REG - Osirium Technologies - Final Results
23/03/2023 07:15
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RNS Number : 9292T Osirium Technologies PLC 23 March 2023
The information contained within this announcement is deemed by the Company to
constitute inside information for the purposes of Regulation 11 of the Market
Abuse (Amendment) (EU Exit) Regulations 2019/310.
23 March 2023
Osirium Technologies plc
("Osirium", the "Group" or the "Company")
Final Results
Osirium Technologies plc (AIM: OSI), a leading vendor of cloud-based
cybersecurity and IT automation software, announces its final results for the
year ended 31 December 2022.
Financial highlights
· Total bookings up 86% at £3.00 million (2021: £1.61 million) reflecting the
success of the Group's continued customer acquisition strategy, alongside
larger average contract values
· Annual Recurring Revenue ("ARR") for SaaS contracts up 28% to £1.86 million
in December 2022 (December 2021 ARR: £1.45 million)
· Total recognised revenue up 31% at £1.92 million (2021: £1.47 million)
· Deferred revenue up 66% to £2.72 million (2021 £1.64 million)
· Operating loss of £3.36 million (2021: £3.23 million)
· Cash balances and debtors at 31 December 2022 of £1.22 million (31 December
2021: £0.71 million), and cash and debtors at 28 February 2023 of £0.70
million
Operational highlights
· Customer base increased by 46%, representing further opportunity for
up-selling and cross-selling through the pursuit of the Group's proven
land-and-expand strategy.
o Over 70% of existing customers increased their range of services or number
of licenses from us during the financial year
· Customer renewal rate continued to be strong at 96% (2021: 95%)
· Average initial contract value for new customers increased by 93% over the
course of the year as the Group focuses on larger and multi-year deals
· New customers signed across a range of sectors and geographies including
notable wins in higher education, healthcare and financial services and the
Group's first contract signed in the US
· Privileged Process Automation ("PPA") and Privileged Endpoint Management
("PEM") now contributing materially to bookings growth alongside Privileged
Access Management ("PAM"), with the first standalone deals for both PPA and
PEM being signed in the year
· Continued innovation in the Group's product suite to ensure Osirium's products
deliver tangible return on investment for customers
Post-period highlights
· Bookings and pipeline growth momentum continues to date as customer purchasing
patterns normalise
· Maintained customer acquisition into the new year, with continued strong
prospects across the Group's target sectors
· Market awareness and demand remains strong across the Group's product suite,
including PPA and PEM, reinforced by increasing recommendations for privileged
security protection by governing bodies and heightened cybersecurity insurance
requirements
· The Group's transition to a partner first strategy is enabling swifter pace of
customer acquisition and access into new sectors and geographies
Stuart McGregor, CEO of Osirium, commented:
"It has been another year of significant progress for Osirium in which we have
achieved record levels in bookings and revenue and further grown our customer
base while also taking substantial steps to reach cash breakeven and beyond.
"The market demand for privileged security continues to strengthen, with
businesses recognising privileged security as an essential component of
cybersecurity despite turbulent macroeconomic conditions. This is reflected in
the healthy levels of product and license expansion from existing customers in
2022, reinforced by the emergence of PPA and PEM as standalone products during
the period.
"We have started the new year with a refocused sales strategy and a partner
first sales approach, through which we expect to see increased interest across
a wider range of sectors and geographies. As privileged security continues to
rise up the agenda of IT professionals globally, we are excited for the future
and the continued growth of the business."
Contacts
Osirium Technologies plc Tel: +44 (0)1183 242 444
Stuart McGregor, CEO
Rupert Hutton, CFO
Allenby Capital Limited (Nominated adviser and broker) Tel: +44 (0)20 3328 5656
James Reeve / George Payne (Corporate Finance)
Tony Quirke (Sales and Corporate Broking)
Alma PR (Financial PR adviser) Tel: +44 (0)20 3405 0205
Hilary Buchanan osirium@almapr.co.uk
Kieran Breheny
Will Ellis Hancock
About Osirium
Osirium Technologies plc (AIM: OSI) is a leading UK-based cybersecurity
software vendor delivering Privileged Access Management (PAM), Privileged
Endpoint Management (PEM) and Privileged Process Automation (PPA) that are
uniquely simple to deploy and maintain.
With privileged credentials involved in over 80% of security breaches,
customers rely on Osirium PAM's innovative technology to secure their critical
infrastructure by controlling 3(rd) party access, protecting against insider
threats, and demonstrating rigorous compliance. Osirium Automation delivers
time and cost savings by automating complex, multi-system processes securely,
allowing them to be delegated to Help Desk engineers or end-users freeing
specialist IT resources. The Osirium PEM solution balances security and
productivity by removing risky local administrator rights from users while at
the same time allowing escalated privileges for specific applications.
Founded in 2008 with its headquarters in Reading, UK, the Group was admitted
to trading on AIM in April 2016. For further information, please
visit www.osirium.com (http://www.osirium.com/) .
Chairman and Chief Executive's Statement
Overview
FY22 was a significant year of operational and financial progress for Osirium
as it achieved strategic milestones that enabled the Group to further
establish itself as a leading mid-market provider of privileged security. The
Group reports its greatest full year bookings total of £3.0 million, with
revenue and deferred revenue also at record levels.
A particular highlight of FY22 is that Osirium increased its new customer
average initial contract value by 93% over the course of the year. At a time
when businesses are paying closer attention to costs, we believe this
demonstrates the increasing priority organisations are placing on securing
their IT infrastructure. This growth came alongside the continued expansion of
Osirium's customer base which drove a 28% increase in Group Annual Recurring
Revenue ("ARR") to £1.86 million, enhancing the Group's forward visibility.
With our three products forming the foundations of our privileged security
suite, we continue to focus our product development efforts on strengthening
our rapid deployment, ease of management, simplicity of use, and patentable
innovation.
We have observed a considerable growth in demand for our Privileged Process
Automation ("PPA") and Privileged Endpoint Management ("PEM") products, in the
form of both standalone sales to new customers and as add-ons to existing
Privileged Access Management ("PAM") contracts. The Group achieved two key
milestones this year with our first customer using all three products and our
first customer joining the platform with a PEM-only contract, demonstrating
the growing strength of each product offering on a standalone basis.
FY22 saw our shift to a channel-first focused sales strategy, with our easy to
use and rapidly deployable solutions proving highly marketable and popular
with our channel sales partners. This growing sales channel has been an
enabler, opening doors and winning contracts for us in new geographies, with
our first contract wins in the US a particular highlight.
Driving our progress is a market increasingly in demand for privileged
security solutions. As geopolitical instability and the further spread of
malware has increased the threats businesses are facing, these cyberattacks
have not targeted only one sector; we are aware of a growing trend towards
more targeted attacks on small to medium size businesses.
We successfully completed two fundraises in the year and with Stuart McGregor
appointed as our new Chief Executive Officer on 1 January 2023, the Group is
focused on managing costs and building on the momentum seen in the past 12
months to capitalise on the clear market opportunity and reduce the timeframe
to breakeven. We are focused on our goal of achieving cashflow breakeven by H2
2024 and have now implemented all the cost savings identified at the time of
December's fundraise.
The significant operational and financial progress made during 2022 means the
Group is now positioned more competitively to target new customer wins and
expansions with existing customers and we would like to thank all of our staff
for their hard work during the year to help achieve this.
Results
The Group's total bookings and revenue for the period was £3.0 million (2021:
£1.61 million) and £1.92 million (2021: £1.47 million) respectively, in
line with its recently upgraded market expectations. Deferred revenue as at 31
December 2022 was £2.72 million. Osirium's ARR for December 2022 was £1.86
million, up 28% over the prior year (December 2021: £1.45 million).
Cash balances as at 31 December 2022 was £1.08 million. The Group's loss
before tax for the period was £3.59 million (2021: £3.43 million).
Osirium continues to invest in R&D for direct staff and contractor costs,
spending £1.96 million (2021: £1.85 million) in 2022 across direct staff
and contractor costs for research and development. This expenditure covers
enhancements to Osirium's product suite across a range of projects, including
to its user experience and security. The Group continues to invest in R&D
with a view to ensuring its products remain a highly secure and compelling
offering for customers.
Business model
Osirium's revenue model is built around its software subscriptions, with its
licensing models adapted to best suit regional and customer needs. We
frequently hear throughout the sales cycle that this simple licencing model is
reassuring to prospects, who are often overwhelmed or confused when purchasing
IT software and this acts as a key differentiator between us and other players
in the market.
The Group's PAM product is charged per device being protected, whereas the PPA
product is charged per user and number of transactions when integrated with a
customers' infrastructure, and our PEM product charged is per protected
endpoint. Osirium's service revenue comes both from new customers setting out
on their initial Osirium deployments and existing customers growing and
expanding their use of its software solutions. From the end of 2021 and
throughout 2022, the Group saw increasing automation add-on sales to its PAM
customers, and this progress has been seen with its PEM product as well.
The Group's innovative sales packages of software subscriptions, production
support and implementation services in Osirium's PAM and PPA solutions have
continued to provide a means of targeting sector-specific opportunities into
2022, particularly within healthcare and education. These packages enable new
customers to acquire Osirium PAM or PPA for a small team, establishing a base
for future add-on sales and license expansions.
Our marketing strategy in 2023 will continue to focus on digital and in-person
marketing to drive up the volume and quality of new customer leads. There will
be an increased focus on joint marketing activities with sales partners,
reinforcing the "channel-first" approach.
Market - giving customers confidence in their IT
The market for privileged security has continued to mature, in line with the
increasing awareness of and requirement for these services globally. In the US
and UK particularly, corporate cyber insurance policies increasingly demand
privileged access security within a cybersecurity stack as a prerequisite
before any insurance policy is brokered with an organisation. For cyber
insurance customers, strong privileged access security is also a means to
reduce increasing costs of coverage. As a result, privileged security is
increasingly rising to the top of the priority list for IT professionals. In
July 2022, a new PAM contract was announced, worth c. £140,000 for a
three-year subscription to provide protection for 1,000 devices at a UK
university. The University selected our PAM solution to address requirements
for improved security for IT system access, as this was a key requirement of
its cybersecurity insurance provider.
Market indications are that hybrid or fully remote working is now a permanent
change for most organisations. As the transition of IT systems to the cloud
continues and the advent of the 'modern desktop' forces a need for on-premise
and remote privileged security, our PAM, PPA and PEM products remain key
aspects of a modern cybersecurity in view of the aforementioned insurance
requirements.
Ransomware continues to be the predominant threat for IT departments. A 2022
joint report co-authored by the National Cyber Security Centre suggests
ransomware is the largest cyber threat facing the United Kingdom, with
businesses of all sizes across the globe being targeted as threat actors shift
their focus away from high-value organisations and those which provide
critical services.
Growth strategy
The Group's growth strategy is centred around these core differentiators:
innovation, customer focus and market expansion.
Commitment to innovation - unlocking incremental value creation
The Group continues to make investments into its product suite as part of its
strategy, ensuring its offerings remain a cutting-edge option for
organisations looking to address their Privileged Access Security needs. Our
overarching ambition is to produce best in class, easy to use products, that
clearly differentiate us from competitors and are quick to deploy at scale.
We saw an increase in the number of contract wins or extensions where PPA and
PEM products were bought alongside PAM, with our innovations in our product
suite resulting in increased spend from existing customers.
10% of our customers now have more than one Osirium product under contract
and this year saw our first customer win where the PPA order was
significantly larger than the PAM element. As reported in March 2022, this
contract with the Midlands and Lancashire Commissioning Support Unit, an NHS
customer, reflected our increasing success in marketing our PPA and PEM
solutions as primary or standalone products. We also saw our first standalone
PEM contract win with a global imaging brand, highlighting the increasing
interest in our products both individually or as part of a wider package.
An additional core focus during the period has been improvements to PPA, the
Group's platform for automating essential IT processes. We have expanded on
the work done in FY21 this year by developing our Automation playbooks, so
they are now able to enforce Multi Factor Authentication (MFA) around steps
within a task. Tasks can now be delegated to select users as well as groups,
further improving flexibility of secure deployments across a business. We have
also improved the reporting capabilities of the PPA product, allowing for
deeper insights and actionable data points based on usage of Automation.
Investments into PEM, our solution for Privileged Endpoint Management which
allows customers to increase productivity while simultaneously increasing
security, have also continued. We have developed native support capability for
Azure AD managed workstations, meaning PEM is available in the Azure
Marketplace. This creates a new, direct to customer sales channel for us and
readies us to service a growing market as the global transition to cloud
computing continues.
Customer focus - providing foundations for land-and-expand opportunity
A core tenet of Osirium's strategy is to ensure excellent levels of customer
support in tandem with the ease of implementation of its platform. Our 24/7 UK
based support service ensures clients have immediate access to support, around
the clock, directly enhancing the stickiness of our products. During the year,
the Group achieved a 96% customer SaaS contract retention rate by customer
value.
The Osirium Customer Network continued in 2022. This forum provides important
feedback into the Company for future development but also helps customers
ensure they are making the most of their investment.
In 2022, TalkTalk, the UK provider of telephony and broadband services,
expanded its existing contract to now include PPA and PEM licences alongside
an extension to their existing PAM contract. This renewal represented a
significant step for the business, with TalkTalk being our first to utilise
all three Osirium privileged security products. TalkTalk has highlighted that
it was easier to use Osirium as a one stop shop for all privileged security
services, representing a clear example of how our customer focus combined with
the effectiveness of our products and sales partners facilitates our land and
expand growth strategy.
Market expansion - opening new opportunities for growth through direct and
partner channels
Osirium continued its customer acquisition through wins in its target sectors
of healthcare, higher education, financial services as well as new areas such
as food manufacturing. In particular, higher education and healthcare continue
to be sources of growth for the Group with further wins with the NHS and
universities throughout the year, not only by upselling to existing customers
but by adding new customers through reference and recommendation.
Sales to new customers are driven by the Group's channel partner network
alongside its own sales team. Throughout the year we transitioned further
towards a "partner first" sales strategy, which means we are increasingly
directing leads generated internally towards our partners to act as
transaction vehicles for sales in resellers local geographies.
As a result of our excellent customer service levels and best-in-class product
offering, we maintain strong relationships with existing customers who are
frequently willing to act as reference points when contacted by potential
customers from the same sector.
Partner and reseller network expansion
We collaborate with our global network of partners to provide them with the
tools and knowledge necessary to sell our products into their local networks.
This approach provides Osirium with a broad reach beyond its direct sales arm
via a collection of experienced sales professionals across five continents.
Over the course of the year, we have continued to fortify our partner and
reseller network globally.
The Group's network of distributors enables us to transact via their portfolio
of partners, avoiding the signatory process associated with direct sales,
which saves time and represents a more efficient way to group our reach.
Notable successes from our network in the year include our first contract win
in the US, a landmark for the Group, via Prianto, a UK based software
distribution firm. The network also achieved our first contract wins in Africa
and Asia, as well as first wins in countries such as Austria, Turkey, Malta
and Finland. With our "partner first" strategy in place, we are expecting the
acceleration of customer acquisition via this network through FY23 and beyond.
Direct
Our direct sales team is now focused on working in tandem with our sales
partners, in line with our partner first approach. Our direct sales team
maintains its strong relationships with customers and, for example, was
instrumental in securing a three-year, c. £0.5 million PAM licence extension
with a leading global asset manager. This customer also extended the use of
our PPA solution for a further 12 months and since they first adopted the PPA
solution in 2019, the user licence number has increased from 40 to over 75.
People
We would like to thank all our staff for their support during the year for
their continued hard work. While Osirium is not immune to the wider
pressures on technology firms from wage inflation and staff churn, we are
pleased to have retained the core of our teams across our technology
department while evolving our commercial team.
In line with our partner first sales strategy and cost saving initiatives
brought in by the new management team, this year saw a streamlining of our
direct sales processes and the complete alignment of objectives across all
teams and staff. Our commercial team is now a more efficient unit, with closer
communications with our partners and prospects helping to drive improved
collaboration with our product and support teams. This has created an
effective all-round relationship with our customers and provides them an
excellent continuity of service moving forwards.
As reported initially in November 2022, in order to align the management team
with the Group's strategy of driving top line growth, Stuart McGregor was
appointed as Chief Executive Officer and as a member of the Board of
Directors, effective 1 January 2023.
In tandem, previous Chief Executive Officer David Guyatt assumed the position
of Executive Chairman in a part-time capacity while the Group's Chairman Simon
Lee stood down to take on the role of Senior Independent Non-Executive
Director. As part of these changes, as of 1 January 2023, Steve Purdham has
stepped down from the Board. We would like to thank Steve for his contribution
to Osirium and we wish him all the best.
Current trading and outlook
Entering the new financial year, the Group has continued its focus on growing
its customer base as well as achieving license expansions with customers
through up-selling and cross-selling and the Group is pleased to have achieved
a mix of additional up-sell contract wins from its expanded base of customers.
The average contract value for new customers remains strong, and the Group is
seeing increasing opportunities for multi-year engagements.
In markets where knowledge of privileged security is maturing, we are seeing
shorter, more focused sales cycles where the customer already understands its
objectives and is looking for differentiators that align to its resources,
budgets and timescales. This is ideal for Osirium as it makes our sales cycles
more efficient and has created opportunities early in the year to win new
customers and expand on existing contracts.
The existing regulatory drivers and cyber insurance requirements are
continuing to ensure cyber security remains a high priority part of overall IT
budgets, with IBM's Cost of a Data Breach 2022 report estimating the global
average total cost of a data breach to be $4.35 million.
Within this trend, organisations are also rationalising budgets and technology
stacks, with the demand for good value and easy to deploy products
representing another positive driver for Osirium. In particular, the Group has
seen a number of contract wins, upsells and renewals with healthcare and
public sector organisations in 2023 to date, as those organisations look to
finalise their year-end spend and in line with the heightened awareness of
cybersecurity threats posed to critical infrastructure.
Osirium's sector agnostic product suite, ability to lead with any of its three
products, and well-developed global sales network mean it is well-positioned
in a fast-growing market. While cognisant of wider macroeconomic conditions,
we affirm our focus around reducing the timeframe to the Company becoming
cashflow breakeven.
Financial Review
Overview
The Group has materially grown its customer base, revenue, Annual Recurring
Revenue ("ARR") and bookings during the period, demonstrating greater customer
engagement. Bookings and ARR represent the key financial measures for the
Group and demonstrate the Company's progress in the period under review.
Bookings for the 12 months ended 31 December 2022, represented by total
invoiced sales for annual subscriptions, were £3.00 million, an increase from
£1.61 million over the previous year. The headline bookings total reflected
an increase of over 47% in total customer numbers to 150. ARR for December
2022 was £1.86 million, an increase of 28% over the past 12 months (December
2021: £1.45 million). The Group's revenue recognition policy recognises
revenue in equal annual instalments over the course of multi-year contracts.
Revenue for the year was £1.92 million, an increase from £1.45 million over
the previous year.
Operating loss before tax for the Group was £3.36 million, increased from the
loss of £3.23 million for the year to 31 December 2021. The losses of the
Group have increased slightly due to expenditure levels returning to a more
normal level. The main expenditure of the business reflects the significant
investment in headcount and activity levels in the business's sales,
pre-sales, marketing and engineering departments, building momentum during
2022, continuing in 2023.
Revenue Analysis
Revenue for the 12 months ended 31 December 2022 was £1.92 million (2021:
£1.45 million). The Group's total customer count increased by 45 for the year
ended 31 December 2022, up by over 47% compared to 2021. This customer growth
reflects the growing sales momentum experienced by the business as the Group
broadens its customer base. The demand for our PAM, PPA and PEM solutions all
continues to increase.
The Company's deferred revenues as at 31 December 2022 were £2.72 million,
compared with deferred revenues at the end of December 2021 of £1.61 million,
helping provide a degree of visibility and certainty over our future revenue
streams.
Taxation
The Group has benefited from the tax relief given on development expenditure,
resulting in a research and development tax credit of £640,860 being claimed
in respect of the year to 31 December 2022, compared with £594,562 for the
previous year to 31 December 2021. The relief illustrates the consistent
investment made in the Group's innovative cybersecurity product and its
pioneering qualities that is expected to continue going forwards.
Loss per Share
Loss per share for the year on both a basic and fully diluted basis was 6p. In
the prior year, the basic and diluted loss per share was 11p.
Results and Dividend
The Directors are unable to recommend the payment of a final dividend (2021:
£nil).
Research and Development & Capital Expenditure
The Group spent £1.96 million (2021: £1.85 million) on direct staff and
contractor costs for research and development, all of which was capitalised in
both periods. This expenditure pertains to developing the Group's new and
enhanced software offerings. The Group continues to invest in new product
development and the continual modification and improvement of its current
product base to meet technological advances, customer requirements, and
ever-expanding new market requirements of the rapidly evolving cybersecurity
market.
Future Developments
The Group has undertaken a strategy to extend its activities to provide a full
range of Privileged Access Security solutions. Alongside accelerating the
expansion into new geographies and industry sectors, the Group will continue
to invest in developing innovative and differentiated solutions for its
growing customer base.
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 this Annual Report. In
developing these forecasts, the Directors have made assumptions based on their
view of the current and future economic conditions that will prevail over the
forecast period.
The Group incurred a loss of £2.94 million in the year ended 31 December 2022
and had net current liabilities of £1.36 million at that date. The Group's
cash and cash equivalents increased by £0.7 million in the same period. Cash
and cash equivalents at 31 December 2022 were £1.1 million.
In its assessment, the Board has included consideration of the potential
ongoing impact of the war in Ukraine and the associated volatile economic
conditions domestically and internationally, including rising inflation,
fluctuations in foreign exchange and interest rates, and unease in global
stock markets. The Board has worked this into the financial assessment of the
Group. Trading conditions started to normalise in the year ended 31 December
2022. This level of enhanced bookings has carried through to the start of the
financial year, with a strong start to the new year. This early trading
momentum increased the number of customers further, and a strong pipeline of
new business supports the Board's business forecasts and underlines their
confidence in the Group's ongoing momentum.
As reported on 22 November 2022, the Board identified a further £1.00 million
of annualised cost saving measures which have been implemented effective from
1 January 2023. The Directors consider these cost savings will contribute
towards shortening the timeframe by which the Company will become cash flow
break-even.
Coupled with 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. The Directors consider it appropriate to continue
to adopt the going concern basis in preparing the Financial Statements.
Accordingly, the financial statements do not include any adjustments required
if the going concern basis of preparation was deemed inappropriate. However,
if the Group is unable to deliver the anticipated order book and revenue
growth, during the going concern period, it would give rise to a material
uncertainty which may cast significant doubt about the Group's ability to
continue as a going concern.
Cash Flow
The Group's cash balances at 31 December were £1.08 million
(2021: £0.38 million).
Cash generated from operations for the period was £0.46 million (2021: cash
used in operations £1.10 million).
Rupert Hutton, CFO
Consolidated Statement of Comprehensive Income
Year ended Year ended
31-Dec-22 31-Dec-21
Notes £ £
OPERATIONS
Revenue 1,922,860 1,474,504
GROSS PROFIT 1,922,860 1,474,504
Other operating income 2 13
Administrative expenses (5,279,002) (4,705,350)
OPERATING LOSS (3,356,140) (3,230,833)
Net finance costs (229,701) (197,030)
LOSS BEFORE TAX (3,585,841) (3,427,863)
Taxation 640,860 594,562
LOSS FOR THE YEAR ATTRIBUTABLE TO
THE OWNERS OF OSIRIUM TECHNOLOGIES PLC (2,944,981) (2,833,301)
Basic and diluted loss per share (6)p (11)p
Consolidated Statement of Financial Position
As at As at
31-Dec-22 31-Dec-21
Notes £ £
ASSETS
NON-CURRENT ASSETS
Intangible assets 3,752,102 3,557,310
Property, plant & equipment 54,848 79,588
Right-of-use assets 199,384 12,266
Total non-current Assets 4,006,334 3,649,164
CURRENT ASSETS
Trade and other receivables 4 906,698 1,082,260
Cash and cash equivalents 5 1,081,135 383,854
Total current assets 1,987,833 1,466,114
TOTAL ASSETS 5,994,167 5,115,278
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 3,307,313 2,158,450
Lease liability 45,216 15,765
Total current liabilities 3,352,529 2,174,215
NON-CURRENT LIABILITIES
Deferred tax - -
Lease liability 194,660 -
Convertible loan notes 2,926,134 2,708,886
Total non-current liabilities 3,120,794 2,708,886
TOTAL LIABILITIES 6,473,323 4,883,101
EQUITY
SHAREHOLDERS EQUITY
Called up share capital 1,225,487 293,820
Share premium 13,750,312 12,462,319
Share option reserve 379,523 365,535
Merger reserve 4,008,592 4,008,592
Convertible note reserve 394,830 394,830
Retained earnings (20,237,900) (17,292,919)
TOTAL EQUITY ATTRIBUTABLE TO THE
OWNERS OF OSIRIUM TECHNOLOGIES PLC (479,156) 232,177
TOTAL EQUITY AND LIABILITIES 5,994,167 5,115,278
Consolidated Statement of Changes in Equity
Called up Share Convertible
share Share Merger option note Retained Total
capital premium reserve reserve reserve earnings equity
£ £ £ £ £ £ £
Balance at 1 January 2021 194,956 10,635,500 4,008,592 351,547 394,830 (14,459,618) 1,125,807
Changes in Equity
Total comprehensive loss - - - - - (2,833,301) (2,833,301)
Issue of share capital 98,864 2,076,135 - - - - 2,174,999
Issue costs - (249,316) - - - - (249,316)
Share option charge - - - 13,988 - - 13,988
Balance at 31 December 2021 293,820 12,462,319 4,008,592 365,535 394,830 (17,292,919) 232,177
Changes in Equity
Total comprehensive loss - - - - - (2,944,981) (2,944,981)
Issue of share capital 931,667 1,599,833 - - - - 2,531,500
Issue costs - (311,840) - - - - (311,840)
Share option charge - - - 13,988 - - 13,988
Balance at 31 December 2022 1,225,487 - 13,750,312 - 4,008,592 379,523 - 394,830 - (20,237,900) (479,156)
Consolidated Statement of Cash Flows & Reconciliation of Net Debt
Year ended Year ended
31-Dec-22 31-Dec-21
Notes
£ £
Cash flows used in operating activities
Cash used in operations (138,715) (1,695,291)
Tax received 603,232 591,436
Net cash generated from/(used in) operating activities 464,517 (1,103,855)
Cash flows used in investing activities
Purchase of intangible fixed assets (1,960,912) (1,837,104)
Purchase of property, plant and equipment (15,338) (37,469)
Sale of property, plant and equipment - 208
Interest received - -
Net cash used in investing activities (1,976,250) (1,874,365)
Cash flows from financing activities
Share issue 2,531,500 2,174,999
Share issue costs (311,840) (249,316)
Payment of lease liabilities (net of interest) (25,392) (60,731)
Allocation of loan note interest 14,746 14,746
Net cash from financing activities 2,209,014 1,879,698
Increase/(decrease) in cash and cash equivalents 697,281 (1,098,522)
Cash and cash equivalents at beginning of year 383,854 1,482,376
Cash and cash equivalents at end of year 1,081,135 383,854
Analysis of changes in net liabilities
As At Cash flows Non cash As at
01-Jan-22 movements 31-Dec-22
Cash and cash equivalents £ £ £ £
Cash 383,854 697,281 - 1,081,134
Borrowings
Lease Liability 15,765 (25,392) 249,503 239,876
Loan notes 2,708,886 - 217,247 2,926,133
2,724,651 (25,392) 466,750 3,166,009
Notes to the Financial Statements
Osirium Technologies 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
Osirium Technologies 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.
Basis of Preparation
The financial statements have been prepared on a going concern basis under
the historical cost convention, and in accordance with UK-adopted
International Accounting Standards 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.
Basis of Consolidation
The consolidated financial statements incorporate the assets and liabilities
of the subsidiary of Osirium Technologies PLC ('company' or 'parent entity')
as at 31 December 2022 and the results of the subsidiary for the year then
ended. Osirium Technologies PLC and its subsidiary together are referred to in
these financial statements as the 'Group'.
Subsidiaries are all those entities over which the consolidated entity has
control. The consolidated entity controls an entity when the consolidated
entity is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the consolidated entity. They
are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions
between entities in the Group are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the consolidated
entity.
The acquisition of subsidiaries is accounted for using the acquisition method
of accounting. A change in ownership interest, without the loss of control, is
accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the
non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown
separately in the statement of profit or loss and other comprehensive income,
statement of financial position and statement of changes in equity of the
consolidated entity. Losses incurred by the consolidated entity are attributed
to the non-controlling interest in full, even if that results in a deficit
balance.
Where the consolidated entity loses control over a subsidiary, it derecognises
the assets including goodwill, liabilities and non-controlling interest in the
subsidiary together with any cumulative translation differences recognised in
equity. The consolidated entity recognises the fair value of the consideration
received and the fair value of any investment retained together with any gain
or loss in profit or loss.
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.
The Group incurred a loss of £2.94 million in the year ended 31 December 2022
and had net current liabilities of £1.36 million at that date. The Group's
cash and cash equivalents increased by £0.70 million in the same period.
Cash and cash equivalents at 31 December 2022 were £1.08 million.
In its assessment, the Board has included consideration of the potential
ongoing impact of the war in Ukraine and the associated volatile economic
conditions domestically and internationally, including rising inflation,
fluctuations in foreign exchange and interest rates, and unease in global
stock markets. The Board has worked this into the financial assessment of the
Group. Trading conditions started to normalise in the latter part of the year
ended 31 December 2022. This level of enhanced bookings has carried through to
the start of the new financial year, with a positive start to the year. This
early trading momentum increased the number of customers further, and a strong
pipeline of new business supports the Board's business forecasts and
underlines their confidence in the Group's ongoing momentum.
Coupled with 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. The Directors consider it appropriate to continue
to adopt the going concern basis in preparing the Financial Statements.
Accordingly, the financial statements do not include any adjustments required
if the going concern basis of preparation was deemed inappropriate. However,
if the Group is unable to deliver the anticipated order book and revenue
growth, and raise additional capital during the going concern period, it would
give rise to a material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern. This additional funding is not
guaranteed, however to date the Group has been successful in securing funding
when required.
New and Amended Standards and Interpretations
There are no new standards or amendments to standards adopted with effect from
1 January 2022, or effective in future accounting periods, which had or are
expected to have a material impact on the Group and Company financial
statements.
2. Accounting Policies
Revenue Recognition
Revenue represents net invoiced sales of services, excluding value added tax.
Sales of software licence subscriptions are recognised over the period of the
contract with the deferred income being recognised in the statement of
financial position. Sales of one-off installation services are invoiced and
recognised fully on completion of the installation.
Contract Assets and Liabilities
Contract assets are recognised when Osirium has transferred goods or services
to the customer but where Osirium is yet to establish an unconditional right
to consideration. Contract assets are treated as financial assets for
impairment purposes. Contract liabilities are recognised when Osirium receive
payment in advance of satisfaction of its performance obligations. Contract
liabilities are included as financial liabilities in deferred income.
Rounding
The figures in the financial statements of Osirium for the current and
preceding year are rounded to nearest whole pound.
Functional and Presentational Currency
Items included in the Financial Statements of Osirium are measured using the
currency of the primary economic environment in which the entity operates
('the functional currency'). The financial information is presented in UK
sterling (£), which is the functional and presentational currency of Osirium.
Financial Instruments
Financial assets and financial liabilities are recognised in Osirium's
statement of financial position when Osirium becomes party to the contractual
provisions of the instrument. Financial assets are de-recognised when the
contracted rights to the cash flows from the financial asset expire or when
the contracted rights to those assets are transferred. Financial liabilities
are de-recognised when the obligation specified in the contract is discharged,
cancelled or expired.
Financial assets
Trade and Other Receivables
Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method
less the provision for impairment. Appropriate provisions for estimated
irrecoverable amounts are recognised in the statement of comprehensive income
when there is objective evidence that the assets are impaired. The amount of
the provision is the difference between the carrying amount and the present
value of estimated future cash flows interest income is recognised by applying
the effective interest rate, except for short term receivables when the
recognition of interest would be immaterial. The directors have made an
assessment on the amounts due from group undertakings under IFRS 9 for
impairment of financial assets
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, demand deposits held on call
with banks, and other short- term highly liquid investments with original
maturities of three months or less that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Cash and cash equivalents are shown in the financial statements as 'cash and
cash equivalents'.
Impairment of Financial Assets
Osirium recognises a loss allowance for expected credit losses on financial
assets which are either measured at amortised cost or fair value through other
comprehensive income. The measurement of the loss allowance depends upon
Osirium's assessment at the end of each reporting period as to whether the
financial instrument's credit risk has increased significantly since initial
recognition, based on reasonable and supportable information that is
available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk
since initial recognition, a 12-month expected credit loss allowance is
estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the
next 12 months. Where a financial asset has become credit impaired or where it
is determined that credit risk has increased significantly, the loss allowance
is based on the asset's lifetime expected credit losses. The amount of
expected credit loss recognised is measured on the basis of the probability
weighted present value of anticipated cash shortfalls over the life of the
instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other
comprehensive income, the loss allowance is recognised in other comprehensive
income with a corresponding expense through profit or loss. In all other
cases, the loss allowance reduces the asset's carrying value with a
corresponding expense through profit or loss.
Financial Liabilities and Equity
Trade and Other Payables
Trade payables are initially measured at fair value and are subsequently
measured at amortised cost using the effective interest rate method; this
method allocates interest expense over the relevant period by applying the
'effective interest rate' to the carrying amount of the liability.
Borrowings
Borrowings are recognised initially at fair value less transactions costs
incurred. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised in the statement of comprehensive income over the period of
borrowings using the effective interest method.
The component of the convertible notes that exhibits characteristics of a
liability is recognised as a liability in the statement of financial position,
net of transaction costs.
On the issue of the convertible notes the fair value of the liability
component is determined using a market rate for an equivalent nonconvertible
bond and this amount is carried as a non-current liability on the amortised
cost basis until extinguished on conversion or redemption. The increase in the
liability due to the passage of time is recognised as a finance cost. The
remainder of the proceeds are allocated to the conversion option that is
recognised and included in shareholders equity as a convertible note reserve,
net of transaction costs. The carrying amount of the conversion option is not
premeasured in the subsequent years. The corresponding interest on convertible
notes is expensed to profit or loss.
Equity
Equity instruments issued by Osirium are recognised at fair value on initial
recognition net of transaction costs.
Taxation
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible.
Osirium's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the date of the Statement of
Financial Position.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
information and the corresponding tax bases used in the computation of the
taxable profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that is
probable that taxable profits will be available against which is deductible
temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit not the
accounting profit.
The carrying of deferred tax assets is reviewed at each statement of financial
position date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
year when the liability is settled or the asset is realised based on tax laws
and rates that have been enacted at the Statement of Financial Position date.
Deferred tax is charged or credited in the Statement of Comprehensive Income,
except when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other
comprehensive income.
Deferred tax assets and liabilities are offset when it is a legally
enforceable right to set off the current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and Osirium intends to settle its current tax assets and liabilities
on a net basis.
Property, Plant and Equipment
Plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses. Depreciation is provided at the following
annual rates in order to write off each asset over its estimated useful life.
Fixtures and fittings - 25% on cost
Computer equipment - 33% on cost
Osirium has elected not to recognise a right-of-use asset and corresponding
lease liability for short-term leases with terms of 12 months or less and
leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
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 year 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.
Right of Use Assets
A right-of-use asset is recognised at the commencement date of a lease. The
right-of-use asset is measured at cost, which comprises the initial amount of
the lease liability, adjusted for, as applicable, any lease payments made at
or before the commencement date net of any lease incentives received, any
initial direct costs incurred, and, except where included in the cost of
inventories, an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the
unexpired period of the lease or the estimated useful life of the asset,
whichever is the shorter. Where Osirium expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its
estimated useful life. Right-of-use assets are subject to impairment or
adjusted for any re-measurement of lease liabilities.
Lease Liability
The lease liability is initially measured at the present value of the lease
payments during the lease term discounted using the interest rate implicit in
the lease, or the incremental borrowing rate if the interest rate implicit in
the lease cannot be readily determined. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1 January 2019
was 7.5%. The lease term is the non-cancellable period of the lease plus
extension periods that the Group is reasonably certain to exercise and
termination periods that the Group is reasonably certain not to exercise.
Leases are cancellable when each party has the right to terminate the lease
without permission of the other party or incurring more than an insignificant
penalty. The lease term includes any rent-free periods.
Subsequent measurement of the lease liability
The lease liability is subsequently increased for a constant periodic rate of
interest on the remaining balance of the lease liability and reduced for lease
payments.
Interest on the lease liability is recognised in profit or loss, unless
interest is directly attributable to qualifying assets, in which case it is
capitalised in accordance with the Group's policy on borrowing costs.
Employee Benefit Costs
Osirium operates a defined contribution pension scheme. Contributions payable
to Osirium's pension scheme are charged to the Statement of Comprehensive
Income in the year to which they relate.
Share-based Payments
Osirium issues equity-settled share-based payments to certain employees and
others under which Osirium receives services as consideration for equity
instruments (options) in Osirium. Equity-settled share-based payments are
measured at fair value at the date of grant by reference to the fair value of
the equity instruments granted. The fair value determined at the grant date of
equity-settled share-based payments is recognised as an expense in Osirium's
Statement of Comprehensive Income over the vesting period on a straight-line
basis, based on Osirium's estimate of the number of instruments that will
eventually vest with a corresponding adjustment to equity. The expected life
used in the valuation is adjusted, based on management's best estimate, for
the effect of non-transferability, exercise restrictions, and behavioural
considerations.
Non-vesting and market vesting conditions are taken into account when
estimating the fair value of the options at grant date. Service and non-market
vesting conditions are taken into account by adjusting the number of options
expected to vest at each reporting date. When the options are exercised
Osirium issues new shares. The proceeds received net of any directly
attributable transaction costs are credited to share capital (nominal value)
and share premium.
Segment Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors that makes strategic decisions.
Financial Risk Factors
Osirium's activities expose it to a variety of financial risks: market risk,
credit risk and liquidity risk. Osirium's overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on Osirium's financial performance. Risk management
is carried out by management under policies approved by the directors.
The directors provide principals for overall risk management, as well as
policies covering specific areas, such as, interest rate risk, non-derivative
financial instruments and investment of excess liquidity.
Earnings per Share
Basic earnings per share is calculated by dividing the profit or loss
attributable to the owners of Osirium Technologies plc, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the financial year.
Critical Accounting Estimates and Judgements
The preparation of the Financial Statements requires management to make
judgements and estimates that affect the reported amounts of assets and
liabilities at each statement of financial position date and the reported
amounts of revenue during the reporting periods. Actual results could differ
from these estimates. The directors consider the key areas to be in respect of
the valuation of intangible assets and impairment of intercompany receivables.
Information about such judgements and estimations are contained in individual
accounting policies and trade and other receivables (Note 4).
IFRS 16 Leases
Right-of-use assets and corresponding lease liabilities are recognised in the
statements of financial position. Straight line operating lease expense
recognition is replaced with a depreciation charge for the right-of-us assets
(included in operating costs) and an interest expense on the recognised lease
liabilities (included within finance costs). For classification within the
statement of cash flows, the interest portion is disclosed in operating
activities and the principal portion of the lease payments are separately
disclosed in financing activities
3. Segment Information and Revenue
Management information is provided to the chief operating decision maker as a
whole. As a result Osirium is a single operating segment. All revenue is
derived from the sale of software subscriptions and consultancy services to
the customers in the UK, and is recognised over time.
The Group had one (2021: one) customer that represented over 10% of total
revenue. The total revenue for this customer was £239,488 (2021: £206,807)
which represents 12% (2021: 14%) of the Group's total income for the year.
4. Trade and Other Receivables
Group
As at As at
31-Dec-22 31-Dec-21
£ £
Current:
Trade receivables 143,052 329,965
Other receivables 632,190 594,562
Prepayments 131,456 157,733
Amounts due from group undertakings - -
906,698 1,082,260
As at 31 December 2022 Osirium had no material receivables past due but not
impaired (31 December 2021: £nil).
The directors have made an assessment on the amounts due from group
undertakings under IFRS 9 for impairment of financial assets, with this being
looked at every 12 months on a continuous basis.
The Directors consider that the carrying value of trade and other receivables
approximates their fair value.
Allowance for Expected Credit Losses on Trade Receivables
The group has assessed the expected credit losses for the year ended 31
December 2022 and concluded that there is no material impairment against trade
receivables.
5. Cash and Cash Equivalents
Group
As at As at
31-Dec-22 31-Dec-21
£ £
Cash and cash equivalents 1,081,135 383,854
The Directors consider that the carrying value of cash and cash equivalents
approximates their fair value.
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