Osirium Tech Regulatory News (OSI)

21 April 2022

Osirium Technologies plc

("Osirium" or the "Group")

Final Results

Osirium Technologies plc (AIM: OSI), a leading vendor of cloud-based cybersecurity software, announces its final results for the year ended 31 December 2021.

Financial highlights

Operational highlights

Post-period and outlook

David Guyatt, Chief Executive Officer of Osirium said:

"I am pleased to report on a year of significant growth in customers and market reach for the Group, underpinned by high customer retention and ongoing product innovation. We have grown our presence and brand awareness in key focus sectors as well as forged new partnership agreements, providing a valuable route to market. This progress is the result of the hard work of everyone at Osirium, and I would like to thank the whole team for their efforts.

"We have started the new year with strong momentum in new customer acquisitions coupled with increasing contract values, reflecting a wider return to pre-pandemic buying behaviour as customers renew focus on investment in IT projects. In addition, we are seeing the value of our complementary product portfolio coming to the fore, with additional product capabilities beyond our core PAM product emerging as standalone solutions, in addition to the upselling and cross-selling potential they offer.

"Looking ahead, the market for Privileged Security remains as promising as ever. With the growing prominence of the Group's complementary product proposition, coupled with increasing momentum across bookings values and pipeline, and supported by a high base of customer renewals, the Board looks ahead to the rest of 2022 and beyond with increasing confidence."

About Osirium Technologies Plc

Osirium Technologies plc (AIM: OSI) is a leading UK-based cybersecurity software vendor delivering Privileged Access Management (PAM), Privileged Endpoint Management (PEM) and Osirium Automation solutions 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 3rd 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 and to free up 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 and 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.

Chairman and Chief Executive's Statement

Overview

Osirium further established itself as leading mid-market provider of Privileged Access Security in 2021, expanding market reach and building on our technology capabilities. Against a market backdrop of prolonged uncertainty as a result of the ongoing effects of the pandemic, the Osirium team worked tirelessly to support customers with mission-critical technology and best-in-class customer service, which is reflected in the Group's consistently high customer retention rates.

Significant progress was achieved against the Group's land-and-expand strategy, with the Group more than doubling its customer base in the year to over 100 customers, reflecting the growing awareness and demand for Privileged Security in line with the market maturation. We achieved this through the expansion of key sectors alongside a widening of the customer base through the Group's partner network. Healthcare proved to be a substantial market for the Group during the period, with a number of contracts signed with NHS trusts. The Group continues to focus on this area alongside other UK public sector areas such as the education sector which present an equally exciting opportunity for growth.

Whilst growth of the customer base was coupled with lower initial contract values, a result of a slowdown in customer decision making in an uncertain economic environment, these new customers pave the way for further expansion long-term through upselling and cross-selling. The Group has proven successful in providing additional services to existing customers in 2021. In addition to the continued momentum in our Privileged Access Management (PAM) solution, our add-on products Privileged Process Automation (PPA) and Privileged Endpoint Management (PEM) solutions are also gaining traction.

We have seen an increase in paying customers for our PPA product during 2021, with new customers buying as part of an initial combined PAM and PPA purchase, as well as customers buying PPA solely as a stand-alone product. We expect to see a strong pipeline with multiple opportunities ahead for this solution, alongside the emergence of PEM, as the next product to complete the Group's solution. Additionally, where these products are not cross sold, they function as an important tool for gaining an initial touchpoint with our customers with a view to expanding to other services.

Our domestic and international partnerships have continued to strengthen, and we saw real traction in sales overseas, including first sales in new regions such as South Africa and Asia-Pacific, as well as within new countries in Europe such as Ireland, Poland, and Hungary.

We have continued to invest in our staff and product suite, focusing on enhancements across our PAM, PPA and PEM solutions. The Group's technology suite continues to be a key differentiator in the market, characterised by its robust functionality yet ease of implementation. Customers are looking for quick improvements in security posture and minimal effort in deployment and on-going management; both areas where the Group's customers have shown success as demonstrated in our published case studies.

Looking beyond PAM, our automation technology helps customers to simplify their processes, empower their teams and protect their businesses further reducing cost and effort.

The Group is pleased to report continued momentum in customer acquisition into the new financial year, while expanding its services to existing customers. Q1 2022 was a record first quarter for bookings as the Group has maintained its focus on landing projects with NHS customers, while expanding its reach in the higher education sector and commercial markets.

Results

The Group's total bookings for the period was £1.60 million, in line with the previous year (2020: £1.57 million). Recognised revenue was also in line with 2020 at £1.47 million (2020: £1.43 million). Deferred revenue as at 31 December 2021 was £1.64 million. Debtors and cash balances as at 31 December 2021 was £0.70 million. The Group's loss before tax for the period was £3.43 million (2020: £3.10 million).

In line with its focus on product innovation, the Group continues to invest in R&D for direct staff and contractor costs, spending £1.85m (2020: £1.81m) on direct staff and contractor costs for research and development, of which all was capitalised in both periods. This expenditure covers the development of Osirium's new and enhanced software offerings. Investment into the Group's new product development continues, along with the modification and improvement of the current product base in line with technological advances, customer needs and the market requirements of the consistently evolving cybersecurity market.

Business model

Osirium's revenue model is built around its software subscriptions, with its licensing models adapted to best suit regional and customer needs. The Group's PAM product is charged per device being protected, whereas the PPA product is charged per user and number of transaction 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 Osirium's software solutions. From the end of 2021 and into 2022, the Group has seen increasing automation add-on sales to its PAM customers, and we expect that progress to be seen with its PEM product as well.

Throughout 2021, innovative sales packages of software subscriptions, production support and implementation services in the Group's PAM and PPA solutions were developed to target specific opportunities. This approach was devised initially for the opportunities in healthcare with NHS trusts early in 2021 and subsequently targeting other markets such as education. These packages make it easy for new customers to acquire Osirium PAM or PPA for a small team and establish a base for future add-on sales supporting the Group's "land and expand" strategy.

As reported at the 2020 final results, digital marketing has emerged in recent years as a pivotal element of the Group's strategy, enabling it to market the Group and develop new business. It is expected that the number of in-person events and trade shows will continue to normalise in 2022, and the increased digital marketing activity will continue in parallel to continue to drive up the volume and quality of new customer leads.

Market - giving customers confidence in their IT

The market for Privileged Security has continued grow, in line with the increasing awareness of these services globally. North America often represents the first stage of adoption for many cybersecurity and IT products, with demand growing as a product is more broadly deployed across smaller and medium-sized companies, and the take-up of this technology flowing through to Europe and other geographies. Privileged Security has now become a highly sought-after product in North America, with a PAM solution often seen as a requirement for cybersecurity insurance on the continent. Osirium is increasingly seeing this need for Privileged Security in line with this direction of travel of technology, and management remain confident in the continued adoption across Europe, Asia and Africa.

Ransomware continues to be the predominant threat for IT departments. The Ransomware Index 2021 (independent research commissioned by Osirium) shows that nearly 80% of businesses in the UK have been the victim of an attack, yet only 31% say they invest sufficiently to protect against such attacks. The Index also highlighted that while 98% say backups are critical to recovery after an attack, only 11% use PAM to protect backup systems even though the National Cybersecurity Centre have highlighted the critical need for that extra security. This research demonstrates not only the relevance of Osirium's solution, but the potential market opportunity ahead.

COVID has undoubtedly accelerated the awareness of Privileged Security as an essential cybersecurity product in line with more staff working remotely. Market indications are that, although many will return to offices in 2022, hybrid or fully remote working is a permanent change for most organisations. Throughout the year, many customers sought our services as part of a wider configuration on how to operate their IT systems with home working long-term.

Growth strategy

The Group's growth strategy is centred around three core areas: 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 offering remains a cutting-edge option for organisations looking to address their Privileged Access Security needs.

Innovation in Privileged Access Management, the Group's primary product, has continued during the year. Improvements made to this service include the introduction of SAML Single Sign On (SSO) capability, which allows us to integrate our solutions with identity providers - making PAM easier to adopt by our customers that already have SSO infrastructure. Building on the new browser-based client in PAM, a desktop version was introduced for those users that prefer a local client and more flexibility. Based on extensive user experience research, further enhancements we have made to the client have focused on improving admin productivity.

As PAM is a critical security service - the gateway through which all admin access to devices should be routed - the availability of PAM is key. With PAM v7.0, we have introduced server clustering that does not depend on expensive external database licensing or complex network configuration. In 2021, we took this further by introducing third-party database replication to enhance resilience and simplify product upgrades. While clustering support is built-in, in some territories we introduced add-on pricing to recognise its value and that smaller organisations do not need the extra management required. This change is being rolled out to all territories in 2022 as another route for add-on sales.

An additional core focus during the period has been improvements to PPA, the Group's platform for automating essential IT processes. The Group introduced authentication tools such as Kerberos authentication with Windows devices, increased management integration, future task scheduling capability and a simplified process for on-boarding users. Investments were also made into the Group's software development kit (SDK), ensuring a simple and secure interface for users to perform complex, operations on multiple third-party systems.

Investments into PEM, our solution for Privileged Endpoint Management which allows customers to increase productivity while simultaneously increasing security, have also continued. There were four major software releases for this solution during the year, with a particular emphasis around the ease of provisioning new users into the PEM system.

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. During the year, the Group achieved a 95.4% customer renewal rate.

The Osirium Customer Network continued to meet during 2021. This forum provides important feedback into the company for future development but also helps customers ensure they are making the most of their investment. Topics include using the automation support packaged with PAM (as described earlier) which in turn encourages the need for further automation licenses later.

Another core focus is on increasing our customer communications and support to existing customers to support our consistently high renewal levels. We remain committed to ensuring customers are getting the most out of their investment and we are enhancing this activity in 2022 with dedicated customer success resources.

Market expansion - opening new opportunities for growth through direct and partner channels

Direct

Osirium has established itself as an agile player across mid-tier and upper mid-tier organisations and is recognised for its swift and straightforward installation process, enabling customers to quickly protect their Privileged Security without unnecessary hassle. The Group remains sector-agnostic, serving organisations across the public and private sectors, but during the year further identified a number of key underserviced areas ripe for expansion.

One significant area of growth during the period was healthcare, in which the Group achieved a substantial number of bookings following on from an NHS Digital initiative at the end of 2020, which provided funding to NHS trusts for privileged access solutions to address the mounting challenge from ransomware targeting backup systems. The Group has responded proactively to this NHS customer opportunity, signing a significant number of NHS trusts in 2021 alone and aided by its bespoke product package for this sector. Healthcare remains a significant opportunity for the Group in 2022, with eight new NHS trusts signed in the year so far.

The higher education sector is also emerging as an important area of expansion for the Group, as there have been a series of high-profile breaches and education institutions are typically highly complex and fluid organisations. The Group signed a number of new customers in this sector during the year and has added further customers post-period. The Group sees a strong pipeline of opportunity in this sector and has developed a tailored product package to target further customers in this sector.

Alongside expansion in the public sector, the Group continues to experience good traction in the commercial sector. During the year, the Group signed a number of key deals, including a London-based law firm, a financial services firm and the cross-sell of our PPA solution to a major UK communications provider, an existing PAM customer.

Partner and reseller network expansion

The Group's partner and reseller network is comprised of software distributors and resellers based across five continents. This network has emerged as a pivotal tool for customer acquisition in recent years and continuing to grow this partner and reseller network is a primary objective for Osirium.

The Group achieved substantial progress growing and deepening this network in 2021, including the displacement of the Group's competitors in some instances. New partnerships secured during the period include software distribution firm, Prianto, which has a large network of mid-market customers in Europe as well as in the USA, representing an exciting opportunity for further expansion in North America.

The Group's network produced a number of sales in new regions throughout the year, including in Europe with the Netherlands, Poland, Hungary and Ireland, Singapore, and in South Africa with our first sale to one of the leading mobile networks on the African continent. This area is underserved by larger providers of Privileged Security, and the Group intends to fully capitalise on the greenfield opportunity in this region and beyond.

People

2021 was another challenging year for many, with the first half of the year characterised by lockdown and restrictions across the UK and abroad. We would like to wholeheartedly thank all our staff for their support during this challenging period, whose resilient performance has seen us double our customer base whilst providing excellent services to our existing base.

While Osirium is not immune to the wider pressures on technology firms from wage inflation and staff churn, we are pleased to report we saw limited staff changeover during the period, having retained the core of our teams across both our technology and commercial departments. This is a further credit to the loyalty and dedication of our staff.

Current trading and outlook

Entering the new financial year, the Group achieved a record first quarter for bookings in Q1 2022, with five of the new deals signed during this period each of a greater value than any customer order signed in 2021. As previously reported, the Group believes this reflects a wider return to pre-pandemic average contract values. The Board expects to see these larger average contract values continue as the Group pursues further new business, providing a growing and valuable base from which to pursue its land-and-expand strategy.

Osirium's customer acquisition continues to be strong, with 20 new customer contracts closed in the year as at 31 March 2022. The pipeline for continued customer wins remains healthy and, while maintaining a broad, sector-agnostic approach, Osirium continues its focus on landing projects with NHS customers, while expanding its reach in the higher education sector and commercial markets.

Osirium is also seeing an increasing demand for its additional services, PPA and PEM, with some customers now seeking out these services as standalone products rather than as add-ons, representing an exciting opportunity for further customer acquisition and another touchpoint for cross-selling and up-selling our services. Post-period end, the Group signed its first contract in which the PPA order was significantly larger than the PAM component, demonstrating the Group's growing capabilities around the provision of a complete toolkit of privileged protection solutions

Customer renewals also represent a significant opportunity for Osirium as part of its land and expand strategy, and the Group's value under contract provides good visibility into new financial year, combined with a strengthened balance sheet as result the £1.0 million fundraise in February 2022. The Board would like to thank its shareholders for their continued support.

Looking ahead, the market for Privileged Security remains as promising as ever. With the growing prominence of the Group's complementary product proposition, coupled with increasing momentum across bookings values and pipeline, and supported by a high base of customer renewals, the Board looks ahead to the rest of 2022 and beyond with increasing confidence. As announced at the time of the fundraise in February, the Board continues to assess the Group's go-to-market strategies in order to deliver long term shareholder value. In order to achieve this, the Board considers that the Company will be required to raise additional capital during the second half of 2022.

Financial Review

Overview

The Group has materially grown its customer base, as well as growing its revenue and bookings during the period, demonstrating greater customer engagement and investment. Bookings represent a key financial measure for the Group and demonstrate the Company's progress in the period under review. Bookings for the 12 months ended 31 December 2021, represented by total invoiced sales for annual subscriptions, were £1.60 million, an increase from £1.57 million over the previous year. The headline bookings total reflected an increase of over 100% in total customer numbers during 2021 to 105 as at 31 December 2021.

The Group's revenue recognition policy recognises revenue in equal annual instalments over the course of multi-year contracts. Revenue for the year was £1.45 million, an increase from £1.43 million over the previous year.

Loss after tax for the group was £2.83 million, increased from the loss of £2.50 million for the year to 31 December 2020. The losses of the Group have increased slightly following the company emerging from the COVID-19 pandemic and expenditure levels returning to a more normal level. That spending reflects the significant investment in increasing headcount and activity levels in the business's sales, pre-sales, marketing and engineering departments, building momentum during 2021, ready for 2022.

Revenue Analysis

Revenue for the 12 months ended 31 December 2021 was £1.47 million (2020: £1.43 million). The Group's doubling of customer numbers 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 continues to increase.

The Company's deferred revenues as at 31 December 2021 were £1.64 million, compared with deferred revenues at the end of December 2020 of £1.50 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 £594,562 being claimed in respect of the year to 31 December 2021, compared with £590,223 for the previous year to 31 December 2020. 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 11p. In the prior year, the basic and diluted loss per share was 13p.

Results and Dividend

The Directors are not proposing the payment of a final dividend (2020: £nil).

Research and Development & Capital Expenditure

The Group spent £1.85 million (2020: £1.81 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 these Final Results. 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 £2.83 million in the year ended 31 December 2021 and had net current liabilities of £0.71 million at that date. The Group's cash and cash equivalents decreased by £1.1 million in the same period. Cash and cash equivalents at 31 December 2021 were £0.38 million. Subsequent to the balance sheet date, the Group raised £1.00 million via a share placing and subscription.

In its assessment, the Board has included consideration of the potential ongoing impact of COVID-19 and factored this into the financial assessment of the Group. Trading conditions started to normalise in the latter part of the year ended 31 December 2021. This level of enhanced bookings has carried through to the start of the new financial year, with a great start to the year and a record Q1 recorded. 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 noted above, the Board considers that the Company will be required to raise additional capital during the second half of 2022 in order to deliver on its growth expectations. 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.

Cash Flow

The Group's cash balances at 31 December were £0.38 million (2020: £1.48 million). The Group's cash reserves have since been boosted by the fund raise post year end that raised £1.00 million gross cash (before expenses, fees and commissions) in February and March 2022. Cash used in operations for the period was £1.66 million (2020: £0.97 million).

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows & Consolidated Reconciliation of Liabilities

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

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 2021 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 £2.83 million in the year ended 31 December 2021 and had net current liabilities of £0.71 million at that date. The Group's cash and cash equivalents decreased by £1.1 million in the same period. Cash and cash equivalents at 31 December 2021 were £0.38 million. Subsequent to the balance sheet date the Group raised £1.00 million via a share placing.

In its assessment, the Board has included consideration of the potential ongoing impact of COVID-19, and factored this into the financial assessment of the Group. Trading conditions started to normalise in the latter part of the year ended 31 December 2021. This level of enhanced bookings has carried through to the start of the new financial year, with a positive start to the year and a record first quarter recorded. 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.

The Board considers that the Company will be required to raise additional capital during the second half of 2022. 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 

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board ('IASB') that are mandatory for the current reporting period.

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 

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. 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.

Rounding 

The figures in the financial statements of Osirium for the current and preceding year are rounded to nearest whole pound.

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. As Osirium is loss making and the likelihood is that a proportion of the amount due from the group undertaking will not be received, the directors have deemed it prudent to account for an impairment of £1,595,620 with this being looked at every 12 months on a continuous basis.

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 dates of the Statements 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 remeasurement 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 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 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.

The Group had one (2020: one) customer that represented over 10% of total revenue. The total revenue for this customer was £206,807 (2020: £248,000) which represents 14% (2020: 17%) of the Group's total income for the year.

4. Trade and Other Receivables

As at 31 December 2021 Osirium had no material receivables past due but not impaired (31 December 2020: £nil).

The directors have made an assessment on the amounts due from group undertakings under IFRS 9 for impairment of financial assets. As Osirium is loss making and the likelihood is that a proportion of the amount due from the group undertaking will not be received, the directors have deemed it prudent to account for an impairment of £1,595,620 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 2021 and concluded that there is no material impairment against trade receivables.

5. Cash and Cash Equivalents

The Directors consider that the carrying value of cash and cash equivalents approximates their fair value.