TIDMOSI
RNS Number : 9694D
Osirium Technologies PLC
03 May 2017
For immediate release
3 May 2017
Osirium Technologies plc
("Osirium" or "Group")
Final Results
Osirium Technologies plc (AIM: OSI.L), a UK based cyber-security
software provider, today announces its final results for the 14
months ended 31 December 2016.
Operational highlights
-- Significant contract win with leading global asset management company in August 2016
-- Pilot contract signed with a UK based contextual surveillance
company in October 2016, fully integrated and operational by
December 2016
-- Simon Hember, Founder and Managing Director of Acumin
Consulting appointed as a Non-Executive Director in September
2016
-- Having laid the foundations in the period under review, our
strategy is clearly showing early signs of success since period
end, adding customers, distributors and moving offices to
accommodate the growing Osirium business
Post year end
-- Three new customers won in the first few months of 2017: one
of the world's largest insurance companies, a critical national
infrastructure business and a retail mobile technology provider
-- Senior management team strengthened with the appointments of
Stephen Roberts as Marketing Director and Tim Ager as Sales
Director in November 2016 and January 2017 respectively
-- Distology signed as UK distribution partner
-- Business Development Director appointed in Middle East
-- Distribution agreement signed with Spectrami as Middle East distributor
-- Footprint extended to APAC with two Business Development
Directors appointed to service the region followed shortly
afterwards by an agreement signed with distributor CHJ Technologies
in Singapore
Financial highlights
-- Total Revenue of GBP477,577 (2015: GBP290,150), comprising:
o SaaS Revenue of GBP440,582 (2015: GBP252,430)
o Professional Services Revenue of GBP36,995 (2015:
GBP37,720)
-- Total Bookings of GBP540,836 (2015: GBP267,722)
-- Operating loss of GBP1,822,497 (2015: GBP847,138), primarily
reflecting increased investment in sales and marketing and
additional headcount in the R&D and Customer Support teams
-- Balance sheet strengthened - Total Shareholders' Equity of GBP4,483,922 (2015: GBP699,499)
-- Cash and cash equivalents at 31 December 2016 of GBP3,572,794 (2015: GBP273,486)
David Guyatt, Chief Executive Officer, commented:
"Overall we are pleased with Osirium's performance for the 14
months ended 31 December 2016. Whilst our revenue growth rate in
2016 was slower than we had originally expected, the Group
outperformed the other performance targets set by the Board for the
period, both operationally and financially, when compared with the
prior period. We have also been careful to deploy the proceeds from
our IPO in a controlled manner.
The global cyber-security market continues to grow and, despite
an increasingly competitive market, we believe Osirium is well
positioned and sufficiently differentiated to take advantage of
this opportunity through continued product innovation and
marketing. Our primary investment focus remains on driving growth
in our UK and global distribution network and augmenting the team
which manages our channel partners and direct customer
relationships.
2016 has provided a strong foundation for the year ahead. As
evidenced by our recent new customer wins, we are now seeing the
signs of significant progress."
- Ends -
For further information:
Osirium Technologies plc Tel: 44 (0) 118 324
2444
David Guyatt, Chief Executive
Officer
Rupert Hutton, Chief Financial
Officer
www.osirium.com
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886
(Nominated Adviser and 2500
Broker)
Andrew Godber / Peter Steel
- Corporate Finance
Charles Leigh-Pemberton
- Corporate Broking
Yellow Jersey PR Tel: +44 (0) 7764 947137
(Financial PR)
Sarah Hollins
The information communicated in this announcement is inside
information for the purposes of Article 7 of Market Abuse
Regulation 596/2014 ("MAR").
Photography
Photography is available, please contact Sarah Hollins at
sarah@yellowjerseypr.com
Notes to Editors
Osirium Technologies plc (AIM: OSI.L), is a UK based
cyber-security software provider. Osirium protects critical IT
assets, infrastructures and devices by preventing targeted
cyber-attacks from directly accessing Privileged Accounts, removing
unnecessary access and powers of Privileged Account users,
deterring legitimate Privileged Account users from abusing their
roles and containing the effects of a breach if one does
happen.
Osirium has defined and delivered what the Directors view as the
next generation PAM (Privileged Access Management) solution. The
team has developed the concept of Virtual Air Gap to separate users
from passwords, with Osirium's Privileged Task Management module
further strengthening Privileged Account security and delivering
impressive return on investment benefits for customers.
Founded in 2008 and with its headquarters in Reading, UK, the
Group was admitted to AIM in April 2016. For further information
please visit www.osirium.com
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
We are very pleased to report the final results for the 14
months ended 31 December 2016, the first following the Group's
admission to AIM in April 2016. Since becoming a public company,
our corporate profile has increased considerably and the Group has
seen growing and positive recognition and a strengthening pipeline,
both for direct sales and through our channel partners.
The Group has made significant progress during the period. The
focus since our IPO has been to lay the foundations to support our
UK and global distribution network and build a team which manages
channel partner and direct customer relationships.
The Board is pleased by the operational and commercial progress
achieved during the 2016 period under review. Activity levels for
the 14 months ended 31 December 2016 were in line with the Board's
expectations, whilst the Company's administrative costs were lower
than previously anticipated.
Osirium has taken time to find the right team and, as a result,
the revenue growth rate in 2016 was slower than the Board
originally expected. With the foundations of the team now firmly in
place, the Board will remain disciplined and selective with future
recruitment and expansion of the Group's overhead base, and
believes that Osirium's strengthened sales, marketing and delivery
teams will provide the momentum to accelerate trading in 2017 and
beyond.
Results
Osirium's loss before tax for the 14 months to 31 December 2016
was GBP1,812,843, compared with a loss before tax of GBP857,052 for
the year ended 31 October 2015. Revenue was GBP477,577 for the 14
months compared with GBP290,150 for the prior 12 month period of
2015, however SaaS revenue was up 64% to GBP441,000 versus the same
period in 2015. The balance of revenue in each period was generated
by chargeable professional services. Invoiced sales (bookings),
increased 102% to GBP540,906 (2015: GBP267,722) during the period.
As at 31 December 2016, the Group had cash balances of GBP3,572,794
(2015: GBP273,486).
The Group continued to increase its investment in research and
development, with GBP915,476 capitalised in the period (2015:
GBP404,385), an increase of 126%. This investment has been focused
on refining and further developing our next generation Privileged
Access Management solution PXM proposition and working to meet and
exceed new and prospective clients' expectations. The Group expects
SaaS revenues to increase further during 2017 and, with the
addition of extra consultancy resource, increased service revenues
are also being targeted.
Strategy and market
The growth in demand for mid-market cyber-security services,
predicted by Gartner and other industry analysts, is beginning to
emerge resulting in the acceleration of new customer enquiries and
partner acquisitions for Osirium. Privileged accounts remain
critical targets for cyber-attacks, and Osirium protects critical
IT assets and manages Privileged Account activities, denying
intruders a foothold. As Privileged Access Management moves from
being a technology only considered by large corporations to a
solution that mid-sized businesses can benefit from, a variety of
regulatory compliance standards are helping to drive mainstream and
mid-sized business adoption. Now, companies with 200 to 2,000
employees are looking at Privileged Access Management as a way to
protect their internal layers of security, and this presents a
significant greenfield opportunity for the Group.
Organisations are increasingly realising the importance of
identifying, controlling and minimising the risks from within their
enterprise, even the common faux pas of authentic system
administrators unwittingly performing over privileged tasks without
the necessary authority or skills to safely do so. Osirium has a
100% focus on the Privileged Access Management market, an
increasingly important part of the larger identity access
management market.
The key demand drivers for Privileged Access Management
solutions hitherto are expected to continue into the future:
-- Scale and frequency of cyber-attacks
-- Damage to corporate reputations and erosion of public confidence
-- Cyber-security focused legislation and regulation
-- Outsourcing of IT functions
-- Privileged Accounts will remain critical targets for cyber-attacks
-- Increasing number of internet connected devices Internet of Things(IOT)
Market review
The market outlook undertaken by TechNavio (a leading market
research company with global coverage) suggests that the Privileged
Access Management market is set to grow at a compound annual growth
rate of approximately 20%, as organisations' buying habits shift
further away from completed projects to secure the perimeter i.e.
firewalls, towards those that add internal layers of security.
TechNavio also expects that the anticipated growth will be
supported by the significant greenfield opportunity in the
mid-market. According to market reference point Gartner, market
growth remains robust. Additionally, the overall Privileged Access
Management market is still very much dominated by the sale of
on-premises software. Gartner estimates that the combined revenue
of all Privileged Access Management vendors in 2015 was $690
million, representing a 33% growth rate over a 2014 market size of
$521 million.
Executing our strategy
One of the purposes of the IPO was to access growth capital.
The following strategic priorities have been identified by
Osirium's senior leadership team:
- Completing a senior management team with the knowledge and
experience of driving successful businesses at a truly
international level.
- Building a robust and growing pipeline of prospects and
customers, in the wider mid-market space as well as meeting the
more demanding operational requirements of high-end enterprises and
the unabating requirements of Managed Service Providers ("MSPs")
and Management Security Service Providers ("MSSPs").
- Changing an "opportunistic" sales team into a group focused on
helping the Company deliver its long term strategic objectives,
transitioning sales to a 100% channel-led mid-market fulfilment
focus, whilst looking to the Group's high-end enterprise and MSSP
engagement for driving scale resilience and service-led
innovation.
- Upscaling our marketing team, nurturing and evolving the brand
into a confident and assertive world-beating icon, projecting
global leadership ambitions that are real and measurable.
- Transforming the R&D team from a tactical start-up group
into a world-class cyber-security IP factory. Innovative
cyber-security vendors need to balance mid-market "reactive" needs
with the "upper-registers" of strategic, scalable and resilient
functionality demanded by Enterprise-class and MSSP customers.
- Implementing a Global Technical Support culture and
infrastructure that is an equally critical and defining service
which will help customers and partners alike decide that Osirium is
the right team to work with.
- The Company has three pending patent applications for
inventions related to Osirium's PAM technology.
New customer acquisitions in existing and new markets
Osirium's management team has extensive experience in
successfully driving mid-market channels and partner programs to
scale up demand and fulfilment volumes, and our support services
team has worked hard this year to establish an expanding global
support infrastructure that is capable of providing 24/7
follow-the-sun support to our customers and partners, wherever they
are in the world. Fully committed to our channels, our solution is
designed with simplicity and ease of deployment in mind, allowing
our partners to quickly realise meaningful technical progress when
deploying at their customer sites.
Using established routes to market will deliver the required
footprint for growth, and the Group's recent decision to engage all
customers through our channels is expected to have an accelerated
effect on customer acquisitions. Regional partnerships are now in
place with proven distribution partners including Distology in the
UK and Spectrami covering the MENA region. As a result, the Group
expects that technology resellers will take Osirium's Privileged
Access Management solution to their clients as an incremental and
valued proposition as they seek additional technologies to drive
new revenue opportunities.
Another important route to market exists in the MSSP market
segment. The Managed Security Service Provider market size is
estimated to grow from USD17 Billion in 2016 to USD34 Billion by
2021, at a Compound Annual Growth Rate (CAGR) of 14.6%. With a
number of MSSP partners already engaged, the Group sees this market
opportunity as a key area for new engagements and relationships to
develop as many providers as possible and invest in their Security
Operations Centres (SOC) and Data Centres to differentiate their
service offerings.
Building on the Group's reputation with its existing customers,
which include blue chip enterprises in the defence and
telecommunications industries, MSSPs and the financial services
sector, Osirium plans to continue its aggressive sales and
marketing strategy and expand into these sectors as well as new
industries.
In August 2016, the Group announced a significant contract win
with a leading global asset management company within the financial
services industry. With daily conference calls and quarterly senior
management review meetings the project is progressing well. In
addition, a pilot contract was signed with a UK based contextual
surveillance company in October 2016 which was fully integrated and
operational by December 2016.
Osirium has, in recent months, also strengthened its management
team with two senior hires. Stephen Roberts joined Osirium as
Marketing Director and Tim Ager as Sales Director in November 2016
and January 2017 respectively. Both bring a wealth of sector
knowledge; Tim has over nineteen years' experience in the IT
security market and was formerly European Managing Director and VP
of Sales at Celestix Networks, a leading provider of secure remote
access and identity management solutions. Stephen has spent over 20
years working in senior strategic marketing roles and was
previously Marketing Director at Wallix, a Privileged Access
Management Company. He is particularly experienced in building
brand momentum for emerging cyber technology companies.
In March 2017, the Group announced that its market leading
Privileged Access Management (PAM) product is now available in the
Asia Pacific region (APAC). Hugh Sunderland and Mike Stephens were
appointed as Business Development partners for the region which was
closely followed by an agreement signed with CHJ Technologies in
Singapore. In addition, Distology, a value-added distributor in the
IT security field, was appointed to strengthen Osirium's UK channel
distribution presence. In February 2017, Duncan Fiskin was
appointed Business Development Director for the Middle East North
Africa region (MENA) followed shortly by the Group signing a
distribution agreement with Spectrami in the region. Spectrami is a
Dubai based value added distributor in the MENA region which is
armed with the innovative approach to channel empowerment through
knowledge sharing and skill building.
The Group has also recently appointed a Business Development
Director in Germany to address the opportunity in this significant
market.
In April 2017, we took the decision to move to larger offices in
Theale near Reading, also the location of our current head office,
to accommodate our growing team.
Finally, we are pleased to announce that the first few months of
the current financial year have included three new customer wins -
one of the world's largest insurance companies, our first sale into
a critical national infrastructure business and a retail mobile
technology provider.
Growth within the existing client base
Through the delivery of excellent support and thorough account
management, Osirium continues to grow its position within existing
key accounts. Customer retention has remained strong over the past
trading period with all customers retained and many expanding the
use of the Osirium products.
Sales and marketing investment
The management team has invested in enhancing the current skills
base and technology to scale our sales and marketing processes. We
have the depth of experience to realise the benefits of best
practice in driving sales momentum through marketing automation
tools. The Group has invested in technology that efficiently
manages prospects through a nurturing and lead scoring process,
evolving them through to conversion.
Also, through a significant investment in the new Osirium.com
website, the goal has been set to attract and drive new prospects
to a platform that now reflects the global ambitions of Osirium.
The reach of this new digital offer has also extended to present a
truly global presence but delivering a local connection wherever we
do business. The new platform fully integrates into the sales
process and complements the attract phase of all engagements.
Delivering on plans at IPO
Following completion of the IPO, we have been able to execute on
those critical deliverables stated in the Admission Document,
ultimately with a view to establishing Osirium as the dominant
cyber-security brand in the UK. By 2018, the Group fully expects to
have built a robust self-sufficient and loyal channel to complement
the existing direct sales model. Although this has meant that
initial bookings will be less, due to commissions to the channel,
we believe that this route will increase our overall ability to
scale and maintain our revenue growth in the medium to long term.
The channel approach will allow us to take advantage and accelerate
the take-up of Proof of Concepts and deployments so as to meet our
growth expectations, and take advantage of this market opportunity
as forecast by industry analysts, Gartner and Kuppinger Cole.
The Group has also completed the transformation of our R&D
and Software Development with a successful recruitment campaign
from a single start-up group of seven, to four teams with a total
of 23 engineers.
Board and employees
In September 2016, the Group strengthened the Board and
appointed Simon Hember, Founder and Managing Director of Acumin
Consulting, a cyber-security recruitment business, as a
Non-Executive Director. In December 2016, John Townsend stepped
down from the Board having served as a Non-Executive Director since
2011. We are grateful to John for his very significant and valuable
contribution to the Company's early development.
Osirium, like any organisation, is only as good as its
employees. On behalf of the Board, we would like to thank the whole
team for their continued support and hard work.
Summary and Outlook
Overall we are pleased with Osirium's performance for the 14
months ended 31 December 2016. Whilst our revenue growth rate in
2016 was slower than we had originally expected, the Group
outperformed the other performance targets set by the Board for the
period, both operationally and financially when compared with the
prior period. We have also been careful to deploy the proceeds from
our IPO in a controlled manner.
The global cyber-security market continues to grow and, despite
an increasingly competitive market, we believe Osirium is well
positioned and sufficiently differentiated to take advantage of
this opportunity through continued product innovation and
marketing. Our primary investment focus remains on driving growth
in our UK and global distribution network and augmenting the team
which manages our channel partners and direct customer
relationships.
2016 has provided a strong foundation for the year ahead. As
evidenced by our recent new customer wins, we are now seeing the
signs of significant progress.
Simon Lee David Guyatt
Chairman Chief Executive
3 May 2017 Officer
3 May 2017
FINANCIAL REVIEW
Overview
For the fourteen month period ended 31 December 2016, revenue
was GBP477,577, an increase of 65% (compared with the 12 months
ended 31 October 2015: GBP290,150).
Bookings for the fourteen month period ended 31 December 2016,
represented by total invoiced sales, were GBP540,836, an increase
of 102% compared with the twelve months ended 31 October 2015 where
bookings were GBP267,722. Part of the increase was due to the
extension of the accounting period by two months, but the majority
due to greater customer engagement.
The fourteen month loss before tax for the Group was
GBP1,812,843, an increase from a loss of GBP857,052 for the twelve
month period to 31 October 2015. The losses of the Group have
increased following significant investment in increasing headcount
and activity levels in our sales, marketing and engineering
departments.
Our balance sheet strengthened through the IPO with total
Shareholders' Equity of GBP4,483,922 (2015: GBP699,499).
Revenue analysis
Revenue for the fourteen month period ended 31 December 2016 was
GBP477,577 (2015: GBP290,150). Bookings in the first six months of
the period ended 31 December 2016 were GBP206,000 compared with
GBP334,836 for the second eight month period demonstrating the
increasing momentum felt within the business as we add more
customers.
Our deferred revenues as at 31 December 2016 were GBP275,650,
compared with deferred revenues at the end of October 2015 of
GBP212,392, helping provide a degree of visibility and certainty
over our future revenues.
Taxation
The Group has benefited from the tax relief given on development
expenditure, which has resulted in a research and development tax
credit of GBP290,000 being claimed for the fourteen month period to
31 December 2016, compared with GBP120,430 for the previous 12
month period to 31 October 2015. This further demonstrates the
investment made in the Company's innovative cyber-security
products.
Loss per share
Loss per share for the fourteen month period on both a basic and
fully diluted basis was 13p. In the prior twelve month period the
basic and diluted loss per share was 7p.
Results and dividend
The Directors are not recommending the payment of a final
dividend (2015: GBPnil).
Research and development & capital expenditure
The Group spent GBP915,476 (2015: GBP404,385) on direct staff
and contractor costs for research and development, of which all was
capitalised in both years.
This expenditure relates to the development of new and enhanced
software offerings. The Group invests in new product development
and the continual modification and improvement of its existing
products to meet technological advances, customer and new market
requirements of the fast paced cyber-security market.
Future developments
The Group has embarked upon a strategy which will extend its
activities to the provision of cyber-security services into new
areas such as financial services, critical national infrastructure
and other market sectors as the need for Osirium's software is
sector agnostic, in addition to developing its activities outside
of the UK.
Cash flow
At 31 December 2016 the Group had cash balances of GBP3,572,794
(2015: cash balances of GBP273,486). Operating cash outflow for the
year was GBP789,443 (2015: operating cash outflow was
GBP132,631).
Key performance indicators
The Group's progress against its strategic objectives is
monitored by the Board of Directors by reference to key performance
indicators ("KPIs"), as mentioned in the Chairman's and Chief
Executive's statement. Progress made is a reflection of the
performance of the business since flotation and the Group's
achievement against its strategic plans.
The Group's major financial KPIs are bookings, revenue, new
channel partners signed up, new customer acquisition, retaining and
growing customer renewals, the number of proof of concepts and
software evaluations installed, increasing at any one time.
Bookings are monitored on a monthly basis and reported in detail
at board meetings. Bookings have increased by 102% to GBP540,836
for the 14 month period to 31 December 2016 from GBP267,722 for the
12 months ended 31 October 2015.
As a result of the increase in booking, the revenue KPI is
performing well, with total revenue up 165% to GBP477,577 (2015:
GBP290,150), for the periods under review.
Non-financial KPIs include new channel partners and, with a UK
distributor and two overseas distributors signed up to date and a
business development director now appointed in Germany, the Board
is pleased with this progress. A further KPI is the retention of
existing customers leading to the renewal of sales contracts. All
customers were retained in the period and new customers added, with
increasing contract values from our existing customer base. Proof
of concepts have also increased now that the Group has more
resources to support this activity, not only in the UK but with our
fledgling partners overseas.
During the year and after the year end we signed up Distology as
a distributor in the UK and Spectrami in MENA and CHJ Technologies
in Singapore, for further details please see the Chairman's and
Chief Executive's statement. The Group did not lose a customer
during the period and each significant renewal was at a higher
level than the year before. With the increases in sales and
marketing and market awareness, the number of proof of concepts
being demanded is increasing, not only in the UK, but also in our
identified overseas markets.
The Group also measures and monitors brand recognition and
momentum increases in the Osirium name as we continue to build a
global brand. Brand recognition includes monitoring Osirium's
Search Engine Optimisation Position and quarterly growth in
qualified sales leads with a quantified 'call to action'.
Principal Risks and uncertainties
Apart from the normal commercial and economic risks facing any
UK based business looking to not only become the dominant company
in its home market, but also expand into overseas territories, the
major risks to the Group are the:
-- loss of a major client and supporter;
-- loss of a relationship with a major supplier; and
-- development of new technologies which may adversely impact
the Group's proprietary software.
In order to mitigate these risks, the Group:
-- has specific relationship management systems in place for
managing both new and existing client and supplier relationships;
and
-- undertakes research and development into various technologies on an ongoing basis.
Other risks include:
Competitor risk
The market for Cyber security software is becoming increasingly
competitive. To mitigate against this risk, management is of the
view that the years of investment that preceded the recent maturing
of the Privileged Access Management market and the continued
investment in the product will maintain Osirium's leadership
position in this market.
Commercial relationships
The Osirium software products are developed and released using
open source. To mitigate against this risk, all elements and
components used within the software are kept under constant review.
The Group continues to expand the various sales channels and
reseller network, so the Group is not dependent on any one
partner.
Personnel/key executives
The Group's future performance is substantially dependent on the
continued services and performance of its Directors and senior
management as well as its ability to attract and retain suitably
skilled and experienced personnel in the future.
Although certain key executives and personnel have joined
Osirium since flotation, there can be no assurance that the Group
will retain their services. The loss of any key executives or
personnel may have a material adverse effect on the business,
operations, relationships and/or prospects of the Group.
The Company believes that it has the appropriate incentivisation
structures to attract and retain the calibre of employees necessary
to ensure the efficient management and development of the Group.
However, any difficulties encountered in hiring appropriate
employees and the failure to do so may have a detrimental effect on
the trading performance of the Group. The ability to attract new
employees with the appropriate expertise and skills cannot be
guaranteed.
Customer attraction, retention and competition
The Group's future success depends on its ability to increase
sales of its products to new prospects. The rate at which new and
existing end customers purchase products and existing customers
renew subscriptions depends on a number of factors, including the
efficiency of the Group's products and the development of the
Group's new offerings, as well as factors outside of the Group's
control, such as end customers' perceived need for security
solutions, the introduction of products by the Group's competitors
that are perceived to be superior to the Group's products, end
customers' IT budgets and general economic conditions. A failure to
increase sales due to any of the above could materially adversely
affect the Group's financial condition, operating results and
prospects. The Group's success depends on its ability to maintain
relationships and renew contracts with existing customers and to
attract and be awarded contracts with new customers. A substantial
portion of the Group's future revenues will be directly or
indirectly derived from existing contractual relationships as well
as new contracts driven at least in part by the Group's ability to
penetrate new partners, verticals and territories. The loss of key
contracts and/or an inability to successfully penetrate new
verticals or deploy its skill sets into new territories could have
a significant impact on the future performance of the Group.
Reputation
The Group's reputation, regarding the service it delivers, the
way in which it conducts its business and the financial results
which it achieves, are central to the Group's future success.
The Group's services and software are complex and may contain
undetected defects when first introduced, and problems may be
discovered from time to time in existing, new or enhanced product
iterations. Undetected errors could damage the Group's reputation,
ultimately leading to an increase in the Group's costs or reduction
in its revenues.
Other issues that may give rise to reputational risk include,
but are not limited to, failure to deal appropriately with legal
and regulatory requirements in any jurisdiction (including as may
result in the issuance of a warning notice or sanction by a
regulator or an offence (whether, civil, criminal, regulatory or
other) being committed by a member of the Group or any of its
employees or directors), money-laundering, bribery and corruption,
factually incorrect reporting, staff difficulties, fraud (including
on the part of customers), technological delays or malfunctions,
the inability to respond to a disaster, privacy, record-keeping,
sales and trading practices, the credit, liquidity and market risks
inherent in the Group's business.
Further reputational risks include failure to meet the
expectations of the customers, operators, suppliers, employees and
intellectual property and technology. The Group's technology is
primarily comprised of software and other code ("Software"). Some
of the Software has been developed internally and is owned by the
Group. Also, some of the Software has been developed by third
parties that have licensed rights in the Software to the Group or
provided access under free and open source licence. However, a
significant proportion of the Software has been developed by third
parties and is provided to the Group under licence. It is not
uncommon for any company's technology, particularly where it is
primarily embodied in Software, to comprise both owned and licensed
code. This, nevertheless, means that the Group's continuing right
to use such Software is dependent on the relevant licensors
continuing to license Software to the Group. Again, as is usual,
such agreements may be terminated by the licensors due to a breach
of their terms by the Group. Any failure by the Group to comply
with the terms of the licences granted could, therefore, result in
such licences being terminated and the Group no longer being
entitled to continue to use the Software in question. Also, use
outside of the terms of any relevant licence could expose the Group
to legal action for infringement of the rights of the
licensor(s).
Further, and in any event, the Group may not have adequate
measures in place to ensure that its use of third party software
complies with all terms under which such software has been licensed
to the Group.
Operations
The Group's facilities could be disrupted by events beyond its
control such as fire and other issues. The Group undertake nightly
back ups in 'the cloud' and prepares recovery plans for the most
foreseeable situations so that its business operations would be
able to continue.
This report was approved by the Board on 2 May 2017
Rupert Hutton
Chief Financial Officer
3 May 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
14 month
Period Year
ended ended
31 Dec 16 31-Oct-15
Notes GBP GBP
CONTINUING OPERATIONS
Revenue 477,577 290,150
Administrative
expenses (2,300,074) (1,137,288)
----------------------- ------------
OPERATING
LOSS (1,822,497) (847,138)
Finance costs - (9,986)
Finance income 9,654 72
----------------------- ------------
LOSS BEFORE
TAX (1,812,843) (857,052)
Income tax
credit 2 453,288 121,046
----------------------- ------------
LOSS FOR THE PERIOD
ATTRIBUTABLE TO
THE OWNERS OF OSIRIUM TECHNOLOGIES
PLC (1,359,555) (736,006)
======================= ============
Loss per share from continuing operations:
Basic and diluted loss per share 3 (13p) (7p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
31-Dec-16 31-Oct-15
Notes GBP GBP
ASSETS
NON-CURRENT ASSETS
Intangible
assets 4 1,134,452 793,256
Property, plant
& equipment 44,315 6,439
------------ ------------
CURRENT
ASSETS
Trade and other
receivables 380,891 154,647
Cash and cash
equivalents 3,572,794 273,486
------------ ------------
3,953,685 428,133
------------ ------------
TOTAL ASSETS 5,132,452 1,227,828
============ ============
LIABILITIES
CURRENT LIABILITIES
Trade and other
payables 648,530 365,041
------------ ------------
648,530 365,041
------------ ------------
NON-CURRENT LIABILITIES
Deferred
tax - 163,288
------------ ------------
- 163,288
------------ ------------
TOTAL LIABILITIES 648,530 528,329
------------ ------------
EQUITY
SHAREHOLDERS
EQUITY
Called up share
capital 5 103,944 65,482
Share premium 5,008,619 -
Share option
reserve 337,559 240,662
Merger reserve 4,008,592 4,008,592
Retained
earnings (4,974,792) (3,615,237)
------------ ------------
TOTAL EQUITY ATTRIBUTABLE
TO THE
OWNERS OF OSIRIUM
TECHNOLOGIES PLC 4,483,922 699,499
------------ ------------
TOTAL EQUITY AND LIABILITIES 5,132,452 1,227,828
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called
up Share
share Retained Share Merger option Total
capital earnings premium reserve reserve equity
GBP GBP GBP GBP GBP GBP
Balance at 1
November 2014 65,482 (2,879,231) - 2,922,100 184,263 292,614
Changes
in Equity
Merger reserve
adjustment - - - 1,086,492 - 1,086,492
Loss for the
period - (736,006) - - - (736,006)
Share option
charge - - - - 56,399 56,399
-------- ------------ ---------- ---------- -------- ------------
Balance at 31
October 2015 65,482 (3,615,237) - 4,008,592 240,662 699,499
-------- ------------ ---------- ---------- -------- ------------
Changes
in Equity
Issue of share
capital 38,462 - 5,961,537 - - 5,999,999
Issue costs - - (952,918) - - (952,918)
Loss for the
period - (1,359,555) - - - (1,359,555)
Share option
charge - - - - 96,897 96,897
-------- ------------ ---------- ---------- -------- ------------
Balance at 31
December 2016 103,944 (4,974,792) 5,008,619 4,008,592 337,559 4,483,922
======== ============ ========== ========== ======== ============
CONSOLIDATED STATEMENT OF CASHFLOWS
14 month
Period
ended Year ended
31-Dec-16 31-Oct-15
Notes GBP GBP
Cash flows from operating
activities
Cash used in operations 6 (909,873) (257,217)
Interest
paid - (9,986)
Tax received 120,430 134,572
---------- -----------
Net cash used in operating
activities (789,443) (132,631)
---------- -----------
Cash flows from investing
activities
Purchase of intangible
fixed assets (915,476) (404,385)
Purchase of tangible fixed
assets (52,508) (2,944)
Interest
received 9,654 72
---------- -----------
Net cash used in investing
activities (958,330) (407,257)
---------- -----------
Cash flows from financing
activities
Share issue (net of issue
costs) 5,047,081 762,753
---------- -----------
Net cash from financing
activities 5,047,081 762,753
---------- -----------
Increase in cash and cash
equivalents 3,299,308 222,865
Cash and cash equivalents
at beginning of period 273,486 50,621
---------- -----------
Cash and cash equivalents
at end of period 3,572,794 273,486
========== ===========
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The above audited financial information in this announcement
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. The above figures for the period ended 31
December 2016 are an abridged version of the Company's accounts
which have been reported on by the Company's auditor but have not
been dispatched to shareholders or filed with the Registrar of
Companies. These accounts received an audit report which was
unqualified and did not include a statement under section 498(2) or
section 498(3) of the Companies Act 2006.
Merger Accounting
On 6 April 2016 Osirium Technologies plc acquired Osirium
Limited. This transaction did not meet the definition of a business
combination as set out in IFRS 3. It is noted that such
transactions are outside the scope of IFRS 3 and there is no other
guidance elsewhere in IFRS covering such transactions. IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors,
requires that where IFRS does not include guidance for a particular
issue, the Directors may also consider the most recent
pronouncement of other standard setting bodies that use a similar
conceptual framework to develop accounting standards when
developing an appropriate accounting policy. In this regard, it is
noted that the UK Accounting Standards Board has, in issue, an
accounting standard covering business combinations (FRS 102 Section
19) that permits the use of the merger accounting principles for
such transactions. The Directors have therefore chosen to adopt
these principles and the financial information has been prepared as
if Osirium Limited had been owned and controlled by the company
throughout the year ended 31 October 2015 and the 14 month period
ended 31 December 2016. Accordingly, the assets and liabilities of
Osirium Limited have been recognised at their historical carrying
amounts, the results for the periods prior to the date the company
legally obtained control have been recognised and the financial
information and cash flows reflect those of Osirium Limited. The
amount recognised in equity is based on the historical carrying
amounts recognised by Osirium Limited. However, the share capital
balance is adjusted to reflect the equity structure of the
outstanding share capital of the Company, and any corresponding
differences are reflected as an adjustment to a merger reserve.
Internally-generated development intangible assets
An internally-generated development intangible asset arising
from Osirium's product development is recognised if, and only if,
Osirium can demonstrate all of the following:
-- The technical feasibility of completing the intangible asset
so that it will be available for use of sale
-- Its intention to complete the intangible asset and use or sell it
-- Its ability to use or sell the intangible asset
-- How the intangible asset will generate probable future economic benefits
-- The availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset
-- Its ability to measure reliably the expenditure attributable
to the intangible asset during its development
Internally-generated development intangible assets are amortised
on a straight-line basis over their useful lives. Amortisation
commences in the financial year of capitalisation. Where no
internally-generated intangible asset can be recognised,
development expenditure is recognised as an expense in the period
in which it is incurred. The amortisation cost is recognised as
part of administrative expenses in the statement of comprehensive
income.
Development costs - 20% per annum, straight line
Impairment of tangible and intangible assets
At each statement of financial position date, Osirium reviews
the carrying amounts of its assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). Where the asset does not generate cash flows that
are independent from other assets, Osirium estimates the
recoverable amount of the cash-generating unit to which the asset
belongs. An intangible asset with an indefinite useful life is
tested for impairment at least annually and whenever there is an
indication that the asset may be impaired.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash- generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
Going concern
As part of their going concern review the Directors have
followed the guidelines published by the Financial Reporting
Council entitled "Guidance on the Going Concern Basis of Accounting
and Reporting on Solvency and Liquidity Risks (2016)".
The Directors have prepared detailed financial forecasts and
cash flows looking beyond 12 months from the date of these
Financial Statements. In developing these forecasts the Directors
have made assumptions based upon their view of the current and
future economic conditions that will prevail over the forecast
period.
On the basis of the above projections, the Directors are
confident that Osirium has sufficient working capital to honour all
of its obligations to creditors as and when they fall due.
Accordingly, the Directors continue to adopt the going concern
basis in preparing the Financial Statements.
NOTES TO THE ACCOUNTS
2. INCOME TAX
Analysis of tax
income
14 month
Period
ended Year ended
31-Dec-16 31-Oct-15
GBP GBP
Current Tax:
Tax (290,000) (120,430)
Adjustment for
prior year tax - -
---------- -----------
Total current
tax (290,000) (120,430)
Deferred tax (163,288) (616)
---------- -----------
Total credit in the
statement of (453,288) (121,046)
========== ===========
comprehensive
income
========== ===========
Within the overall tax credit contained in the statement of
comprehensive income there has been during the period to 31
December 2016 successful claims made to HM Revenue & Customs in
connection with Research and Development tax credits being claimed
for the current period.
Factors affecting the tax income
Tax on the loss before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to
losses of the group as follows:
14 month
Period
ended Year ended
31-Dec-16 31-Oct-15
GBP GBP
Loss before
tax (1,812,843) (857,052)
------------ -----------
Loss before tax multiplied
by the applicable
Rate of corporation tax
of 20% (2015: 20%) (362,569) (171,410)
Expenses not deductible
for tax purposes 664 7,287
Unrelieved tax
losses 361,905 164,123
R&D tax credit
relief 290,000 120,430
Deferred tax 163,288 616
------------ -------------
Tax credit for
the period 453,288 121,046
============ ===========
As at 31 December 2016 the group had unutilised tax losses of
GBP2,359,884 (31 October 2015: GBP1,194,557) available to offset
against future profits. A deferred tax asset has been recognised in
respect of tax losses carried forward to the extent that it offsets
the deferred tax liabilities in respect of research and development
credits and accelerated capital allowances.
Factors affecting future tax charges
The UK corporation tax rate has reduced to 19% from 1 April 2017
and the UK Government has indicated that it intends to reduce the
main rate of corporation tax to 17% from 1 April 2020.
3. EARNINGS PER SHARE
14 month
Period
ended Year ended
31-Dec-16 31-Oct-15
Weighted average
no. of shares in
issue 10,394,255 10,394,255
------------ -----------
Weighted average no. of shares for
the purposes of basic earnings per
share 10,394,255 10,394,255
------------ -----------
Effect of dilutive potential
ordinary shares:
Share options - -
------------ -----------
Weighted average no. of shares for
the purposes of diluted earnings
per share 10,394,255 10,394,255
------------ -----------
Basic losses attributable
to equity shareholders (1,359,555) (736,006)
------------ -----------
Losses for the purposes of diluted
earnings per share (1,359,555) (736,006)
------------ -----------
Basic loss per
share (13p) (7p)
============ ===========
Diluted loss
per share (13p) (7p)
============ ===========
Earnings per share has been calculated using the following
methodology:
Basic losses per share are calculated by dividing the losses
attributable to ordinary shareholder by the number of weighted
average ordinary shares during the period.
At 31 December 2016, there were 1,723,958 share options
outstanding that could potentially dilute basic earnings or losses
per share in the future, but are not included in the calculation of
diluted losses per share because they are anti-dilutive for the
periods presented.
4. INTANGIBLE FIXED ASSETS
Development
Costs
GBP
Cost
At 1 November
2014 1,906,186
Additions 404,385
------------
At 1 November
2015 2,310,571
Additions 915,476
------------
Cost c/f as at 31
December 2016 3,226,047
============
Amortisation:
At 1 November
2014 1,110,473
Charge for the
year 406,842
------------
At 1 November
2015 1,517,315
Charge for the
period 574,280
------------
Amortisation as at
31 December 2016 2,091,595
============
Carrying
Amount:
At 31 December
2016 1,134,452
============
At 31 October
2015 793,256
============
All development costs are amortised over their estimated useful
lives, which is on average 5 years.
Amortisation is charged in full in the financial year of
capitalisation.
All amortisation has been charged to administrative expenses in
the statement of comprehensive income and total comprehensive
loss.
5. CALLED UP SHARE CAPITAL
The company was incorporated on 3 November 2015 with 100 shares
of 1p each. On 6 April 2016 6,548,102 1p shares were issued in
consideration for the acquisition of Osirium Limited. On 15 April
2016 3,846,153 1p shares were issued on listing of the company on
the AIM exchange at a price of GBP1.56 per share for a total
consideration of GBP6m.
Allotted, issued
and fully paid
No. of
Nominal Value GBP0.01 per share shares GBP
On incorporation on 3 November
2015 100 1
Shares issued as consideration
for Osirium Limited on 6 April
2016 6,548,102 65,481
Shares issued on listing on AIM
Exchange on 15 April 2016 3,846,153 38,462
----------- --------
10,394,355 103,944
=========== ========
Voting rights
Shares rank equally for voting purposes. Each member will have
one vote per share held.
Dividend rights
Each share ranks equally for any dividend declared.
6. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED
FROM OPERATIONS
Group
14 month
Period
ended Year ended
31-Dec-16 31-Oct-15
GBP GBP
Loss before income
tax (1,812,843) (857,052)
Depreciation charges 14,632 6,026
Amortisation charges 574,280 406,842
Share option
charge 96,897 56,399
Finance costs - 9,986
Finance income (9,654) (72)
------------ -----------
(1,136,688) (377,871)
(Increase)/decrease in trade
and other receivables (56,674) 49,813
Increase/(decrease) in trade
and other payables 283,489 70,841
------------ -----------
Cash used in operations (909,873) (257,217)
============ ===========
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSAFMEFWSEII
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May 03, 2017 02:00 ET (06:00 GMT)
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