PRSM.L Regulatory News (PRSM)

25 January 2018

Blue Prism Group plc

("Blue Prism" or the "Group")

Full Year Results for the Year Ended 31 October 2017

Significant strategic and commercial progress

Blue Prism (AIM: PRSM), a global leader in Robotic Process Automation ("RPA"), is pleased to announce full year results for the year ended 31 October 2017 (the "Period").

Financial Highlights

· Revenue increased 155 per cent to £24.5m (FY16: £9.6m)

· Recurring licence revenue represented 90 per cent of total revenue (FY16: 85 per cent)

· Exit run-rate (recurring licence revenue) increased to £2.8m per month at 31 October 2017 (31 October 2016: £0.95m per month)

· Adjusted EBITDA loss of £8.3m (FY16: £4.7m)*

· Cash and cash equivalents at 31 October 2017 were £16.3m (31 October 2016: £11.8m)

* Adjusted EBITDA loss is EBITDA loss adjusted to exclude share-based payments and foreign exchange (losses)/gains.

Operational Highlights

· Secured 609 software deals (FY16: 189), comprising:

o 324 new customers (FY16: 96)

o 264 upsells across 131 customers (FY16: 81 upsells across 47 customers)

o All scheduled renewals were achieved in the period, securing 21 renewals (FY16: 12 renewals)

· Further growth in customer base, which now stands at 477 (FY16: 153)

· All new customers sourced through our global partner channel

· International expansion continuing:

o US customer base stands at 135 (FY16: 26), with 109 new customers (FY16: 18), 63 upsells (FY16: 19) and 3 US renewals (FY16: 0) secured this year

o Emerging geographies growing fast, with APAC customer base now at 52 (FY16: 3)

o Sales and services operations opened in Japan, Australia and India

· Global employee base grown to 187 (FY16: 86), of whom 65 are US based

· Continued investment in the Group's software, with the launch of Blue Prism Version 6

· Further developed and standardised the ecosystem that surrounds and supports our growth:

o Technology Alliance Program expanding Blue Prism's interoperability with third party software

o Certification Programme established to ensure partner quality standards

o Advanced Blue Prism skills development efforts, increasing the number of accredited developers to 3,096 and establishing an Education Services division to drive training initiatives

Post Period End

· Announced that Gary Johnson, Chief Financial Officer, retires today from his role and Board position and is succeeded in both positions by Ijoma Maluza who joined the Group on 18 December 2017

The Company has this morning also launched a process to raise up to £40m in a Placing, carried out by way of an accelerated book build. Details of the Placing can be found in a separate announcement issued this morning.

Alastair Bathgate, CEO, commented:

"We are fast approaching the second anniversary of Blue Prism's admission to AIM and these results show just how far we have come in a short period of time. The significant sales momentum we have seen this year and the 609 software deals we have signed - more than three times the number signed in the prior year - underscores our confidence in our product and the market's readiness to engage in the potential of RPA.

As we move in to the new financial year, we will continue to focus on the many ways in which this commercial momentum is being driven. Our opportunity for geographic expansion continues to broaden; our sales partners are highly engaged and effective, continuing to deliver long term, valuable customers; and we are investing in educating developers, partners and customers on the power of RPA and the required skills to take advantage of it. Our rapidly growing Technology Alliance Program, which increasingly positions Blue Prism as the 'Operating System' for digital workforce deployments, presents us with further opportunities to develop new revenue streams.

The Group has had a strong start to the first quarter of FY18 and as such now expect revenues for the full financial year to be comfortably ahead of existing market expectations. Funded by the anticipated net proceeds of the Placing we have announced today, the additional investment planned for FY18 to support our global growth is expected to increase our revenue growth in the next financial year. The 2018 financial year shows every sign of being yet another exciting year of growth for Blue Prism."

For further information please contact:

Blue Prism Group plc via FTI Consulting

Alastair Bathgate, Chief Executive Officer

Gary Johnson, Chief Financial Officer

Ijoma Maluza, Chief Financial Officer Designate

Investec Bank plc +44 (0)20 7597 5970

Andrew Pinder

Sebastian Lawrence

Carlton Nelson

FTI Consulting +44 (0)20 3727 1000

Matt Dixon

Dwight Burden

About Blue Prism

Blue Prism Group plc ("Blue Prism" or the "Group"), a UK-headquartered global software company, is a leader in Robotic Process Automation ("RPA"), which enables blue-chip organisations to create a digital workforce powered by Blue Prism's software robots that are trained to automate routine back-office clerical tasks. The Group's enterprise-grade software enables the automation of manual, rules-based, administrative processes to create a more agile, cost effective and accurate back-office.

Blue Prism's RPA software delivers the world's most successful digital workforce execution for our customers and has executed over 1 billion transactions. Our customers include Aegon, BNY Mellon, Commerzbank, IBM, ING, Maersk, Nokia, Nordea, Procter & Gamble, Raiffeisen Bank, Siemens, Westpac and Zurich. As at 31 October 2017, Blue Prism had 187 employees based out of offices in Newton le Willows and London (UK), Sydney (Australia), Tokyo (Japan), Bangalore (India), Austin, Miami, Chicago, New York and San Francisco (US).

For more information visit www.blueprism.com and follow the Group on LinkedIn and Twitter.

Chairman's Statement

Since the flotation of Blue Prism in March 2016 we have seen significant progress in the RPA market and in our business.

There have been advances in the size and visibility of the RPA market and it is clear that RPA as a technology offering is now high on the agenda for many organisations. The growing interest in the market for RPA from new and existing participants is testament to its increasing importance.

Blue Prism is both driving and benefiting from this evolution of the market. In the Period, we have seen a significant increase in sales, a substantial growth of our customer base and further strengthening of our market-leading position whilst managing the cost base and cash flow with real discipline.

The executive management has successfully executed the strategy for growth set out at the time of the flotation. Our principal route to market is through our partner channel which is now highly engaged and growing in sophistication and global reach and has contributed enormously to our growth.

The Board, which was formed just prior to flotation, is functioning well and interacting effectively with the executive management contributing a good balance of skills and experience. Gary Johnson, our Chief Financial Officer at the time of flotation, has decided to step down from the Board. Gary has made a significant contribution over the past three years developing and strengthening the financial systems to support our expansion and growth. Ijoma Maluza has joined the Board as CFO and will continue to build on the strong platform established by Gary.

While businesses experiencing rapid growth, such as Blue Prism, often face managerial challenges, the Board is fully engaged with the executive management team to ensure that the Group is positioned to address the growth challenge head-on. In particular, ensuring the ongoing recruitment of senior experienced staff with strong track records who can proactively engage in the challenge of building a world class technology company.

Without the energy, commitment and enthusiasm of the Blue Prism employees the rapid growth and financial performance of Blue Prism would not be possible. We thank them for another year of hard work and execution.

In the year ahead, we are focused on maintaining our growth momentum. The attractiveness of our market will inevitably encourage competition. However, we believe 2018 will be a year in which we extend and capitalise on the clear lead we have built in the enterprise market for RPA, positioning us to deliver another exciting year of growth.

Jason Kingdon

Non-Executive Chairman

Chief Executive's Statement

OVERVIEW

FY17 was a year of global growth and growing commercial momentum. We have seen significant increases in our revenues, customer numbers, geographic coverage and in our skilled developer base. Alongside this, we have doubled our employee base and opened three new offices globally. We have also seen significant growth in industry recognition of the RPA sector, and strong, global endorsement of Blue Prism's leading position in the market.

As our business has developed, so has the market we serve. The RPA market is now advancing beyond the early hype stage and our indirect partner channel continues to grow and diversify in recognition of this shift. This channel was responsible for sourcing all new customers in FY17 and there was a healthy number of upsells given that two thirds of our customer base joined the roster in FY17. In addition, all 21 expected renewals in the year were secured.

We are pleased to report that total recognised revenue for the year ended 31 October 2017 increased by 155 per cent to £24.5m (FY16: £9.6m) driven by sales from both new and existing customers. Sales momentum built throughout the year such that our exit run-rate (monthly recognised, recurring license revenue) stood on 31 October 2017 at £2.8m per month (FY16: £0.95m per month): a strong foundation for FY18 and beyond.

EBITDA losses for the period were £9.4m (FY16: £5.2m) and adjusted EBITDA losses for the period were £8.3m (FY16: £4.7m, being EBITDA before share-based payments and foreign exchange gains/(losses) to remove the effect of volatile share based payments expenses and foreign exchange gains/(losses)), both representing continued investment in our global expansion. Cash and cash equivalents at 31 October 2017 were £16.3m (31 October 2016: £11.8m).

MARKET REVIEW

Supported by board level conversations between global consulting firms and their clients, Intelligent Automation, the digital enterprise, robotics and the future of work are all themes that RPA plays well to, and this is driving the market into global expansion. As today's major organisations look to find new ways of interacting with their customers, it is becoming clear that RPA can become a transformational enabler to the digital enterprise and not just a tactical automation tool focussed on cost reduction.

This is reinforced by increasing media and analyst attention. For example, in November, the primary product category search terms on Gartner Inc's website, a leading technology research and advisory firm, were Cloud, Internet of Things, Blockchain and RPA.

Blue Prism has helped shape the growth in media, analyst and industry awareness of RPA throughout the year, and endorsement for the RPA market continues to be supported by an increasing number of independent commentators. According to McKinsey*, the introduction and development of business process automation offers returns on investment, in the first year alone, of up to 200 per cent. Such rapid growth and adoption - and the recognition of the value RPA can provide at the enterprise level - stems from an increasing demand at board level to introduce automation technologies into their business.

Analysts and media continue to point to the scale of opportunity ahead, as enterprises look to RPA to automate legacy business processes at a time when their talent, technology and time resources are constrained.**Industry analysts are starting to make significant forecasts of a large, growing market size for RPA - with one business consulting and market research firm forecasting the RPA market to reach up to $8.75 billion by 2024*** - and we can see already the demand from growing levels of interest.

* Source: McKinsey, http://bit.ly/2ABnkLW ** Source: CIO.com, http://bit.ly/2iT5j3Z *** Source: GVR, http://bit.ly/2BrkRYs

COMPETING IN THE MARKET PLACE

Against an increasingly positive wider market, Blue Prism continues to emerge as an important thought leader in the market for RPA. We were one of only two British companies, and the only RPA vendor, to feature in Massachusetts Institute of Technology ("MIT") Technology Review's 50 Smartest Companies of 2017. We continue to grow and deepen our partnerships with global consulting and implementation firms who, with us, are working to make customer engagement with RPA increasingly transformational. We also partner with niche and specialised players with a specific geographic, industry or functional focus who make a valuable contribution to our revenue mix.

Although the US remains a key priority strategically, we have opened offices in Australia, Japan and India resulting in encouraging early revenues in the Asia Pacific region. Japan is the world's third largest economy. It has one of the worst demographic 'time-bombs' of the developed world with many baby-boomers already moving into retirement. The workforce is shrinking, and production must be maintained. Japan is culturally pre-disposed towards automation, based on positive experience in manufacturing (especially robotics in automotive) and the high value its society places culturally on the quality of products and relationships. Japan is in the earliest stages of RPA adoption and Blue Prism is quickly building a presence there with key customer wins including Dai-ichi Life and DeNa via partners including Accenture, EY, RPAi Technologies and Deloitte.

We have plans for further geographic expansion in FY18 in the Americas, localisation and specialisation in Europe, and entering new areas of the Asia Pacific region.

As with any growth market, there is healthy competition. Industry analysts such as Forrester and HfS Research continue to highlight UIPath and Automation Anywhere alongside Blue Prism as the three leaders in the market.

Against that competition, Blue Prism continues to differentiate on enterprise scale, security, performance and adaptability. We believe competitors will invest not just in distribution, but in product development to directly compete in the enterprise space and we continue to invest in our own software product to maintain its position and to increase its value to the customer. This value arises in a variety of business outcomes, which we reference further down in this report, and in the comfort of knowing the solution is going to meet data security, regulatory compliance, and governance requirements.

In 2017 we released Blue Prism Version 6 which included a number of software enhancements to help internationalise the product, make it easier to use, faster to deploy, more intelligent and responsive. For example, Version 6 now includes:

· Intelligent Surface Automation and Adaptive Positioning Technology to give the robots more sophisticated and flexible "visual" capabilities when reading applications.

· Certified reference architectures for all the main cloud vendors (Microsoft, Amazon, Google, IBM) to offer rapid scale-out and Artificial Intelligence Capabilities.

· Enhanced security and encryption controls that provide greater configurability and flexibility to ensure absolute secure connectivity, data storage and access across an extended range of deployment models.

· Double byte character support to enable international languages, and the ability to translate and localise our own user interface.

· An improved Control Room giving more real time visibility of robot activity, health and digital workforce achievements.

We believe that the combination of intelligent automation targeted at transformational change, supported by technical partners and a robust methodology is appealing to both our distribution partners and our customers and along with our public status, and strengthened balance sheet sets us apart from other RPA vendors.

EXECUTING OUR STRATEGY

The Group set out a growth strategy at the time of its IPO based on four strategic objectives. During the past twelve months we have continued to make meaningful progress against each, as follows:

Building scalable development, sales and delivery channels

Blue Prism's sales strategy is to achieve broad and scalable sales growth through a global channel of distribution partners. This partner sales channel includes a wide range of highly engaged partners, comprising some of the world's largest consulting firms such as Accenture, EY, IBM, KPMG, Deloitte and HCL as well as specialist technology and digital transformation firms, such as Thoughtonomy, DXC, RPAi, Symphony and Reveal Group. All of the 324 new customers in FY17 were sourced through the channel for the first time (FY16: 90 per cent), including an increase in reseller deals.

The Group launched a partner certification programme during the Period, designed to maintain the highest levels of quality assurance in our sales and delivery model. Eleven partners are now certified and, in March 2017, EY became the first partner to achieve Gold status, followed later in the year by Accenture. As interest in RPA continues to increase, our focus remains to ensure the Group is best equipped to service increasing demand by maximising and optimising this partner distribution channel.

The Group has seen strong levels of industry recognition and community support, as evidenced by the scale of attendance and quality of sponsors at our Blue Prism World events. Almost 2,000 customers and partners attended events in San Francisco, New York, London, Tokyo and Sydney. With premium sponsors including Accenture, EY, Deloitte, KPMG, IBM, and Capgemini, we go into 2018 with the confidence of having leading names in the sectors we serve supporting our long term vision.

Increasing business with the Group's customers

During the first six months of the year, the Group introduced an account management function to help improve the effectiveness of customer management following the initial sale. This has proven effective in driving increased adoption in the legacy direct accounts. We have been working on rolling this out in to the indirect model with early signs of success. In FY17 the Group secured 264 upsells across 131 customers, a meaningful increase on the 81 upsells secured across 47 customers in the prior financial year. 49 of the 131 customers who upsold during the Period upsold more than once with approximately 27 per cent of all customers buying more licences in the Period. Renewals of existing licences also continue to be healthy with all 21 of those due in the Period secured (FY16: 12).

These increasing levels of adoption are a result of our customers' engagement with RPA and the subsequent return on investment they see from increased use of our software.

The Financial Services sector is one of many realising real benefits from RPA. For example, a leading Middle East retail bank is using Blue Prism software robots to process over 15,000 transactions daily, bringing greater operational efficiency, accuracy and speed along with a 70 per cent reduction in fraud. Elsewhere in the sector, within the first 12 months of its Blue Prism deployment, BNY Mellon rolled out 222 robots in 35 of its different businesses, spanning 147 different business functions. Turnaround time has been reduced by an average of 62 per cent, including reducing one particular process from ten days to 24 hours while also improving error rates.

Blue Prism RPA has also delivered significant business benefits, within just six months of deployment, to a leading Fortune 500 financial services provider in the US - with over $3 trillion of life insurance in force worldwide. Blue Prism's software robots were deployed to support an enterprise-wide programme of strategic revenue growth, which needed to be deployable at speed and across all its subsidiary businesses and functional areas. Using Blue Prism enabled the organisation to improve customer experience and reduce costs by eliminating an onerous, lengthy re-underwriting backlog. It took just ten months to put the robotic operating model in place, and since deployment Blue Prism RPA has resulted in a $500,000 one-time cost avoidance and delivered more than $3 million savings from run rate cost reductions annually.

In addition to process automation, the value of Blue Prism's RPA can be realised in its positive impact on customer experience. A leading global payments services provider - which in 2016 completed 791 million transactions for its consumer and business clients - needed to improve customer experience whilst expanding automation capabilities throughout the organisation. Automating more than 15 processes to date, Blue Prism delivered end-to-end automation of financial transactions whilst enabling the company to maintain full regulatory compliance, and with seamless integration with existing infrastructure. It took only half a year to see the returns on investment of using Blue Prism RPA, with $1.3 million worth of savings generated in the first six months, resulting in a 3-6 times return on the investment in the RPA programme. Employee satisfaction and productivity also increased with 12 FTEs reassigned to more cognitive, value-add tasks, as employee attrition reduced due to the elimination of repetitive and non-value added work.

Similarly, the advantage of Blue Prism's RPA technology can be seen in the scale of impact delivered, and value generated, for a major player in the retail sector. Shop Direct, one of the UK's largest pure-play digital retailers, has automated approximately 130 processes to date using Blue Prism and continues to return 328,000 hours annually (and rising) back to its business. As a result, the company was also able to generate £16 million in incremental revenue from just one single process.

It is also possible to combine the operational benefits of RPA with social benefits. At Lighthouse Works in Florida - a not-for-profit social enterprise which exists to support people in living, learning and earning with vision loss - Blue Prism software robots are helping employees complete tasks such as scheduling, billing and claims processing, thereby expanding the scope of jobs that visually challenged workers can complete. After deploying Blue Prism's RPA, blind workers could complete tasks in their entirety four to six times faster and three times more efficiently than before, for an estimated cost saving of nearly 65 per cent.

The breadth of RPA use cases is phenomenal with Blue Prism software already in use across more than 40 industry sectors. It is hard to imagine an industry that could not benefit from RPA.

Executing on the Group's US market strategy

The Group has continued to invest in the US which is a market of strategic importance. We are pleased to report that Blue Prism has grown its US customer base by 419 per cent over the last financial year and the Americas operations now accounts for 36 per cent of Group revenues (FY16: 28 per cent). In absolute terms, the Group's US customer base has advanced from 26 customers at the end of FY16 to 135 (or 28 per cent of total customers) at the end of FY17 (FY16: c.17 per cent). US customers include BNY Mellon, Western Union, Pfizer, AIG, Fannie Mae, Walgreens and IBM.

Investment in people is the most important part of our expansion plans and, during the financial year, the Group grew US employees by 150 per cent to 65 (FY16: 26). This team now represents c.35 per cent of the Group's total global employee base.

The Group will continue to invest in the US so it can meet the growing demand for RPA in what remains the world's largest and most important software market. Against this backdrop, we are encouraged by progress in the Group's home EMEA market and emerging APAC market. In FY17 the Group's APAC customer count grew from 3 at the close of FY16 to 52 at the close of FY17, with a recognised revenue contribution of £2.2m.

Reinforcing the Group's market leadership to take advantage of RPA adoption

The launch of Version 6, billed as the "Operating System" edition of our software, has helped to build on Blue Prism's profile as a thought leader in the RPA market. This latest release of our software is designed with the specific requirements of enterprise level deployment as an execution platform, or "operating system", supporting the digital enterprise.

During the year, advances have been made with our Technology Alliance Programme (TAP). Originally designed with the architectural objective of positioning Blue Prism as the 'operating system' for digital workforce deployments, the programme has enjoyed an encouraging reception from customers, partners and commentators. We have already announced TAP collaborations with partners including Microsoft, Appian, Captricity, and IBM. We believe that the TAP offers Blue Prism the potential to find new revenue streams. For example, Appian offers Blue Prism as an extension to its low code application development and BPM platform and extends its automation footprint. FY18 will see us invest in further commercialisation and extension of the Technology Alliance Program.

Skills shortages can, as with any early market, hold back customer adoption. In FY 17, the Group established a formal Education Services department to bring customer and partner education under one roof. This has resulted in a 389 per cent increase in accredited Blue Prism developers to 3,096, a 408 per cent increase in (now outsourced) accreditation exams to 4,176 across 44 countries, and, the introduction of new accredited roles to align with our Robotic Operating Model delivery framework and methodology.

OPERATIONAL REVIEW

Customer and sales growth

The 609 software licence deals secured during the twelve months ended 31 October 2017 equates to more than three times the number of software licence deals won in the prior year.

We experienced impressive growth in the number of new customers: two thirds of our current customer base signed-up to Blue Prism in the Period bringing the total to 477. Given that most customers buy on a "land and expand" strategy, this represents a meaningful sales opportunity for us over the medium term providing we can continue to ensure that customers get real value from their use of the software.

Existing customers also continued to increase their adoption of our product at a healthy rate. 264 upsells were secured across 131 customers in FY17, representing a 225 per cent increase on FY16. All renewals that were due in the Period were achieved.

It is increasingly apparent that customer success is more likely when customers, supported by our partners, adopt Blue Prism's ROM (Robotic Operating Model). The ROM is a best practise delivery framework and methodology designed to provide assurance and light touch governance to maximise business benefits whilst meeting security, scalability and compliance objectives. We promote the ROM vigorously and have created a full partner enablement program so that our partners may integrate it into their wider methodologies.

Employees

As at 31 October 2017, Blue Prism had 187 employees worldwide, compared to 86 at the end of FY16 and 127 at the end of H117. Whilst this level of growth inevitably places challenges on the company, the management team has worked hard to build new organisational infrastructure. In particular, we have strengthened the management team with key appointments including Shail Khiyara, Chief Marketing Officer; Pat Geary who stepped in to the newly-created role of Chief Evangelist; and Nicola Bergstrom who joined Blue Prism to lead Human Resources. We also implemented a new, scalable, accounting platform and invested in a corporate development team to co-ordinate and build the people, systems and processes needed for a larger organisation. Having made extensive use of our own robots product development, we are now starting to scale their use into other parts of the business for flexibility, accuracy and efficiency.

Our public company status and employee share ownership schemes are enabling us to attract high quality talent. We will continue to invest in people to support our growth plans, and in systems and processes to provide an organisational platform for the next phase of Blue Prism growth.

SUMMARY AND OUTLOOK

This has been a successful year for Blue Prism. Our product and the global partner sales channel built to commercialise it have delivered real sales momentum, strengthening our market position and underpinning our belief in our long-term potential. In FY18, the focus remains on addressing the global demand for RPA software through our indirect go to market model with particular investment in geographical expansion and in our Technology Alliance Program.

The Group has had a strong start to the first quarter of FY18 and as such now expect revenues for the full financial year to be comfortably ahead of existing market expectations. Funded by the anticipated net proceeds of the placing we have announced today, the additional investment planned for FY18 to support our global growth is expected to increase our revenue growth in the next financial year. The 2018 financial year shows every sign of being yet another exciting year of growth for Blue Prism.

Alastair Bathgate

Chief Executive Officer

FINANCIAL REVIEW

INTRODUCTION

The financial results for 2017 reflect a year of strong organic growth and greater global reach through our partner network.

REVENUE

Recognised revenue for the year increased 155 per cent to £24.5m (FY2016: £9.6m).

Recurring licence revenue accounted for 90 per cent of recognised revenues at £21.8m (FY2016: £8.2m: 85% recognised revenues). Professional Services revenues increased to £2.2m (FY2016: £1.3m) mainly due to a significant increase in training revenues reflecting the significant growth in our customer base. Non-recurring revenue was £0.5m (FY2016: £0.2m) and included £0.2m in sponsorship revenues from our partners' attendance at the Blue Prism World events staged during the year.

The monthly exit run rate, which illustrates the momentum of recognised recurring licence revenue, stood at £2.8m for October 2017. This has grown 196 per cent in the year from £0.9m per month for October 2016. The exit run rate is the recurring licence revenue released to the profit and loss account in the month of October.

Revenue from EMEA operations grew 100 per cent to £13.8m (FY2016: £6.9m), representing 56 per cent of total revenues. Revenue from the Americas operations grew to £8.9m (FY2016: £2.7m), representing 36 per cent (FY2016: 28 per cent) of total revenues. New operations opened in the year in APAC generated £1.8m (FY2016: £nil)of recognised revenue (7 per cent) reflecting a significant start for the region in a very short period of time.

LOSS FROM OPERATIONS

Losses from operations were £9.5m (FY2016: £5.3m), which includes share-based payments of £1.1m (FY2016: £0.36m), foreign exchange losses of £0.03m (FY2016: gain £0.3m) and IPO costs of nil (FY2016: £0.5m).

Adjusted losses from operations (losses before share-based payments and foreign exchange losses), £8.4m (FY2016: £4.7m) were impacted by the growth in total contracted revenue which resulted in increased sales introduction commissions, see note 7, since the Group policy is to expense sales commissions on the whole contract immediately upon signing of the first contract. The nature of this is that the nearer the contract is signed to the year-end then the lower the attributable margin is on that contract in the year. However there is no impact on the margin for commissions in the following years of the contract.

FOREIGN EXCHANGE GAINS

The entity generated foreign exchange losses during the period of £0.03m (FY2016: gain £0.32m). The losses generated during the period have arisen as a result of the changes in the GBP: USD exchange rate during the Period.

OTHER COMPREHENSIVE INCOME

During the year the translation of the overseas subsidiaries from their local currency into the Group's reporting currency resulted in other comprehensive income of £0.3m.

STATEMENT OF FINANCIAL POSITION

Deferred income, which is the value invoiced less the recognised revenue, grew 162 per cent to £27.5m (FY2016: £10.4m), as a result of strong growth in new business and the advance payments of £5.2m from a small number of customers. Of the £27.5m at 31 October 2017, £23m will be released in 2018 and the balance over the remaining period of the contract.

Trade and other receivables increased to £15m (FY2016: £5.6m) as the Group enjoyed a strong end to the financial year. There are no intangibles on the balance sheet and research and development costs have been fully expensed as incurred as none of these met the criteria for capitalisation.

CASH FLOWS

Cash and cash equivalents at 31 October 2017 were £16.3m (31 October 2016: £11.8m). Net cash for the year increased as a result of advanced payments from customers of £5.2m. Once again, strong growth and contract payment term negotiations have enabled us to fund operating losses organically and bring forward investments from 2018 without the need to use any of the funds raised at the IPO. We continue to focus on being cash-generative in the medium term.

Additionally, the Group has a £2.0m Revolving Credit Facility which is currently unutilised.

Key Performance Indicators (KPIs)

The Group tracks a number of KPIs to identify trends in the trading performance and to benchmark progress of key objectives.

Recognised revenue: Being the total revenue recognised in the Group's profit and loss account.

Monthly run rate: Being the amount of recurring software licence revenue recognised in the Group's profit and loss account in the last month of the financial year. This is an indicator of the level of licence business the Group would achieve on a monthly basis if there was no new business generated in the future and if there were 100% renewals.

Operating loss: Being the total loss in the period.

Adjusted loss: Being the operating loss before share-based payments and foreign exchange gains/(losses). This is seen to be an accurate measure of the trading position of the business.

Cash: The level of cash in the business dictates the amount of investment the Group can make and is therefore considered to be one of the most critical KPIs.

Cash generated from operations: This is seen as a good indicator of how the business is managing its cash.

Non Financial KPIs

Total number of customers: This metric is a clear indicator of the progress of the business in the market.

Number of staff: The number of staff in the business is closely monitored to ensure we have the right mix of sales to non-sales staff and is also the major cost driver for the business.

The detailed numbers comparing the current financial year to the previous financial year are shown below:

Blue Prism Group PLC

Consolidated statement of profit or loss and other comprehensive income

for the year ended 31 October 2017

Blue Prism Group PLC

Consolidated statement of financial position

at 31 October 2017

The financial statements on pages to were approved and authorised for issue by the Board of Directors on 25 January 2018 and were signed on its behalf by:

G Johnson

Director

Blue Prism Group PLC

Consolidated statement of cash flows

for the year ended 31 October 2017

Blue Prism Group PLC

Consolidated statement of changes in equity

for the year ended 31 October 2017

Blue Prism Group PLC

Notes forming part of the financial information

for the year ended 31 October 2017

Basis of preparation

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

The financial statements of the Group have been prepared on a going concern basis and in accordance with International Financial Reporting Standards ('IFRS') and their interpretations which have been issued by the International Accounting Standards Board ('IASB'), as adopted by the European Union. They have also been prepared with those parts of the 2006 Companies Act applicable to companies reporting under IFRS.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.

Changes in accounting policies

a) New standards, interpretations and amendments effective from 1 November 2016

There were no new standards or interpretations effective for the first time for periods beginning on or after 1 November 2016. None of the amendments to Standards that are effective from that date had a significant effect on the Group's financial statements.

b) New standards, interpretations and amendments not yet effective

The following new IASB standards, interpretations and amendments, which are not yet effective and have not been adopted early in these financial statements, may have a material impact on these financial statements:

IFRS 15 Revenue from Contracts with Customers, effective for periods commencing on or after 1 January 2018. The directors have begun to assess the potential effects of this standard on the business and, in particular, if it will have any impact on the way revenue is recognised. A study is underway to fully understand and identify the impact on;

i) revenue recognition and

ii) accounting for commission on sales.

The Company is taking external advice and has set up a working committee to do the following:

This project commenced in November 2017 and is expected to be completed prior to the year-end October 2018.

IFRS 9 Financial Instruments, effective for periods commencing on or after 1 January 2018. The impact of this standard is being considered by the directors and any impact, especially around the value of debtors is yet to be fully investigated.

IFRS 16 Leases, effective for periods commencing on or after 1 January 2019. The directors are assessing the impact of this standard and the possible impact of any leases being capitalised on the balance sheet. A full review is yet to take place. Due to the pace of growth of the business this will be more appropriately reviewed during 2018.

Blue Prism Group PLC

Notes forming part of the financial information

for the year ended 31 October 2017 (continued)

Basis of consolidation

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The financial statements of the Group have been prepared on a going concern basis and in accordance with International Financial Reporting Standards ('IFRS') and their interpretations which have been issued by the International Accounting Standards Board ('IASB'), as adopted by the European Union. They have also been prepared with those parts of the 2006 Companies Act applicable to companies reporting under IFRS. Due to the nature of the Group's business model, which involves annual invoicing of software licences and recognising the revenues over the period of the contract, and due to the fast growth of the business, the deferred revenue account has grown significantly which has created the negative balance sheet in the financial statements. The deferred income is non refundable and so the Directors are confident that the business has sufficient working capital to satisfy liabilities as they arise.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.

Group reorganisation and IPO

During 2016 the Group was subject to restructuring prior to the IPO. Blue Prism Group PLC was positioned at the top of the Group as the new parent company, with the former parent, Blue Prism Limited, becoming a wholly owned direct subsidiary of Blue Prism Group plc through a share-for-share exchange. Such group reorganisations are outside of IFRS3 as the Company does not meet the definition of a business and as such has been accounted for as a group reorganisation rather than a reverse acquisition.

The Group reconstruction in 2016 has been accounted for using merger accounting principles. Therefore, the consolidated financial statements of Blue Prism Group plc are presented as if Blue Prism Group plc and Blue Prism Limited had always been part of the same Group. Accordingly, the results of Blue Prism Limited for the entire year ended 31 October 2016 are shown in the consolidated statement of comprehensive income.

Transaction costs that relate directly to the issue of new equity instruments were accounted for as a deduction from equity. Where IPO transaction costs related to both the listing of pre-existing and newly issued shares, those costs have been allocated proportionally between profit or loss and equity on the basis of the proportion of the new shares issued.

Revenue recognition

The Group recognises revenue depending on the substance and legal form of the contracts with its customers. Revenue is recognised once a legally binding contract between the Group and its customers has been established and the delivery of the service has commenced. Service delivery is triggered by providing a 'software key' to the customer, and the commencement date of the license is reached, allowing them access to the software for the license period.

Revenue includes the provision of a license through a software key, follow up support, and maintenance, throughout the term of the license. Provided the amount of revenue can be measured reliably and it is probable that the Group will receive consideration, revenue from the provision of a license and follow up services is recognised from the license start date over the period of the license, which is also the period in which the services are rendered, on a straight line basis.

Licence fee revenues, support revenues, and maintenance revenues are bundled together, as the revenue streams have no individual value as standalone items, due to the specific nature of the software, and the specific nature of the support services and maintenance. As such, these elements are considered as being intertwined and therefore inseparable due to their value together. Maintenance is incurred throughout the licence term on an ongoing basis. Support is provided throughout the license period, and varies depending on how the customer chooses to deploy the software.

Revenue for these licenses, support, and maintenance are recognised on an accruals basis; when invoiced in advance, the income is deferred in the statement of financial position and recognised in the income statement over the length of the licence and maintenance period. This policy is consistently applied across all customers and contracts.

Professional services revenues are recognised when the service has been delivered. If billed in advance, the income related to consultancy days not yet delivered at the end of the period is deferred and recognised in the income statement when the service takes place.

Training revenues are recognised at the point the training course has been completed.

Sales commission

Sales commission is recognised in the profit and loss in wages and salaries at the point at which the contract is signed and paid once the initial invoice has been collected. This is recognised up front as opposed to deferring this cost over the period of the contract as it is deemed an introductory fee, and is not affected by the future performance of a contract.

Foreign currency

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss. At the balance sheet date the non sterling-balances of the overseas entities are retranslated at the rate ruling at the Balance sheet date and the foreign exchange gain or loss is shown in foreign exchange reserves.

During the period the Board has made the decision to change the functional currency of Blue Prism Software Inc, a wholly owned subsidiary within the Blue Prism group, to US Dollars. The decision to change the functional currency to US Dollars was made as a consequence of sales volumes increasing in the prior period and expenses becoming increasingly US Dollar denominated. As a result of this, with effective 1 November 2016, the Board made the decision to change the functional currency to US Dollars.

Trade receivables

Trade receivables are amounts due from customers for services provided in the ordinary course of business and are stated net of any provision for impairment. Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default, or significant delay in payment) that the Blue Prism Group will be unable to collect all of the amounts due. The amount of such a provision is the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less.

Financial assets

The only financial assets held by Blue Prism Group plc are trade receivables and other cash and cash equivalents. Due to their short term nature, the carrying value of cash and cash equivalents, trade and other receivables approximate their fair value.

Financial liabilities

Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

All financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through income statement.

Share capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

The Group's ordinary shares are classified as equity instruments.

Share-based payments

Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received.

Defined contribution pension schemes

Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.

Leased assets

Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an "operating lease"), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

Deferred taxation

Deferred tax is recognised in respect of relevant temporary differences that have originated but not reversed at the balance sheet date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. The deferred tax assets and liabilities are not discounted.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. The principal annual rates used for this purpose are:-

Computer equipment - straight line over 3 years

Research and development expenditure

Research expenditure is recognised as an expense when it is incurred.

Development expenditure is capitalised if, and only if, the Group can demonstrate all of the following:

(i) the ability to measure reliably the expenditure attributable to the asset under development;

(ii) the product or process is technically and commercially feasible; its future economic benefits are probable;

(iii)  the ability to use or sell the developed asset; and

(iv)  the availability of adequate technical, financial and other resources to complete the asset under development.

Currently, development expenditure does not meet the criteria to be capitalised as it is not possible to reliably measure the expenditure attributable to the Robotic Process Automation ("RPA") (see note 2). This development expenditure is expensed as incurred. If the criteria is met, future capitalised development expenditure would be measured at cost less accumulated amortisation and impairment losses, if any.

Any future capitalised development expenditure will be amortised on a straight-line method when the services are ready for sale or use. In the event that it is no longer probable that the expected future economic benefits will be recovered, the development expenditure would be written down to its recoverable amount.