TIDMOSI
RNS Number : 8515L
Osirium Technologies PLC
24 April 2018
For immediate release
24 April 2018
Osirium Technologies plc
("Osirium" or "Group")
Final Results
Osirium Technologies plc (AIM: OSI.L), a leading cyber-security
SaaS vendor, built on robotic process automation (RPA) technology,
today announces its final results for the 12 months ended 31
December 2017.
Operational highlights
-- Strong progress made by building sales momentum with existing
and new customers in the UK and abroad, demonstrated by invoiced
sales up 123% and total revenues up 63% YoY
-- A number of new blue chip customers across several new industry verticals
-- A number of upsells and renewals reflecting high customer
retention and increasing awareness of Privileged Access Management
("PAM")
-- Our largest contract win to date with a leading global asset
management company renewed for a further 12 months, with the
project progressing according to plan
-- Largest international contract to date with one of the
leading telecommunications companies in the Middle East
-- Senior sales and marketing team in place and business
development directors appointed in Middle East and Germany -
already producing results
-- Signed distribution and reselling agreements with multiple
channel partners globally including Progress Distribution (UK),
Adyton (Germany, Austria & Switzerland) and Spectrami (Middle
East)
-- Osirium named as a 'Cool Vendor' by Gartner for Identity & Fraud Management
Post year end
-- Momentum has continued to grow in the first few months of 2018
-- New customers signed up in Q1
-- Successful Placing raising GBP4.2 million in March 2018, with existing and new shareholders
-- Agreement signed with Progress Distribution in the UK
-- Partnership with EB2BCOM to supply software in Asia Pacific
-- Contract win with a global online fashion retailer
-- Accelerating traction within the NHS with 3 new contract wins with the NHS
-- PxM Platform now available in the Microsoft Azure Marketplace
Financial highlights
-- Total Revenue of GBP647,580 (2016 12m period: GBP397,678), up 63% YoY
-- Total Bookings of GBP876,323 (2016 12m period: GBP393,826), up 123% YoY
-- Operating loss of GBP2,296,814 (2016: GBP1,822,497), in line
with Management expectations and primarily reflecting increased
investment in sales and marketing and additional headcount in the
R&D and Customer Support teams
-- Cash and cash equivalents as at 31 December 2017 of GBP1,023,811 (2016: GBP3,572,794)
David Guyatt, Chief Executive Officer, commented:
"We are pleased with Osirium's performance for the year ended 31
December 2017 as the Group continues to build momentum and
value.
Osirium has a unique proposition and is building an increasingly
strong pipeline of opportunities across a broad range of corporate
sectors. Since the year end, the funds raised in March 2018 will
provide us with the capital to invest further in our sales,
marketing, R&D and engineering teams to ensure the Group's
momentum continues. As the global cyber-security market continues
to grow and with General Data Protection Regulation (GDPR) on the
horizon, Osirium is well positioned and is sufficiently
differentiated to take advantage of this opportunity.
The Group has built strong foundations for the year ahead and we
look forward to updating shareholders on future 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
Stifel Nicolaus Europe Limited Tel: +44 (0) 20 7710 7600
Nominated Adviser and Broker
Fred Walsh / Neil Shah / Ben Maddison
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
The preliminary announcement does not constitute full financial
statements.
The results for the year ended 31 December 2017 included in this
preliminary announcement are extracted from the audited financial
statements for the year ended 31 December 2017 which were approved
by the Directors on 23 April 2018. The auditor's report on those
financial statements was unqualified and did not include a
statement under Section 498(2) or 498(3) of the Companies Act
2006.
The 2017 annual report is expected to be posted to shareholders
and included within the investor relations section of our website
on 24 April 2018 and will be considered at the Annual General
Meeting to be held on 24 April 2018. The financial statements for
the year ended 31 December 2017 have not yet been delivered to the
Registrar of Companies.
The auditor's report on the consolidated financial statements of
Osirium plc for the period ended 31 December 2016 was unqualified
and did not include a statement under Section 498(2) or 498(3) of
the Companies Act 2006. The financial statements for the period
ended 31 December 2016 have been delivered to the Registrar of
Companies.
Notes to Editors:
About Osirium
Osirium Technologies plc (AIM: OSI.L), is a leading
cyber-security SaaS vendor, built on robotic process automation
(RPA) technology. Osirium protects critical IT assets,
infrastructure 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 solution. The team has developed the concept of
Virtual Air Gap to separate users from passwords, with Osirium's
Privileged Task Management module which is built on Robot
Automation technology and further strengthens Privileged Account
security by minimising the cyber-attack surface 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 AND CHIEF EXECUTIVE'S STATEMENT
We are very proud to report the final results for the 12 months
ended on 31 December 2017. Osirium continues to gain both mind and
market share globally, highlighted by our recent results and a
record pipeline of new prospects and opportunities.
The Group's focus since our IPO in April 2016, has been both on
building and supporting our UK and global distribution network, and
on the construction of a dedicated team to manage channel partner
and existing customer relationships. Osirium has made some
significant strategic steps over the last 12 months. The Group has
continued to win business globally based on the quality of our
products, ease of use and local presence, with a 100% renewal rate.
This has been supported by upscaling our sales and marketing team
with 7 new hires during the period.
In March 2018, Osirium successfully raised GBP4.2 million
through a Placing, to strengthen the balance sheet and fund the
Group's working capital requirements over the next twelve months
and beyond. The proceeds will be used to invest further in
Osirium's sales and marketing, while the Group's product
development plans will accelerate with its plan to grow its
engineering and R&D teams to provide further innovative 'next
generation' additions to grasp a leadership claim on the growing
billion dollar PAM market.
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 dedication and hard work.
We remain very confident in the Group's prospects and believe
Osirium has a unique proposition and is well placed to prosper as
cyber-security becomes an even greater priority for corporates
globally.
Results
Revenue was up GBP249,000 versus the same 12 month period in
2016. The revenue in each period was driven by the increase in
bookings from GBP393,826 to GBP876,323 resulting in a 123% rise in
total revenue for the comparable 12 month period in 2016. As of 31
December 2017, the Group had cash balances of GBP1,024,000, this
balance has been boosted by the recent fund raise of
GBP4,200,000.
Osirium's loss before tax for the 12 months to 31 December 2017
was GBP2,296,814 compared with a loss before tax of GBP1,822,497
for the 14 months ended 31 December 2016. Revenue for the 12 months
was GBP647,580, versus GBP477,577 for the previous 14 month
period.
The Group has also continued to increase its investment in
R&D this past year. During this period, GBP1,254,000 has been
capitalised; an increase of 53% from the previous year. The focus
of this R&D investment has been on refining and further
developing our next generation PAM solution, the PxM Platform, our
proposition and working hard to exceed both new and prospective
clients' expectations. The Group anticipates SaaS revenues to
increase further during 2018 and is also targeting increased
service revenues with the addition of extra consultancy
resource.
Strategy and Market
Since Osirium's IPO in April 2016, cyber-security attacks
continue to be one of the most critical business disablers,
particularly where the defence of prized business data is
concerned. During 2017, no sector was immune to cyber-attacks.
According to UK government figures, around 46% of businesses have
now suffered a digital attack. With 5.5 million companies in the
UK, that is 2.2 million companies compromised in some way by a
cyber-attack over the course of just 12 months. These numbers
increase with the size of business, with 66% of medium-sized and
68% of large corporations subject to an attack.
The pace and volume of attacks continue to accelerate, as does
the momentum from organisations both in the public and private
sectors transitioning 'on-premise' IT services to the Cloud. As a
result, "hybridised infrastructure" is becoming the norm, adding
further security complexity because of the broad mix of access
policies required and the whereabouts and criticality of their
data. Migration to the Cloud is an important agenda item for most
organisations, offering reduced time and costs to deploying
projects. Over the period, the Group has seen significant advances
in the way technology is provisioned and taken action by making PxM
available on the Azure Marketplace platform, which is an online
applications and services marketplace managed and operated by
Microsoft.
Osirium's complete and "built-for-purpose" next generation PxM
Platform solution is well placed for meeting today's current
requirements by both being easy to deploy and simple to use.
Furthermore, the Group's innovative Task Automation technology was
incorporated into its PxM platform from day one to provide
customers with an even more secure PAM solution, combining the
unique productivity benefits of Robotic Process Automation, or RPA,
while better managing the "digital workforce" through strict
security, data integrity and regulatory standards. Many of
Osirium's customers have already seen how the Group's Automation
platform helps to improve business efficiency and processes. A
recent study by one of Osirium's customers found time savings of
more than 80% for their ten most common administrative tasks.
Looking not too far into the future, the Group's RPA platform
will become more cognitive as machine learning triggers the next
rapid wave of innovation, with software robots gaining intelligence
by adapting and learning from mistakes. Analysts predict that by
2025, close to a third of jobs will be carried out by automated
software and smart robots, as personnel replaced by RPA are
reassigned to more important and higher cognitive tasks.
Global analyst firm Gartner has reported an increased interest
in PAM solutions from small to midsize businesses, who are often
unregulated, particularly in North America, with the trend
noticeable in other markets. Not only are smaller businesses now
able to see how they can benefit from PAM, but a range of
regulatory compliance standards are driving mid-sized and
mainstream business adoption, GDPR being one where organisations
are faced with the threat of fines as high as 4% of revenue in the
event of a data-breach, transitioning the need for cyber-security
solutions such as PAM from 'nice-to-have' to 'must-have'. This
remains a significant greenfield opportunity for the Group. The
global growth in demand for midmarket cyber-security solutions has
given way to some exciting new customer enquiries and partner
acquisitions for Osirium.
Gartner has also noted a continuation of the trend where
enterprises who have committed to a PAM solution for compliance
reasons are now looking at extending their deployments deeper into
their businesses. This directly resonates with Osirium's "land and
expand" strategy which delivered significant results during the
period, demonstrated by the high level of customer retention, and
the Group's continued strength of account management of our growing
base.
Interest in PAM tools is driven by several factors:
-- Cyber-security focused legislation and regulation, including GDPR and cyber-essentials
-- Increased security threats, and their scale and frequency
-- Privileged Accounts remaining critical targets for cyber-attackers
-- Damage to corporate reputations, and erosion of public confidence and trust
-- Growth in the outsourcing of IT functions and the need to
grant privileged access to third parties, including vendors,
contractors, and service provider technicians
-- An increasing number of Internet of Things (IoT) connected work devices
-- Evolving IT infrastructure and the need to readdress
requirements for a comprehensive cyber-security strategy,
particularly for critical infrastructure
Osirium has an unparalleled focus on the PAM market. This is
becoming an increasingly vital part of the overall picture that is
the Identity and Access Management market, as organisations realise
the importance and benefits of identifying, controlling and
minimising risks from within. Privileged accounts remain critical
targets for cyber criminals, and Osirium protects and manages those
Privileged Account activities, denying attackers access to those
primary targets.
Market Review
Organisations' purchasing habits are moving from
perimeter-securing firewalls to more complete solutions that add
internal layers of security to a business. The PAM market growth
remains robust and is set for continued double-digit growth. The
overall PAM market also remains dominated by the sale of legacy
on-premises software.
Cyber-security spending hit $89 billion in 2017, growing 8% over
2016. By 2020, organisations with PAM tools will have at least a
50% lower risk of impact by advanced threats as compared to peers
without, according to Gartner. They also estimate that PAM will
continue to grow at a CAGR of 27% through 2020, accounting for 2%
of all cyber-security spending and 38% of the Identity and Access
Management market.
Analysts anticipate that by 2020, not only will over 40% of PAM
vendors (up from the 10% today) integrate machine learning and
other predictive analytics techniques into their solutions, but
over half of the security failures associated with IaaS and PaaS
will be directly attributable to gaping holes in security caused by
a lack of PAM technology and processes. With Task Automation at the
core of the PxM Platform solution, Osirium is well placed to take
advantage of this maturing requirement. Leading independent
Technology sector analyst firms, Gartner and IDC, value the
addressable market for PAM in terms of annualised spend, at $1-2
billion, however, an authoritative bottoms-up analysis of the
market based on customer lifetime value, has recently sized the
market at $44 billion. Osirium believes this is a better reflection
of the greenfield demand that the Group is experiencing for our
products.
By 2020, approximately 75% of large enterprises will utilise PAM
products, up from less than 40% today.
Executing our strategy
The Group's sales and marketing focus continues to build brand
momentum, industry recognition and thought leadership. Osirium's
continuing achievements in growing the brand in 2017 has led to
thought leadership discussions at prestigious industry events
including large corporate forums with the UK's largest broadcaster
and media groups in attendance.
2017 also delivered formal recognition of our innovation from
Gartner with Osirium being presented with the Cool Vendor Award for
Identity and Fraud Management. The Group believes being included in
Gartner's Cool Vendor report is of huge significance to our
business. Seeing Osirium's PxM Platform evaluated in this report
illustrates the team's dedication and innovative approach to
breaking through the cyber-security newsflow with a topical niche.
For Osirium, this is a company-wide achievement and the Group will
certainly be enjoying the attention and benefits of becoming a
Gartner Cool Vendor.
Throughout 2017, the Group focused on building a 100% channel
sales organisation. This included scaling awareness, building
cohesive partnerships and trust with the growing global partner
community. With Osirium's reputation for high customer retention,
key services have been added to the portfolio including 24/7 global
support that reinforces the vision of building trusted
relationships, supporting our customers anywhere and at any
time.
This year, Osirium has engaged with over 24 channel partners to
extend the Group's footprint, helping deploy our PAM solution and
build on the results and momentum achieved in 2016.
Looking at 2018, the Group's key development areas are:
-- Accelerating sales momentum and our new prospects pipeline in
a rapidly growing market; we now believe PAM to be a mainstream
requirement and a "must have"
-- Promoting our 'next generation PAM innovator' message
supported by our goal to be a dominant mid-market cyber-security
brand in a >90% greenfield market
-- Continuing our low-risk overseas market development in Germany and the Middle East
-- Drive "sticky" entry level deployments to stimulate future upsell opportunities
-- Scaling UK and overseas channels to support a committed global partner base
-- Investing and strengthening our winning cyber-security leadership team
-- Growing market share through rigorous pipeline management and agenda setting innovation
-- Building on the success of our 'land and expand' strategy,
showing customers the breadth and depth of innovation in our PxM
platform
-- Continuing implementation of a Global Technical Support culture and infrastructure
-- Maintaining the Group's marketing momentum and evolving the
Osirium brand into a confident and powerful global icon
-- Continued thought leadership activity and influencing of the influencers
-- Maintaining our technology leadership with four patents
pending and with new routes to market continually being
investigated.
New customer acquisitions in existing and new markets
Osirium has acquired over 30 "high-profile" customers across
multiple industry sectors over the years and with a number of new
customers signed in Q1 2018, we expect our momentum and growth to
continue. These sectors include insurance, financial services,
healthcare, higher education, luxury goods, critical national
infrastructure, legal, telecoms, gaming, MSP's & MSSP's, and
private equity and asset management.
The Group has also made significant upsells and renewals over
the period, reflecting high customer retention since 2016. 2017 saw
Osirium's largest customer, a leading global asset management
company, renewing for a further 12 months. The Group was also
awarded its largest international contract to date with one of the
leading telecommunications companies headquartered in the Middle
East.
The management team has extensive experience in successfully
driving mid-market channels and partner programs to scale up demand
creation and pipeline volumes. Regional partnerships are now in
place with trusted distribution partners including Progress
Distribution in the UK with a view to extending reach in the UK
with the appointment of a complementary distribution partnership.
With Spectrami covering the Middle East and Adyton establishing a
'bridge-head' into Germany, the Group is confident these
partnerships will continue to fuel growth. Osirium's distribution
and growing reseller community are looking for technologies to
drive new revenue opportunities within their businesses, and the
Group expects these resellers to refer their clients to Osirium's
PAM solution in response.
The Group already has an exceptional reputation with its
existing customers, which include blue-chip enterprises in defence,
telecommunications and the financial services sector, and Osirium
plans to continue expanding into new high growth sectors.
Summary and outlook
Osirium has a unique proposition and is building an increasingly
strong pipeline of opportunities across a broad range of corporate
sectors. Since the year end, the funds raised in March 2018 will
provide us with the capital to invest further in our sales,
marketing, R&D and engineering teams to ensure the Group's
momentum continues. As the global cyber-security market continues
to grow and with General Data Protection Regulation (GDPR) on the
horizon, Osirium is well positioned and is sufficiently
differentiated to take advantage of this opportunity.
The Group has built strong foundations for the year ahead and we
are confident of delivering significant progress as a result.
Simon Lee David Guyatt
Chairman Chief Executive Officer
23 April 2018 23 April 2018
Financial review
Overview
For the twelve month period ended 31 December 2017, revenue was
GBP647,580, an increase of 36% (compared with the 14 months ended
31 December 2016: GBP477,577).
Bookings for the twelve month period ended 31 December 2017,
represented by total invoiced sales for annual subscriptions, were
GBP876,323, an increase of 62% compared with the fourteen months
ended 31 December 2016 where bookings were GBP540,836. We have
managed to increase significantly revenue and bookings despite a 2
month shorter accounting reporting period, demonstrating greater
customer engagement and investment.
The twelve month loss before tax for the Group was GBP2,293,000,
an increase from a loss of GBP1,812,843 for the fourteen month
period to 31 December 2016. The losses of the Group have increased
following significant investment in increasing headcount and
activity levels in our sales, marketing and engineering departments
of the business.
Cash reserves were boosted by the recent fund raise that raised
GBP4,200,000 gross cash in March 2018.
Revenue analysis
Revenue for the twelve month period ended 31 December 2017 was
GBP647,580 (2016: GBP477,577 - 14 month period). Customer numbers
more than doubled from 14 in the period ended 31 December 2016 to
30 in the year ended 31 December 2017 demonstrating the increasing
sales momentum felt within the business as we add more
customers.
Our deferred revenues as at 31 December 2017 were GBP505,000,
compared to deferred revenues at the end of December 2016 of
GBP276,000, 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 GBP408,000 being claimed for the twelve month period to
31 December 2017, compared with GBP290,000 for the previous 14
month period to 31 December 2016. This further demonstrates the
investment made in the Company's innovative cyber-security
products.
Loss per share
Loss per share for the 12 month period on both a basic and fully
diluted basis was 18p. In the prior 14 month period the basic and
diluted loss per share was 13p.
Results and dividend
The Directors are not recommending the payment of a final
dividend (2016: GBPnil).
Research and development & capital expenditure
The Group spent GBP1,254,000 (2016: GBP755,000) on direct staff
and contractor costs for research and development, of which all was
capitalised in both periods.
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 and 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
The Group's Cash balances at 31 December 2017 were GBP1,023,811
(2016: GBP3,572,794). Net cash from operating activities for the
period was GBP1,232,558 (2016: 789,443). Cash reserves were boosted
by the recent fund raise that raised GBP4,200,000 gross cash in
March 2018.
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). 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, all of which have increased over
the period.
Bookings are monitored on a monthly basis and reported in detail
at board meetings. Bookings have increased by 123% to GBP876,323
for the 12 month period to 31 December 2017 from GBP393,826 for the
12 months ended 31 December 2016.
As a result of the increase in booking, the revenue KPI is
performing well, with total revenue up 63% to GBP647,580 (2016:
GBP398,678), for the period 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 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 16 new customers added,
with increasing contract values from our existing customer base;
further evidence that our stated 'land and expand' objective with
customers is working. 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 Progress
Distribution as a distributor in the UK and Spectrami in MENA and
CHJ Technologies in Singapore, for further details please see the
Chairman 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'.
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 feel that
the years of investment ahead of the maturing 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 that 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 plus 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 licence 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 strategic report was approved by the board on 23 April
2018
Rupert Hutton
CFO
23 April 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
14 month
Period
Year ended ended
31-Dec-17 31-Dec-16
Notes GBP GBP
CONTINUING OPERATIONS
Revenue 647,580 477,577
Administrative expenses (2,944,394) (2,300,074)
------------ ------------
OPERATING LOSS (2,296,814) (1,822,497)
Finance income 4,190 9,654
------------ ------------
LOSS BEFORE
TAX (2,292,624) (1,812,843)
Income tax
credit 2 409,421 453,288
------------ ------------
LOSS FOR THE PERIOD ATTRIBUTABLE
TO
THE OWNERS OF OSIRIUM TECHNOLOGIES
PLC (1,883,203) (1,359,555)
Loss per share from continuing
operations:
Basic and diluted loss per share 3 (18p) (13p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
31-Dec-17 31-Dec-16
Notes GBP GBP
ASSETS
NON-CURRENT ASSETS
Intangible
assets 4 1,731,856 1,134,452
Property, plant &
equipment 80,168 44,315
------------ ------------
CURRENT ASSETS
Trade and other receivables 622,619 380,891
Cash and cash equivalents 1,023,811 3,572,794
------------ ------------
1,646,430 3,953,685
------------ ------------
TOTAL ASSETS 3,458,454 5,132,452
============ ============
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 857,734 648,530
------------ ------------
857,734 648,530
------------ ------------
NON-CURRENT LIABILITIES
Deferred tax - -
------------ ------------
- -
------------ ------------
TOTAL LIABILITIES 857,734 648,530
------------ ------------
EQUITY
SHAREHOLDERS EQUITY
Called up share capital 5 103,944 103,944
Share premium 5,008,619 5,008,619
Share option reserve 337,559 337,559
Merger reserve 4,008,592 4,008,592
Retained earnings (6,857,994) (4,974,792)
------------ ------------
TOTAL EQUITY ATTRIBUTABLE
TO THE
OWNERS OF OSIRIUM TECHNOLOGIES
PLC 2,600,720 4,483,922
------------ ------------
TOTAL EQUITY AND LIABILITIES 3,458,454 5,132,452
============ ============
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 12 November
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)
Total comprehensive
loss - (736,006) - - (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
Changes in
Equity
Issue of share
capital - - - - - -
Issue costs - - - - - -
Loss for the period - (1,883,202) - - - (1,883,202)
Share option
charge - - - - - -
Balance at 31 December
2017 103,944 (6,857,994) 5,008,619 4,008,592 337,559 2,600,720
CONSOLIDATED STATEMENT OF CASHFLOWS
Year 14 month
ended Period ended
31-Dec-17 31-Dec-16
Notes GBP GBP
Cash flows from operating activities
Cash used in operations 6 (1,523,979) (909,873)
Interest paid - -
Tax received 291,421 120,430
------------ -------------
Net cash used in operating activities (1,232,558) (789,443)
------------ -------------
Cash flows used in activities
Purchase of intangible fixed
assets (1,254,268) (915,476)
Purchase of tangible fixed assets (66,347) (52,508)
Interest received 4,190 9,654
------------ -------------
Net cash used in investing activities (1,316,425) (958,330)
------------ -------------
Cash flows from financing activities
Share issue (net of issue costs) - 5,047,081
------------ -------------
Net cash from financing activities - 5,047,081
------------ -------------
Increase/(decrease) in cash and cash
equivalents (2,548,983) 3,299,308
Cash and cash equivalents at beginning
of period 3,572,794 273,486
------------ -------------
Cash and cash equivalents at
end of period 1,023,811 3,572,794
============ =============
Osirium Plc is a company incorporated in the United Kingdom
under the Companies Act 2006 and listed on the AIM market. The
address of the registered office is One Central Square, Cardiff,
CF10 1FS.
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared on a going concern
basis under the historical cost convention, and in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the EU, the International Financial Reporting Interpretations
Committee (IFRIC) interpretations issued by the International
Accounting Standards Boards ("IASB") that are effective or issued
and early adopted as at the time of preparing these Financial
Statements and in accordance with the provisions 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 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.
NOTES TO THE ACCOUNTS
2. INCOME TAX
Analysis of tax income
Year 14 month
ended Period ended
31-Dec-17 31-Dec-16
GBP GBP
Current Tax:
Tax (408,000) (290,000)
Adjustment for prior
year tax (1,421) -
---------- -------------
Total current tax (409,421) (290,000)
Deferred tax - (163,288)
---------- -------------
Total credit in the statement
of (409,421) (453,288)
========== =============
comprehensive income
========== =============
For the period ended 31 December 2016 successful R&D tax
claims were submitted and paid by HM Revenue & Customs.
Management intend to submit similar claims for the period ended 31
December 2017 and future periods.
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:
Year 14 month
ended Period ended
31-Dec-17 31-Dec-16
GBP GBP
Loss before
tax (2,292,624) (1,812,843)
------------ -------------
Loss before tax multiplied by
the applicable
Rate of corporation tax of 19%
(2016: 20%) (435,598) (362,569)
Expenses not deductible for tax
purposes - 664
Unrelieved tax losses 437,019 361,905
R&D tax credit relief 408,000 290,000
Deferred tax 163,288
Income Tax Income 409,421 453,288
============ =============
As at 31 December 2017 the group had unutilised tax losses of
GBP4,086,939 (31 December 2016: GBP1,184,906) 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 (see note 18).
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
Year 14 month
ended Period ended
31-Dec-17 31-Dec-16
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 (1,883,203) (1,359,555)
------------ -------------
Losses for the purposes of diluted earnings
per share (1,883,203) (1,359,555)
------------ -------------
Basic loss per share (18p) (13p)
============ =============
Diluted loss per
share (18p) (13p)
============ =============
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 2017, there were 1,905,817 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 2015 2,310,571
Additions to 31 December
2016 915,476
------------
At 1 January 2017 3,226,047
Additions to 31 December
2017 1,254,268
------------
Cost c/f as at 31 December
2017 4,480,315
============
Amortisation:
At 1 November 2015 1,517,315
Charge to 31 December
2016 574,280
------------
At 1 January 2017 2,091,597
Charge to 31 December
2017 656,862
------------
Amortisation as at 31 December
2017 2,748,459
============
Carrying Amount:
At 31 December 2016 1,134,452
============
At 31 December
2017 1,731,856
============
All development costs are amortised over their estimated useful
lives, which is on average 5 years. This reflects management's best
estimate of the period of time over which the group will benefit
from the amounts capitalised.
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.
The Company had no intangible fixed assets as at 31 December
2017.
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
Nominal Value GBP0.01 per share No. of 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
Year 14 month
ended Period ended
31-Dec-17 31-Dec-16
GBP GBP
Loss before income
tax (2,292,624) (1,812,843)
Depreciation charges 30,494 14,632
Amortisation charges 656,862 574,280
Share option
charge - 96,897
Finance costs - -
Finance income (4,190) (9,654)
------------ -------------
(1,609,458) (1,136,688)
(Increase)/decrease in trade and other
receivables (123,725) (56,674)
Increase/(decrease) in trade and other
payables 209,204 283,489
------------ -------------
Cash used in operations (1,523,979) (909,873)
============ =============
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEEESDFASELL
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