Sysgroup (LSE:SYS) — Half Year Results

0:01 Good morning, everyone. My name's Owen Phillips. I'm the CFO at SYSGROUP here on a cloudy day in Manchester, and my colleague next to me, mister Hejay Chae, will be we will be here for the next forty minutes or so and tell you about where we are in our journey and where we got most excitingly, where we're going. So if I just tell you a bit really about how this is gonna go today, we're tending to have very much a forward looking conversation with you. We're gonna tell you about where we're going, all the things we're excited about, all the things that are going on. I should, of course, talk about the six months that have just passed or certainly the results we just put out. We need to reiterate on those. Revenue was flat.

0:47 Expenses were up, which was really related to our planned investment. It was absolutely what we knew we were doing and what we'd always intended to do, and we're excited to tell you about about all the investment we've done. Cash is very much under control, and our balance sheet is strong. You know, we've raised circa between 10 and 11,000,000 three or four or five months ago, and so the balance sheet is is ready and everything is stable. So, really, that's that's my half year update. It's really gonna be very forward looking. I'm, of course, gonna put the well, you've seen the r and s with the financial results. We'll, of course, put some put some more color around them. On the website, we'll put we'll put the p and r, etcetera, up there. But, really, the the financial results for the first six months are as I set out. Really, it's how we set ourselves up to go forward, which is really exciting us and and really getting us enthusiastic.

1:39 So if I just jump to the next slide, what we're gonna do today is give you an overview of where we are today, talk to you a bit about how we look at the business, this concept of future proofing or AI readiness,

1:53 and we're gonna tell you why we believe SYSGROUP is different to you know, there's a lot of MSPs out there. This is why we're different. We're gonna talk to you about project Genesys, which is our internal transformation project, which is to AIify our own business. So this is something we're super excited. It's it's already in full flow, and we're excited to tell you about it. And, really, we're gonna tell you about our vision going forwards and and where we sit in that and why we think it's such an exciting space to be.

2:22 So if I I jump to the next slide, today's proposition, don't know. HJ, do you wanna do you wanna talk about this? Yeah. Thanks, Owen. Thanks for that intro. I mean, I guess, it's been a year and a half. Can't believe time flies so quickly. But, you know, when I joined the company, year and a half ago, I think if I reflect back, we had a limited capability and offerings. We're pretty much a private cloud, what we call SYSGROUP provider, which is a technology that was losing ground to to hypercloud, the AWS, Azure, and the and the Google, and really had limited growth growth profile. So that's lie the dilemma at that at that point as a as a company in terms of the ability to grow. So, you know, the challenge was, you know, if you kinda step back and look at a broader IT requirements in the tech space, what customers want want was a a end to end solution partner who can really come in and and assess their IT estate and architect and implement and manage and support going forward.

3:27 And and really being able to only offer a limited offering along that technology suite was a limiting growth and, I think, making us uncompetitive. So, really, from our perspective was to expand our offering. And and the way we did that is first layout and define what we thought was the core technology necessary for us to be able to be a end to end solution. And, you know, the five pillars that we have laid out was analytics, connectivity, hosting across the different platform, not just whether that's on prem, private cloud, or hypercloud, or public cloud, but across all that, irrespective, to the to meet the demand of the customer's need, protection, and security.

4:18 So those are the kind of the five pillars that we have defined, and we'll go later in our conversation to provide you a technical definition of each pillar.

4:27 So, really, about you know, the much of the last twelve months for us has been building the capabilities to, across those five towers. You know? And and there are examples that to validate the the investments we made. You know, we we were very absent in the whole hyper cloud space, and, you know, our investment has taken us from really not knowing how to spell AWS to becoming what they call advanced partner status, which is that three years three tier

5:00 status. That is one more above us. But to be able to accomplish advanced partner status in six months, which we needed to validate in terms of the accreditation amongst the both, not on the technical people, but also the salespeople, being able to deliver x amount of work stream and pipeline, for AWS work. Again, all those things has been the work that's been going on for us to be able to kinda position ourselves as an end to end provider.

5:32 We talked a lot internally about future proofing and and AI readiness and and where we see that as being central to of what we do. And we'll talk to you in a moment about our Genesis project, which is our AI redesign of everything we do. We really just wanted to touch on the the future proofing point. I mean, there's there's some quotes on the screen, but, really, it is getting companies ready. Companies know they need to be ready. They need their infrastructure to be agile, and that's very much the way we're looking at our business, but also the way we're encouraging our customers to look at the business. Yeah. I mean, from my perspective, I mean, I think as as came in and really kinda took a step back and say, look at from a customer perspective. What it would be the the differentiation?

6:18 What would be the, really, the value that we can bring to our customer as a as a kind of MSP and IT partner? And and kinda reflecting back on my twenty years as a CEO of big businesses, whether that's Volex or SCAPA, you know, my biggest challenge was really, I think, to to the the need challenge with the need to continue to invest to keep up with the new technology. It it feels like you know? And we have this chart on the screen that the the the cycle of refresh kinda gets shortened, on a on a exponential level. And I used to have a conversation with my CTO when he came in every twelve months to telling me that I needed to spend another million quid on something new technology. That's to keep up.

7:06 And my biggest challenge you know, my constant challenge with those guys used to be like, hey. Why can't you guys not future proof me, you know, to the extent that the foundation that we're laying on is something we can build on that so that not every time we go this go through this exercise, it feels like we're starting from ground zero. And, you know, again, I think if anything else, that cycle of, of of, evolution or the refresh or the pace has is is increasing than anything else. And I think with the advent of AI, which we'll come back to, I think we'll just further aggravate the situation. So for us, you know, to play that role of being an end to end partner that goes from really assessing all the way to the management of their estates going forward. The fundamental messaging we have, and I think that the eye we keep on in terms of be able to have that conversation with that customer saying, look. What we're doing for you today is to future proof you for that this this rapid evolution of technology that will continue to change and to the extent and make sure that we minimize the capital investment you need to keep up with the latest technology that's coming to the fore to make you competitive and bring out kind of the the best competitive advantage that you can bring to the table. And the reason next page. The reason we are kinda a lot of the businesses in the state they're in, and really, I think the conversation that I used to have as a at SYSGROUP of OLEX will happen is because the traditional approach of a I

8:37 t of IT and MSP is, as you can see, very disjointed, not only from definition execution, but management. Really, I think with the, the the increasing variety of technology, whether that's security, whether that's hosting, or whatever or not, is creating the fragmentation of decision not only at the customer basis, but also on the the suppliers and the partners. Right? I mean, I think if you run any middle midsize business, I think if you go through your, list of contractor, you'll see so many different people that are, you know, resellers, consultants, product experts, implementation guys, managers, management of the implementation. And, really, that creates a a really, I think, a a a disjointed and a very,

9:26 you know, present looking without really thinking about what's two step, three step ahead to come. So, you know, from our perspective, with that in mind, as we had the luxury to, I think, build out from scratch, I think that given that we only had one capability that we we started with and really kinda look at as a start up in a in a with that blank sheet of paper, we kinda took a if I'm a customer, what are the type of partners that we want, and what are the conversation we would like to have? And, really, I think that's the page that, you know, that you see on your screen is how we approach them. We said, look. How can we not only be adviser, but be an expert on what we consider a highly opinion view or what is the best practice tech term? What is the upper right quadrant of Gartner chart? And and be able to kinda architect our solution around that, but at the same time, be able to be conversant across the entire technology and be able to give you why ours proposition is better than other, but at the same time, be open to the customer's need and to their legacy infrastructure and provide a a really, I think, optionality and be able to give you a sound device of what is the right and wrong for you and not push a singular solution.

10:49 And and from you know, also, I think we've been also trying to make sure by understanding the ecosystem, the reseller as well as the, distributor, which is really at the part of the overall tech, ecosystem, and being able to understand how to navigate to be able to make sure our customer gets the best price, best cost, and best value that's available. And, ultimately, obviously, I think we wanna manage and support, and I think this is gonna become a bigger issue as the technology becomes more complicated, as evolves much quicker and, you know, and we'll come back to when AI, you know, make makes a landing in The UK. I think the ability to support it so the business who really cannot, have the does not have the skill or the confidence to be able to manage themselves and can focus on their core business and leave this technology management and implementation to a third party who they do day in, day out, which is us. So from our perspective, you kinda peel that into the next layer and saying, look. What does that mean from an offering perspective? So we I spoke to you earlier in the presentation about our five pillars. So for the techies out there, what we kinda looked at is, like and, essentially, we talked about this before is, really, we follow the data. You know, we fundamentally believe technology today, it's about how do we monetize and how do we leverage data that every business creates day in day

12:20 out, whether that's through our ERP, CRM, HR system, just web, email, and such. And to that extent, we looked at just the transgression or the value chain of the data and

12:31 really looked at, you know, how do we host data? How do we protect data? How do we connect data? How do we secure data? And how do we analyze data? So those are the kind of the offerings that we have laid out as a as a kinda end to end solution that we can go to our customers saying, look, we can help you across the entire state and provide you a solution. And and, you know, I think we highlighted in yellow. Those are the what we call legacy capability that existed

13:00 pre year and half ago. So as you can see, it's pretty nominal. And the key investments we made is really, I think, twofold. On the analytics side, that's a brand new I mean, that's really, I think, what makes us different than most MSP and, yeah, in in a sense that we have a full data management capability as well as the AI, ML machine learning model design capability and implementation and support capability. I think you will find very few MSP that has that. Equally, on the hosting side, we were able to expand our optionality beyond just a a private cloud of SYSGROUP. And, really, I think, as we talked about, invested heavily on AWS as well as a modern workspace workplace, which is Azure or or Microsoft, that really, I think, puts us on the forefront and be able to have that conversation because everybody's going to public cloud. And not being able to follow our customer or lead a customer to that space was a highly, detrimental to ability to have a really, I think, sensible conversation.

14:09 So, really, the investment and the progress we made on the hosting element is huge. And and, obviously, kind of you know, it goes without saying that in every, company, cybersecurity is high on the agenda. And to that extent, to be able to really, I think, for us to cover that end of the conversation, us investing on the in into our capability across cybersecurity, you know, whilst we had couple of solution in, you know, technology in our cybersecurity portfolio, we further augment this. So, I mean, for example, Zscaler, we became, you know, one of the two managed service provider that in The UK for Zscaler, which is upper right quadrant software in in cybersecurity space. Same with the CyberArk.

15:02 We became an advanced partner from a transactional partner, again, showing the investments we made. Because to make the leap in that status is not just growing the revenue with them, but also making sure we made an investment in our business, in our people to get the accreditation and have the capability for them to consider as such. And and as you guys know, I guess, six weeks ago Yeah. We made an acquisition of a a consulting business, cybersecurity consulting. Yeah. Crossword Consulting. So we're really excited about that. As I say, really great customer list where they do recurring, managed virtual CSO. They also bring a really skilled pen testing unit that we're excited to push it push over and introduce to to our existing customers. It it really it really looks really interesting and really exciting, the stuff they do. And if we have to say ourselves, it was a decent value, wasn't it? Yeah. I think so. I think it's good.

15:56 And what was the purchase price? Remind the audience. About 300 k, I think. Yeah. So, I mean, we got we know, it's about 2,500,000 revenue. So about 20% EBITDA kind of business. So I think we got and it's a it's a great reputation. The customer base is amazing. So I think we're already seeing the benefit of cross sells. And and, really, I think it puts us in a different entry point when we're having a a conversation with this, you know, CTO or CIO or CSO. Right? And being able to have a, I guess, what I call a seat on the grown up state table is what's allowing us to do. And I think that really, I think, gives us a full suite of cybersecurity. I think that's that really kinda, you know the the the the front foot of the conversation is cybersecurity, data analytics, and hosting cloud solutions. So for us, beefing that capability across the our portfolio solution along with that protection and connectivity, I think, has been really the the main priority for us as a business.

16:59 And, really, I think, you know, the next page, this this kinda it's a a a for me, the the landing point. And this is, like, what gets me excited and gets me out of bed every night every morning, I should say. Night as well. This is why I joined. Yeah. I mean, look. I I think we can debate what is AI, and it's funny. Today, there was an article in The Guardian I forwarded to you, Owen, which is like Yeah. Yeah. You know, apparently, the number one question that, you know, people ask Alexa, which is the AI tool for Amazon,

17:31 is what is AI? Right?

17:34 Define AI. And I think that really kinda speaks to where UK is in terms of their understanding about AI. And I think it's a bit nebulous, and people really don't appreciate what's the value proposition of it. But I am I think everyone wants to understand it, but at the moment, it's They can't see it. Just too abstract. Yeah. Exactly. Exactly. Exactly. And I I think look. Having said that, I think living in that space for now three years and and consuming it, every day, I I believe you know, I I'm a firm believer AI is the most consequential development of our generation. I I think it's gonna change the world and and definitely will change the business as we know it. It'll be the most mission critical aspect of what we what company needs to adopt to to be competitive going forward. But I think everybody will admit UK companies are not prepared.

18:31 And I and I can see that, in my conversations with, my, colleagues, you know, the ex you know, the CEO, the c suites, the boards I sit in, as much as they wanna they understand intellectually, you know, from a skill set perspective and knowledge perspective, they are just not ready to implement, but moreover, manage AI. And I think that's that's the bigger the more scary bit than implementation. Because end of the day, AI is a living,

19:03 creature, and you need to manage it for it to work. You can't just turn it on and forget about it. So I think as people soon as people appreciate that, they realize they need help, someone who can manage the the service that can provide a holistic solution. And I think there will be a a a

19:25 demand, and and I would let me rephrase that. I think having an AI managed service provider will be essential for any business to embark on this AI journey. And we believe that we are positioning ourself to be the answer to that need. The five pillars as we laid it out, you know, I think it's unique. I don't think there are very few people, if not any, in our space that can provide that proposition. And and and to answer that question that people are asking Alexa every day in The UK, we want to demonstrate that. And we do we wanna do that by pointing the tools and the capability of AI internally. We are going through our own transformation to take AI from proof of concept to realization.

20:16 And I think that's gonna be really powerful because I think we're you know, people are just waiting for a proof point. Yeah. I mean, I'm so excited about this. You know, we initially raised in the business many months ago, and and we had so many ideas for what people wanted wanted to do, for what people thought could be improved, could be made more efficient, and and really kinda maximize the potential of AI. We've done a complete review of our business. I'm talking sales, service desk, down to finance, HR, really the full the full spread. And we really looked at how we can improve our processes and really embrace AI and and and future proof ourselves, to use that use that phrase, make ourselves AI ready. We started this project with a whole load of objectives. I won't I've I've listed them on the screen. I I won't read them out.

21:06 And, really, we we were looking at the full end as to where we could get the most benefits, And and we almost very quickly agreed that the the single place that we get the most value, the most return on investment now is the service desk. I mean, do you wanna talk to us about that? Yeah. I mean, like, look, don't forget that SYSGROUP is a collection of, I think, four or five, if not more acquisition in the past five, six years. So it's really typical of all the MSP that's out there in The UK, which is, you know, they they grow by through acquisition. And I think, you know, SYSGROUP ran into the the the challenge that every other, MSP go through, which is, like, how do you achieve synergy? Where are the integration? What is the integration challenge? And if you kinda step back and look at any MSP,

21:56 50% of the census, if not most of the headcounts, is with the service desk. And, really, that is an area where, you know, if you look at where does the integration need to happen, is that's where the opportunity is. And the traditional way is just people will just put it one plus one equals two. You know? So if you buy an MSP that has 50,

22:23 let's say, a service desk headcount, and you buy a company with another 20, you end up with 70 headcounts and really not achieve synergy. Because the way that process is is is is set in all MSP, and I and I find it interesting how consistent it is across the board, is a very job shop and very manual. There's very little automation involved with it. And, you know, I think by looking at how can we augment and automate the process, we saw a significant opportunity to, improve not only productivity, but the quality of the outcome. Because end of the day, one of the main things that suffers and I think, you you know, if you guys run a business and and your MSP comes to you saying, hey. We were bought by a bigger MSP, which is a everyday narrative.

23:15 You know, the first thing your IT guy would tell us saying, oh, let's hold our

23:19 breath because our service is just gonna deteriorate. And I think that is the the aspect of it that we thought with AI, we can resolve. So, you know We we can actually improve the service. Absolutely. Absolutely. So being a a manufacturing guy, if you guys know me, I ran manufacturing, and it's all about process mapping, Toyota lean manufacturing. So first thing I did let's go to the next page, Owen, is mapped out a process in a service desk.

23:50 And and for the for the operational geeks out there, you guys will look at this and understand the process flow chart. And we really looked at it and saying, okay. Where is the the bottleneck, and where is the kind of the the biggest impediment to get the product from one end? We call it tickets. When a ticket comes in through the door, and goes out to the resolution aspect of it. And having just looking at it from a flow perspective, we were quickly able to identify few areas that will significantly resolve the problems. You know, for example, this is as as basic sounds today. So most IP MSP today, when a a ticket a customer raises a problem saying, hey. My, my Internet is down or my firewall has been jeopardized or, you know, or or my system has gone blank.

24:43 An an engineer gets your ticket and looks at the problem and goes through a few manual process saying, hey. If he has a a native

24:54 knowledge because he dealt with that customer for years and on, He can easily resolve it because that's a repeated problem. But if it's new to you, you look at to the guy next to you saying, Owen, hey. I just got a call from Duke of Edinburgh. You know? Did you have this problem before? And Owen says, yes. I know the solution for that. Or if as Owen says no, then I go through my,

25:16 search of all the historical tickets and saying, hey. Is there one that I can pull out? Which is a manual process and takes, hours, if not days. Then if that doesn't solve it, we they go to a technical manual to look for the solution, which is, again, very manual process. And then thirdly and lastly, lastly, they even resort to googling a solution or now ChatGPT. And that really took about 70% as we measure it throughput time. We have created what we call an info finder AI tool. Gonna say, yeah, we found out that they spent more time working out how to fix the problem than actually fixing the problem. Right. So, you know, this tool that we created is literally we just the engineer cuts the email or the the portal that has information, loads it into this AI model.

26:06 And first of all, by specifying what customer is from, it'll pull up all the tickets in the history that this company this customer raised with a specific problem. So, again, the engineer can quickly if their problem matches the historical problem, a, be able to provide feedback very quickly. But secondly, then feedback internally to saying, guys, this problem keeps recurring. Let's go relook at the architecture and be proactive with that customer in providing a solution.

26:38 And and so simple things like that oh, so I'm sorry. I've just before not only does it do that. So if it doesn't have a similar ticket, then you'll go again to the broader database of our tickets across the all our customer base and, again, pull a similar solution. And along with it, the the the AI tool will pull the technical definition solution for it because we have put all the the we indexed all the data of our technical manuals.

27:06 So, you know, they can it automatically pulls out the relevant section on the technical manuals that exist in our SharePoint or in our data data lake and provides it to the customer. And then this is the clever bit. Then it also we we have this tool on Copilot, but it it it it writes this on email as a solution. So from an engineer perspective, all they need to do is really look at the solution and saying, does that make sense? And just kinda proof point it and all you know, and press a send. So,

27:37 I mean, we have done a simple implementation. This is still early days. And we've seen our SLA, which is a a service level agreement. So what what we promised our customer how quickly we'll respond to our problem. It's gone from in the high sixties to high eighties today in matter of weeks. So, I mean, really, I think some of the benefit of this tool, it's it's kind of, you know, so self evident. And, really, I think for me, this is, you know, we I think if you follow AI, you will hear about how the biggest and the easiest area to to benefit from,

28:14 AI is in the call center service desk, areas like that. And I think, you know, we can definitely see the opportunity there, and we're we're we're targeting 50% increase on the efficiency. So Go ahead. Well, no. Absolutely. There's so much efficiencies and just quicker, easy way we do things, and it's such a crucial part because it's a massive part of our staff, but also it's it's the key interaction with customers. So it's it's so crucial. You know, the the service and managed service

28:46 partner is is Yeah. Is all key. No. No. Exactly. Exact and, you know, look, what's interesting has been also for me, you know, as as as I'm learning about this industry and and really, seeing a lot of the companies, other MSP out there, it's amazing how consistent how people do their business is that as as innovative this industry is, how people do their business is so antiquated and and so, I think,

29:17 manual. Yes. And I thought it was us. The SYSGROUP were different, and we were just doing poorly. And every MSP I've spoken to and looked at, I'm realizing is exactly the same, which kind of, like, for me was a a light bulb moment, an epiphany moment, which is like, whether you look at a big MSP role of play or smaller one. And I think they their their their ability to grow and their ability to integrate and their ability to demonstrate synergy is is challenging. And once you understand why, I think, you know, what the problem is. And, really, it comes to our ability to really, I think, automate and augment. Because the biggest synergy, if you think about the economics we just went through, right, which is that 50% of your cost basis in most of MSP lies with the service desk.

30:10 The only way you really can achieve synergy is to create efficiency in that

30:16 domain. And, really, unless you are relooking at how the process works and really looking at the tools to support and augment this, your engineers, it'll be difficult to achieve that synergy because there is that manual element in every MSP. And I think our project Genesis

30:39 is gonna significantly help us to solve that problem. And and with that in mind, look, we're thinking there's about 30,000 MSP in The UK alone, and we genuinely believe that our Genesis platform around Service Desk and and funny enough, we took this solution last week to, Las Vegas to AWS re:Invent, which is a flagship event for AWS. About 50,000 people come to really hear what's the latest on on AWS. We because our platform, this Genesys platform, is, is run on a Jess on AWS, cloud platform, we were invited to present our Genesys solution to to reinvent.

31:31 And I think for I think that speaks to I think what we're doing, it speaks to our capability, and I think it speaks to that what we're doing is interesting, and people see significant value. Right? So for me, I think having this tool will be a huge, competitive advantage as we look at, you know, opportunity to,

31:58 look you know, acquire other MSP. And I think that's a that's a value creation stream that I'm quite excited about. Yeah. I mean and and it'll be acquisition, but it will be I think we talked about it internally as importation. Got it. If we if we can really get everything right, we can can just slot we can buy MSPs and slot them in. Right. And they'll they'll join an existing infrastructure which is defined and set out. And, therefore, you know, these things are not easy, and a lot of people have found them difficult over the years, but we think we'll have a platform to really do it quickly and at scale. No. Exactly. I mean, I think, you know, we call it if you look at the dynamics of most MSPs, it's like average about a hundred, two hundred customer. You know, I think eighty twenty rule applies that 20 to 40 customer drives bulk of the revenue. So really onboarding 20 customer and our our engine, our, Genesys tool is really, you know, an a a facilitator of customer onboarding. It's a it's a simple way looking at it, you know, in terms of what integration mean in our space.

33:06 So I I think that's really kind of if I were to summarize in terms of how I'm thinking about what does the future vision of the SYSGROUP is, really, we wanna become the AI MSP, for The UK SME. Yeah. I I think there's gonna be a clear need for that. I think there's a pathway to it. I think where we are today is we wanna make sure we are the partner that that can advise end to end solution for our customer that will that will help future proof their technology investment because the reality is that the velocity of change is gonna accelerate. And with the advent of AI, where you don't wanna be caught out is that, hey. Your technology and your infrastructure is obsolete, and you gotta rip it out and start all over again.

33:53 And I think partnering with someone that you can you can whilst you're getting the best of solution that exist in each of the technologies tower, the upper right quadrant of Gartner, but yet it allows you to future fruit, I think, is the proposition of today. But equally at the same time, we wanna be on the forefront of this AI wave that is coming. Trust me. And what we wanna be able to demonstrate to, not just to you, but everybody else, is that the benefit and how AI works. So if someone asks, what is AI? What does AI look like? You don't have to ask Alexa. You can come to SYSGROUP, and I'll show you what AI looks like.

34:39 And and for us, that is gonna be the the the biggest marketing. That's what's gonna convince the customer saying, hey. AI works because AI implementation is a journey. It's not, you know, buying a SaaS off the off the shelf and putting it in and turning it on. We have spent a year and a half of hard work to get where we are and and being able to say, look. We are on the first step of AI journey, and we are already seeing the benefit, and we're excited about it. And we wanna share that case study with you. But, you know, the hidden weapon that comes out of this, the hidden value proposition is obviously that once we become, we deploy the Genesis internally, it creates a a a framework for us to grow, not only organically, but inorganically.

35:34 And it has a mindset around the company. It's really a a way of thinking. It's a way of looking at decisions through this lens, and and it it's about always thinking about that infrastructure that we need in place that we can then build on top of. Right. Yeah. Look. So I I appreciate today's format was bit different than their traditional flipping the page and reading the numbers out. But I think we have a diff unique story, and we wanted to have a conversation and share with you what we wanna achieve here. Because I think just looking at the six months number and saying, hey. You're a plus or minus. I don't think really captures what we wanna do. And I think we wanna share with you kind of the excitement, and and kind of the opportunity that SYSGROUP represent.

36:22 We are a believer. I, we are personally invested. This is this is the you know, what we are committed to, not just from a a a professional perspective, but I I genuinely believe I'm an evangelist of AI. I genuinely think we wanna do good for The UK economy, UK PLC by providing this service. Yeah. And and I couldn't agree more. I mean, this is this is why I'm here. He just sat me down for dinner and and and told me told me the vision, and and I brought in. And because it's just it's exciting, but it's also where where we're going. Mean, you know, it sounds cliche to talk with waves and and and stuff like that, but but it really is you know, you you you want we want to be at that forefront at that this opportunity to really be involved and really be leading the way.

37:17 So it's it's it's so exciting at the moment. Yeah. And, look, I mean, from our perspective, if this format was not exactly what you were looking for, but you have questions, obviously, we'll take the next time to to ask the to answer the questions that's that's all that got asked beforehand as well as the questions that are coming online. I don't know if there's any new questions coming through. But equally, look, we are very open. Owen and I, you can reach us out. Our email address is firstname.lastname@SYSGROUP.com. Please do reach out. We're available in online or in person. We're based in Manchester. So yeah. Now look. Any questions you guys have, financial, strategic, operational, I'm more than happy to sit. I think people who have dealt with me in the past at SYSGROUP PLC, know that I am very open and and, transparent, and I think, I will continue to be.

38:15 So with that, what questions do we have? So I've got some that were sent in, I believe, over the last couple of days, and then I can see some. So I'll try and read the ones that are appearing in the chat. So just on the ones we had already. Before a new chair stepped in, the acquisitions made by SYSGROUP increased revenues but were not earnings accretive. This is also reflecting the share price. What do you think went wrong, and how do you think about acquisitions going forward? Yeah. I think we covered that, you know, in my you know, in the presentation, which I think the challenge is that, the the integration. Right? I mean, I think, the the the reason why an acquisition is not coming to the bottom line is that you're not achieving the synergy in the key area that that needs to be integrated, which is service desk. As I said, the traditional approach and I think this is not just SYSG, but across the industry is that, you know, you just combine, put together the service desk and really not look to how we can change the flow and and help the service desk to be able to create a synergy being the manual process as we laid out.

39:24 You know, I think the process flow chart that you saw in our presentation, if you put it up against that, take it to any MSP, we'll agree that's the process. So given that, it's hard to achieve synergy unless you introduce a new business framework or process flow or new tools such as we're doing with Genesys. I'll take the next one for a finance one. Do do you have target percentage of recurring revenue you want to maintain? Main MSPs at a high percentage of recurring revenue get higher valuations. Yes. Absolutely. We want recurring revenue to be high, and recurring revenue is high. Recurring revenue will always be a key part because it's managed services. Even with the the SYSGROUP business, we bought. A large bulk of that is is recurring annual contracts.

40:11 That the the percentage, if you're talking to a percentage, will fluctuate depending on when we have high value transformation projects. But those, you know, those are great. They may they may impact the kind of, I guess, the recurring element, but they will drive recurring revenue going forward. It's those high value transformation projects that are the way in to then, oh, and we'll manage that for you, and we do this managed services. So it may fluctuate slightly, but it's always going to be high, and it's always an absolute key KPI of the business. AJ mentioned you have a plug and play platform for integrating acquisitions. Can you elaborate how that works in practice? I think we probably covered that Genesys is that that kind of the, you know, the the the tool to be a plug and play.

40:58 Can you elaborate on the AIML offering that SYSGROUP wants to build? Is this going to be recurring revenue or consulting stream? Yeah. No. I mean, as I think, we wanna be so AI is not, you know, plug and play. It's it's really something that needs to be assessed, architected, implemented, and managed and supported going forward. It's a it's a it's a transformational process. So from our perspective, the AI is gonna touch all elements of that. And I think from our perspective, the end goal down the line is to be the MSP for AI. So in terms of, you know, what's unique about us is that in the AI space, we can cover all element from data data management to machine learning algorithm design to training the model to maintaining model and supporting the model. So I think that is, you know, very unique that we can look at provide that capability and solution with the context with the with the with the infrastructure, into the into the conversation instead of just being a consultant that coming in, give a solution irrespective of platform that it runs at or the infrastructure guys who do not have the capability and and might be putting a solution that is disconnected to the AI capability or requirements.

42:23 The second part of that question actually, how long does it take to have an AI ML solution for a client from design to production environment? Well, that's a tough question. And because I think it really depends what's the starting point for the customer from there, how the data is it the state of their data, and and how do we kinda get the data in the right shape if that's what's required. But along with that, it's really what's the use case. I mean, if it's a very, you know, narrow definition of use case, but then it turns into a bit of a gimmick. And I think, again, AI is something that, you know, it's it's a transform transformational tool. It's not AI. It's not something in itself. It means, you know, it's a business transformation that is enabled by AI, and it's more than just kind of, you know, plugging a model out and and dumping it into your computer.

43:15 Yeah. And and I would add to that that and we've seen on some of the projects We're doing it ourselves, aren't we? Right. Seen on some of the projects we've done externally that we will go in and do initial kind of health checks or readiness checks, which will be a kind of consulting engagement, and then we will make recommendations to your infrastructure Mhmm. Which will lead to infrastructure improvements, investments the the customer might need to make in certain areas, which they're willing to make because they know they need this. And they've they've invited us to advise them on this. Yeah. And then we've as I say, so there's been various layers of infrastructure we've built before we've even started the proper kinda AI ML, and that and that leads to this managed services point of where we where they need, you know, stuff done to their hosting. They need they need all all these sorts of steps completed.

44:00 Otherwise, it it really is you know, it's just not gonna help them. Right. No. Exactly. I think that's it, is it? Yep. I think that's it. Should I jump to the ones in the chat? I'm gonna have to bend over a bit. This There is a second. Oh, there's more coming up. Gary from From Gary, what are the anticipated impact of the investment in AWS and Azure capability on your market positioning and revenue growth? I think it'd be significant. So, I mean, look, it's early days. We achieved our events partner status literally, I think, last month, and our engagement is just at the nascent stage. We are seeing opportunities. I don't know if you know how the AWS framework works is that once you reach a certain partner status, you co market with them.

44:53 They give you market funding, rebate funding, and such that actually, you know, elevates you in terms of the the competitiveness across the market. So, you know, I think that puts in a good stead. Yeah. So from our perspective, that's early days. And that but having said that, look, I mean, it's so you know, we think it'd be one it's one of our priority thrust in terms of go to market. So we'll we think there'll be benefit to that, but it's hard to quantify at this, you know, at this point. Yeah. So this question is from Richard. We got lots of questions coming in. With a strong cash balance of 9,930,000, how do you plan to allocate this capital growth? Will it be primarily fund acquisition or internal transformation project?

45:43 So, I mean, you know, we we have, already made a lot of the investments. So in terms of the cost, to be able to deliver the the priority projects that we have, I think we have we have reached, I think, a cost basis that we are comfortable with. You know? To be that's not to say we want make further investment. But But there's not there's not huge additional CapEx, I mean Correct. Correct. For internal spend. I mean, I think if you go to our presentation investment presentation, we show you some of the kind of the the shift on the head counts in term by function. And we have doubled our engineering head counts or technical head counts whilst we have reduced some of the admin costs and some of the nontechnical, resources.

46:30 So we've been very judicious about our investment on people and make sure we are we are not cash consumptive. So they cut where we are at the baseline today, we are not cash consumptive. So from our ability to grow organically, we don't you know, I am making sure that we are not dipping into that cash unless it's a clear opportunity. And, again, look, I think that strong balance sheet enables to be very opportunistic with the crossword acquisition and really capture value. So, you know, we are gonna look to, you know, spend that money on acquisition, but I think we'll be very judicious in terms of how we go about spending that money. Given access.

47:23 Are there any legacy issue from the previous management which are still to be resolved? You know, this is, I don't want I don't wanna put up, you know, our own dirty laundry, but gotta say, we we pulled a lot of hair out dealing with the legacy problem. It's much more than we expected. He was full headed hair when he showed up a year ago. I mean, it's, it's been, it's been challenging. Having said that, I think a lot of that is is kinda over, but I think the biggest legacy challenge that we we have overcome, and I would say we have overcome, is really, I think, regaining the trust of the customer. I think, you know, I I every customer visit I had, every time we were, was a very antagonistic.

48:15 It was definitely not a partnership. And and, you know, a lot of the customers' feedback was like, they were being held hostage by us. And I think that's gone a long way in terms of being able to create a partnership arrangement and agreement and having a, I think, a a a a discussion instead of confrontation at the customer's level today. So I think that's been really, I think, me, the hardest element to overcome. Yeah. And I I think for me, the the challenge has just been when I turned up even eight months ago now, it still felt like a company that bought four or five different companies. You know, I had six offices when I joined. We've now consolidated into four. And and they were they were all kinda doing slightly different things, and and they were they weren't they weren't properly integrated.

49:02 So what you know, the big exercise has been trying to integrate everyone, trying to get everyone on the vision, on the mission, you know, move people around, and really get make it feel like one company. And that's one of the things we've achieved. Yeah. And and you can just feel the way that sales different sales people are talking to each other now and the way we're doing more cross selling rather than previously, a customer typically would only buy one or two things, and they would come in from one of the acquisitions originally. Right. Now we're cross selling more and more. Well, we only had one or two things to sell historically. So now that there are other more things to sell also helps that conversation, doesn't it? Sure. When do you expect the first large AI order? How large will this contract roughly be? How do you price contract in the new area? I mean, I think, you know, we are actually, one of the areas that we're excited about is the pipeline around AI AWS because it's kind of you know, a lot of the AI element happens in the AI AWS platform.

50:02 So it's that pipeline is growing. I think we have some really interesting projects in, you know, in our docket that is progressing well. You know, I I think on the first instances, a lot of the work would be a consulting project. So it'd be, you know, kind of professional services as we are doing the assessment and and and development of the solution. And I think that would migrate you know, go into the into implementation and hopefully, you know, ultimately to the support. So those are kinda the the the, the lifeline or the value chain of an AI project. And in terms of, you know, what's the large size, I mean, each step is is kinda has priced on its own in the the in terms of the time it takes to to, to deliver that project and assignment. So, you know, in terms of kinda the the assessment and the and the architecting a solution, let's say, it's usually two, three months, and we apply day rates and all that.

51:02 So, I mean, that's, like, somewhere in the 50 to 100 k on on average, you would say. Right? You know, that kind of project. Some will run, you know, obviously, bigger than that. There's been a the shares at an all time low. Don't remind me. We have seen little insider buying. This doesn't add up to the amount of time exciting was used in the presentation. So first of all, I did buy. So, you know, I I bought, I think, day after the results. But let's not ignore. I mean, I think from an insider perspective, when we did the rights issue five months ago, everybody kind of, invested, you know, all the insiders. And, you know, I don't know how rich you think we are by writing, you know, $2,030.40, £50,000 check. It's meaningful. It's not something we can do every six months. So I I think, hopefully, you guys are a bit sympathetic that we did all of us, a board member and management, wrote a a significant check for for, you know, poor people like us, five months ago. So, you know, there there's only so much liquidity we can, we have in our balance sheet personally and and and all that. So Yeah. And and and just so I I I still feel just as excited as when I invested then.

52:22 Like, nothing's changed fundamentally for me. I even found kind of more excited. You know, you can you can feel it coming together. So it's all positivity for me. Yeah. We're veering into politics, so I'm gonna hold judgment on the whole and my opinion on that. What percentage of client is likely to take on your AI proposal? I mean, I think that's an interesting question. Really, really good question. I mean, I think, you know, if I'm if I'm very honest, I you know, I don't have a really clear answer. I think, you know, a lot of our customers and I think, you know, once you are curious and interested, I think really what holds back from people in terms of getting on the AI bandwagon is not as much as scale, but really, I think where their starting point is. I would even argue, and I think this is proven out in The US, which is, like, the people who are benefiting or who are engaging in AI more so than established business is actually the start up and the smaller businesses.

53:21 Because I think they'll have a a bigger ROI because they don't have that kind of fixed cost that they gotta worry about. You know, it's a classic innovator's dilemma that people are going through. So I I really think it's not the size of the customer that I think that drives whether the adoption AI will happen, but, really, I think people the mindset and the use cases that that will apply. Having said that, I think in, you know, in the short time frame, I think every business needs to look at AI. I think I think it will be, you know, as I said, mission critical. And and part of the reason for Genesys is really to give us, something that we can go and show about, look, this is how we did it because we kept getting asked, well, tell us about how you use AI. You know, we were interviewing people, and they were saying, well, tell us about the AI tools you use. And so we recognized we we needed to build this in part because we need to be there, but, also, it's it's such a great marketing tool to show people how we use it, how we've done it, and give people something to to touch and feel and and kind of otherwise, it it does remain as to to kind of kind of an idea rather than something concrete. Yeah. I agree.

54:27 This is the last question unless something new comes in. How developed the international US managed service provider in AI? Clearly, U US is a is a front runner, and I think, you know, a lot of the activities and investment is going in The US. And I think UK is significantly behind. And I guess, from my perspective, I look at that as an opportunity. I think if I go talk to, kind of my peers or or others in The US saying, hey. What do you think about UK market? Everybody goes like, really, you know, we don't see opportunities there. And and no one's willing to kinda, invest into The UK yet. And I think that for for us give us, I think, the opportunity to solidify our position, and I think, really, I think, gain gain a first mover advantage. So, you know, I think, the analogy I always kinda use is that we wanna be the Seattle coffee of AI for those who remember Seattle coffee.

55:26 So I think with that, I think it's the end of all the questions. So I'll turn it back to the moderator. Absolutely, Hejay. And if I may just jump back in there. Thank you very much for your presentation and for answering all of those questions that that came in this morning. But, PJ, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourselves and and the company, if I could please just return to you for a few closing comments just to wrap wrap things up, that'd be great. Yeah. No. Well, I wanna thank everyone for taking the time, to join us today, and and secondly, for, showing interest in SYSG and for those who have invested for investing and trusting your money with us. You know, I am as you know, kind of my history, I am a believer in what we're trying to accomplish here.

56:18 This is actually, I think I don't wanna say it's a job. It's like a vocation of religion, and and evangelism, in my end because I having been in in the seats of my customers of of running businesses. I know the value that we can bring to them. I think there is a huge white space. I think customers, companies are realizing the opportunity this provides for them. Equally, I think they recognize the threat that this, you know, brings to them. So I think, you know, it's inevitable that AI will become to the forefront of a lot of the companies and will become mission critical.

57:05 We are at the early, early stage of our journey. I think, there's it's it's it's a a bit fallacy to say this is a continuation of the old SYSGROUP. I think if you were to come in today and really look at who we are as a business in terms of our strategy, our proposition, our people, our culture, our value is fundamentally different. All essentially, if I'm kind to kinda trivialize it a little bit is that, you know, I I took SYSGROUP as a shell business, and really, I think, invested to create this something unique, something that's different. And I think the opportunity that we have is is tremendous, and I think we are making significant progress to it. So, yes, appreciate that. As a public company, we gotta deliver numbers, and I appreciate we missed our revenue.

58:05 I appreciate there is a expectation out there. Having said that, I think in the context of what we're achieving, what we're trying to lay out in terms of the three years to five years target, I think we are, well on track, and and we're quite excited about the opportunity that this business represents. Look. I've been around the block, in the public market. I took my share of beating, so I'm a big boy here. I battle scars to show for it. So, you know, I think, I understand, what you guys are looking for and what your expectations are. But, again, you know, I think in in this market, and particularly with this current, public market environment, I think from us, our perspective, you need to kinda step back and look at what is our vision, what's our strategy, and and look beyond just the two, three numbers that gets posted every six months. So, again, thank you for your support. Again, we're open for any questions, any comments. Again, both Owen and I are readily accessible. We gave you our email address, or just drop us a line and and more than happy to have a dialogue and conversation and explain our business better to y'all.

59:17 Thank you. Thank you very much. Perfect. That's great. Hey, Jay. Thank you once again for updating investors this morning. Could I please ask investors not to close this session? Shall now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of SYSGROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.