Osirium Tech Regulatory News (OSI)

8 May 2019

Osirium Technologies plc

("Osirium" or "Group")

Final results

Osirium Technologies plc (AIM: OSI.L), a leading vendor of cloud-based cybersecurity software, today announces its final results for the 12 months ended 31 December 2018.

Financial highlights

· Total revenue increased 48% to £957,461 (2017: £647,580). Deferred revenues as at 31 December 2018 were £725,000, compared with £505,000 at the prior period underpinning confidence in the current financial year

· Total bookings up 34% to £1,177,292 (2017: £876,323) supported by a growing awareness of Privileged Access Management (PAM)

· Operating loss of £2,674,800 (2017: £2,296,814), in line with Management expectations and primarily reflecting increased investment in sales and marketing and additional headcount in the R&D and Customer Support teams

· Cash and cash equivalents as at 31 December 2018 of £2,386,624 (2017: £1,023,811)

Operational highlights

· Increased sales momentum with existing and new customers in the UK and abroad, demonstrated by increase in total revenues and bookings

· Inclusion in the Gartner Magic Quadrant of leading suppliers of PAM solutions

· Expanded range of new customers in established sectors such as finance and retail, as well as securing new blue-chip accounts in the energy, manufacturing, travel and transport services sectors

· Renewal of largest customer, a leading global asset management company, for a further 12 months and largest international contract renewal to date with one of the leading telecommunications companies in the Middle East

· Release of PxM Express, free version of the Osirium Platform, to drive Proof of Concept (POC) initiatives with new prospects

· Investment in our second generation Task Automation solution, Opus, to broaden Osirium's offering beyond cybersecurity into DevOps, NetOps and IT Service Management

· Investment in a Strategic Technology Partnership with RazorSecure to deliver cybersecurity solutions for Critical Infrastructure, Transport and Industrial Internet-of-Things (IoT) markets

· Release of PxM Platform for Microsoft Azure and Amazon Web Services

· Senior management team strengthened with appointment of Chris Heslop as Marketing Director

Post-year end

· Increasing conversion rate of POCs to sales with more POCs scheduled for Q1 2019 than in the whole of 2018

· Strong lead generation and presence at major industry events - first customer win in North America

· Successful early engagement with existing customers deploying Opus second generation task automation offering

· Technology Partnership with RazorSecure has enabled development of new Privileged Endpoint Management solution

· Further additions to management team Stuart McGregor (Sales Director) and Barry Scott (Customer Service Director)

· Further patents registered, reinforcing innovation and competitive advantage

David Guyatt, Chief Executive Officer, commented:

"We are pleased to report these final results and the Group continues to gain market share from new and existing customers in the UK and internationally. The Privileged Access Management (PAM) market is gaining pace and becoming increasingly mainstream amongst corporates.

"Our unique proposition to address security controls in today's increasingly complex IT environment is accelerating our growth with new and existing customers. We are confident that there will be further progress as the Group maintains this momentum and further expands our market presence."

- Ends -

For further information:

Notes to Editors:

About Osirium

Osirium Technologies plc (AIM: OSI.L) operates in one of the fastest growing parts of the cybersecurity market and is a leading vendor of Privileged Access Management ("PAM") software. Osirium's cloud-based products protect critical IT assets, infrastructure and devices by preventing targeted cyber-attacks from directly accessing Privileged Accounts, removing unnecessary access and powers of Privileged Account users, deterring legitimate Privileged Account users from abusing their roles and containing the effects of a breach if one does happen.

Osirium has defined and delivered what the Directors view as the next generation PAM solution. The team has developed the concept of a Virtual Air Gap to separate users from passwords. Built on Robotic Automation technology, Osirium's Privileged Task Management module further strengthens Privileged Account security by minimising the cyber-attack surface and delivering an impressive return on investment benefits for customers.

Founded in 2008 and with its headquarters in Reading, UK, the Group was admitted to AIM in April 2016. For further information please visit www.osirium.com

CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT

Overview

We are pleased to report the final results for the 12 months ended 31 December 2018. Osirium continues to make strong progress and gain market share internationally. As well as winning new UK accounts in sectors such as financial services and retail, where we had an established presence, the Group also secured customers in the manufacturing, transport and energy and utility sectors.

Building on earlier wins in the healthcare sector, the Group was awarded further contracts at two further NHS Trusts. Outside the UK, we were awarded a contract with a significant provider of financial services in the Middle East, and were delighted that a major account in the same region underlined its commitment to Osirium with the renewal of its contract.

Our Proof of Concept (POC) programme continues to be a strong key performance indicator (KPI) enabling us to better predict when our pipeline opportunities will close. At the beginning of 2019, the Group had more POCs scheduled for the first quarter than occurred in the whole of 2018 and the rate of conversion from POC to sale continues to increase.

In December 2018 we were delighted to be included in the Gartner Magic Quadrant for Privileged Access Management, and to be positioned as the highest European vendor of PAM solutions in terms of completeness of both vision and execution.

The Group is confident that there will be further progress in 2019 and beyond as new prospects are converted through our UK and international channel partners as the market for PAM becomes increasingly 'mainstream'. In addition, we expect to see further revenues from existing customers through the continued implementation of our 'land and expand' approach that continues to add value to the business.

Like any organisation Osirium is only as good as its employees. We are therefore very excited to have added excellent new hires across all technical and commercial functions over the course of the year. On behalf of the Board, we would like to thank the whole team for their dedication and hard work.

We remain very confident in the Group's prospects and believe Osirium has a unique proposition and is well placed to prosper as cybersecurity becomes an even greater priority for corporates globally.

Results

Revenue was up £300,969 versus the same 12 month period in 2017. The revenue in each period was driven by the increase in bookings from £876,323 to £1,177,292 resulting in a 34% rise in total revenue for the comparable 12 month period in 2017. As at 31 December 2018, the Group had cash balances of £2,386,624.

Osirium's loss before tax for the 12 months to 31 December 2018 was £2,675,374 compared with a loss before tax of £2,292,624 for the 12 months ended 31 December 2017. Revenue for the 12 months was £957,461, versus £647,580 for the previous 12 month period.

The Group has also continued to increase its investment in R&D this past year. During this period, £1,439,119 has been capitalised, an increase of 15% from the previous year. The focus of this R&D investment has been on refining and further developing our next generation PAM solution, the PxM Platform, and working hard to exceed both new and prospective clients' expectations. The Group anticipates Software-as-a-Service (SaaS) revenues to increase further during 2019 and is also targeting increased service revenues with the addition of extra consultancy resource.

The Market - Increasing Validation, Widening Scope

2018 has been a year marked by repeated signs of industry and business validation for PAM, driven by a number of factors:

· Legislation and regulation, including GDPR and cyber-essentials

· Privileged Accounts increasingly becoming critical targets for cyber-attackers

· Damage to corporate reputation and brand

· Continued growth in the outsourcing of IT functions and the need to grant privileged access to third parties, including vendors, contractors, and service provider technicians in a managed regulated environment

· An increasing number of Internet of Things (IoT) connected work devices.

In this context, in early 2019 Gartner listed PAM as the number one priority in a list of the top ten security projects for the year. Building on our 2017 recognition by Gartner as a 'Cool Vendor', in December Osirium was included in Gartner's first ever PAM-specific Magic Quadrant, with similar market reports published by two other top software analysts, Kuppinger Cole and Forrester. By 2021, Gartner expects that 40% of organisations (up from less than 10% in 2018) using formal change management practices will have embedded and integrated PAM tools within them, significantly reducing the overall risk surface.

The scope for PAM continues to expand, increasingly touching on practices such as DevOps, a set of software development practices that combine software development and information technology operations to shorten the systems development life cycle. Gartner predicts that by 2021 over 50% of organisations using DevOps will adopt PAM-based products, rising rapidly from less than 10% in 2018.

Osirium sees further validation of the PAM market by the recent consolidation involving BeyondTrust, Bomgar, Avecto, Lieberman and Centrify. From being seen as a niche offering, PAM is now increasingly becoming an indispensable weapon in the portfolio of the cybersecurity vendors, as well as the security integrators and resellers that drive the market uptake.

Awareness of the business implications of PAM-related security risks has continued to rise, fuelled by high profile breaches at organisations such as British Airways, Facebook, T-Mobile, Marriott Hotels and FIFA. This has been matched by the proliferation of cybersecurity tradeshows, conferences, forums and seminars that specifically look to include Privileged Access Management as a major discussion topic.

At the same time, Osirium has seen a parallel expansion in the scope of PAM projects we run with our individual customers. In particular, the range of use cases spurring customers to invest time and money in our solutions has become broader and deeper:

· Manage the 'insider threat'

· Control privileged access for third party contractors

· Meet rigorous compliance obligations for GDPR

All of these drive more and more customers to acknowledge the need for PAM.

Our Strategy: innovation, customer focus, market expansion

To build on our current strengths and seize the opportunities presented by current market disruption we are focusing on three key strategies:

Commitment to innovation

· Next generation, full-featured PAM technology

· Transforming our award-winning, first generation Task Automation engine to address significant opportunities both in and beyond cybersecurity

· Partnerships with innovative technology providers including an initiative to develop a Privileged Endpoint Management solution

· Out-of-the-box integration with a wide range of complementary technologies

· Continued thought leadership activity and influencing of the influencers

· Four patents pending and a further two patents filed

Customer focus

· Running effective POC programmes, that are simple to run and demonstrate immediate value

· Broadening the range of use cases and operational challenges we address

· Continuing development of a Global Technical Support culture and infrastructure

· Driving entry-level deployments to create 'stickiness' and stimulate future demand

· Ramping up our 'land and expand' strategy, proving to customers the breadth and depth of innovation in our PxM platform

Market expansion

· Accelerating sales momentum and expanding our new prospects pipeline in a rapidly growing market

· Maintaining a direct-touch model to customers in conjunction with close collaboration with channel partners

· Growing market share through effective sales, marketing and support

· Expanding the Group's marketing momentum and evolving the Osirium brand into a confident and powerful global icon

Trading and Outlook: from Automating Security to Securing Automation

The Osirium proposition is strongly placed to take advantage of growing market awareness of PAM. We are building an increasing pipeline of opportunities across a wide range of industry sectors, with a well-defined POC model for engaging with new prospects and a consistent track record of expanding our business with existing customers.

In 2018, the Group solved customer problems and displaced competitors by offering high functionality PAM technology that was simple to deploy, with rapid time to value benefits, backed up by excellent support capabilities. A key differentiator has been our Task Automation capability, recognised by Gartner and other analysts, that minimises the attack surface by automating essential operational tasks and reducing the scope for errors and security breaches. We expect 'Automating Security' to continue to be an important factor for success in the cybersecurity marketplace in 2019.

However, our vision for Osirium goes beyond this. Building on our expertise in this field we are excited by the opportunities presented by our second-generation Opus Task Automation solution. Opus enables us to address not only PAM and cybersecurity threats, but also help customers to automate vital and complex process challenges in a secure environment. By opening up fields such as DevOps, NetOps and IT Service Management, Opus considerably expands the markets in which we can compete and win. 'Securing Automation' as well as 'Automating Security'.

Trading in the first four months of 2019 has been in line with our expectations and we are pleased to be able to announce multiple contract wins in Q1 2019. It is clear that the growing awareness of PAM in the market presents us with a substantial opportunity and the Board is currently evaluating options so as to ensure that Osirium is able to take advantage of this. This may result in Osirium carrying out a fundraise in 2019 with a view to accelerating sales growth and strengthening its balance sheet.

For these reasons, with the customer base we have established, and with the team we have built up at Osirium, the Group looks forward with confidence to 2019.

Simon Lee David Guyatt

Chairman Chief Executive Officer

7 May 2019 7 May 2019

FINANCIAL REVIEW

Overview

31 December 2018, revenue was £957,461, an increase of 48% compared with the year ended 31 December 2017: £647,580.

Bookings for twelve month period ended 31 December 2018, represented by total invoiced sales for annual subscriptions, were £1,177,292, an increase of 34% compared with twelve month period ended 31 December 2017 where bookings were £876,323.

The Group has significantly increased revenue and bookings, demonstrating greater customer engagement and investment.

The twelve month loss before tax for the Group was £2,675,374, a small increase from a loss of £2,292,624 for the year to 31 December 2017. The losses of the Group have increased following significant investment in increasing headcount and activity levels in our sales, pre sales marketing and engineering departments of the business.

Revenue for the twelve month period ended 31 December 2018 was £957,461 (2017: £647,580). Customer numbers almost doubled for the year ended 31 December 2018 to 59 from 30 as at the end of December 2017. This reflects the increasing sales momentum felt within the business as the Group increases its customer base, and customer demand in the market for a PAM solution grows.

Our deferred revenues as at 31 December 2018 were £725,000, compared with deferred revenues at the end of December 2017 of £505,000, helping provide a degree of visibility and certainty over our future revenues.

The Group has benefited from the tax relief given on development expenditure, which has resulted in a research and development tax credit of £407,606 being claimed for the year to 31 December 2018, compared with £409,421 for the previous year to 31 December 2017. This further demonstrates the consistent investment made in the Company's innovative cybersecurity product.

Loss per share for the year on both a basic and fully diluted basis was 17p. In the prior year the basic and diluted loss per share was 18p.

The Directors are not recommending the payment of a final dividend (2017: £nil).

The Group spent £1,439,119 (2017: £1,254,268) on direct staff and contractor costs for research and development, of which all was capitalised in both periods.

This expenditure relates to the development of new and enhanced software offerings. The Group invests in new product development and the continual modification and improvement of its existing products to meet technological advances, customer and ever expanding new market requirements of the fast paced cybersecurity market.

The Group has embarked upon a strategy which will extend its activities to the provision of cybersecurity services into new areas such as financial services and critical national infrastructure and other market sectors as the need for Osirium's software is sector agnostic, in addition to developing its activities outside of the UK.

The Group's cash balances were £2,386,624 (2017: £1,023,811).

Cash reserves were boosted by the fund raise that raised £4,200,000 gross cash in March 2018.

Net cash used in operating activities for the period was £1,173,618 (2017: £1,232,558).

Key performance indicators (KPIs)

The Group's progress against its strategic objectives is monitored by the Board of Directors by reference to KPIs. Progress made is a reflection of the performance of the business since flotation and the Group's achievement against its strategic plans. The Group's major KPIs are bookings, revenue, new channel partners signed up, new customer acquisition, retaining and growing customer renewals, the number of proof of concepts and software evaluations.

Bookings are monitored on a monthly basis and reported in detail at board meetings. Bookings have increased by 34% to £1,177,292 for the year to 31 December 2018 from £876,323 for the year ended 31 December 2017.

As a result of the increase in booking, the revenue KPI is performing well, with total revenue up 48% to £957,461 (2017: £647,580), for the periods under review.

Non-financial KPIs include:

- New channel partners: with a UK distributor and two overseas distributors signed up to date and business development directors appointed in the Middle East and Germany, the Board is pleased with this progress.

- Customer retention: All bar one customer were retained (a loss of £6,500 in revenue and bookings) in the year, which compares favourably with our SaaS peers highlighting the 'mission-critical' nature of our solution and customer satisfaction.

- New customer wins: We were fortunate to add 14 new customers in 2018 and expect this growth to continue as PAM becomes mainstream. POCs have also increased now that the Group has more resources to support this activity and this is giving us greater control over the timing of closing new sales from our sales pipeline, not only in the UK but with our fledgling partners overseas.

- Average contract values have increased from our existing base as customers add devices and roll Osirium's solutions out across their wider IT estates both in the UK and abroad; further evidence that our stated 'land and expand' objective with customers is working.

The Group also measures and monitors brand recognition and momentum increases in the Osirium name as we continue to build a global brand. Brand recognition includes monitoring Osirium's Search Engine Optimisation Position and quarterly growth in qualified sales leads with a quantified 'call to action'.

Rupert Hutton

Chief Financial Officer

7 May 2019 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CASHFLOWS

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

The preliminary announcement does not constitute full financial statements.

The results for the year ended 31 December 2018 included in this preliminary announcement are extracted from the audited financial statements for the year ended 31 December 2018 which were approved by the Directors on 7 May 2019. The auditor's report on those financial statements was unqualified and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006. 

The 2018 annual report is expected to be posted to shareholders and included within the investor relations section of our website on 8 May 2019 and will be considered at the Annual General Meeting. The financial statements for the year ended 31 December 2018 have not yet been delivered to the Registrar of Companies.

The auditor's report on the consolidated financial statements of Osirium plc for the period ended 31 December 2017 was unqualified and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006. The financial statements for the period ended 31 December 2017 have been delivered to the Registrar of Companies.

Basis of preparation

The financial statements have been prepared on a going concern basis under the historical cost convention, and in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU, the International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the International Accounting Standards Boards ("IASB") that are effective or issued and early adopted as at the time of preparing these Financial Statements and in accordance with the provisions of the Companies Act 2006.

Going Concern

As part of their going concern review the Directors have followed the guidelines published by the Financial Reporting Council entitled "Guidance on the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity Risks (2016)".

The Directors have prepared detailed financial forecasts and cash flows looking beyond 12 months from the date of these Financial Statements. In developing these forecasts the Directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period.

On the basis of the above projections, the Directors are confident that Osirium has sufficient working capital to honour all of its obligations to creditors as and when they fall due. Accordingly, the Directors continue to adopt the going concern basis in preparing the Financial Statements.

Cash reserves were boosted by the fund raise in the year that raised £4m net cash in March 2018.

New and amended standards and interpretations

New standards, amendments and interpretations effective after 1 January 2018 were not early adopted by Osirium.

New Standards

IFRS 9, 'Financial Instruments', effective for annual periods beginning on or after 1 January 2018 addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the Statement of Comprehensive Income, unless this creates an accounting mismatch. Osirium has adopted IFRS 9 in this accounting year beginning on 1 January 2018.

IFRS 15, 'Revenue from contracts with customers', is effective for accounting periods beginning on or after 1 January 2018. IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.

The five steps in the model are as follows:

· Identify the contract with the customer.

· Identify the performance obligations in the contract.

· Determine the transaction price.

· Allocate the transaction price to the performance obligations in the contract.

· Recognise revenue when (or as) the entity satisfies a performance obligation.

Due to the SaaS nature of the contracts where revenue is taken over the life of the contract and services are recognised as delivered the impact of IFRS 15 will be immaterial.

Amendments:

· IFRS 5 - Non-current assets held for sales and discontinued operations

· IFRS 7 - Financial instruments, disclosures

· IAS 1 - Presentation of financial statements

· IAS 16 - Property, plant and equipment

· IAS 19 - Employee benefits

· IAS 34 - Interim financial reporting

· IAS 38 - Intangible assets

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.

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.

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'.

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.

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

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 us 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 probably 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.

Operating Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease, except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

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 a 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 principles 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.

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 the share based payment charge. Information about such judgements and estimations are contained in individual accounting policies.

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 two (2017: three) customers that all represented over 10% of total revenue each. The total revenue for these two customers was £339,256 (2017: £352,880) which represents 35% (2017: 55%) of the Group's total income for the year:

4. Trade and Other Receivables

All trade receivable invoices that make up the balances were invoiced on or after 11 September 2018.

As at 31 December 2018 Osirium had no material receivables past due but not impaired (31 December 2017: £nil). The Directors consider that the carrying value of trade and other receivables approximates their fair value.

5. Cash and Cash Equivalents

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