ECSC records adjusted profit even as organic revenue falls
Cybersecurity service provider ECSC Group reported a 4% fall in organic revenue in its final results on Wednesday, to £5.66m, which it put down to the short-term impact of Covid-19 in the second quarter.
The AIM-traded firm said recurring revenue from its managed detection and response operations grew 22% to £2.42m, with total revenue from the division up 6% to £2.73m in the year ended 31 December.
It made an adjusted EBITDA profit of £0.4m, having broken even in 2019.
Cash at period end stood at £1.12m, up from £0.35m year-on-year, with the figure including £0.42m of medium-term Covid-19 government support relating to VAT and PAYE deferral.
The group's bank facility of £0.5m remained unutilised.
On the operational front, the company secured 90 new assurance clients, down from 118 in 2019, as it continued to develop its partner programme, with more than 150 partners signed up, expanding its reach and routes to market.
Development of its proprietary artificial intelligence (AI) software was also ongoing, with research and development investment at 14%.
Since year-end, ECSC said it had secured “major” contract wins in managed detection and response, for a large UK charity and a national leisure group.
“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,” said chief executive officer Ian Mann.
“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 the second quarter, we began to see rapid recovery in the third quarter and a return to growth of 6% in the fourth quarter against 2019, as well as an addition of 90 new clients to the division, which is testament to both our business resilience and market demand.”
Mann said the continued growth in recurring managed detection and response revenue demonstrated the “strength” of the service, and the firm’s strategy of winning consulting clients and converting them into long-term managed services clients.
“The strong momentum of the fourth quarter has continued into the first quarter of 2021, with a number of impressive contract wins in our managed detection and response division.
“We are resuming our organic growth strategy and related recruitment activities, and we look forward to keeping the market updated on our progress.”
At 1316 GMT, shares in ECSC Group were down 1.28% at 74.04p.