Interim Results

Osirium Technologies PLC

07 September 2023

 

The information contained within this announcement is deemed by Osirium to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended.

7 September 2023

Osirium Technologies plc

("Osirium" or the "Group")

Half Year Results and Bridge Finance Facility

Osirium Technologies plc (AIM: OSI), a leading vendor of cloud-based cybersecurity and IT automation software, announces its unaudited interim results for the six months ended 30 June 2023.

Financial highlights

·	Annualised recurring revenue ("ARR") for June 2023 of £2.16 million, an increase of 34% from June 2022 (ARR: £1.61 million)
·	Total bookings increased to £1.22 million (H1 2022: £1.18 million)
·	Deferred revenue increased 50% to £2.87 million (H1 2022: £1.91 million)
·	Operating loss reduced to £1.24 million (H1 2022: £1.63 million)
·	Cash balance at 30 June 2023 of £0.22 million (30 June 2022: £0.27 million), and debtors at 30 June 2023 of £0.40 million (30 June 2022: £0.33 million)

Operational highlights

·	Maintained average contract values
·	New partner-first strategy underpinned customer acquisition, with 22 customers signed during the six-month period
·	All three products successfully serving as first points of entry for new customers
·	Significant number of expansions and renewals
·	Core focus on customer success validated by Software Reviews: "Gold Medal" rating and number one ranking in vendor support received

Post period highlights

·	As announced on 30 August 2023, agreement was reached with SailPoint Technologies UK Ltd for the recommended cash acquisition of the entire issued, and to be issued, ordinary share capital of Osirium
·	£200,000 Bridge Finance Facility put in place with SailPoint Technologies UK Ltd to fund operating costs during the offer period of the acquisition
·	The Group's network and strong reputation supporting further renewals and customer wins in H2 2023

Contacts:
Osirium Technologies plc	Tel: [phone]
Stuart McGregor, Chief Executive Officer
Rupert Hutton, Chief Financial Officer
Allenby Capital Limited (Nominated adviser and broker)	Tel: [phone]
James Reeve / George Payne (Corporate Finance)
Tony Quirke / Stefano Aquilino (Sales and Corporate Broking)
Alma PR (Financial PR adviser)	Tel: [phone]
Hilary Buchanan	[e-mail]
Kieran Breheny
Will Ellis Hancock

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.

Chief Executive Officer's Review

Proposed Acquisition of Osirium

As reported on 30 August 2023, the Board is pleased to announce an agreement with the Board of Directors of SailPoint Technologies UK Ltd ("BidCo"), which is indirectly owned by SailPoint Parent, L.P., for the recommended cash acquisition of the entire issued, and to be issued, ordinary share capital of Osirium (the "Acquisition"). Under the terms of the Acquisition, each Osirium Shareholder will be entitled to receive 2.35 pence in cash for each Osirium Share. The Acquisition values Osirium's entire issued, and to be issued, ordinary share capital at approximately £3.11 million on a fully diluted basis and implies an enterprise value of approximately £6.56 million.

The Board believes the Acquisition will provide the scale, recognition and resources that will enable the full potential of Osirium's PAM, EPM and PPA solutions.

Further, we believe that the Acquisition fairly recognises the medium-term prospects and growth potential of Osirium as a standalone business and provides Osirium Shareholders with an immediate and certain value in cash.

The proposed Acquisition is subject to shareholder approval at a court meeting and at a general meeting, the dates of which will be announced in due course.

HY23 performance

Overview

The Group is pleased to report a period of continued trading momentum, in which it has strengthened its presence in the public and private sectors alongside ensuring its offering remains a compelling option for customers through enhancements to its privileged security solutions. Alongside this trading performance, the Group has maintained a focus on managing its cost base, with material cost savings initially identified in Q4 2022 having been achieved in the business.

The Group's ARR increased by 34% over the 12 months to 30 June 2023 to £2.16 million (30 June 2022 ARR: £1.61 million) and by 16% since the start of the year (December 2022 ARR: £1.86 million). ARR growth has been driven by a combination of new customer wins and renewals from existing customers.

Bookings for the period were £1.22 million (H1 2022: £1.18 million) and revenue was £1.07 million (H1 2022: £0.91 million), representing a 3% and 18% increase on H1 2022 respectively. Deferred revenue at 30 June 2023 was £2.87 million (30 June 2022: £1.91 million).

The Group maintained its average contract value on the last financial year, with its partner-first sales strategy and delivering a healthy pipeline of opportunities across its Privileged Access Management ("PAM"), Privileged Process Automation ("PPA") and Endpoint Privileged Management ("EPM") solutions. All three products represent attractive standalone options to prospective customers, and have contributed meaningfully to the Group's bookings and ARR.

Capturing new business

Osirium continued its new business momentum in the new year, with 22 new customers signed by 30 June 2023.  

The Group's sales functions consist of a channel partner network alongside a direct sales model. The Group's channel partner network consists of over 50 active resellers and vendors across five continents.

In 2023, the Group has transitioned to a partner first model, with a greater emphasis placed on winning customers via the broad channel partner network. This transition positions the Group for further growth, enabling a swifter pace of customer acquisition and providing an entry point into new sectors and geographies where the Group's direct sales team is limited. A significant majority of the Group's new wins have been achieved through this model during the period alongside traditional sales and marketing such as appearances at a number of key trade shows, which raise the Group's profile among its core audiences.

While maintaining an emphasis on expansion within all the markets its partners operate, the Group has seen particular traction within its UK markets on account of its strong reputation and the requirements for this level of protection. New customers signed during the half include Northern Ireland Water, Quaker House, De La Rue and Telehouse.

Healthcare represents a core market for the Group, with Osirium counting approximately a quarter of all NHS Trusts as customers. The Group's reputation in this sector has actively contributed to the pipeline via referrals to prospective customers and direct approaches from resellers, supporting new business acquisition.

Customer renewals, license expansions and cross-selling

Alongside new customer wins, a core focus of Osirium's strategy is to achieve significant renewals, license expansions and cross-selling following an initial sale.

A significant number of customers bought more products or increased their license capacity during the period, aided by the continued maturation of the Group's PPA and EPM products. The Group has achieved a number of cross-sells from initial contracts, including the purchase of EPM from an initial contract, leading to the addition of the Group's PAM product. As at 30 June 2023, over 25% of active customers have been issued with licenses for more than one product.

In addition, supported by our customer focus and continued product enhancements, our strong rate of customer renewals has been maintained, currently at 98%.

Market

The market for privileged security has continued to grow in line with the increasing awareness of and requirement for these services globally, supporting the Group's customer acquisition.

Key regulatory drivers, directives and hybrid working trends continue to underpin the demand for privileged security, particularly in Europe and North America. In particular, the requirements for organisations to obtain privileged security for cyber insurance policies mean our solutions continue to be one of the factors at the top of the priority list for IT professionals.

Within the UK, these directives have also been issued in the Group's target sectors such as healthcare. The National Health Service's recent cyber security strategy outlines the role PAM products can play in preventing the insider threat and limiting security risks around privileged access more generally.

Ransomware continues to represent the core threat to IT departments, with a number of significant attacks observed during the year and reported across mainstream media. Compounded by geopolitical instability, these attacks highlight the need for privileged security in businesses and organisations of all sizes.

Current trading and outlook

The Group has made a positive start to the second half to date, with a number of further customer renewals. In addition, the Group has continued to see a growing pool of prospective new customers driven by the Group's partner network and strong reputation within its markets. Osirium's cash balance at 31 August 2023 was £89k with debtors of £242k.

Bridge Finance Facility

On 6 September 2023, Bidco (as the lender), Osirium Limited (as borrower) and the Group (as guarantor) entered into a bridge finance facility agreement (the "Bridge Finance Facility Agreement"). Pursuant to the Bridge Finance Facility Agreement, Bidco agreed to make available to Osirium Limited, as the operating subsidiary of the Group, a loan facility in an aggregate amount of up to £200,000 (the "Bridge Finance Facility"). Multiple loans may be drawn under the Bridge Finance Facility.

The Bridge Finance Facility is being made available to fund the working capital needs of the Group. Any drawdown is subject to the consent of Bidco, which may be granted in its sole discretion.

The Bridge Finance Facility will terminate on the earlier of: (i) 31 December 2023; (ii) the date falling ten Business Days (as defined in the Bridge Finance Facility Agreement, being "Bridge Finance Facility Business Days") after the date on which Bidco announces, with the consent of the Panel on Takeovers and Mergers (the "Panel"), that it does not intend to make or proceed with the Acquisition and no new, revised or replacement offer or scheme is announced in accordance with Rule 2.7 of the Takeover Code at the same time; (iii) the date falling ten Bridge Finance Facility Business Days after the date on which the Scheme is withdrawn or lapses for the purposes of the Takeover Code (save where Bidco has exercised its right to switch from the Scheme to a takeover offer prior to such withdrawal or lapse); (iv) the date falling ten Bridge Finance Facility Business Days after the date on which a third party (other than Bidco or any person acting in concert with Bidco) announces a firm intention to make an offer for shares in Osirium pursuant to Rule 2.7 of the Takeover Code, whether or not recommended, at an offer price greater than 2.35p per share; and (v) where Bidco has exercised its right to switch from the Scheme to a takeover offer, if: (a) subject to Panel consent, the offer document has not been published by 11:59 p.m. on the 28th calendar day following the announcement of such exercise of the right to switch (or such later time or date as agreed between Bidco and Osirium, with the approval of the Panel if required); or (b) such Offer lapses for the purposes of the Takeover Code, in each case on the date falling ten Bridge Finance Facility Business Days after such date.

Interest on each loan under the Bridge Finance Facility will accrue at a rate of 10 per cent. per annum until the date of termination of the Bridge Finance Facility Agreement. Any voluntary prepayment by Osirium Limited is without penalty or fee (apart from breakage costs and accrued interest).

The Bridge Finance Facility Agreement includes customary representations and undertakings and financial information rights for a facility of this kind. The Bridge Finance Facility Agreement is unsecured.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

					6 months to		6 months to		Year to
					30-Jun-23		30-Jun-22		31-Dec-22
					(Unaudited)		(Unaudited)		(Audited)
					£		£		£
CONTINUING OPERATIONS
Revenue					1,072,987		909,577		1,922,860
Other operating income					42		2		2
Administrative expenses					(2,311,136)		(2,535,240)		(5,279,002)
OPERATING LOSS					(1,238,109)		(1,625,661)		(3,356,140)
Finance costs					(120,067)		(107,395)		(229,701)
Finance income					3		-		-
LOSS BEFORE TAX					(1,358,173)		(1,733,056)		(3,585,841)
Income tax credit					228,062		315,774		640,860
LOSS FOR THE PERIOD ATTRIBUTABLE TO
THE OWNERS OF OSIRIUM TECHNOLOGIES PLC					(1,130,111)		(1,417,282)		(2,944,981)
Loss per share from continuing operations:
Basic and diluted loss per share					1p		5p		6p

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

					30-Jun-23		30-Jun-22		31-Dec-22
					(Unaudited)		(Unaudited)		(Audited)
					£		£		£
ASSETS
NON-CURRENT ASSETS
Intangible assets					3,781,195		3,721,569		3,752,102
Property, plant & equipment					41,348		68,790		54,848
Right-of-use asset					175,927		211,598		199,384
					3,998,470	4,011,957		4,006,334
CURRENT ASSETS
Trade and other receivables					811,823		1,236,390		906,698
Cash and cash equivalents					220,443		273,218		1,081,135
					1,032,266		1,509,608		1,987,833
TOTAL ASSETS					5,030,736		5,511,565		5,994,167
LIABILITIES
CURRENT LIABILITIES
Trade and other payables					3,379,088		2,786,811		3,307,313
Lease liability					54,609		19,125		45,216
					3,433,697		2,805,936		3,352,529
NON-CURRENT LIABILITIES
Lease liability					167,050		212,084		194,660
Convertible loan notes					3,032,262		2,816,678		2,926,134
					3,199,312		3,028,762		3,120,794
TOTAL LIABILITIES					6,633,009		5,834,698		6,473,323
EQUITY
SHAREHOLDERS EQUITY
Called up share capital					1,225,487		604,377		1,225,487
Share premium					13,750,312		13,006,740		13,750,312
Share option reserve					386,517		372,529		379,523
Convertible note reserve					394,830		394,830		4,008,592
Merger reserve					4,008,592		4,008,592		394,830
Retained earnings					(21,368,011)		(18,710,201)		(20,237,900)
TOTAL EQUITY ATTRIBUTABLE TO THE
OWNERS OF OSRIRIUM TECHNOLOGIES PLC					(1,602,273)		(323,133)		(479,156)
TOTAL EQUITY AND LIABILITIES					5,030,736		5,511,565		5,994,167

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

			Called up		Share		Merger		Share option		Convertible note		Retained		Total
			Share Capital		premium		reserve		reserve		reserve		earnings		equity
			£		£		£		£		£		£		£
Balance at 1 January 2022			293,820		12,462,319		4,008,592		365,535		394,830		(17,292,919)		232,176
Changes in equity
Total comprehensive loss			-		-		-		-		-		(1,417,282)		(1,417,282)
Issue of share capital			310,557		689,443		-		-		-		-		1,000,000
Issue costs			-		(145,021)		-		-		-		-		(145,021)
Share option charge			-		-		-		6,994		-		-		6,994
Balance at 30 June 2022 (unaudited)			604,377		13,006,741		4,008,592		372,529		394,830		(18,710,201)		(323,132)
Balance at 1 January 2022			293,820		12,462,319		4,008,592		365,535		394,830		(17,292,919)		232,177
Changes in equity
Total comprehensive loss			-		-		-		-		-		(2,944,981)		(2,944,981)
Issue of share capital			931,667		1,599,833		-		-		-		-		2,531,500
Issue costs			-		(311,840)		-		-		-		-		(311,840)
Share option charge			-		-		-		13,988		-		-		13,988
Balance at 31 December 2022 (audited)			1,225,487		13,750,312		4,008,592		379,523		394,830		(20,237,900)		(479,156)
Balance at 1 January 2023			1,225,487		13,750,312		4,008,592		379,523		394,830		(20,237,900)		(479,157)
Changes in equity
Total comprehensive loss			-		-		-		-		-		(1,130,111)		(1,130,111)
Share option charge			-		-		-		6,994		-		-		6,994
Balance at 30 June 2023 (unaudited)			1,225,487		13,750,312		4,008,592		386,517		394,830		(21,368,011)		(1,602,273)

CONSOLIDATED STATEMENT OF CASHFLOW

					6 months		6 months		Year
					ended		ended		ended
					30-Jun-23		30-Jun-22		31-Dec-22
					(unaudited)		(unaudited)		(audited)
					£		£		£
Cashflows from operating activities
Cash used in operations					(629,067)		(602,944)		(138,715)
Tax received					640,556		603,232		603,232
Net cash from operating activities					11,489		288		464,517
Cash flows from investing activities
Purchase of intangible fixed assets					(853,601)		(945,808)		(1,960,912)
Purchase of tangible fixed assets					(583)		(10,524)		(15,338)
Sale of tangible fixed assets					42		-		-
Interest received					3		2		-
Net cash used in investing activities					(854,139)		(956,330)		(1,976,250)
Cashflows from financing activities
Share issue					-		1,000,000		2,531,500
Share issue costs					-		(145,021)		(311,840)
Lease payment					(25,416)		(16,947)		(25,392)
Allocation of professional fees on loan notes					7,374		7,374		14,746
Net cash (used in)/from financing activities					(18,042)		845,406		2,209,014
Increase/(decrease) in cash and cash equivalents					(860,692)		(110,636)		697,281
Cash and cash equivalents at beginning of period					1,081,135		383,854		383,854
Cash and cash equivalents at end of period					220,443		273,218		1,081,135

GENERAL INFORMATION

Osirium Technologies PLC was incorporated on 3 November 2015, and registered and domiciled in England and Wales with its registered office located at One Central Square, Cardiff CF10 1FS.  

The principal activity of the Group in the periods under review was that of the development, sale and licensing of security software.  

BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES  

Basis of preparation

The Group financial information is presented in pounds sterling which is the Group's presentational currency, and all values are rounded to the nearest whole pound.

The financial information does not comprise statutory accounts within the meaning of section 435 of the Companies Act 2006. The financial information together with the comparative information for the six months ended 30 June 2022 are unaudited with the audited information included for the 12-month period ended 31 December 2022. The audited information received an audit report which was unqualified and did not include a statement under section 498(2) or section 498(3) of the Companies Act 2006 but did contain a material uncertainty paragraph on going concern.

The financial information was approved by the Board of Directors on 6 September 2023 and authorised for issue on 7 September 2023.  

Accounting Policies

The accounting policies used in the preparation of the financial information for the six months ended 30 June 2023 are in accordance with the recognition and measurement criteria of UK-adopted international accounting standards and are consistent with those which will be adopted in the annual financial statements for year ended 31 December 2023.

These Interim Financial Statements have been prepared in accordance with the accounting policies, methods of computation and presentation adopted in the financial statements for the year ended 31 December 2022. As permitted, the Group has chosen not to adopt IAS 34 'Interim Financial Reporting' in preparing these Interim Financial Statements.  

The Directors have considered all new, revised or amended standards and interpretations which are mandatory for the first time for the financial year ending 31 December 2023, and concluded that none have had any significant impact on these interim financial statements. New, revised or amended standards and interpretations that are not yet effective have not been adopted early.  

Intangible assets  

An internally generated, development intangible asset arising from Osirium's product development is recognised if, and only if, Osirium can demonstrate all of the following:

·      The technical feasibility of completing the intangible asset so that it will be available for use of sale.

·      Its intention to complete the intangible asset and use or sell it.

·      Its ability to use or sell the intangible asset.

·      How the intangible asset will generate probable future economic benefits.

·      The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.

·      Its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Internally generated development intangible assets are amortised on a straight-line basis over their useful lives. Amortisation commences in the financial year of capitalisation. Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Development costs 20% per annum, straight line.

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 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.

INTANGIBLE FIXED ASSETS

					Development
					Costs
					£
Cost
At 1 January 2022					11,349,999
Additions to 30 June 2022					945,808
Cost c/f as at 30 June 2022					12,295,807
At 1 January 2022					11,349,999
Additions to 31 December 2022					1,960,912
Cost c/f as at 31 December 2022					13,310,911
At 1 January 2023					13,310,911
Additions to 30 June 2023					853,601
Cost c/f as at 30 June 2023					14,164,512
Amortisation
At 1 January 2022					7,792,689
Charge to 30 June 2022					781,549
Amortisation c/f as at 30 June 2022					8,574,238
At 1 January 2022					7,792,689
Charge to 31 December 2022					1,766,120
Amortisation c/f as at 31 December 2022					9,558,809
At 1 January 2023					9,558,809
Charge to 30 June 2023					824,508
Amortisation c/f as at 30 June 2023					10,383,317
Carrying Amount:
At 30 June 2022 (unaudited)					3,721,569
At 31 December 2022 (unaudited)					3,752,102
At 30 June 2023 (unaudited)					3,781,195

 All development costs are amortised over their estimated useful lives, which is on average 5 years. Amortisation is charged in full in the financial year of capitalisation.

All amortisation has been charged to administrative expenses in the statement of comprehensive income.

RIGHT OF USE ASSETS

				Leases & Buildings
				£
Cost
At 31 December 2021				159,455
Additions				234,569
Disposals				(159,455)
At 31 December 2022				234,569
Additions				-
At 30 June 2023				234,569
Depreciation
At 31 December 2021				147,189
Charge for year				47,451
Depreciation eliminated on disposal				(159,455)
At 31 December 2022				35,185
Charge for year				23,457
At 30 June 2023				58,642
Net Book Value
At 31 December 2022				199,384
At 30 June 2023				175,927

 Additions to the right of use assets during the period were £nil (year to 31 December 2022: £234,569).

The group leases land and buildings for its office under an agreement for 5 years running from 2022 to 2027.

LEASE LIABILITIES

			As at		As at		As at
			30-Jun-23		30-Jun-22		31-Dec-22
			£				£
Current
Lease liability			54,609		19,125		45,216
Non- current
Lease liability			167,050		212,084		194,660

RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH FROM OPERATIONS

					6 months		6 months		Year
					ended		ended		ended
					30-Jun-23		30-Jun-22		31-Dec-22
					(unaudited)		(unaudited)		(audited)
					£		£		£
Loss before income tax					(1,358,173)		(1,733,056)		(3,585,841)
Depreciation charges					37,541		44,729		75,265
Amortisation charges					824,508		781,549		1,766,120
Share option charge					6,994		6,994		13,988
Profit on disposal of fixed assets					(42)		-		-
Finance costs					105,853		107,395		229,701
Finance income					(3)		-		-
					(383,322)		(792,388)		(1,500,767)
(Increase)/decrease in trade and other receivables					(317,522)		(22,036)		213,190
Increase /(decrease) in trade and other payables					71,777		211,480		1,148,862
Cash used in operations					(629,067)		(602,944)		(138,715)

 

END