ECSC GROU 27 September 2022
ECSC Group plc
('ECSC' or the 'Company' or the 'Group')
Unaudited interim results for the six months ended 30 June 2022
ECSC Group plc (AIM: ECSC), the provider of cyber security services, announces its unaudited interim results for the six months ended 30 June 2022.
Financial Highlights
- MDR order book up 30% to £2.9m (31 December 2021: £2.2m)
- Group revenue of £2.77m (H1 2021: £3.01m)
- Assurance division (testing, standards and certification services) revenue of £1.48m (H1 2021: £1.49m)
Post-Period Highlights
Mid-Sept 2022 Assurance booking level up 30% upon the year-to-datemid-month average Appointment of new CEO
Return to a level of MDR new service wins comparable to pre-COVID levels
Partnership with Securonix, joining their global Managed Service Provider (MSP) programme
Matthew Briggs Chief Executive Officer of ECSC, commented:
"H1 was a challenging period, however, we have a firm handle on what caused the under performance. Some changes have already been implemented. With several more tactical and strategic initiatives now identified and being executed, I am expecting to see improvements in H2 with further improvements during 2023."
Enquiries: | |
ECSC Group plc | +44 (0) 1274 736 223 |
Ian Mann (Executive Chairman) | |
Matthew Briggs (Chief Executive Officer) | |
Allenby Capital (NOMAD and Broker) | +44 (0) 203 3285 656 |
David Hart | |
Piers Shimwell |
Notes to Editors:
Founded in 2000, ECSC Group plc (AIM: ECSC) is the UK's longest running full-service cyber security service provider. With an extensive range of in-house developed proprietary technologies, including advanced Artificial Intelligence (AI) systems, ECSC provides expert security breach prevention and advisory support to organisations across all sectors.
ECSC operates from two Security Operations Centres (SOCs): one in Yorkshire, UK, and the other in Brisbane, Australia. ECSC offers flexible 24/7/365 cyber security monitoring, detection, and response support to its clients, either as a fully managed service or to enhance an organisation's existing cyber security systems. In addition, ECSC's Assurance division provides guidance, certification to industry standards, and extensive testing services to allow organisations to assess their cyber security protection.
ECSC is led by a highly experienced senior management team with over 80 years' combined experience within the company and has delivered consecutive organic growth for the last 20 years.
The Company's broad client base ranges from e-commercestart-ups to global blue-chip organisations, including 10% of the FTSE 100.
For more information, please visit the following: https://investor.ecsc.co.uk/
Chairman's Statement
Following fresh challenges in H1, I am pleased to see how the group has responded, as reflected in the recent MDR recurring revenue wins and the current level of Assurance consulting bookings. Increases of 30% in both MDR order book and current Assurance booking levels illustrate the up-turn we are seeing on a range of internal KPIs.
There is now strong evidence that post COVID-19, cyber security has returned as the number one priority for most organisational boards. ECSC is the ideal partner to advise and secure these organisations.
I am delighted with the recent appointment of Matthew Briggs as our new Chief Executive Officer (CEO). He brings a wealth of senior commercial experience, placing him in an ideal position to lead us through the next stage of our development. As a previous client of ECSC, with a good understanding of our services, he has worked rapidly to understand the opportunities for the group and brought with him the highest expectations for the whole team.
We intend to fully report the current, and planned, board structure in our annual report. However, in line with QCA guidance, my position as Chairman will be temporary, and reviewed in light of future non-executive appointments.
On behalf of the Board, I would like to thank all of our clients, staff, partners and wider stakeholders for their continued support.
Ian Mann
Executive Chairman
27 September 2022
Chief Executive Officer's Statement
Having commenced the CEO role in August this year, I am still identifying the mission critical tasks which need to be executed along with their sequencing. That said, our overall focus on profitable, sustainable growth remains unaltered and very much central to our strategic intentions.
It is clear from what has been observed so far, and what I know of the market, that there are significant opportunities for ECSC. And whilst at a macro level, there may be some headwinds from inflation, cost of living, salary costs and interest rate rises, history tells us that the cyber security industry is resilient compared to many other sectors.
Some of the areas which will be getting my attention over the coming weeks and months include re-energising the culture of our people and ensuring they feel empowered to deliver very clearly defined targets and objectives. We will be implementing enhanced KPIs and reporting to ensure full performance transparency exists across the business. We will also be co-creating our 3 year business strategy. Essentially, this will produce a roadmap for how we will stay relevant and appealing so we deliver P&L growth over the coming years, whilst also ensuring we don't get distracted from business as usual activities.
Two particular aspects which have struck me since joining are that firstly, the business has been very inward looking. In turn, understanding a client's wants and needs and competitor intelligence is lacking. However, with the combination of Ian's new role and my connections we can remedy this in relativity short order. Secondly, ECSC has many significant opportunities to build different partner relationships, moving away from IT resellers towards like minded 'trusted advisor' businesses. From a standing start since I joined, we already have over 25 conversations in play many of which are with blue chip brand's with extensive client banks potentially interested in offering our services to their clients.
Whilst revenue growth during 2022 will not have been at a level the Board would have wished, one of the overwhelming reasons for me joining ECSC was the opportunity for significant profitable growth, and the early signs are indicating that this is within our gift.
Key Performance Indicators
The following Key Performance Indicators:
Jun | Dec | Jun | ||
Performance | Rationale | 2022 | 2021 | 2021 |
Indicator | (interim) | (full year) | (interim) | |
Revenue Growth* | Measurement of the success of the organic growth | -8% | 8% | 15% |
strategy | ||||
Managed Detection and | Visibility of the success of increasing the | |||
Response Recurring | percentage of revenue from long-term recurring | -17% | 7% | 12% |
Revenue Growth* | revenues | |||
Managed Detection and | Visibility of the success of increasing the | 39% | 42% | 44% |
Response Recurring | percentage of revenue from long-term recurring | |||
Revenue Proportion | revenues | |||
Managed Detection and | Combined measurement of new client contracts | £2.9m | £2.2m | £2.7m |
Response Order Book | together with renewals of existing client contracts | |||
Managed Detection and | Delivery efficiency measurement | 46% | 61% | 64% |
Response Gross Margin | ||||
Assurance Repeat Revenue | Quasi-recurring from longer-term consulting | 87% | 81% | 83% |
clients | ||||
Assurance Gross Margin | Delivery efficiency measurement | 58% | 63% | 61% |
Research and | Investment in future cyber technologies, service | 18% | 15% | 16% |
Development (percentage | enhancements and intellectual property | |||
of Group revenue) | ||||
* Percentage change when compared to the prior comparable period.
Matthew Briggs
Chief Executive Officer
27 September 2022
Financial Review
Principal Activities
The principal activity of the Group during the period continued to be the provision of professional cyber security services, including Assurance, Managed Detection and Response Services and the sale of Vendor Products.
Unaudited | Unaudited | Audited | |
6 months | 6 months | Year ended | |
30 June | 30 June | 31 December | |
2022 | 2021 | 2021 | |
£'000 | £'000 | £'000 | |
Revenue | |||
Assurance | 1,476 | 1,489 | 3,123 |
MDR | 1,218 | 1,450 | 2,886 |
Vendor Products | 45 | 49 | 93 |
Other | 31 | 19 | 42 |
2,770 | 3,007 | 6,144 | |
Gross Profit | |||
Assurance | 860 | 905 | 1,965 |
MDR | 561 | 932 | 1,757 |
Vendor Products | 7 | 8 | 15 |
Other | (33) | (29) | (63) |
1,395 | 1,816 | 3,674 | |
Adjusted EBITDA* | |||
Other Income | 140 | 117 | 282 |
Sales & Marketing Costs | (859) | (1,025) | (2,018) |
Administration Expenses | (1,040) | (889) | (1,773) |
(364) | 19 | 165 | |
EBITDA** | |||
Share Based Payments | (24) | (69) | (100) |
Exceptional Items | (137) | (26) | (145) |
(525) | (76) | (80) | |
Depreciation and Amortisation | (197) | (206) | (400) |
Adjusted Operating Loss* | (561) | (187) | (235) |
Operating Loss | (722) | (282) | (480) |
- Adjusted Operating Loss and Adjusted EBITDA excludes one-off charges and share based charges ** EBITDA is defined as Earnings before Interest, Tax, Depreciation and Amortisation
Revenue & Organic Growth
Total revenue in the period ended 30 June 2022 was £2.77m, down 8% on the comparable prior period (revenue in the six months ended 30 June 2021 was £3.01m). Within this, Assurance revenue was down 1% to £1.48m (June 2021: £1.49m).
Managed Detection and Response division revenue was down by 16% to £1.22m (June 2021: £1.45m). This was due to MDR pipeline issues caused by COVID which are now resolved. Within this division, Incident Response revenues decreased to £0.09m (June 2021: £0.14m) during the period.
Vendor Products revenue remained at £0.05m, (June 2021: £0.05m), and remains a small part of ECSC's business, contributing only 2% of revenues.
Margin Generation
Gross Profit in the period was £1.40m representing a 50% gross margin (prior year interim period: £1.82m representing a 60% gross margin).
Assurance margin fell to 58% in the period (prior year interim period: 61%). This was due to a 5% increase in costs over the prior period.
Managed Detection and Response margin fell to 46% (prior year interim period: 64%) due to a 16% decrease in revenue and a 27% increase in costs due to wage inflation and additional headcount in the MDR division during the period.
EBITDA & Operating Loss
Adjusted EBITDA for the period, which excludes one-off charges and share based charges, was a loss of £0.36m (June 2021: Adjusted EBITDA profit of £0.02m). EBITDA in the period was a loss of £0.53m (June 2021: EBITDA loss of £0.08m).
Adjusted Operating loss in the period was £0.56m (June 2021: Adjusted Operating loss of £0.19m). The Operating loss
in the period was £0.72m (June 2021: Operating loss of £0.28m).
Cash Flow
Cash and cash equivalents decreased by £0.87m to £0.30m as at 30 June 2022, primarily due to wage inflation pressures and reduced revenues compared to the prior year.
During H1 2022, the Group took action to reduce cash burn by cost control, resulting in costs of over £500k per year being removed from the business.
The Group will continue to prioritise cash management and closely monitor this to ensure that the Group has adequate liquidity to meet all of its financial commitments as they arise. The budget figures are closely monitored against actuals on a monthly basis. Variances that may arise are discussed at Board level on a monthly basis. The Directors also consider a sensitivity analysis based on lower revenue growth and margins achieved and have formulated appropriate contingency plans which enable the Group to preserve its financial resources.
Gemma Basharan
Chief Financial Officer
27 September 2022
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
ECSC Group plc published this content on 27 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 September 2022 07:50:01 UTC.
