Momentum recovers at listed cyber security group

Cyber security services business ECSC has reported Group revenues of £5.66m, down 4% on the prior period (revenue in the 12 months ended 31 December 2019 was £5.91m).

The company attributes this drop to short-term COVID-19 related impact in quarter two.

Also within its final results for the year ended 31 December 2020, it records adjusted EBITDA profit £0.4m (2019: break-even) with its Managed Detection and Response (MDR) division seeing recurring revenue growth of 22% to £2.42m (2019: £1.98m).

MDR revenue was up 6% to £2.73m (2019: £2.59m) and the firm had cash of £1.12m at period end (31 December 2019: £0.35m), including £0.42m of COVID-19 related medium-term Government support relating to VAT and PAYE deferral.

The Bradford-based business says it achieved major contract wins in its MDR division for one of the UK’s major charities and a national leisure group.

And ECSC says 90 new Assurance clients were secured over the period (2019: 118), along with continued development of its partner programme, with over sales 150 partners signed up, expanding the company’s routes to market.

These sales partners are already contributing 5% to the company’s Assurance revenue and 3% to its managed services revenue.

Ian Mann, chief executive officer, said: “The Group responded rapidly to the challenges posed by the pandemic, drawing up a strategy early on to manage the situation effectively and ensure business continuity. 

“As a result, we are delighted to report growing adjusted EBITDA profitability and cash generation for the 2020 financial year.

 “Despite the impact of COVID-19 on the Assurance division in quarter two, we began to see rapid recovery in quarter three and a return to growth of 6% in quarter four against quarter four 2019, as well as an addition of 90 new clients to the division, which is testament to both our business resilience and market demand.

 “The continued growth in recurring MDR revenue demonstrates the strength of this service line, and our effective strategy of winning consulting clients and converting them into long-term managed services clients.

“The strong momentum of quarter four has continued into quarter one 2021, with a number of impressive contract wins in our MDR division. 

“We are resuming our organic growth strategy and related recruitment activities, and we look forward to keeping the market updated on our progress.”

He said he was surprised at how little financial impact the pandemic has had on ECSC’s clients, with only one bad debt and a couple of other clients asking if they could pay late.

But he cautioned that there could be more economic pain for these businesses later this year as Government support starts to wind down.

Mann said ECSC is no longer needing to rely on any Government backing.

“We had put some of our staff on furlough but we brought all of them back towards the end of quarter three,” he said.

“We welcomed the Government support, which meant we didn’t have to go into a loss last year. The furlough scheme was extremely good – that worked efficiently and it was simple to administer.

“But from a business point of view, what didn’t function so well was the business loans scheme, which was administered by the banks.

“That wasn’t really effective because it was too slow and too many businesses were turned down for it.”

Mann said before the pandemic only about 20% of his firm’s consulting was done remotely. This has now successfully transitioned to 100%.

He said whether this method of working switches back in future will largely depend on the company’s clients.

He added: “I’m a bit old school, I prefer to deal with people face-to-face. But now that everyone is set up with reasonably efficient screens, cameras and microphones it actually works very well.”

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