suite of capabilities focused on cybersecurity, managed services and AI-enabled operational delivery. What we achieved is not just a restructuring of a legacy traditional MSP. We fully leaned in on the latest AI tools and technologies to transform SysGroup into a business with a differentiated strategy and an operating model that I believe sets us apart in a crowded and fragmented £10 billion addressable UK MSP market.

Group revenue grew 8% to £22.1m, driven by a particularly strong second half. H2 revenue increased 17% year on year, with organic growth of 7%. Adjusted EBITDA for the full year increased 26% to £1.2m, ahead of market expectations, with £1.0m delivered during the second half and margin level maintained into the first quarter of the new year. The cash generation was strong with cash conversion of 105% (FY25:54%) and gross cash of £7.7m (net cash of £2.7m) after payment of £1.25m for purchase of Saxis.

These results were not achieved in a favourable demand environment. SME discretionary spending remained cautious throughout the year. We have achieved our growth by increasing our share of wallet with our customers, reflected in average annual contract value per customer increasing 77% over two years. Additionally, we have been able to secure a new three-year managed service contract with The Scout Association whilst minimising churn which has historically been high.

Delivering on What We Said

Last year's statement highlighted an important inflection point: two sequential quarters of managed services revenue growth for the first time in two years, alongside a significant reduction in churn. The expectation was that those trends would sustain.

We are pleased to report that Managed IT services revenue for FY26 increased £0.7m compared to £(0.9)m decline in FY25. Managed IT Services now accounts for 83% of the revenue mix (FY25: 86%), with Value-Added Resale (VAR) comprising 17% (FY25: 14%). Value-Added Resale (VAR) in the period increased slightly due to the acquisition of Saxis in December 2025, which is predominantly VAR. Excluding Saxis, Managed IT Services increased year on year to 87%.

The Group's revenue base is higher quality and more defensible than at any point in recent years.

On AI, last year's statement signalled that early service desk improvements would translate into structural efficiency gains, and that AI would drive the operational model of the company leading to not only enhanced operational economics but also a differentiated sales engine. Artificial intelligence moved from ambition to operational reality at SysGroup during FY26 as it is operationally embedded in every function of the business. In FY26, all functions reported active AI adoption against measurable outcomes, supported by a deliberate programme of structural work - integrated source data, secure AI bridges, and a portfolio of custom AI applications - that turns off-the-shelf models into a SysGroup-specific operating engine. The work done in FY26 establishes the foundation for the AI-native operating model that underwrites the next phase of value creation at SysGroup.

We are already seeing measurable benefits of the new operational model. The Group delivered £1.2m of annualised cost reduction without compromising service capability or reduction in service portfolio. We believe that the new cost base can support our growth ambition without significant increase in cost.

On cybersecurity, the Group continued to strengthen its position in a market where customer demand is being driven by increasing regulatory pressure, expanding threat landscapes and growing infrastructure complexity. Cybersecurity (which forms part of IT Managed Services) now represents 45% of total revenue, which is almost entirely Managed IT services, and remains one of the Group's most strategically important growth areas.

During the year, the Group deepened relationships with several world-leading technology partners, including Zscaler and Rubrik, enhancing both our technical capability and our ability to support customers with increasingly complex security, resilience and compliance requirements. These partnerships, alongside our consulting and advisory capability, deepen customer engagement, broaden our strategic relevance and reinforce SysGroup's position as a long-term partner rather than a transactional supplier.

On M&A, the fragmented MSP market was identified as an opportunity for selective, accretive acquisitions capable of being integrated efficiently through AI-enabled onboarding and operational tooling.

In December 2025, we completed the acquisition of Saxis Group Limited for a purchase price of £1.25m in cash, with a further earn-out of up to £0.5m. Saxis brought a high-quality public sector and regulated client base, deep expertise in enterprise storage and data protection, and long-standing customer relationships.

Integration has progressed materially faster than prior acquisitions. Revenue synergies are already emerging, with approximately 30% of Saxis's contract wins since acquisition generated through cross-sell of SysGroup's broader portfolio into Saxis accounts.

AI Led Operating model

Our approach to artificial intelligence has evolved as quickly as the technology itself. We began by developing our own solutions, but soon recognised that the pace and scale of this generational shift could not be met by building it internally. We moved instead to adopt best-in-class tools - at first as discrete capabilities, and increasingly as a connected network of solutions that work together across the business. Critically, we resisted the temptation simply to automate what already existed. Before deploying AI at scale, we invested the time to understand how SysGroup actually operated: where the friction was, how work really got done, and what had to change before technology could compound the gain. We reorganised around that understanding, restructuring the operating model first so that automation accelerated a better business rather than entrenching an old one. The same discipline now shapes the next phase: connecting our customer, service and assurance data into a single, governed view of operational reality, so that our AI can reason and act across the whole picture of a customer rather than within the limits of any one system. That connected foundation is what turns AI from a collection of productivity gains into a genuine operating advantage.

The Service Desk: Operational Leverage in Practice

The service desk is where the operational impact of the Group's AI strategy is most visible.

Over the past two years, the Group's service desk has delivered a step-change in performance: standard tickets are now resolved roughly twice as fast, while customer satisfaction has averaged 98%, above target every month over the last twelve months, and our Net Promoter Score has increased 4x over two years, from 8 to 32. P1 critical incidents have fallen by a third year on year, and the ticket backlog is down 34% to a two-year low. Routine demand is being engineered out before it reaches the engineer; monthly volume is down 17% year on year, with routine low-touch tickets down 24% as we deliver higher quality, from a leaner delivery structure.

That improvement was delivered while reducing service desk headcount from 33 to 25, a 24% reduction. This has been achieved through workflow redesign, automation and AI-enabled operational tooling embedded across core service desk processes, supported by the underlying data infrastructure required to make those tools effective. We are rolling out internal proprietary software to automatically solve tickets for both our own internal systems and for our client estates, further freeing up engineers' time to proactively solve issues before they are raised as tickets. The commercial consequence is straightforward. SysGroup has structurally reduced its cost-to-serve, front-line payroll is down 39%, while improving customer experience. This is how operational efficiency translates into operating leverage, and it is increasingly visible in the Group's margin profile.

MSP 3.0: The Model Emerging

The MSP 3.0 strategy was built around a simple thesis: that the traditional managed services model was becoming increasingly commoditised, and that AI, cybersecurity and operational intelligence would create an opportunity to build a genuinely different kind of MSP. That thesis has strengthened.

The UK MSP market remains highly fragmented, with many providers operating narrow, transactional service models with limited differentiation. At the same time, customers face increasing technology complexity, expanding cybersecurity obligations and growing pressure to manage cost more effectively. The gap between what customers need and what most providers can deliver is widening.

What distinguishes the MSP 3.0 model in practice is the quality of intelligence it generates. SysGroup is building a proprietary intelligence mesh consisting of six specialist monitoring tools, integrated to deliver continuous, full-stack visibility across every layer of a client's technology environment: from physical infrastructure through to the cloud applications employees use every day. That data feeds a central intelligence layer where it is combined, interpreted, and translated into action. Over time, this builds a comprehensive intelligence profile for each client - a digital fingerprint. The same proprietary signal serves three stakeholders inside the business: our operations team, who use it for predictive remediation; our commercial team, who engage customers with intelligence rather than guesswork; and our acquisition and integration team.

In practice, this shifts SysGroup from reactive to proactive. We identify issues before they surface, anticipate needs before they are articulated, and convert intelligence into client conversations built on evidence. During the year, the Group introduced VISTA, its Visibility as a Service product, making this intelligence visible to customers in real time across assets, environments and compliance posture.

Contract wins during the year, including a renewed and expanded three-year agreement with the Scouts Association secured through competitive tender, demonstrate the commercial traction of a model built on proactive insight rather than transactional activity.

The Board formalised AI as a governance and capital-allocation priority through a dedicated strategy session during the year. The appointment of Dr David Park as AI Adviser to the Board reflects the importance the Board places on disciplined execution as this model develops.

Our People

The transformation of SysGroup has been delivered by its people.

Total headcount has reduced from 107 in FY23 to 83 at the end of FY26 (77 excluding Saxis acquisition), while service quality has improved, capabilities have broadened, and two acquisitions have been successfully integrated. It reflects a meaningful increase in productivity, accountability and operational focus across the organisation.

During the year, the Group completed its first full Objectives and Key Results (OKR) cascade, with objectives aligned from company level through to individual accountability. This represents an important step in building the culture and operating discipline required to support the Group's next phase of growth.

We recruit for the capability and disposition to work effectively in an AI-enabled environment, and we measure AI adoption across the business as an operational metric. The team we have built is designed for the model we operate.

Owen Phillips, Chief Financial Officer, has notified the board of his intention to step down from the board with immediate effect to pursue a new opportunity, but will support the Group over the next few months to provide an orderly handover. He will be succeeded by Craig Ormesher as Interim CFO, who has served as Group Financial Controller since joining the Group in 2024. Craig was previously Group Financial Controller at LBG Media plc from 2020, after spending ten years in PwC's audit practice.

Outlook

What we have built over the past two years is not a restructured legacy MSP; it is a fundamentally different business. We have leaned fully into AI, re-engineering how the company operates from the ground up rather than bolting technology onto old processes. AI is now operationally embedded in every function of the business, cybersecurity accounts for 45% of Group revenue, and we have structurally reduced our cost-to-serve while our Net Promoter Score has increased 4x over the past two years.

FY26 shows the model working: revenue up 8%, Adjusted EBITDA up 26% and strong cash generation, all achieved in a cautious SME spending environment. This is MSP 3.0: a connected, AI-native service model that breaks the traditional link between growth and headcount. We have entered FY27 on the same trajectory as H2 FY26, and that momentum has been maintained in the early months of the new financial year. The Board remains confident of making further progress. The Board expects to exceed market expectations for FY27.

On behalf of the Board, we thank our employees for their commitment, our customers for their trust, and our shareholders for their continued support.

Heejae Chae

Executive Chairman

Chief Financial Officer's report 

FY26 was the year the Group's transformation became visible in its financial results. Revenue grew 8% to £22.07m (FY25: £20.50m), driven by a strong second half in which revenue rose 17% year on year, including the first contribution from Saxis Group Limited, acquired in December 2025 for £1.25m in cash plus up to £0.50m of earn-out and funded entirely from existing cash. 

Adjusted EBITDA increased 26% to £1.19m (FY25: £0.95m), reflecting both the revenue performance and the £1.20m of run-rate savings delivered through Project Atlas, the Group's AI-enabled restructuring programme. The statutory loss before tax narrowed to £2.24m (FY25: £2.45m) and remains driven principally by non-cash charges, chiefly amortisation of acquired intangibles. Cash generation was a particular strength, with operating cash conversion of 105% (FY25: 54%) leaving the Group with gross cash of £7.74m and net cash of £2.70m at the year end.

This report covers each of these areas in turn: trading performance, the balance sheet and the Saxis acquisition, cash position including the Group's £8.00m revolving credit facility, and the employee share schemes introduced to align the employees with shareholder value creation.

Group statement of comprehensive income 

The Group delivered revenue growth of 8% and a 26% increase in Adjusted EBITDA, with trading ahead of expectations.

Momentum compounded through the year as AI moved from a discrete initiative to a core part of the Group's operating model, and SysGroup advanced its transition to an advisory-led, end-to-end Managed IT Services provider.  Growth in both Managed IT Services and Value Added Resale revenue reflected this momentum towards higher-value solution sales. The revenue mix is now 83% Managed IT Services (including professional services) and 17% VAR (FY25: 86%:14%). 

  Gross profit grew 3% year-on-year. The overall 2pp reduction in gross margin reflects the mix shift towards security services and away from higher-margin legacy hosting (MIS: 52% to 49%), partly offset by stronger VAR margins (29% to 34%) from higher-value solution sales.

Core operating expenses, on an underlying basis (excluding the acquisitions in mid FY25 and mid FY26), reduced by £1.12m to £7.53m (FY25: £8.66m), reflecting savings from investment in AI-enabled tooling and systems. Operating expenses (before depreciation, amortisation, impairments, exceptional items and share-based payments), when inclusive of acquisitions, were £9.08m, in line with the previous year (FY25: £9.07m). This was driven by a large restructuring exercise through FY26 entitled "Project Atlas" which delivered £1.20m of run rate savings.

Adjusted EBITDA increased 26% to £1.19m (FY25: £0.95m), representing a margin of 5.4% (FY25: 4.6%).

Exceptional items in the year totalled £0.64m (FY25: £0.83m), of which £0.58m (FY25: £0.42m) relates to integration and restructuring costs arising directly from the Group's multi-year transformation programme, and from the integration of recent acquisitions (Saxis Group Limited in December 2025 and the trade and assets of Crossword Consulting Limited in November 2024). Further detail is set out in Note 8.

Amortisation of intangible assets was £1.54m (FY25: £1.56m), comprising £1.17m of acquired intangibles (FY25: £1.33m) and £0.37m of software development and licence costs (FY25: £0.23m).

There was no impairment of intangible assets in the year (FY25: £nil). At 31 March 2026 the Group has three cash-generating units (CGUs): the combined IT Managed Services CGU, the Truststream Cybersecurity Limited CGU (acquired in FY25) and the Saxis Group Limited CGU (acquired in the year). Further detail is set out in Note 13.

During the year, the Truststream Security Solutions CGU was combined with the legacy IT Managed Services CGU to form a single combined IT Managed Services CGU. This reflects completion of the operational integration of Truststream Security Solutions into the Group's leadership, systems, reporting and budgeting structures, such that cash inflows are no longer largely independent. With effect from 1 April 2025, goodwill previously allocated to Truststream Security Solutions has been reallocated on a relative-value basis to the combined CGU in accordance with IAS 36, and headroom was tested both immediately before and after the reorganisation. The combined CGU now comprises acquisitions completed between 2016 and 2023, with goodwill of £17.95m. The Truststream Cybersecurity Limited and Saxis Group Limited CGUs continue to be assessed on a stand-alone basis.

Impairment indicators were reviewed in light of the CGU reorganisation, and a full value-in-use assessment was performed on each CGU. Sensitivities to the discount rate, terminal growth and forecast EBITDA were tested, and no reasonably possible change in a key assumption would result in an impairment. Full disclosure of assumptions and sensitivities is set out in Note 13.

Net finance costs rose to £0.30m (FY25: £0.10m), reflecting lower interest received of £0.16m (FY25: £0.37m) on cash reserves following the £10.60m net fundraising in FY25. The loan balance increased by £0.09m in the year (FY25: £0.03m). This movement reflects the amortisation of capitalised arrangement and other fees, which are being amortised to finance costs over the term of the facility using the effective interest method in accordance with IFRS 9. Cash interest paid in the year was £0.37m and is recognised within finance costs. The loan continues to be measured at amortised cost.

The share-based payments charge of £0.41m (FY25: £0.20m) relates to share schemes introduced mid-way through the prior year (see below).

The Directors consider Adjusted EBITDA the most appropriate measure of business performance as it reflects the underlying trading of the Group. It is not a statutory measure and is calculated differently by each company. The reconciliation from operating loss is set out below. 

Reconciliation of operating (loss) to adjusted EBITDA

Taxation 

The Group has a tax credit of £0.36m this year (FY25: £0.62m) which principally arises from the deferred tax credit movement in the period. The corporation tax current credit of £0.02m (FY25 debit: £0.01m) is as a result of R&D tax credits adjustment in relation to previous periods. The deferred tax movement is a £0.00m debit (FY25: £0.56m credit) due to the increase in amortisation of acquired intangibles recognised in the Consolidated Statement of Comprehensive Income. 

Consolidated statement of financial position 

Total net assets at the year end were £22.28m (FY25: £23.73m), with non-current assets of £24.04m (FY25: £23.83m) including intangible assets of £22.97m (FY25: £22.39m).

Within intangible assets, there were additions of £1.48m ascribed to customer relationships and brand, with £0.56m ascribed to goodwill which both wholly relate to the acquisition of Saxis Group Limited ("Saxis"). A further £0.08m of systems development additions reflects capitalised third-party development costs. Remaining year-on-year movement relates to ordinary amortisation. 

Property, plant and equipment was £1.07m (FY25: £1.44m), with £0.13m of additions principally on data centre equipment (FY25: £0.18m).

Net trade debtors fell to £2.30m (FY25: £2.94m), driven by timing of invoicing on several large contracts. Prepayments of £2.72m (FY25: £2.37m) and contract liabilities ("deferred income") of £3.55m (FY25: £3.72m) were broadly consistent, reflecting the working capital model of the security business: customers are typically invoiced annually in advance and supplier costs are received on the same basis, with income and costs deferred and recognised over the contract term.

Saxis acquisition

In December 2025, the Group completed the acquisition of Saxis Group Limited. This was funded via an upfront payment of £1.25m with a further post earn-out payment of £0.50 million due, subject to certain performance conditions over a two-year period, and payable in two instalments in 2026 and 2027. This is discounted to £0.42m in the table.

At acquisition, Saxis was holding £1.59m in cash. £1.17m was immediately distributed to the seller as part of the acquisition. The remaining £0.42m was retained as part of the working cash settlement and settled post year end as part of the £(0.23)m final completion accounts adjustment.

The breakdown of the total consideration is set out below:

The above transactions are represented in the cash flow statement as below:

Cash flow and net cash

The components of net cash are set out below.

Group Net cash

Cash flow and cash conversion

The Group delivered Adjusted EBITDA of £1.19m (FY25: £0.95m) and adjusted cash generated from operations of £1.25m (FY25: £0.51m), representing an operating cash conversion ratio of 105% (FY25: 54%). Cash conversion is defined as cash generated from operations before tax and integration, restructuring and other exceptional cashflows, divided by Adjusted EBITDA1. 

The reconciliation from Adjusted EBITDA1 to net cash generated from operating activities is set out below.

Working capital released £0.17m of cash in the year (FY25: absorbed £(0.83)m) evidencing that underlying working capital intensity remains broadly stable with no changes in customer payment behaviour or credit quality.

The Consolidated Statement of Cashflows reflects £1.25m of Saxis consideration paid and £0.10m for contingent payments related to the Crossword acquisition in 2024. Further Cash outflows of £0.13m on property, plant and equipment (FY25: £0.18m) relate to internal hardware. £0.08m of intangible asset additions (FY25: £0.57m) relate to third-party system development costs; with the prior-year figure reflecting capitalisation of development on the Group's bespoke AI service desk platform. 

The Group's strong cash conversion and net cash4 position of £2.70m underpin the Directors' going concern assessment, which is set out in further detail in the Notes to the Accounts.

£8.0m revolving credit facility 

The Group retains an £8.00m RCF provided by Santander in April 2022 to support acquisitions and working capital. The utilised balance is £4.86m, reflecting the £4.50m drawn to finance the Truststream acquisitionin April 2022, with the remainder representing amortised interest charged. There have been no further drawdowns.

The facility has a five-year term expiring April 2027 and bears interest at base rate +3.25% on drawn funds and 1.3% on undrawn funds. Covenants (total net debt to Adjusted EBITDA leverage and minimum liquidity) are tested quarterly and were met throughout the year.

The facility provides operational flexibility but is not required to fund working capital, capital expenditure or contractual obligations during the going concern period, including under the Directors' severe but plausible downside scenarios. The current strategy is to maintain the facility as drawn only so that free cash funds are readily held for possible opportunistic strategic investments as required. This policy remains actively under review by the board. The interest paid on the loan account during the year was £0.37m.

The Group's forecast cash position remains sufficient to repay the drawn balance in full at any point during the assessment period, and the Directors have modelled the facility being repaid in cash on maturity in the base case scenario. The Directors have concluded that the maturity of the RCF within the going concern assessment period does not give rise to a material uncertainty over the Group's ability to continue as a going concern.

Notwithstanding this, the Directors are actively engaging with Santander plc and the broader lending market in good time ahead of the April 2027 maturity to refinance or extend the facility on appropriate terms, with a view to retaining strategic and acquisition headroom. The Group's track record of cash generation, stable customer base and net cash position give the Directors a high degree of confidence that a replacement facility can be put in place if deemed necessary for future acquisitive activity.

Share option grants 

The Group operates three share schemes, all introduced in the prior year:

1. Value Creation Plan (VCP) 

2. Performance Share Plan (PSP) 

3. Save As You Earn Plan (SAYE)

The VCP is an equity-settled scheme incentivising Executive Directors and senior management, administered through SysGroup Holdings No 1 Limited ("SGH"), a wholly owned subsidiary incorporated in FY26. Participants hold nil-cost options over 'A' Ordinary shares in SGH for the performance period August 2024 to June 2029, sharing in the Group's value appreciation subject to achieving specified performance hurdles. Vesting is subject to continued service and market-based share price conditions.

The PSP grants options to eligible employees, vesting subject to continued employment and EPS performance targets measured over three years.

The SAYE scheme grants options to purchase ordinary shares at a discount to the market price at the invitation date, with employees contracted to monthly savings over three years.

More detail is provided in the Remuneration Report and note 9 to the financial statements. 

KPIs 

The Board reviews Group performance against the financial measures below; commentary on these results is set out in the Financial Review above.

* Managed IT Services as a % of total revenue excluding mid year Saxis acquisition: 87% (2025: 86%)

1 Adjusted EBITDA is profit before net finance costs, taxation, depreciation, amortisation, exceptional items, share-based payments and share scheme set-up costs

2 Adjusted Basic EPS is profit after tax after adding back amortisation of intangible assets, exceptional items, share based payments, share-set up costs and associated tax, divided by the weighted average number of shares in issue.

3 Cash conversion % comprises adjusted cash from operations before tax, integration, restructuring and other exceptional cashflows, divided by Adjusted EBITDA1

4 Net cash represents cash balances less bank loans and lease liabilities, excluding deferred and contingent consideration 

Owen Phillips 

Chief Financial Officer 

7 July 2026

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 

FOR THE YEAR ENDED 31 MARCH 2026 

* Adjusted EBITDA, which is defined as profit before net finance costs, tax, depreciation, amortisation, shared based payment charge, share scheme setup costs and adjusting items is a non-GAAP metric used by management and is not an IFRS disclosure 

** Adjusted EPS is loss after tax after adding back amortisation of intangible assets, impairments, exceptional items, share based payments, share scheme setup costs and associated tax, divided by the weighted average number of shares in issue.

 The financial statements were approved by the Board and authorised on 7 July 2026. 

Owen Phillips, Director

7 July 2026 

Registered number 06172239 

COMPANY STATEMENT OF FINANCIAL POSITION 

AS AT 31 MARCH 2026 

As permitted by section 408 of the Companies Act 2006, the Company's statement of comprehensive income has not been included in the financial statements. For the year ended 31 March 2026, the Company made a loss of £2,239,000 (FY25: loss of £1,807,000).

Owen Phillips  

Director 

7 July 2026 

Registered number 06172239 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

FOR THE YEAR ENDED 31 MARCH 2026 

The following describes the nature and purpose of each reserve within equity: 

COMPANY STATEMENT OF CHANGES IN EQUITY 

FOR THE YEAR ENDED 31 MARCH 2026 

CONSOLIDATED STATEMENT OF CASHFLOWS 

FOR THE YEAR ENDED 31 MARCH 2026 

 *See Note 26 for details of restatement.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE YEAR ENDED 31 MARCH 2026 

1. Accounting policies 

SysGroup Plc (the 'Company') is a Company incorporated and domiciled in the United Kingdom. The Company's registered office is at The Clove Gallery, Maguire Street, London, SE1 2NQ. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the 'Group'). 

Statement of compliance 

The financial information set out above and below, does not constitute the company's statutory accounts for the periods ended 31 March 2026 or 2025, but is derived from those accounts. Statutory accounts for 2025 have been delivered to the registrar of Companies, and those for 2026 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of UK-adopted international accounting standards and Financial Reporting Standard 101 (FRS 101) and as applied in accordance with the provisions of the Companies Act 2006, this announcement does not itself contain sufficient information to comply with UK-adopted international accounting standards or with Financial Reporting Standard 101 (FRS 101). The financial information contained within this full year results statement was approved and authorized for issue by the Board on 7 July 2026.

Basis of preparation - Group 

The principal accounting policies adopted in the preparation of the Financial Statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. The consolidated financial statements have been prepared under the historical cost basis, except for the revaluation of certain financial liabilities and share based payments which have been valued in accordance with IFRS 9 and IFRS 2 respectively.

The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 2. The financial statements are presented in pounds sterling, rounded to the nearest thousand, unless otherwise stated.

Basis of preparation - Company 

The Company financial statements are prepared under the historical cost convention, except for certain financial instruments that are measured at fair value. The Company's financial statements are presented in pounds sterling (£), which is also the functional currency of the Company.

The preparation of financial statements in conformity with FRS 101 requires the use of certain critical accounting estimates and assumptions. It also requires management to exercise its judgement in applying the Company's accounting policies. Significant judgements and estimates are disclosed in the relevant notes to the financial statements. 

The Company has elected to take advantage of certain disclosure exemptions available under FRS 101, including: 

· A cash flow statement and related notes under IAS 7 'Statement of Cash Flows' 

· Certain disclosures required by IFRS 7 'Financial Instruments: Disclosures' 

· Disclosures in respect of the fair value of financial instruments under IFRS 13 'Fair Value Measurement' 

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.

On 31 March 2026, the Group had a gross cash balance of £7.74m and a net cash position, defined as Cash balances less bank loans and lease liabilities excluding deferred and contingent consideration of £2.70m. The Group also has a £0.50m committed overdraft facility.

In order to assess whether the Group is a going concern, the Directors have reviewed the Base business forecast and a Sensitised version for the period to September 2027.

In the Base forecast there is considered ample cash headroom and assumes repayment of the debt facility from cash; refinancing is not assumed.  The business is starting with a strong cash position of £7.74m on 31 March 2026 and coupled with high levels of cash conversion, the cash balance steadily improves over time under the Base forecast.

The Sensitised forecast includes assumptions for a significant decline in revenue and profits compared to the Base forecast. Even under this forecast, the Group still maintains a positive gross cash balance and stays within the bank covenants and able to fully repay any outstanding debt at any point.

The Group retains an £8.00m RCF provided by Santander in April 2022 to support acquisitions and working capital. The utilised balance is £4.86m and it expires in April 2027. The Group's forecast cash position remains sufficient to repay the drawn balance in full at any point during the assessment period under the base case and sensitised scenario. The Directors have concluded that the maturity of the RCF within the going concern assessment period does not give rise to a material uncertainty over the Group's ability to continue as a going concern.

The Group has a business model with a high degree of financial resilience since c80% of revenue is derived from contracted IT managed services which is a continuous and business critical service supply to customers, providing comfort that the Sensitised forecast is unlikely to materialise.

The forecasts show that even under a downside scenario, the Group has adequate cash reserves to continue to operate for the foreseeable future. Therefore, the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

New standards and interpretations  

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. 

The following amendments are effective for the annual reporting periods beginning 1 January 2026: 

· Amendment to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 Financial Instruments and IFRS 7) 

· Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7) 

The following standards and amendments are effective for the annual reporting periods beginning 

1 January 2027: 

· IFRS 18 Presentation and Disclosure in Financial Statements

· IFRS 19 Subsidiaries without Public Accountability: Disclosures. 

The Group is currently assessing the effect of these new accounting standards and amendments.

IFRS 18 Presentation and Disclosure in Financial Statements, which was issued by the IASB in April 2024 supersedes IAS 1 and will result in major consequential amendments to IFRS Accounting Standards including IAS 8 Basis of Preparation of Financial Statements (renamed from Accounting Policies, Changes in Accounting Estimates and Errors). Even though IFRS 18 will not have any effect on the recognition and measurement of items in the consolidated financial statements, it is expected to have a significant effect on the presentation and disclosure of certain items. These changes include categorisation and sub-totals in the statement of profit or loss, aggregation/disaggregation and labelling of information, and disclosure of management-defined performance measures.

The Group does not expect to be eligible to apply IFRS 19. 

A number of amendments to existing standards were effective for the first time in the current year (annual periods beginning on or after 1 January 2025), including Lack of Exchangeability (Amendments to IAS 21). None of these amendments had a material impact on the Group's financial statements.

IFRS 16 - Leases 

The group has no activities acting as a lessor that are within the scope of IFRS 16. The group recognises right of use assets in relation to the lease of office space and equipment. 

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. The interest rate used was 4%. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate. 

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: 

· Lease payments made at or before the commencement of the lease 

· Initial direct costs incurred 

· The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations - see note 18) 

The property lease rentals are fixed payments over the rental terms. 

Basis of consolidation 

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee; exposure to variable returns from the investee; and the ability of the investor to use its power to affect those variable returns. Control is re-assessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. 

The consolidated financial statements present the results of the Company and its subsidiaries ('the Group') as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full. 

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquirer's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases. 

Business combinations 

All business combinations are accounted for by applying the purchase method. On acquisition, all the subsidiaries' assets and liabilities that exist at the date of acquisition are recorded at their fair values reflecting the conditions at that date. The results of subsidiaries acquired in the period are included in the income statement from the date on which control is obtained. 

Goodwill 

Goodwill represents the excess of the cost of a business combination over the total acquisition date fair value of the identifiable assets, liabilities and contingent liabilities acquired. Goodwill is not amortised but is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. In determining the fair value of consideration, the fair value of equity issued is the market value of equity at the date of completion, and the fair value of contingent consideration is based on the expected future cashflows based on whether the Directors believe performance conditions will be met and thus the extent to which the further consideration will be payable. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date. 

Impairment of non-financial assets 

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (i.e. the lowest Group of assets in which the asset belongs for which there are separable identifiable cash flows that are largely independent of the cash flows from the other assets or Groups of assets). Goodwill is allocated on initial recognition to each of the Group's cash-generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill. 

The estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. 

Foreign currencies 

Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the consolidated statement of comprehensive income. The results of foreign subsidiaries that have a functional currency different from the Group's presentation currency are translated at the average rates of exchange for the year. Assets and liabilities of foreign subsidiaries that have a functional currency different from the Group's presentation currency, are translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising from the translation of the results of foreign subsidiaries and their opening net assets are recognised as a separate component of equity. 

Revenue 

Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow into the Group and revenue represents the fair value of amounts received or receivable for goods and services provided net of trade discounts and VAT.

The Group has three revenue streams: managed services, professional services and value-added resale. All customer sales are signed as contracts or orders which separately specify the services and products to be delivered and these are mapped to one of the three revenue recognition categories. The contracts or orders specify, by service and product, the sales price and the contracted term of the services. As such, the separate performance obligations and allocation of transaction price can be identified clearly from the customer sales contracts. 

The revenue recognition policies can be summarised as follows: 

For managed services and professional services revenue, these are recognised over time as the entity's performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. 

Note that some contracts with customers combine a mix of managed services, professional services and value-added resale. When this is the case, performance obligations are identified and recognised in line with the policies described above. 

Segmental reporting 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors. 

Alternative profit measures 

In reporting its results, the Directors have presented various alternative profit measures (APMs) of financial performance, position or cashflows, which are not defined or specified under the requirements of IFRS. On the basis that these measures are not defined by IFRS, they may not be directly comparable with other companies. The key APMs that the Group uses include recurring revenue as a percentage of revenue, Adjusted EBITDA, Adjusted EPS and Net cash. 

The Group makes certain adjustments to the statutory profit in order to derive many of these APMs. These include exceptional items and share based payments. 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 on a consistent basis from year to year.

Financial instruments 

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. 

Financial assets 

The Group's financial assets comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Trade receivables are stated at their nominal value and an expected lifetime credit loss will be recognised using the simplified approach and shown in administrative expenses in the Consolidated Statement of Comprehensive Income. Impairment reviews for other receivables, including those due from related parties, use the general approach whereby twelve month expected credit losses are provided for and lifetime credit losses are only recognised where there has been a significant increase in credit risk, by monitoring the credit worthiness of the other party. Cash and cash equivalents include cash in hand.

Contract assets 

Costs incurred to fulfil a contract are recognised as an asset if and only if all of the following criteria are met: - 

· The costs relate directly to a contract (or a specific anticipated contract) 

· The costs generate or enhance resources of the entity that will be used in satisfying performance obligations in the future 

· The costs are expected to be recovered 

These include costs such as direct labour, direct materials, and the allocation of overheads that relate directly to the contract.  

The asset recognised in respect of the costs to obtain or fulfil a contract is amortised on a systematic basis that is consistent with the pattern of transfer of the goods or services to which the asset relates.  

Share capital 

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group's ordinary shares are classified as equity instruments and are recorded at the proceeds received, net of direct issue costs. Proceeds of any share issue in excess of the nominal value of the share capital is recognised within the share premium account. 

Financial liabilities 

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which it was acquired. The Group's accounting policy for each category is as follows: 

Fair value through profit or loss 

This category comprises only contingent consideration. They are carried in the statement of financial position at fair values with changes in fair value recognised in the consolidated income statement. 

Other financial liabilities 

Other financial liabilities include trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method. 

Fair value measurement hierarchy 

IFRS 9 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value to reflect the significance of the inputs used in making the fair value measurement. The fair value hierarchy has the following levels: 

a. Quoted prices in active markets for identical assets or liabilities (Level 1) 

b. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2) 

c. Inputs from the asset or liability that are not based on observable market data (Level 3) 

The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the three levels. 

Share based payments 

Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the SysGroup's estimate of the shares that will eventually vest allowing for the effect of non market-based vesting conditions. 

Fair value is measured using the Black-Scholes or the Monte Carlo pricing models, based on observable market prices. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. 

All outstanding Share Plans are subject to some performance conditions. The element of the income statement charge relating to market performance conditions is fixed at the grant date. 

At the end of the reporting period, SysGroup revises its estimates for the number of awards expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. 

Property plant and equipment 

Items of property, plant and equipment are stated at cost less depreciation. Depreciation is provided at annual rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows: 

Office equipment - 20% - 33% straight line 

Freehold property - 2% straight line 

Right of use assets - over the period of the lease 

Investment in subsidiaries 

Fixed asset investments in the parent company are shown at cost less any provision for impairment as necessary. 

Research and development 

Research expenditure is written off to the consolidated statement of comprehensive income in the year in which the expenditure occurs. Development expenditure is treated in the same way unless the Directors are satisfied as to the technical, commercial and financial viability of individual projects, there is an intention to complete and sell the product and the costs can be easily measurable. In this situation, the expenditure is capitalised, and the amortised expense is included in administrative expenses in the Consolidated Statement of Comprehensive Income over the years during which the Group is to benefit. 

Intangible assets 

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below). 

The significant intangibles recognised by the Group, their estimated useful economic lives and the methods used to determine the cost of intangibles acquired in business combinations are as follows: 

Deferred taxation 

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

· The initial recognition of goodwill 

· The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit 

· Investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future 

Recognition of deferred tax assets is restricted to those instances where it is highly probable that relief against taxable profit will be available.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either the same taxable Group Company; or different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Deferred tax liabilities are recognised on intangible assets and other temporary differences recognised in business combinations. 

2. Significant accounting estimates and judgements 

The preparation of this financial information requires management to make estimates and judgements that affect the amounts reported for assets and liabilities at the period end date and the amounts reported for revenues and expenses during each period. The nature of the estimation or judgement means that actual outcomes could differ from the estimates and judgements taken in the preparation of the financial statements.

Significant accounting estimates 

Impairment of goodwill and other intangibles 

The Group tests goodwill for impairment annually and in line with the stated accounting policy. This involves judgement regarding the future development of the business and the estimation of the level of future profitability and cash flows to support the carrying value of goodwill.

An impairment review has been performed at the reporting date taking into account sensitivities around future business performance, covering a range of outcomes and risks over levels of revenue, cost and cash generation (see note 13 for details). No impairment is required.

Valuation of intangible assets acquired in business combinations 

Determining the fair value of customer relationships acquired in business combinations requires estimation of the value of the cash flows related to those relationships and a suitable discount rate in order to calculate the present value. 

During the year this estimate related to the intangible assets acquired with Saxis Group Limited (note 10), for which the Group engaged an independent valuation specialist. Customer relationships of £1,315k were valued using a multi-period excess earnings method; the key assumptions are the customer renewal rates (75% in the first year, 60% in the second year and 40% thereafter), an EBIT margin of 33.3%, pricing growth of 2.0% and a post-tax discount rate of 14.3% derived from the weighted average cost of capital. The Saxis brand of £166k was valued using the relief-from-royalty method, applying a royalty rate of 1.0% of revenue, a long-term growth rate of 2.0% and the same discount rate. The valuations are most sensitive to the assumed renewal rates and the discount rate; a reasonably possible change in these assumptions would not have a material effect on the Group, and any change in the value of the identified intangible assets would result in a corresponding change to goodwill.

Impairment of investments (Company) 

The Company holds investments in subsidiaries. In line with the Company accounting policies, investments are assessed for impairment when there is an impairment trigger.

An impairment review has been performed at the reporting date considering sensitivities around future business performance, covering a range of outcomes and risks over levels of revenue, cost and cash generation. See note 15 for details. No impairment has been recorded.

 Significant accounting judgements 

Assessment of CGU's and carrying value of intangible assets  

A cash-generating unit (CGU) is the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets and the Board of Directors use their judgement to identify the CGUs of the Group. When SysGroup acquire a company, the newly acquired business is usually allocated its own CGU for the first year and until such time as either the business and assets have been hived up into the main SysGroup trading company or when the systems, finances and management of the business have been successfully integrated, whichever is earlier.

During the year, the Truststream Security Solutions CGU was combined with the legacy Managed IT Services CGU to form a single combined IT Managed Services CGU. This change reflects the completion of the operational integration of Truststream Security Solutions into the Group's leadership, systems, reporting and budgeting structures. The Group's Senior Leadership Team manages the business within a single operational and delivery structure. Truststream Security Solutions no longer has its own management team, budget, or internal reporting. Bidirectional cross-selling between the legacy customer bases means that cash inflows are no longer largely independent. This combination represents a change in accounting judgement and reflects the evolution of the Group's operational structure since the acquisition of Truststream Security Solutions in FY23.

This means that for the current year, there are three CGUs, being the IT Managed Services CGU, the Truststream Cybersecurity Limited CGU and the Saxis Group Limited CGU (newly acquired in year). See note 13 for details.

Useful economic lives of intangible assets 

Intangible assets are amortised over their useful economic lives. Useful lives are based on management's estimates of the period over which the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in changes in the carrying values and hence amounts charged to the income statement in particular periods which could be significant.

Exceptional costs 

The classification of costs as being exceptional, and their quantum is viewed as a key management judgement. For details of exceptional costs in the year see note 8. 

3. Financial instruments - risk management 

The Group's financial instruments comprise cash and liquid resources and various items such as trade receivables and trade payables that arise directly from its operations. There have been no substantive changes in the Group's objectives, policies and processes for managing those risks or the methods used to measure them from previous periods. The Group's objective is to ensure adequate funding for continued growth and expansion.

All the Group's financial instruments are carried at amortised cost with the exception of contingent consideration. There is no material difference between the carrying and fair value of its financial instruments, in the current or prior year, due to the instruments bearing interest at fixed rates or being of short-term nature. 

The Group faces a financial risk that such financial assets are not recovered but a provision is made where recoverability is in doubt. 

A summary of financial instruments held by category is shown below: 

Fair value of financial instruments  

The Group has adopted the following fair value hierarchy in relation to its financial instruments that are carried in the balance sheet at the fair values at the year-end: 

· Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

· Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2)

· Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3) 

The following table sets out the fair value of all financial assets and liabilities that are measured at fair value: 

The provision for contingent consideration is in respect of the Saxis acquisition. See note 10. 

Liquidity risk 

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. 

The Group prepares cashflow forecasts during the month and working capital forecasts on a monthly basis. These allow the Directors to make an assessment of the cash position and the future requirements of the Group to manage liquidity risk. Cash resources are managed in accordance with planned expenditure forecasts and the Directors have regard to the maintenance of sufficient cash resources to fund the Group's operating requirements and capital expenditure. 

 The following table sets out the contractual maturities (representing undiscounted contractual cashflows) of financial liabilities: 

The Amounts due to subsidiaries shown in 'up to 3 months' category in the table above are payable on demand (Note 17). 

Interest rate risk 

The Group and Company finance their operations through a combination of retained profits and bank borrowings. The Group's RCF Bank loan with Santander has an interest charge of 3.25% above bank base rate and accordingly the interest charge the Group incurs fluctuates according to any movement in the bank base rates. 

Credit risk 

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's receivables from customers. The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group receives payments either from automated banking receipts or from customers paying on direct debit or 30-day credit terms. The Group has a dedicated credit control function to manage customer payments and uses an external credit rating agency to assess customers and prospects for creditworthiness. Doubtful debts are provided for in accordance with IFRS 9. For cash and cash equivalents, the Group only uses recognised banks with high credit ratings of A- or above on the Standard & Poor's rating system. 

Foreign exchange risk 

A small number of suppliers invoice in USD. Foreign exchange exposure is closely managed, including holding limited funds in USD. Alternate suppliers invoicing in GBP are also sought where suitable. 

Capital disclosures 

The Group monitors capital which comprises all components of equity (i.e. share capital, share premium and retained earnings). 

The Group's objective when maintaining capital are to safeguard the entity's ability to continue as a going concern, so that it can provide returns for shareholders in future periods and benefits for other stakeholders, and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and adjusts it in the light of changes in economic conditions and the risk characteristics of the underlying assets. 

4. Segmental analysis 

The chief operating decision maker for the Group is the Board of Directors. 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 VAR sales where the business sells products and licences 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 both operational segments as Group functions. In this respect, assets and liabilities are also not reviewed on a segmental basis. All assets are located in the UK. All segments are continuing operations and there are no transactions between segments. 

There were no sales between the two business segments, and all revenue is earned from external customers. The business segments' gross profit is reconciled to profit before taxation as per the consolidated income statement. The Group's overheads are managed centrally by the Board and consequently there is no reconciliation to profit before tax at a segmental level. The Group's assets are also managed centrally by the Board and consequently there is no reconciliation between the Group's assets per the Statement of Financial Position and the segment assets.

5. Operating loss 

6. Finance income and expenses 

7. Staff numbers and costs