Isentia apologises for cyber attack, confirms ‘significant’ impact on revenues
Isentia has apologised to clients following last month’s cyber security attack and said all key services, including its Mediaportal platform are now up and running.
The apology came as almost 27% of shareholders voted against the adoption of the company’s remuneration report, representing the first ‘strike’ under Australia’s two-strike rule designed to give shareholders a degree of power over the financial packages of senior executives.
Should 25% of shareholders vote against the remuneration report in 2021, that would trigger a ‘spill’ resolution to determine whether directors will need to stand for re-election.
The two-strike rule is generally regarded as a vote of confidence – or not – in the board.
Chairman Doug Snedden appeared to play down the cyber attack, describing it as “temporary setback” at the firm’s annual general meeting.
“Although disappointing we have addressed this issue and limited the impact on our operations,” he said.
But the media monitoring firm confirmed that compensation and remediation costs are expected to wipe out between $7 million and $8.5 million of net profit in the 2021 financial year.
Earlier, chief executive Ed Harrison apologised to customers “for the disruption this incident caused”.
He told the annual general meeting that its own team and cyber security experts “worked round the clock” to restore services.
Ed Harrison: Apologised to clients
“This has been a challenging time for Isentia and I am grateful for our customers’ ongoing support and proud of our people’s response,” Harrison said. “Our tech teams, together with leading cyber security experts have worked around the clock to restore services and our account managers have developed even stronger relationships with our customers as they have worked tirelessly to keep them informed of important media coverage.”
Confirming the financial damage, Harrison said: “As a result of the incident, Isentia provided discounts or credits to affected customers, significantly reducing expected FY2021 revenues.
“We have also incurred remediation costs, which together with the revenue impact are expected to reduce net profit before tax by $7 million-$8.5 million.”
Harrison stressed it was a non-recurring item.
Isentia’s management added that it would not be providing guidance in FY21 as “our earnings visibility has been affected by; the economic uncertainty created by COVID-19 and; the uncertain outcome of our Copyright Tribunal proceedings.”
Isentia was in the process of transitioning to a new Commonwealth Bank debt facility at the time of the cyber attack which impacted its Mediaportal platform and other key services.
Some services of the business were still being affected many days after the incident.
The response of Isentia to the attack was criticised by some, including Isentia customer and Pure Public Relations’ managing director, Phoebe Netto.
Writing in Mumbrella, she said: “To say I am disappointed and frustrated is an understatement.”
The firm said the three-year debt facility with Commonwealth Bank has now been finalised. It includes a $33.5 million term loan with a $12 million revolving tranche as well as a $1 million bank guarantee and transactional bank tranche.
