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8
Connected
RPA: Powering
the connected
enterprise
Annual Report and Accounts 2018
Welcome to our 2018 Annual Report
At Blue Prism, we believe
that technology has the
ability to unlock potential
for your business and our
platform enables this.
Contents
Strategic report
2018 highlights
Company overview
Case studies
Market overview
Business model
Chief Executive’s review
Strategic framework
Key performance indicators
Strategy in action
Financial review
Principal risks and uncertainties
Governance
Chairman’s statement
Board of Directors
Senior management
Corporate governance statement
Nomination Committee
Audit Committee report
Remuneration Committee report
Directors’ report
Directors’ responsibilities
Financial statements
Independent auditor’s report
Consolidated statement of profit or
loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes forming part of the financial statements
Company statement of financial position
Company statement of cash flows
Company statement of changes in equity
Notes to the Company financial statements
Company information
2
4
6
12
14
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18
22
24
26
28
32
34
36
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43
48
50
51
55
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59
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74
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76
78
Annual Report 2018
Scaling
for growth
2018 revenue
£55.2m
Increase in revenues
125%
See pages 26-27
Unlocking potential
Investing in growth, expanding
globally. See our Strategic Framework.
See pages 18-21
Growing customer base
Find out more about how our customers
use us in our case studies.
Customers
992
See pages 6-11
222
2018 highlights
We have made great progress
in the year, more than doubling
revenues, while investing in the
international growth
opportunity.
Operational highlights
Very strong sales momentum
1,359 software deals secured (FY2017: 609),
consisting of:
• 528 additional customers (FY2017: 324)
• 723 upsells, secured across 310 customers
(FY2017: 264 upsells across 131 customers)
• 108 renewals
• Customer base of 992 (FY2017: 477)
Ever expanding reach
• New offices opened in Singapore,
Hong Kong, France and Germany. Office
network now covering 9 countries
• Global employee base of 469 (FY2017: 187)
• Distribution partner network of 95
• Over 78,000 registered users
• 8,500 accreditations issued over
Excellent progress in the key US
market
• 349 customers (FY2017: 135)
• 214 new customers (FY2017: 109)
• 29 renewals
64 countries
• Blue Prism World events hosted, with
over 3,000 attendees across both, as well
as 12 webinar ‘Cafe’ events and local
Pulse events
Continually developing product,
backed by an alliance of
technology partners
Blue Prism Digital Exchange launched
which allows customers direct access to
in-house technologies and third-party
content-enabling access to our ecosystem
of technology partnerships
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
3
We are continually improving
our product offering, and
building an organisation to
support future growth.
Financial highlights
Revenue
Recurring licence revenue (%)
Exit monthly recurring revenue
£55.2m
2018
2017
£55.2
£24.5
94%
2018
2017
Adjusted EBITDA
Cash
£(21.6)m
2018
2017
£(21.6)
£(8.3)
£50.5m
2018
2017
£5.6m
2018
2017
See page 22 for definition
£5.6
£2.8
94%
90%
£50.5
£16.3
Adjusted EBITDA is the loss for the year after
adding back share-based payments and
associated taxes, depreciation and amortisation
To find out more see www.blueprism.com
Blue Prism Group plc
Annual Report and Accounts 2018
44
Company overview
Our software puts cutting edge
technology in the hands of
business leaders, so that they
can build a Digital Workforce
that reshapes the way they
achieve their objectives.
Our vision
To provide an enterprise software solution that
empowers business leaders to respond to ever
changing business needs by leveraging a Digital
Workforce that utilises leading edge technologies.
What is the problem?
Every organisation today is a technology company, whatever the
sector it operates in. New, disruptive technologies are emerging at
an increasingly rapid rate, changing the ways consumers behave
and giving rise to new, dynamic competition. This creates a digital
entrepreneur gap, leaving established businesses vulnerable.
Business leaders need to be increasingly agile, with access to the
same technologies as the ambitious new start-ups while mitigating
the burdens of legacy systems or business models.
How we solve it?
We close the gap using connected-RPA (robotic process
automation). Our market leading software delivers a Digital
Workforce, who can be quickly implemented and trained to work
seamlessly between applications such as legacy IT systems,
delivering processes accurately and with speed. The Digital
Workforce can be managed by the business leaders themselves,
who can make sure it is focused on the tasks that matter most
to the business at that point in time, the same way you would
manage a team of people. The workforce is configured and
managed within an IT governed framework, so IT departments
can remain comfortable with the security and resilience of the
digital workforce, while the business leaders can manage and
amend it to suit their needs at the time.
We have access to a wide network of technology partners
such as Google and Microsoft who are developing new,
innovative tools in areas such as Machine Learning and
Artificial Intelligence. We aim to ensure that these
developments are readily available to the digital
workforce, improving their capabilities at the same
pace as technology is released.
There is also a network of developers, working on
applications that use the Blue Prism platform as a
base for their technologies, adding specific skills
to the Digital Workforce all the time.
Blue Prism Group plc
Annual Report and Accounts 2018
It is built on 3 key principles:
• Business led: we empower the operation
to deliver business outcomes
• Controlled: we provide simplicity
with governance to support scale
• Intelligent: we surface skills from an
ecosystem of digital ideas to deliver
the power of choice
These tools and skills can be accessed directly by the
business leaders using the Blue Prism Digital Exchange,
meaning they are better and more equipped to meet the
changing consumer and competitive world. The end
result is a connected entrepreneur enterprise that
provides a competitive edge and closes the gap.
We are used by almost 1000 organisations worldwide,
including eBay, Fannie Mae, Sony, E.ON, Santander,
Hyundai, DuPont and PayPal.
How we do it
The Blue Prism digital worker interacts with other
applications such as email, or ERP (Enterprise Resource
Planning) systems in the same way a human worker
would. The software robot can be trained by operational
staff, using defined rules and they don’t need coding
expertise to do this.
The Digital Workforce learns new processes as the
organisation needs them, and can incorporate new
skills and tools seamlessly. Any change is immediately
adopted by the entire workforce.
Blue Prism work with a network of distribution
and delivery partners (such as EY, Accenture
and Deloitte) who will help business leaders
identify opportunities for the Digital Workforce
in their organisations
The partner and Blue Prism will work to deploy
the software into the organisation, and make sure
operational teams know how to train the Digital
Workforce, in case they need to amend workflows
or want to add tasks
The Digital Workforce will run all the processes they
are trained to do, either based on a server or in the
cloud, with no attendance or desktop required.
It can prioritise tasks based on requirements
Strategic report
Governance
Financial statements
5
Customers
992
Distribution partners
Countries served
95
67
What this means for our customers
Blue Prism’s Digital Workforce provide
the following benefits to our customers:
Access to market leading technology
• Customers have access to continual
product development, and a range
of skills and capabilities from our
technology partnerships
• Business leaders can continually
improve operations based on the latest
technologies available, meaning they
are able to respond to opportunities that
new disruptive technology can present
with agility
Technology partners
>15
Productivity & efficiency
• The Digital Workforce can deliver any
task, quickly, accurately and to scale
• It runs 24/7, completing even the most
repetitive task without compromising
quality
• Using software robots to complete rules
based tasks frees up human workers to
commit more time and focus to higher
value activities they are more suited to,
involving communication, empathy
and judgement
• Customer service can improve as fewer
mistakes are made, and time can be
spent with customers directly
Security and compliance
• Multiple processes can be delivered
simultaneously across the organisation
• Security improves by removing human
fraud, error, intrusion to sensitive data
and malpractice
• All Blue Prism processes are clearly
mapped and auditable, beneficial in
regulatory compliance
Blue Prism Group plc
Annual Report and Accounts 2018
6
66
Case study
Putting people
where the value is.
Walgreens use Blue Prism’s Digital
Workforce to improve HR to give their
team members more time to increase
customer interactions.
Store managers in Walgreens
spend significant time managing
the recruitment of new staff.
Blue Prism and the HR shared
service team began to automate
parts of the hiring process, such
as requisition creation, to give
managers more time to focus on
customers. Additionally, Blue
Prism has increased the existing
bandwidth in HR shared services
to assist over 300 stores with
centralised administrative
support without adding
additional costs.
Walgreens hire
95,000 to
100,000
employees a year
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
7
Managers can now spend
their time helping customers,
not finding somebody to help
a customer.
Curt Burghardt
VP of shared services and systems
Blue Prism Group plc
Annual Report and Accounts 2018
8
88
Case study
Applying cognitive technologies
to RPA, bridges the gap between
humans and IT systems – where
all parties increasingly work
more seamlessly together – to
enable continual, digital
transformation.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
9
24/7 availability.
Siemens use the Digital Workforce to manage
invoice payment queries.
The Digital Workforce use an
integrated chatbot to automate and
orchestrate invoice status related
inquiries using real-time ERP and
workflow data.
It interprets intent, collects the
required information, retrieves
real-time status from back-end
systems, sends a response to the
users and if not resolved, creates a
ticket – which is passed to a human
service agent. The result is reduced
manual effort, 24/7 availability and
faster response times.
Blue Prism Group plc
Annual Report and Accounts 2018
10
1010
Case study
Improving
customer service.
Postbank use the Digital Workforce to
reallocate employees to higher quality
tasks, while improving customer service.
By using the Digital Workforce
for tasks previously managed
by employees, Postbank were
able to free up existing employee
resource to focus on the growing
business. They were also able to
improve customer service, as
the Digital Workforce work in
the same way each time - always
fast and to the same level of
quality – accelerating the
processing of orders and saving
customer’s time.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
11
Blue Prism Group plc
Annual Report and Accounts 2018
1212
Market overview
Our market continues to grow and develop
rapidly as new customers are attracted by
the returns, efficiency and customer service
gains that RPA can bring, and existing
customers begin to realise the organisation
wide potential of their initial adoption.
We are a thought and market leader providing connected-RPA. Our Digital Workforce,
supported by our partners and our people can lead transformational change in organisations,
and we believe the potential is only just starting to be realised.
Who are our customers?
We are focused on enterprise scale
organisations. Within these organisations
our primary customers are the business
leaders themselves who we provide a Digital
Workforce which allows fast response to
changing customer needs and provides
direct access to the rapidly evolving
technology network of our partners. We
also work with the IT departments, who we
offer security and governance, to avoid the
threat of ‘grey IT'.
We believe that in today’s world every
business is a technology business, that
needs to be able to respond to the threats
and opportunities that new, disruptive
technology can bring. As a result we see
our potential market as covering all sectors.
We currently operate over multiple sectors,
with the key ones being banking,
insurance, financial services, professional
services, telecoms and utilities.
In addition to new customers there is a
market driven by existing customers,
who having used Blue Prism, establish
further opportunities to deploy a Digital
Workforce and improve performance. New
technology also provides increased use
cases. In 2018, we completed 723 upsells,
where customers added to their Digital
Workforce.
What do industry experts
say about our market?
Sizing the potential market and the scale
of the opportunity ahead continues to be
a subject for debate amongst industry and
financial analysts, but there is a consensus
that the marketplace is in its infancy.
In August 2018, HfS (“Horses for Sources”)
estimated the market for enterprise robotic
software and services to have grown 47%
in 2018 to surpass $1.5bn in total. Looking
further ahead Forrester estimates that
there will be more than 4 million robots in
office and administrative roles as well as
sales and other tasks by 2021, with an
approximate market size of around $2.9bn.
Customers are also talking about RPA.
A Deloitte survey of 400 companies found
that 78% were likely to increase, or
significantly increase, their RPA
investments in the next three years.
There is also commentary around the
attractiveness of RPA to businesses. A 2017
study by Forrester found the introduction
and development of business process
automation offers returns on investment,
in the first year alone, of up to 200 per cent.
It is important to note that while industry
analysts focus on RPA as a whole, we
believe our connected-RPA is unique in the
way it enables business leaders to challenge
and embrace new technologies using an IT
compliant approach.
References:
Forrester Total Economic Impact Study Commissioned By Blue Prism – November 2017
Deloitte: The Robots are ready. Are you? – 2017
Forrester: The RPA Market Will Reach $2.9 Billion by 2021 – February 2017
Forrester: The Forrester Wave: Robotic Process Automation, Q2 2018
HfS Benchmark Report: Detailed assessment of the 10 leading RPA products – June 2018
HfS Top 10 RPA Products 2018 – August 2018
Who are the competition?
The scale of the market opportunity
means we operate in a competitive
market. Industry analysts such as
Forrester and HfS point to Blue Prism,
Automation Anywhere and UI Path as
the market leaders.
We differentiate from the pack by
delivering connected-RPA, which means
we have several distinct competitive
advantages.
Business led, enterprise focused,
controlled and intelligent
Our Robotic Operating Model
(“ROM") – users can easily manage
our no code platform
Product – our product is market
leading – rated first for
functionality, security and
compliance by HfS
Our platform approach, bringing
the latest technologies from a wide
range of sources directly to
business leaders
Channel relationships – our
distribution and implementation
partner network means we have
access to opportunities across a
range of organisations including
the world’s largest companies
As with any competitive advantage these
must be invested in to be sustained and
our strategy is focused around enhancing
and developing these core differentiators.
More detail about the strategy can be
found from page 18.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
13
2018 market size
Over 3 years
Return on investment
$1.5bn
+47%
Source: HfS
78%of RPA users surveyed
will increase their
investments
Source: Deloitte survey
200%
Source: Forrester
How global is the marketplace?
As the market develops the global opportunity becomes clearer. Blue Prism now
has offices in 9 countries, with new openings in France, Germany, Singapore and
Hong Kong. Customer reach is beyond this, with customers in 67 countries.
The US remains a key strategic priority, but there is good potential globally and we
are committed to increasing our reach.
San Francisco
New York
Warrington
Tokyo
Chicago
London
Hong Kong
Number of offices
15
Number of countries
we sell to
67
Austin
Washington, DC
Paris
Bangalore
Sydney
Miami
Munich
Singapore
Blue Prism Group plc
Annual Report and Accounts 2018
1414
Business model
We work with our distribution partners
and technology partners to deliver a digital
workforce that helps business leaders fulfil
their goals today, and gives them access to
new disruptive technologies, which can
provide opportunities in the future.
Key inputs
What we do
Introducing our digital workforce solution
Contact and sale
Design and
implement
Blue Prism
in place
Blue Prism sales and distribution partners
establish contact with a customer and
establish how Blue Prism could work
with the organisation.
When contracted, the distribution partners
supported by Blue Prism will help the
customer implement the digital workforce.
People and expertise
• Innovative and creative
engineers, leading sales and
customer success and support,
robust back office functions.
A market leading product
• Provides intelligent automation
that is business led.
• Places best in class technologies
with business leaders.
Technology partnerships
• Combine with product
development to provide
customers access to new,
disruptive technologies.
Strong financials and balance sheet
• Licence model provides good
revenue visibility.
• Predictable cash generation:
we use the cash generated to
reinvest back in the business
for further growth.
Reseller partnerships
• Our distribution and delivery
channels.
• Highly aligned partner
community.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
15
How we generate revenue
2% Professional services
We provide other professional services
including advisory and assurance on the
Robotic Process Automation
94% Licences
We sell software licences for our Digital
Workers and the right to future software
upgrades, standard maintenance and support
4% Education and other
We provide training and education around the
optimal deployment of our Digital Workers.
Other is items like sponsorship of our
Blue Prism World events
Deepening the customer relationship
Blue Prism regularly issues
product updates, which improve
performance or add features to
the operating system.
Blue Prism sales and channel
partners help establish new
opportunities.
Updates
Support
Evolve
Customer
expands their
Digital Workforce
Customer
renews
contract
Digital
Exchange
New technologies are
continually offered and updated
by our technology partners at
the application level. These are
available via our Digital Exchange.
Blue Prism sales and channel
partners work with a customer
to renew their existing contract.
How we add value
• We employ engineers to develop
a Digital Workforce that we
licence to end user customers.
• We continue to invest in R&D
programmes to enhance the
(intelligent) skills of our Digital
Workforce and sustain
our differentiation.
• We distribute and deliver the
Digital Workforce to the end
customers through our reseller
partner network. Our partners
benefit from the discount that
they obtain by acting as a
reseller and, in most cases,
benefit from services revenue
that they generate by delivering
the software robots to the end
customers.
• We have created an ecosystem
of technology partners that
provide end users with access
to the latest in technology
developments and innovation.
• We use our Robotic Operating
Model, a proprietary
methodology for implementing
the Digital Workforce. We
believe that this maximises the
value that our customers get
from their Workforce, increasing
loyalty and increasing the
chance of upsells.
Blue Prism Group plc
Annual Report and Accounts 2018
1616
Chief Executive’s review
We can deliver real,
transformational value to
our customers, positioning
us well for future growth
Our values
P
R
I
S
M
We are Professional –
smart in both thought
and presentation
We argue passionately and openly
but we have Respect for each
other and a consensual style
We act with Integrity
in our business
dealings
We strive for Success –
we are totally committed
to being the best we can be
We eMpower our people to
act in the interests of the
Company
Alastair Bathgate
Chief Executive
Officer
Blue Prism Group plc
Annual Report and Accounts 2018
Upsells
+174%
Assets on the Digital
Exchange (January 2019)
79
Strategic report
Governance
Financial statements
17
Overview
2018 was another year of exceptional
progress and excellent commercial
momentum. We saw global growth , with
revenues in EMEA up 96%, Americas up
137% and APAC up 294%. In total our
revenues were up 125%, a very strong
achievement. Importantly these revenues
are all very high quality, with 94% coming
from license sales.
Customers are becoming more and more
aware of the potential of the Digital
Workforce and how it can transform a
business and the way we work today. New
customers are attracted by the testimonies
and recommendations of early adopters,
which they can see via our Blue Prism
World events and Blue Prism Café series,
where customers talk about their
experiences and share best practices, or
from recommendations by our channel
partners. Our upsells are a key
demonstration of the value that our
customers continue to realise from
deploying our products. Upsells increased
174% in the year as customers, impressed
by the return on investment that they had
achieved, extended both the level of
automation within existing processes as
well as deploying RPA in new areas of their
organisations.
We are continuing to invest in these
markets, expanding our global reach and
ensuring we remain a market leader in a
competitive marketplace. As a result we
invested ahead of revenues this year, and
are forecast to do so next year.
Communicating our difference
We operate in a noisy marketplace, with
multiple vendors offering different products
that claim to solve the same problems.
Our connected-RPA is unique in driving
business-led automation in an IT endorsed
and controlled environment. We are focused
on communicating this differentiation to
set ourselves apart from the crowd.
Strategic pillars
In this competitive market our product,
methodology, distribution channels and
our people set us apart. Our strategy is
designed to build and capitalise upon these
advantages, and we have 4 strategic
priorities on which the organisation centres
its activities:
• Building scalable development, sales and
delivery channels
• Increasing business with our existing
customers
• Focusing on the key US market
• Using our market leadership to continue
to attract new customers
Every employee of Blue Prism receives share options or awards
– they are truly vested in our long-term performance and each
a steward of the business.
In January 2018 we raised £40m in a placing
to the market in order to deliver several
objectives that could underpin and
accelerate our strategic goals. You can find
more detail on our strategy and how we
have used those additional funds from
page 18.
Our people
In particular, key to our continued growth
is our people. We are investing a great deal
in new employees, to support our sales
efforts, continue to develop our product,
and build out the structures and
departments needed by the Blue Prism
of today, and the far larger Blue Prism of
tomorrow. Our employee base is now 469,
over double that at the end of 2017, and this
has continued to increase further in 2019.
The management team and I are clear that
people are vital to our continued success,
and we dedicate a lot of time and effort to
make sure that all new recruits have the
right skills, attitudes and cultural fit.
As a result we have a robust recruitment
methodology, and a well defined cultural
framework to assess potential employees.
I also believe ownership truly empowers,
and as a result every employee of Blue
Prism receives share options or awards
when they join the Company – they are
truly vested in our long-term performance
and each a steward of the business.
Looking ahead
Looking ahead to 2019 I am often asked
what I am most excited about. In truth there
are many, many things going on across Blue
Prism that continue to excite and amaze me
in their potential, but if I had to point to
one it would be the Blue Prism Digital
Exchange. I like to think of this as an ‘app
store’ for Blue Prism, where new and
existing customers can find features from
Blue Prism or our technology partners that
can enhance their digital workforce.
Despite only launching in November, the
site already contains 79 unique assets. It
throws open the potential for Blue Prism to
be truly transformative to an organisation,
and leverages the cutting edge of
technology that is in the market today. You
can read more about our product and the
digital exchange on page 24.
Finally, I would like to take a moment to
thank Jason Kingdon for his contribution
to Blue Prism over the past 10 years as
Chairman. Jason has been a great supporter
of Blue Prism and has helped steward the
business to where it is today. The Board are
engaged in a search for Jason’s successor
and he will remain in place until we have
appointed a replacement.
I am excited by what lies ahead in 2019,
as we continue to grow into the market
we helped establish. The RPA market is
thriving, and we at Blue Prism have what
it takes to make the most of this. I am very
proud to be leading the Company as we
move ahead.
Alastair Bathgate
Chief Executive Officer
The new Blue Prism Digital Exchange,
find out more on page 24
Blue Prism Group plc
Annual Report and Accounts 2018
18
Strategic framework
We have a clear, deliverable
strategy that will make sure we
maintain our position as market
leader, and grow with the market.
In January 2018 we raised £40m so that we could drive our
strategy forward at pace. While raising these funds we set
ourselves some specific objectives, which enhance our
existing strategy. These were:
Priority set at placing
1
2
3
4
5
Expand sales &
marketing across
US, APAC & EMEA
Develop & scale
the channel
partner network
via partner
certification
Commercialise
the Technology
Alliance
Programme
Reinforce market
leadership by
investing further
in our product &
differentiation
Invest in people,
process and
infrastructure
to support the
growing business
Core strategy
Building scalable
development, sales
and delivery channels
Increasing business
with our existing
customers
Focusing on the key
US market
Using our market
leadership to continue
to attract new customers
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
19
Our progress in our strategy, mapped against
the objectives set in January:
Building scalable development, sales and delivery channels
Why is this important?
As we scale to seize the market opportunity our leading product and
a growing market provides, we need to build scalable channels to
market, as well as processes and structures that ensure growth is
sustainable and customer satisfaction remains high.
We use channel partners such as EY and Accenture to connect with
the end customers and to deliver our products.
We believe that the strength of our partner network is a key
differentiator for the business and that it would take many years and a
great deal of investment to replicate the networks our partners bring.
We offer certification to our partner network to maintain the highest
levels of quality assurance in our sales and delivery model.
Our sales and services’ teams work with customers both before and
after purchase of our product, and support a range of activities from
education of the channel partners to 24/7 support after transaction.
95distribution partners 42certifications
What have we done this year?
1
2
3
5
Sales and marketing head count has increased by 182%, with
an increase of 140% in EMEA, 145% in the Americas and 700%
in APAC.
We also consolidated all of our non-Sales customer-facing services
teams under one function managed by our Chief Customer Officer
(“CCO"). This team is engaged throughout the entire customer life
cycle and is designed to increase pipeline conversion, maintain
customer satisfaction and drive renewals and upsells.
We continue to grow our channel partner network and now have
95 partners.
Of this 28 partners are certified, with 42 certifications between
them, 1 at platinum (the highest), 8 at gold and 33 at silver.
We built and launched the Blue Prism Digital Exchange (“DX"), a
platform which brings our customers in contact with the latest
technologies and skills, including a range of assets from our
technology alliances.
During the year we have put in place a robust HR framework and
processes around sales recruitment so that we ensure the quality
of our service and people remains high in a period of high growth
and that our quality and leadership is not diluted or inconsistent.
We use a clear set of behavioural values that dictate our
recruitment approach.
Our back office teams have expanded to support both the business
today and the growth we expect in the future. In particular we
have put in place an improved finance organisation designed to
more effectively support the business.
Blue Prism Group plc
Annual Report and Accounts 2018
20
Strategic framework continued
Increasing business with our existing customers
Why is this important?
When we first work with an end customer our product will often be
used by one department, or for a set group of processes.
There are typically many more areas of the business that can benefit
from the Digital Workforce and as we integrate more tools and
capabilities through our DX, the range of activities a digital worker
can help with is growing rapidly.
Once we are in a customer’s organisation and they begin to see the
benefits of Blue Prism there is an opportunity to help establish other
areas our product can be used to transform their business. This helps
drive our growth.
723upsells into
310customers
What have we done this year?
1
4
We established the Chief Customer Office function, which is
engaged throughout the entire customer life cycle and designed
to create a direct contact point between the end customer and
Blue Prism, maintain customer satisfaction and advocacy and
increase conversions. We believe that this investment in customer
satisfaction will drive loyalty, which in turn will drive upsells.
We have also continued to build and develop our community. Blue
Prism World and the Blue Prism Café seminars are forums which
allow customers access to a network of other users who provide
tips for implementation, and examples of use cases and best
practices. We hosted World events in London and New York, and
12 cafes in the year.
In addition to the launch of the DX we have also issued several
product upgrades during the year, providing new features and
functionality. We have also invested in a R&D team to ensure
we continue to offer the best possible product to market.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
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Financial statements
21
Focusing on the key US market
Why is this important?
The US is the world’s largest and most important software market.
It is a global market leader driving global trends and adoption as
well as being the single largest market in its own right.
East to West coverage
San Francisco
Chicago
Austin HQ and Tech Hub
349US customer base
New York
Washington
Miami
What have we done this year?
1
2
4
We increased the US based workforce by 152%, and sales and
marketing staff by 175%. Not only do our US employees improve
our reach, they also provide a US voice in the organisation,
meaning our approach and focus resonates with the market.
We have expanded the sales force to encourage more direct dialog
with end user clients, encourage more resellers to complement
our partnerships and cover the broader market and employ our
own ‘mid-market’ teams to have dialogue with and service the
next tier of end user clients
We have continued to develop a broad partner base providing
access and visibility to key decision makers across the Fortune
500 and other organisations.
By demonstrating the security, reliability and stability of our
product we were able to gain access to the GSA schedule in
September 2018, meaning that US government agencies can easily
procure and implement Blue Prism software.
Using our market leadership to drive new customers
Why is this important?
Blue Prism pioneered RPA. Our product was developed with
customers and designed from the start to be enterprise grade,
scalable and secure. We established the RPA product category,
and our product is regarded by industry analysts as one of the
best available.
As a market leader in a rapidly growing market we have an
opportunity to increase our customer base and drive growth.
528new customers in 2018
What have we done this year?
1
3
4
5
Implemented a range of digital and airport marketing campaigns
focusing on a range of topics including scalability, AI, security
and Blue Prism’s role in a digital strategy.
We have invested in our technology alliance partnerships
(“TAP"), which now includes over 15 partners. These
partnerships bring new skills to our digital workforce and allow
our customers access to market leading technology. The DX
works as a shop window to these skills, and allows prospective
and existing customers to visualize and map new opportunities.
We have continued to significantly ramp up our investment in
product development. In November we launched v6.4, a version
which integrates Blue Prism with the DX and makes integration of
new skills seamless. We also established a research team aimed to
investigate the latest developments in the technology market.
During the year we have put in place a robust HR framework and
processes around sales recruitment so that we ensure the quality
of our service and people remains high in a period of high growth
and that our quality and leadership is not diluted or inconsistent.
We use a clear set of behavioural values that dictate our
recruitment approach.
See pages 22-23 for more details on the KPIs we use to measure our progress
Blue Prism Group plc
Annual Report and Accounts 2018
22
Key performance indicators
We have a range of financial and
non-financial key performance indicators
(“KPIs”) to measure business performance,
particularly against our strategic objectives.
Financial
Revenue
£55.2m
+125%
£9.6m
£24.5m
£55.2m
EBITDA
£(5.2)m
£(10.0)m
£(25.6)m
£(25.6)m
2016
2017
2018
2016
2017
2018
Measure
The increase in
revenue over the
previous financial
year.
Relevance
As we continue to grow our business
and increase our share of a growing
market, growth in revenue
demonstrates the progress we are
making and the dynamism we see in
the market.
Measure
Earnings before
interest, tax,
depreciation and
amortisation in the
financial year.
Relevance
Measures the trading position of
the business and demonstrates
ongoing investments in the future
of the business and its growth.
Performance
We continued to see excellent revenue growth from both
new customers and upsells.
Which of our strategic objectives influence this metric:
Performance
EBITDA losses widened as we continued to invest in
global expansion and future growth.
Which of our strategic objectives influence this metric:
Exit monthly run rate revenue
(see below for definition)
£0.9m
£2.8m
£5.6m
£5.6m
Cash from operations
£(5.4)m
£0.1m
£4.4m
£(5.4)m
2016
2017
2018
2016
2017
2018
Measure
The amount of
recurring software
licence revenue
recognised in the
Group’s profit and
loss account in the
last month of the
reporting period.
Relevance
Indicates the level of licence
revenue that the Group would
achieve on a monthly basis going
forward if there was no new
business generated in the future
and a 100% renewal rate.
Performance
We closed the year with a significant increase in exit
MRR due to new customers and upsells during the period.
Which of our strategic objectives influence this metric:
Measure
Cash generated
from operations
before interest or
financing
activities.
Relevance
Our business model is inherently
cash generative as customers
typically pay for their licences a
year in advance. This measure
is a good indicator of the
underlying cash generation of the
business. It is also a good indicator
of how we are managing our
cash cycle.
Performance
While the underlying business remains cash generative
this was outweighed by the investment in further growth
during the year.
Which of our strategic objectives influence this metric:
Blue Prism Group plc
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Link to strategy
Building scalable
development, sales
and delivery channels
Increasing business
with our existing
customers
Americas’ revenue
£21.3m
+136%
Focusing on the
key US market
Using our market
leadership to
continue to attract
new customers
£2.7m
£9.0m
£21.3m
Non-financial
Upsells
723
81
264
723
2016
2017
2018
2016
2017
2018
Measure
Revenue from
customers in the
Americas in the
current financial
period.
Relevance
Measures our performance in the
key US & continental America
market, which is important
strategically and in terms of size.
Performance
We saw excellent growth across the US and wider
Americas as our investment in sales resource and
infrastructure expanded our reach.
Which of our strategic objectives influence this metric:
Measure
The number of
additional contracts
existing customers
have entered into
during the financial
year.
Relevance
Measures the strength of customer
advocacy and of Blue Prism’s
impact on organisations. A key
driver of our continued growth
and performance.
Performance
Upsell activity increased significantly during the year as
existing customers increased their Digital Workforces.
Which of our strategic objectives influence this metric:
Non-financial
Non-financial
Number of customers
153
477
992
Number of employees
86
187
469
992
469
2016
2017
2018
2016
2017
2018
Measure
Total number of
contracted
customers.
Relevance
A clear indicator of the progress of
the business within the market.
Drives existing revenues but also
provides a platform for future
growth and upsells.
Measure
Number of
employees within
the business at
the period end.
Relevance
As we grow our business
to respond to the market
opportunity available, we are
growing our employee base to
make sure we have and are able to
attract and retain the right skills
and capabilities within the
organisation.
Performance
The number of new customers more than doubled
during the year as we began to increase our
global reach.
Which of our strategic objectives influence this metric:
Performance
We more than doubled our employees during the year as
part of our investment in global growth.
Which of our strategic objectives influence this metric:
Blue Prism Group plc
Annual Report and Accounts 2018
24
24
Strategy in action
Our product:
constantly evolving
We are continually investing in
Blue Prism to make sure that
our product is market leading
and remains the best option
for our customers in a
competitive marketplace.
When Blue Prism was first
conceived it filled the gaps
between systems and
processes, which previously
have had to be filled by human
workers who could more
usefully be spending their
time elsewhere. These gaps
continue to exist, however as
companies see the potential of
Blue Prism they are beginning
to find more and more use
cases, above and beyond the
initial scope.
At the same time technology
is developing, particularly
around machine learning and
artificial intelligence. These
can help make the Digital
Workforce even more
impactful and increase
the use cases.
We have established 6 skills
needed to provide a truly
intelligent workforce:
• Knowledge and insight –
working with fragmented data
to deliver insight
• Visual perception – read,
understand and contextualise
visual information
• Learning – evolve processing
patterns and contextual
meanings
• Planning and sequencing –
discovery of opportunities
and ability to plan accordingly
• Problem solving – solving
logic, business and system
problems without human
intervention
• Collaboration – integrating
seamlessly with people
& systems
Unique assets currently
available through the DX
79
Many of the upgrades we have
delivered in 2018 have been
improving Blue Prisms’
capabilities so it can fulfill
the 6 skills, for example
visual perception.
In November we also launched the
Blue Prism Digital Exchange (DX),
our “app store” where new and
existing customers can discover
and download pre built AI,
cognitive and other disruptive
technologies, all
which can integrate
with Blue Prism.
Users can explore
and identify
opportunities for
automation, upskill
their existing workforce,
or share technology. The
latest version of Blue Prism,
v.6.4, allows instant integration
of these technologies.
By investing in our product, and
integrating with other cutting
edge technologies, we are
providing our customers with
solutions at the forefront of the
latest proven technologies.
Link to priorities
The development of the Blue Prism
Digital Exchange addresses our strategic
priorities
3
4
To commercialise
the Technology
Alliance Programme
Reinforce market
leadership by
investing further
in our product and
differentiation
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
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Financial statements
25
Registered users
>1000
Image shows the
front page of the DX.
Blue Prism Group plc
Annual Report and Accounts 2018
2626
Financial review
We have continued to build a
strong software licence revenue
base which provides a solid
platform for future
growth
Ijoma Maluza
Chief Financial Officer
Revenue
+125%
Blue Prism Group plc
Annual Report and Accounts 2018
Introduction
I am pleased to present another year of
excellent revenue growth, as we have
continued to capitalise on the significant
market opportunity available.
Group revenue increased 125%, as strong
sales and upsells built on the exit revenue
generated prior to the start of the year. The
monthly recurring revenue (“MRR") at the
end of the October was £5.6m, an increase
of 100%. MRR indicates the level of licence
revenue the Group generated in October.
In January 2018 we raised £40m (before
issue costs) in a placing to accelerate our
growth ambitions and seize the market
opportunity. We invested these proceeds
across 2018 and expect to see the full
benefits come through in future periods.
These increased investments, along with
increased sales commissions driven by
strong sales activity in the fourth quarter,
have led to increased EBITDA, (Earnings
before interest, tax, depreciation and
amortisation), losses of £(25.6)m. At this
critical stage of Blue Prism’s growth these
investments, and the resulting losses, are
necessary to realise our ambitions to
become a leading enterprise software
provider.
More details on our financial performance
in 2018 can be found below.
Revenue
Recognised revenue for the period
increased 125% to £55.2m (FY2017: £24.5m).
Recurring licence revenue, driven by strong
sales and upsell activities, accounted for
94% of recognised revenue (FY2017: 90%).
Professional services and support revenue
for the period increased to £3.5m (FY2017:
£2.2m), mainly due to an increase in
education services and training revenues
which accounted for £0.9m (FY 2017: £0.2m).
Non-recurring revenues for the period were
£0.5m (FY2017: £0.5m), primarily driven by
partners sponsoring the Blue Prism World
events staged during the first half of 2018.
The MRR increased 100% to £5.6m per
month (FY2017: £2.8m).
Strategic report
Governance
Financial statements
27
Revenue by geography
EMEA
Americas
APAC
Total
FY2018
FY2017 % movement
26.8
21.3
7.1
55.2
13.7
9.0
1.8
24.5
96%
136%
294%
125%
Loss from operations
Losses from operations before tax for the
period including share-based payments,
were £26.0m, compared to £10.1m in FY2017.
The increase primarily related to continued
investments in the Group’s international
growth strategy, with significant
investments in sales, marketing, product
and underlying business infrastructure.
These investments particularly focused
on international expansion into APAC and
the Americas. In addition, increased sales
activity year on year and in particular
toward the end of the period increased the
amount of introductory commissions,
which are paid upfront on contract signing,
but which only generate revenues in the
financial year from point of signing.
Cash flow
Cash and cash equivalents at the period end
were £50.5m (31 October 2017: £16.3m).
The cash outflow from operating activities
was £(5.4)m, as an increase in deferred
revenues partially offset the operating loss.
Both deferred revenues (defined as the
value invoiced versus the recognised
revenue during the year) and receivables
increased during the year, with the closing
balance primarily driven by the sales
growth seen in the fourth quarter.
Currency impact
The Group generated foreign exchange
gains during the period of £0.1m.
The gains generated are 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
loss of £(0.7)m (2017: gain of £0.3m).
Statement of financial position
Deferred revenue increased to £47.9m
(FY2017: £27.3m). This increase is the result
of the strong growth achieved in new
business, particularly the activity levels
seen in the fourth quarter.
Trade and other receivables increased to
£28.1m (FY2017: £14.9m). The increase was
again driven by increased activity levels
seen in the fourth quarter.
During the year development costs of £0.3m
have been capitalised relating to product
developments which will give rise to future
economic benefits. These costs are being
amortised over 18 months.
The January placing of £38.7m (net of fees)
drove the cash and cash equivalents at the
end of the period of £50.5m.
The Strategic report on pages 1 to 31 was
approved by the Board on 24 January 2019
and signed on its behalf by
Ijoma Maluza
Chief Financial Officer
Blue Prism Group plc
Annual Report and Accounts 2018
28
Principal risks and uncertainties
The Group is exposed to a number of potential
risks which may have a material effect on its
reputation, financial or operational performance.
It is not possible to identify or anticipate every risk that may affect the Group, or the materiality of that risk, however,
the principal risks and uncertainties faced by the Group are set out below. The Board has overall responsibility for risk
management and internal controls and is fully supported by the Audit Committee. For financial instrument risk management
and objectives please see note 3 of the financial statements. Key areas for on-going risk management are:
Risk
Growth
strategies
Failing to
successfully
implement its
growth strategies
Channel partners
Dependence on
Channel Partners
Description
The Group intends to carry out certain growth and
expansion strategies. The Group’s growth and future
success will be dependent to some extent on the successful
completion of such growth and expansion strategies
currently or proposed to be undertaken by the Group and
the sufficiency of demand for the Group’s software. The
execution of the Group’s growth and expansion strategies
may also place strain on its managerial, operational and
financial reserves and the failure to implement such a
strategy may adversely affect the Group’s reputation,
business, prospects, results of operation and financial
condition.
The Group sells its software robots through partners. There
can be no guarantee that these partners will continue to sell
the Group’s software robots to their end customers. The loss
of certain key Partners (and the resulting loss of indirect
customers contracted via those Partners) could have a
material adverse effect on the Group’s business and financial
condition.
Group’s
operating model
Failure of the
market to accept
the Group’s
operating model of
a fully automated
Digital Workforce
A large proportion of the Group’s target market still uses
traditional systems relying on human driven activities for
the major part of their operations. The Board believe the
market needs further education on the virtues of its
software machine-driven technology, and on how to
integrate it into its current operations. Potential customers
may however favour more traditional methodologies and/or
be cautious about investing in the Group’s software due to
lack of education as to how it operates. Failure by the Group
to bring about a change in the market’s readiness to accept
a new technology will lead to slower than projected growth
in the Group’s revenues and profits.
Trend Mitigation
The Board monitors and manages these
growth strategies against market conditions,
monthly performance against budgets, and
cash available.
Our strategic objective to build scalable
sales and delivery looks to develop scalable
channels to market as well as processes and
structures to support international growth.
The Group has relationships with 95
distribution partners and has established
a certification programme to ensure
customers can select a partner suited to
their needs.
Internal resource is dedicated to partner
relationships and education, to ensure the
partner network is informed to the strengths
and capabilities of the software, and to
assist with sales where necessary.
The Group provides a range of benefits
to members of its partner programme
including sales and marketing support and
tiered discounts on licences for resale to
end customers.
The Group has internal sales and marketing
functions, supported by a distribution
partner network, who work with potential
customers to educate on the opportunities
that the product can offer an organisation.
The Blue Prism World and Café series
connect existing customers with potential
customers to provide a forum where RPA
opportunities and experiences can be
discussed.
Trend
Increasing
No change
Decreasing
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
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29
Risk
Software
reliability
Undetected defects
in the software
provided by the
Group
Description
The Group’s business involves providing customers with
reliable software. If the software contains undetected
defects when first introduced or when upgraded or
enhanced, the Group may fail to meet its customers’
performance requirements or otherwise satisfy contract
specifications. As a result, it may lose customers and/or
become liable to its customers for damages and this may,
amongst other things, damage the Group’s reputation and
financial condition.
Trend Mitigation
The Group targets significant investment in
product R&D, and these investments include
performance enhancements, bug fixes and
integration of new technologies in the
marketplace.
Where possible, the Group endeavours to
negotiate limitations on its liability in its
customer contracts.
Security breaches
Security breaches
of the Group’s or
customer’s systems
Cyber-attacks
The Group’s
software may
be at risk from
cyber-attacks
Defects in software developed and sold by the Group could
result in the loss of a customer, a reduction in business
from any particular customer, negative publicity, reduced
prospects and/or a distraction to its management team. A
successful claim by a customer to recover such losses could
have a material adverse effect on the Group’s reputation,
business, prospects, results of operation and financial
condition.
The Group is often required and authorised by its
customers to work with confidential information in the
deployment of the Group’s software and services. Although
the Group employs security and testing measures for the
software it deploys, these may not protect against all
possible security breaches that could harm the Group’s or
its customers’ business. Any compromise of the Group’s
security could harm its reputation or financial condition
and, therefore, its business. In addition, a party who is able
to circumvent the Group’s security measures could, among
other things, misappropriate proprietary information,
interrupt the Group’s operations or expose customers to
computer viruses or other disruptions. Actual or perceived
vulnerabilities may lead to claims against the Group.
The Group relies on information technology systems to
conduct its operations. Because of this, the Group and its
software are at risk from cyber-attacks. Cyber-attacks can
result from deliberate attacks or unintentional events and
may include (but are not limited to) third parties gaining
unauthorised access to the Group’s software for the
purpose of misappropriating financial assets, intellectual
property or sensitive information, corrupting data, or
causing operational disruption. If the Group suffers from
a cyber-attack, whether by a third party or insider, it may
incur significant costs and suffer other negative
consequences, such as remediation costs (including
liability for stolen assets or information) and repairing any
damage caused to the Group’s network infrastructure and
systems. The Group may also suffer reputational damage
and loss of investor confidence. If the Group suffers a
cyber-attack, this could expose the Group to potential
financial and reputational harm.
The Group employs security and testing
measures for the software it deploys and on
internal systems. Employees are trained on
the risks of phishing and best practice for
data security.
Where possible the Group endeavours to
negotiate limitations on its liability in
customer contracts.
The Group employs security and testing
measures for the software it deploys and on
internal systems. Employees are trained on
the risks of phishing and best practice for
data security.
Where possible the Group endeavours to
negotiate limitations on its liability in its
customer contracts.
Blue Prism Group plc
Annual Report and Accounts 2018
Trend Mitigation
The Group continues to deliver innovative
solutions for customers, and invests in R&D
to ensure that the Group’s products reflect
the latest technological developments.
In the year a research department has been
invested in, with the goal of researching new
disruptive technologies, and ensuring these
are considered in the product roadmap.
The Group has a number of technology
partnerships, which allow the leverage of
other market leading technology alongside
or within the Group’s product.
The Group invests in R&D and product
development to ensure that the product
remains market leading. Technology
partnerships mean the product is well linked
to emerging technologies.
The Group’s Chief Marketing Officer is
responsible for ensuring the marketing
strategy is robust and competitive.
The Group aims to attract employees
through market competitive remuneration,
share options or awards and a positive
culture.
Part of the Group’s strategy is designed to
build the organisation, systems and processes
needed to support further growth. There are
specific programmes in place and ongoing
investments to ensure that these initiatives
are successful.
30
Principal risks and uncertainties continued
Risk
Technological
changes
The Group may be
adversely affected
by technological
change in the
artificial
intelligence
industry
Description
The Group may be adversely affected by technological
change in the artificial intelligence industry.
The Group expects that new artificial intelligence
technology will continue to emerge and develop, therefore
it is possible that this technology may be superior to, or
render obsolete or unmarketable, the technology that the
Group currently offers.
The Group plans to continue to develop innovative solutions
for its customers but there can be no assurance that the
Group will be able to successfully develop new products
and expand its business as planned or that these new
products will be successful or profitable.
Any failure of the Group to ensure that its software remains
up to date with the latest technology may have a material
impact on the Group’s competitiveness and financial
performance.
Market
The Group faces
strong competition
in a rapidly
evolving market
The Group faces strong competition in a rapidly evolving
market.
Although the Board believe that significant barriers to
entry exist in the markets in which the Group operates,
including for example the technical skill and expertise
required to develop its technology, the Group may face an
increasing amount of competition.
Growth
management
The Group would also face an increase in competition if its
competitors adopted comparatively superior technology or
if there were new entrants to the market with comparable
or competitively superior technology.
Competitors may seek to develop software which more
successfully compete with the Group’s current product and
they may also adopt more aggressive pricing policies or
undertake more extensive marketing and advertising
campaigns. This may have a negative impact on sales volumes
or profit margins achieved by the Group in the future.
Many of the Group’s existing partners are also undergoing
expansion plans, and can compete for resource such as
sales people.
The Board believe that further expansion, either
organically or through acquisition, may be required to
capitalise on the market opportunities available to the
Group. Such expansion is expected to place further
demands on management, support functions, sales and
marketing functions and other resources of the Group. In
order to manage the further expansion of the Group’s
business and the growth of its operations and personnel,
the Group may be required to expand and enhance its
infrastructure and technology, and enhance its operational
and financial systems and procedures and controls from
time to time in order to match that expansion. This could
have a material cost to the Group. Historically, the Group
has invested in its people, infrastructure, processes and
policies to enable and support continued revenue growth
but its future success will depend, in part, on its ability to
continue to manage this anticipated expansion. There can
be no assurance that the Group’s current and planned staff,
infrastructure, systems, procedures and controls will be
adequate to support its expanding operations in the future.
If the Group fails to manage its expansion effectively, its
business, prospects and results of operations may be
materially and adversely affected.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
31
Risk
Brexit
The process of the
United Kingdom
leaving the
European Union
Description
The process of the United Kingdom’s departure from the
European Union and the terms of the UK’s future
relationship with the EU remain uncertain.
The Group’s head office, product development and many
of its business support functions are located in United
Kingdom. Regulatory or other new barriers to trade may
be implemented that may make it less convenient for the
Group’s customers and partners to trade with a UK
Company. Depending on the future regulatory
arrangements between the EU and the UK, it may become
more difficult for the Group’s customers and partners to
transfer data to the Group for processing in the UK for
product support purposes under the General Data
Protection regulation (“GDPR”) than it is at present while
the UK is automatically deemed to have adequate legal
safeguards for the protection of personal data. Many of the
Group’s contracts with EU customers are governed by
English law and subject to the agreed jurisdiction of the
English courts, it may become more complex to enforce
such contracts in the future than it is at present should
court enforcement be required.
The UK represents an important market for the Group’s
products and services. Financial instability in the UK
business environment may result in fewer sales to new
and existing customers in the UK market.
Many of the Group’s sales are under contracts with a
duration of three years or more that are priced in
currencies other than sterling, including US dollars,
Euro and Japanese Yen. A period of heightened volatility in
sterling exchange rates surrounding Brexit may result in
significant changes in the Group’s revenues or costs when
reported in sterling.
Trend Mitigation
Blue Prism’s business model does not rely
on the physical shipment of goods across
borders. There are at present no tariffs on
the import of the Group’s software to the
EU from a non-EU country.
The Group has already invested in
establishing trading subsidiaries in the EU
in France and Germany through which it can
trade with EU customers, and would have
the ability to establish presence in further
EU markets should that prove necessary or
advantageous. This international investment
has already included recruiting staff who
are able to provide services locally to the
Group’s customers in those markets, and
additional service staff could be recruited
should it prove difficult to serve customers
from the UK. Well-established procedures
are available under the GDPR to permit the
transfer of personal data outside the EU
which, although they require certain
additional administrative steps, would allow
continued transfers of data to be made to the
Group in the UK in compliance with GDPR
requirements.
Subject to certain notice periods, the Group
has the ability to vary pricing for future
orders under its contractual arrangements
with its resellers, which would allow it to
mitigate the impact of medium-term
exchange rate changes.
Trend
Increasing
No change
Decreasing
Blue Prism Group plc
Annual Report and Accounts 2018
32
32
Chairman's statement
We are fundamentally changing
the way people work now and in
the future, taking the robot out
of the human
Jason Kingdon
Chairman
Blue Prism Group plc
Annual Report and Accounts 2018
New customers
528
New employees
282
Why customers use us
1
2
3
4
Business led enterprise
focused, controlled and
intelligent
Our Robotic Operating
Model – no code platform
Our market leading,
scalable product
Our technology
partnerships
Strategic report
Governance
Financial statements
33
Dear shareholder
As we announced in November 2018, I will be
stepping down from the Board in 2019 once a
successor has been appointed.
Whether measured in terms of numbers
of customers, revenues, employees or
countries of operation, the progress of the
business and the value that has been created
for all stakeholders has been remarkable.
In particular, I am very proud of the value
that has been created for our customers
and the breadth of issues that are solved
and tackled by Blue Prism technology. As is
testified within our case studies and partner
testimonials, Blue Prism is changing the
way that businesses can operate, laying the
foundations for a productivity explosion,
and a new era of corporate creativity and
expression. To me, this technology is as
profound a corporate change as was the
database back in the late 1980s and early
90s. Moreover, it ushers a period in which
automation itself becomes a utility.
At a conference I attended in Shanghai
China, Blue Prism was publicly thanked
by a delegate for creating the RPA
category, and the delegate commented
that RPA was transforming the nature and
quality of people’s work within business
operations. For business to be thanked and
acknowledged in this way hints at the impact
that our work is driving. The whole idea
of an ‘automated digital worker’ that can
carry-out tasks, provide straight-through-
processing and automated fulfilment
has taken hold globally, and I believe is
improving the quality of work-life and
service-fulfilment everywhere. It is also my
belief that this technology is about improving
quality, flexibility, scale, and consistency
of service and much less about human job
replacement. This too is the output from our
customer testimonials. They strive to offer
better, more connected, more scalable and
high-value services, not reduce head count
as a simple end in itself. All of which,
I believe, makes this a very positive
enterprise revolution.
We are a global company now, with a
positive sales and service presence in all
major territories. Since IPO we have put in
place a global Customer Services Operation
and global Customer Success offerings;
all of which are aimed at supporting our
customers, and commercial partners, to
achieve quality of service. This serves to
underwrite the breadth and depth of impact
they can achieve with Blue Prism product.
We have also pioneered the notion of
an “enterprise app store”. Through the
flexibility of the Blue Prism platform new
technologies, such as AI and all sub-flavours
and specialisms within this, can be sourced
by our customers in real-time. This is
more like a retail product experience than
enterprise solutions. It is groundbreaking
and transforming work, and all aims
towards better and more impactful customer
outcomes.
Developing the governance infrastructure
of the Company has been a key focus for
the Board over the period too. Increasing
transparency through expanded reporting,
not only through this Annual Report but also
through all communications’ channels has
been important. This work is in progress but,
like most organisations, more can always be
done. We employ locals in all the operating
regions we act in, and act in good faith
within those regions with respect to tax and
local participation. In short we aspire to be a
good corporate citizen.
On behalf of the Board, I would like to thank
all of Blue Prism’s staff for the contribution
they have made to the successful growth and
development of the Group in 2018 through
their hard work and collaboration. The
outlook for 2019 is exciting. From the market
overview and customer case studies set out
earlier in this report, it is clear that this is
an attractive and growing global market,
with a wide scope of application for the
Group’s technology, and in which the Group
is a leader. With strong leadership, good
governance, clear strategy and attractive
products, Blue Prism is well positioned to
build on our success so far as we head into
the next stage of this market and of the
Group’s growth.
I look forward to engaging further with
shareholders at our AGM on 19 March 2019.
Jason Kingdon
Chairman of the Board
Investment case
The RPA market offers customers
significant gains in productivity
and efficiency to its customers, and
as such has potential for long-term,
sustainable growth
We are a market leader, and our
product is regularly assessed as
one of the top three available
We have an attractive commercial
model, with majority licence based
revenue and good cash generation
Blue Prism Group plc
Annual Report and Accounts 2018
34
Board of Directors
1
2
3
4
Blue Prism Group plc
Annual Report and Accounts 2018
5
6
Strategic report
Governance
Financial statements
35
1
2
3
Dr. (Conrad) Jason Kingdon (56)
Non-Independent, Non-Executive Chairman
Alastair Bathgate (54)
Chief Executive Officer & Co-Founder
Ijoma Maluza (39)
Chief Financial Officer
Appointed to the Board
2016
Appointed to the Board
2016
Appointed to the Board
2018
Experience
Jason has been commercialising AI for over
25 years. He has a PhD from University College
London and was co-founder of UCL’s Intelligent
Systems Lab. He co-founded and was CEO of
Searchspace, a Company which pioneered big
data analytics introducing intelligent
transaction monitoring for Anti Money
Laundering for many of the world’s top tier
banks. The Company was multiaward winning
for both technology and revenue growth and
was also endorsed by the American Banking
Association as the preferred technology for
AML detection. Jason led a highly successful
exit in 2005 and has since been a member of
UCL Enterprise Board, has set-up his own
private AI research lab and became an early
backer to Blue Prism. He’s an EY entrepreneur
of the year, author and editor of AI books,
papers and patents.
Experience
Alastair has over 30 years’ experience in
enterprise software, manufacturing, retailing
and banking. He co-founded the Group in 2001
alongside David Moss, having previously spent
8 years in process improvement at Bradford &
Bingley Building Society and 4 years delivering
enterprise software solutions to major
customers such as Barclays Bank at Lynx
Financial Systems.
Alastair has an MBA with distinction from
Leeds University Business School.
Key strengths
• Entrepreneurship
• Business strategy
• Management
External appointments
None.
Experience
Ijoma is a Chartered Accountant and a Fellow
of the Institute of Chartered Accountants in
England & Wales. He has over 10 years of
experience in the technology sector and joined
Blue Prism from ip.access Limited where he
was Chief Financial Officer. Prior to joining
ip.access Limited he served as Corporate
Strategy and Corporate Development Director
of Xchanging plc. Ijoma read Economics at
Cambridge University.
Key strengths
• Finance
• Technology
• Corporate strategy & development
•
Investment banking
External appointments
None.
Key strengths
• Technology
• Artificial intelligence
• Data analytics
• Entrepreneurship
External appointments
None.
4
5
6
Charmaine Carmichael (48)
Independent Non-Executive Director
Christopher Batterham (63)
Senior Independent Non-Executive Director
Kenneth Lever (65)
Independent Non-Executive Director
Appointed to the Board
2016
Appointed to the Board
2016
Appointed to the Board
2016
Experience
Charmaine was Global Senior Vice-President at
Nokia. Between 2002 and 2008 Charmaine was
Managing Director and Vice President, EMEA
at Research in Motion (Blackberry). She also
led Wayra, the digital accelerator, and was a
Non-Executive Director of Wayra UnLtd, a joint
venture between the UK Government and
Telefónica.
Key strengths
• Technology
• Management
• Global marketing
• Start ups
Experience
Chris qualified as an accountant with Arthur
Andersen and has significant experience in
senior finance roles across the technology
sector. He was previously Finance Director of
Unipalm plc, the first internet Company to IPO
in the UK, until 2001, and Chief Financial
Officer of SearchSpace Limited until 2005.
He was formerly Non-Executive Chairman
of Eckoh plc and Non-Executive Director of
various other public companies including
Staffware plc, SDL plc and Iomart plc.
Chris has an MA from Cambridge University
and is a Fellow of the Institute of Chartered
Accountants in England & Wales.
External appointments
Charmaine is a partner and Managing Director
of BCG Digital Ventures. She is the CEO of Plan B.
Charmaine serves as a Non-Executive Director
at GB Group plc. She holds the position of
Chairperson of Buzzmove and is a partner with
the Boston Consulting Group. Charmaine is
also a Board member and trustee of The
Marketing Academy.
Key strengths
• Finance
• Technology
• Start ups
• Business strategy
External appointments
Chris currently serves as Non-Executive
Director of NCC Group plc.
Experience
Ken was a partner of Arthur Andersen & Co,
Chartered Accountants and Arthur Andersen
Consulting. He has held Senior Executive
Director roles in many listed companies
including Alfred McAlpine plc, Albright &
Wilson plc and Tomkins plc. Ken was Chief
Financial Officer of Numonyx in Switzerland
from April 2008 to September 2010 and was
Chief Executive of Xchanging plc between
2011 and 2015.
From 2007 to 2013 Ken was a member of the
Accounting Council (formerly the UK
Accounting Standards Board) of the Financial
Reporting Council. Ken is a Fellow of the
Institute of Chartered Accountants in England
& Wales.
Key strengths
• Finance
• Leadership & management
• Strategy development
• Strategic financial management
External appointments
Ken is currently Chairman of Biffa plc,
Chairman of RPS Group plc, Senior
Independent Director of Vertu Motors plc,
and Non-Executive Director of Gresham House
Strategic plc.
Blue Prism Group plc
Annual Report and Accounts 2018
36
Senior management
Blue Prism Group plc
Annual Report and Accounts 2018
David Moss
Chief Technology Officer & Co-Founder
David co-founded Blue Prism in 2001 and is the chief software architect behind the Blue
Prism software product. Prior to Blue Prism, Dave spent 5 years working for Lynx Financial
Systems as a Senior Software Designer, providing packaged and bespoke solutions to major
names in Financial Services such as Barclays Bank, Nationwide Building Society and
Transamerica Commercial Finance. Dave holds a BSc (Hons) in Mathematics from
Leeds University.
Chris Bradshaw
Chief Marketing Officer
Chris is a strategic visionary with 25+ years of experience building and scaling businesses
and driving innovation at a global scale. Known for developing successful strategies and
leading execution with a focus on customer success and value creation.
A proven Chief Marketing Officer at Autodesk, his expertise includes brand building,
demand generation, partner marketing, and creating corporate social responsibility
programmes and organisations. He currently serves on the Board of Directors for Project
Lead The Way (“PLTW"), a non-profit leading provider of STEM education programmes to
K-12 in the US. Chris holds a bachelor’s degree in electrical engineering from Cornell
University and a master’s degree in business administration from Duke University.
Martin Flood
Chief Revenue Officer
Martin brings sales and sales management expertise and experience, gained in the IT
industry over 2 decades in a variety of enterprise software and hardware businesses.
Martin’s roles have ranged from large international organisations such as Sybase and Sun
Microsystems through to early stage software companies such as Whitelight Systems and
Searchspace. Immediately before joining Blue Prism, Martin headed the new products
Division of Progress Software EMEA, which comprised SOA integration, business activity
monitoring and business process management offerings.
Neil Wright
Chief Customer Officer
Neil now has responsibility for our Customer Office having previously been Head of
Professional Services at Blue Prism since 2008. He is recognised as a leading figure in the
delivery of RPA implementation projects having successfully delivered Blue Prism at scale
in major institutions across the globe. He has used his vast experience to architect our
world leading Robotic Operating Model which provides the blueprint for successful delivery
at scale.
Prior to joining Blue Prism, Neil had over 20 years’ experience in the successful delivery of
enterprise software to both the public sector and Blue Chip companies such as Lloyds
Banking Group, Barclays Bank and Royal Bank of Scotland.
Strategic report
Governance
Financial statements
37
Pat Geary
Chief Evangelist
Pat has over 30 years of international marketing experience across a range of large
multinational and start up software and hardware businesses. Most recently Pat has
worked as CMO at Skinkers, a UK-based enterprise software Company and CMO for
Livestation, the world’s first global news platform on the internet. Pat’s previous
experience included international corporate marketing roles at Searchspace, Sequent
Computer Corp and DEC. He holds an honours degree in computer science.
John Warrick
General Counsel & Company Secretary
John has 15 years’ experience of international corporate and technology law. Having begun
his legal career at global law firm Allen & Overy, he has since worked in a variety of
in-house legal roles with General Electric, ADP and, most recently, automotive retail
software specialist CDK Global. John is admitted as a solicitor in England and Wales and
has an MA from Oxford University.
Vikki Sly
Chief People Officer
Vikki is responsible for leading the Global HR function with a remit to develop innovative
and scalable people solutions which showcase the Blue Prism culture as one where the very
best choose to join, grow, make impact and thrive. She brings over 20 years of experience
and passion for building global values driven, most latterly at Qlik Technologies and
Barclaycard. She is known as, and will continue to be, a vocal advocate of creating places
that are connected, collaborative and where everyone gets the opportunity to win together.
Blue Prism Group plc
Annual Report and Accounts 2018
38
Corporate governance statement
I m a g e t o C o m e
Board membership and attendance
Attended/
Eligible to attend
Chair
Jason Kingdon
Members
Alastair Bathgate
Ijoma Maluza (appointed 25 January 2018)
Charmaine Carmichael
Chris Batterham
Ken Lever
Gary Johnson (resigned 25 January 2018)
Dear shareholder
10/10
10/10
7/7
9/10
10/10
10/10
3/3
I am pleased to report on the governance arrangements
undertaken by Blue Prism during the financial year. The
Board is committed to ensuring standards of governance are
proportionate and embedded into the Company’s culture.
Blue Prism welcomed the changes to AIM Rule 26 in 2018 which
mandated that all AIM listed companies were required to adopt
and follow a recognised corporate governance code and publish
a corporate governance statement on their website.
For the purposes of AIM Rule 26, the recognised corporate
governance code that the Board has decided to apply is the
Quoted Companies Alliance Corporate Governance Code 2018
(“QCA Code”). The Board believes the QCA Code provides the
most appropriate framework of governance arrangements for
the Company, considering the size and stage of development of
the Company’s business. The following information is provided
to explain how the Company complies with the QCA Code.
Where we have deviated from the Code we have stated as such.
Blue Prism Group plc
Annual Report and Accounts 2018
Long-term value and strategy
The Company’s business model is designed to promote long-term
value for all stakeholders. It is explained in detail on pages 14-15.
Shareholder engagement
The Company actively engages in dialogue with shareholders. The
Chief Executive Officer and Chief Financial Officer regularly meet
with institutional shareholders and analysts, including after the
announcement of full-year and half-year results, and are
responsible for ensuring that their expectations are understood
by the Board. The AGM also provides an opportunity for all
shareholders to engage and to ask questions of the Board.
Stakeholders
The Board considers the interests of shareholders and all relevant
stakeholders in line with section 172 of the Companies Act 2006.
The Company focuses on building strong and sustainable
relationships with a range of different stakeholders in order to
support the long-term success of the Company.
For customers, we regularly engage through customer events such
as our flagship Blue Prism World event, held last year in London
and New York, with touring events held in Tokyo, Sydney and San
Francisco. We also run a series of smaller user groups around the
world to share information with our customers and obtain their
feedback on the strategic direction of the product. For our partners,
we hold regular dedicated events such as the Partner Forum and
Partner Executive Council, at which we share information about
our product and solicit feedback and market intelligence.
For employees we create a motivational and supportive work
environment to promote high performance and low turnover.
Regular employee engagement events are held through live
webinar due to the geographically dispersed nature of the
Company’s workforce, and the CEO and members of the executive
team regularly hold local employee “town hall” meetings when
visiting the global offices. All employees share in the creation of
long-term shareholder value through participation in the employee
share plan.
In the wider community, we operate the Blue Prism Academia
programme, under which qualifying academic institutions are
provided with free access to the Company’s software to help develop
the intelligent automation skills of the workforce of the future.
Risk management
The Company is exposed to a number of potential risks which may
have a material effect on its reputation, financial or operational
performance. The Board has overall responsibility for risk
management and internal controls and is fully supported by the
Audit Committee. More detail about the identified principal risks
and uncertainties can be found on pages 28 to 31.
The Board has overall responsibility for the Company’s system of
internal control and for reviewing its effectiveness. The processes
to identify and manage the key risks of the Company are an integral
part of the internal control environment. Such processes, which are
regularly reviewed and improved as necessary, include strategic
planning, approval of annual budgets, regular monitoring of
performance against budget (including full investigation of
Strategic report
Governance
Financial statements
39
significant variances), control of capital expenditure, ensuring
proper accounting records are maintained, the appointment of
senior management and the setting of high standards for health,
safety and environmental performance.
The effectiveness of the internal control system and procedures is
monitored regularly through a review by management, the results of
which are reported to, and considered by, the Audit Committee. The
system of internal control comprises those controls established to
provide assurance that the assets of the Company are safeguarded
against unauthorised use and to ensure the maintenance of proper
accounting records and the reliability of financial information used
within the business or for publication. Any system of internal control
can only provide reasonable, but not absolute, assurance against
material misstatement or loss, as it is designed to manage rather
than eliminate the risk of failing to achieve the business objectives
of the Company.
Board practice
The Board consists of the Chairman, two Executive Directors and
three Non-Executive Directors. The biographical details of the
Board members can be found on pages 34-35.
The Board has determined that Chris Batterham, Charmaine
Carmichael and Ken Lever are independent in character and
judgement. The Chairman, Jason Kingdon, is not considered to be
independent, however the Board considers that his long experience
as Chairman of the Board of Blue Prism Limited (which until the
IPO was the Parent of the Group of companies) is of benefit to the
Board in providing continuity of knowledge and additional industry
expertise to the Company. Chris Batterham has been appointed as
Senior Independent Director.
The Board meets sufficiently regularly, at least ten times
throughout the year. Meetings of the Non-Executive Directors
without the Executive Directors being present are held at least
annually, both with and without the Chairman.
Board composition and performance
The Board considers its overall size and current composition to be
suitable and have an appropriate balance of sector, financial and
public markets skills and experience as well as an appropriate
balance of personal qualities and capabilities. Composition of
the Board will be reviewed at least annually by the Nomination
Committee. The Nomination Committee will make
recommendations to the Board based on a number of factors
including the skills necessary for execution of the Company
strategy and diversity.
In order to develop their skills and keep up to date with market
developments the Board receive regular training from the
Company’s Nominated Adviser. All members of the Board have
access to the advice and support of the Company Secretary, who
is also responsible for facilitating the induction programme for
new Directors.
All Directors are expected to devote such time as is necessary for
the proper performance of their duties. This includes the need to
make themselves available if an event occurs that requires Board
involvement. It is expected that Non-Executive Directors who chair
committees or have additional responsibilities (for example, the
Senior Independent Director) will increase their time commitment
to the Company.
Board evaluation
The Nominations Committee is responsible for Board evaluation,
and the Committee intends to conduct its first formal evaluation
of the Board within the year. The Committee envisages that an
internal evaluation will take place on an annual basis, and that the
process will be replicated for each of the Committees of the Board.
The results of the Board evaluation process will be used by
the Nominations Committee to inform its approach to
succession planning.
Company culture
The Company has defined a set of common values:
P:
R:
We are Professional – smart in both thought and presentation
We argue passionately and openly but we have Respect for
each other and a consensual style
We act with Integrity in our business dealings
We strive for Success – we are totally committed to being the
best we can be
We eMpower our people to act in the interests of the Company
I:
S:
M:
These Blue Prism Values are reflected in everything that we do,
beginning with the selection criteria used in the employee
recruitment process and continuing throughout all elements of the
Company’s business. The Board ensures that ethical behaviours are
expected and followed by approving a set of internal policies on
matters such as anti-bribery and whistleblowing, and by ensuring
that appropriate systems and controls are in place to ensure
compliance with those policies.
Governance
Whilst the Board is collectively responsible for defining corporate
governance arrangements, the Chairman is ultimately responsible
for corporate governance. The governance structures within the
Company have been assessed by the Board and are considered
appropriate for the size, complexity and risk profile of the
Company. This will be reviewed by the Board to ensure governance
arrangements continue to be appropriate as the Company changes
over time.
There is a formal schedule of matters reserved for the decision of
the Board that covers the key areas of the Company’s affairs. The
schedule includes approval of the Annual Report and any other
financial statements, the adoption of the budgets and business
plans, material financial commitments, and the release of
inside information.
The Chairman, Chief Executive and Senior Independent Director
have clearly defined roles and responsibilities. The role of the
Chairman is to lead the Board and ensure it is operating effectively
in approving and monitoring the strategic direction of the
Company. The role of the Chief Executive is to propose strategic
direction to the Board and to execute the approved strategy by
leading the executive team in managing the Company’s business.
The role of the Senior Independent Director is to act as a sounding
board for the Chairman and a source of reciprocal feedback for
other members of the Board and shareholders, where required.
The Board is supported by an Audit Committee, Remuneration
Committee and a newly-established Nominations Committee.
Details of Committee composition and copies of their respective
terms of reference can be found on our website.
Communication
The Company is committed to open communications with all its
shareholders. Communication is primarily through the Company’s
website and the Annual General Meeting. All shareholders will
receive a copy of the Annual Report (electronic or hard copy
depending on shareholder preference), and an interim report at the
half year is available on the Company’s website. Copies of historical
Annual Reports and notices of general meetings covering the
period since the shares of the Company were admitted to trading
on AIM are also available on the Company’s website. The Company
reports on the responsibilities and activities of each of the
Committees in the Annual Report.
Jason Kingdon
Non-Independent, Non-Executive Chairman
Blue Prism Group plc
Annual Report and Accounts 2018
40
Nomination Committee report
Membership and attendance
Attended/
Eligible to attend
Dear shareholder
I am pleased to report on the work so far of the newly formed
Nomination Committee. The Committee is an example of how we
have enhanced governance in the Group proportionally as the
Company has matured.
Chair
Jason Kingdon
Members
Charmaine Carmichael
Ken Lever
Chris Batterham
N/A
N/A
N/A
N/A
Members
The Committee consists of the three Non-Executive Directors and
me. I act as Chair of the Committee. The Company Secretary, John
Warrick, acts as Secretary to the Committee.
The Nominations Committee was formed late in the financial year
so it did not hold a formal meeting within the year.
Roles & responsibilities
• Undertake a Board evaluation and report on findings to the
Board
• Consider, and make recommendations on, the composition
of the Board
• Carry out succession planning for the Board and senior
management
• Fill Board vacancies when they arise
• Review the time requirement of Non-Executive Directors
• Make recommendations to Board regarding the performance
of Directors
Biographies for the members of the Committee can be found on
pages 34-35.
Responsibilities
The Nomination Committee terms of reference are available on the
Company’s website. These largely follow ICSA’s guidance on terms
of reference for nominations committees.
It was announced on 15 October 2018 that I will be stepping down
from the Board when a successor has been found. The search for
a successor as Chair will be the principal initial focus of the
Committee. While the Nomination Committee is considering my
succession, all meetings will be chaired by Chris Batterham, the
Senior Independent Director. Chris and the other members of
the Nomination Committee are carrying out the search for my
replacement with the assistance of external consultants. Further
detail will be provided in next year’s Annual Report.
Once this initial task is completed, the Committee will move on
to assume responsibility for Board evaluation and succession
planning more generally.
Board composition
The Board recognises the importance of a diverse Board and as
such the Committee will consider diversity when examining Board
composition and when considering new appointments to the Board.
In all cases the Committee will consider candidates on merit and
against objective criteria and with due regard for the benefits of
diversity on the Board, including gender, taking care that
appointees have enough time available to devote to the position.
The Committee will report further on its progress in next year’s
Annual Report.
Jason Kingdon
Chair of the Nomination Committee
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
41
Audit Committee report
Membership and attendance
Chair
Ken Lever
Members
Chris Batterham
Charmaine Carmichael
Attended/
Eligible to attend
3/3
3/3
1/3
Key activities
• Review of the financial statements
• Monitored the effectiveness and independence of BDO
• Agreed the fees and scope of the 2018 audit
• Considered the impact and future application of new
accounting standards, in particular IFRS 15
• Reviewed the accounting judgements used in this year’s
financial statements
• Reviewed and amended the risk register
Roles & responsibilities
Financial reporting
• Monitoring the integrity of the financial statements
• Reviewing and challenging on the application of
accounting policies
• Review the narrative of the Annual Report
• Reviews key judgements and estimates used in the
presentation of financial statements
Internal controls
• Review the effectiveness of the Company’s internal
financial controls, internal controls and risk management
systems
• Review any statements regarding internal controls and risk
management to be included in the Annual Report
Whistleblowing and fraud
• Review the adequacy and security of the Group’s
whistleblowing arrangements
• Review the Group’s procedure for detecting fraud
• Review the Group’s systems and controls for the prevention
of bribery and corruption
External audit
• Consider and make recommendations to be put to
shareholders regarding the appointment, reappointment
and removal of the external auditors, as appropriate
• Oversee the selection process for new auditors if an
auditor resigns
• Oversee the relationship with the external auditor
including terms of engagement, independence and the
balance of audit and non-audit work
• Agree the scope of the audit with the external auditor
• Set a policy on the provision of non-audit
work by the external auditor
Dear shareholder
I am pleased to report on the work of the Audit Committee during
the 2018 financial year.
Members
The Audit Committee consists of three Non-Executive Directors all
of whom are considered independent. The Committee met on
3 occasions throughout the year. I have acted as chair of the
Committee throughout the financial year. Of the three members
serving on the Committee, Chris and I are qualified accountants
and have recent and relevant financial experience. Charmaine,
having held several senior management positions, has a high level
of financial literacy. The Company Secretary, John Warrick, acts as
Secretary to this committee.
Biographies for the members of the Committee can be found on
pages 34-35.
Responsibilities
The main responsibilities of the Audit Committee are contained
within its terms of reference. The terms of reference largely follow
ICSA’s guidance on terms of reference for Audit Committees. They
have been approved by the Board and are available on our website.
Audit
Subject to the approval of shareholders, the Audit Committee is
responsible for approving the appointment of the external auditor
and setting their remuneration. Our current auditors are BDO UK
LLP and they have held the office of auditor to the Group since 2015.
The Committee have reviewed the relationship with the auditor
and, having considered its effectiveness and independence,
propose that BDO are re-appointed as the Group’s auditors at the
forthcoming AGM.
The Committee monitors the level of non-audit work the auditors
undertake and ensures they do not perform any services that could
be perceived as affecting the independence of the auditor. The
Committee is satisfied that the level of audit to non-audit work
performed by BDO has not affected their independence.
In view of the relative lack of complexity of the Group’s operations,
the Committee does not consider that an internal audit function is
necessary, however, the Committee will keep this under review and
ensure that a function will be established should it be deemed
necessary by the Committee.
Blue Prism Group plc
Annual Report and Accounts 2018
42
Audit Committee report continued
Financial Reporting Council letter
The Company received a letter from the Financial Reporting
Council’s Corporate Reporting Review Team (“FRC") on 23 May
2018, which informed it that the FRC had carried out a review of the
Annual Report and Accounts for the year ended 31 October 2017.
The letter indicated that the FRC had not identified any matters
on which it wished to raise specific questions with the Group.
The letter did, however, make some observations regarding
potential improvements to certain disclosures included in the
Annual Report. The principal change resulting from these
observations is that the Group has sought to improve the clarity
of the Key Performance Measures disclosed and analysed in the
strategic report.
The Group recognises that the FRC’s review was based only on
a review of its Annual Report and Accounts for the year ended
31 October 2017 and did not benefit from detailed knowledge of
the Group’s business or an understanding of the underlying
transactions entered into. Its review did not provide any assurance
that the Group’s Annual Report and Accounts are correct in all
material respects. The Group also recognises that the FRC's letters
are written on the basis that it (and its officers, employees and
agents) accept no liability for reliance on them by the Group or any
third party including but not limited to investors and shareholders.
Internal control & risk management
The Audit Committee regularly receives an update on risk and
internal control from executive management. The Committee has
assured itself that internal control systems are effective and is
satisfied that risks are within the risk appetite of the Group and,
where mitigating actions are undertaken, they are proportionate.
Whistleblowing
The Audit Committee is responsible for the effectiveness of the
Whistleblowing Policy. The Committee will, where appropriate,
review the policy and its effectiveness periodically.
Further information on risk management is available on
pages 28-31.
Ken Lever
Chair of the Audit Committee
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
Remuneration Committee report
43
Membership and attendance
Chair
Charmaine Carmichael
Members
Ken Lever
Chris Batterham
Attended/
Eligible to attend
2/3
3/3
3/3
Key activities
• Reviewed Committee terms of reference and executive
delegated authorities, and made recommendations to
the Board for updates
• Oversaw a benchmarking exercise for executive
remuneration and approved proposals for changes
in remuneration of Executive Directors
• Reviewed the effectiveness and appropriateness of existing
equity incentive plans for all employees (including Executive
Directors) and approved changes in the structure and
operation of those plans
• Monitored remuneration structures and levels below Board
level and considered proposals for bringing key talent into
the Group
Roles & responsibilities
• Determining the overall framework and policy for
remuneration for Directors and senior managers
• Recommending to the Board any changes to the
remuneration policy, or its application, where appropriate
• Determining compensation payments in the case of the
termination of an Executive Director
• Agreeing the total remuneration package for each Executive
Director, the Company Secretary and other senior managers
• Approving targets for performance-related schemes
• Reviewing the design and application of employee
share schemes
• Overseeing major changes to benefit structures across
the Group
• Reporting to shareholders on remuneration
Dear shareholder
I am pleased to present the Remuneration Committee’s report for
the 2018 financial year.
As outlined in this year’s strategic report, 2018 has been a year of
significant growth and change in the business and operations of the
Group. This has been a continuation of the rapid growth seen since
the Group’s IPO in 2016. A key theme of the Committee’s work this
year has therefore been to give consideration to the challenges and
opportunities presented by that growth.
The Committee recognises that the changes in the scale of the
Group’s business and its market capitalisation not only impact
on the challenges of remuneration policy itself, but also lead
shareholders to have increased expectations of transparency in
respect of the communication of the Group’s remuneration policy
and its application. We have therefore for this year’s report
included this letter setting out the background to the executive
remuneration changes and share incentive policy and information
on key decisions made, and a table setting out the executive
remuneration policy and how it will operate in 2018/19 as well as
significant additional disclosures throughout the report to what
was included in last year’s Annual Report.
As an AIM-listed Company, the publication of this report is
voluntary. It is included in the interests of transparency and in
recognition of good practice.
This Remuneration Committee report will be put to an advisory
vote at the 2019 AGM. The Committee welcomes all shareholder
feedback on remuneration and I will be available at the AGM to
answer any questions that shareholders have on this topic.
Members of the Committee
The Remuneration Committee consists of three independent
Non-Executive Directors. The Company Secretary acts as Secretary
to the Committee.
Biographies for the members of the Committee can be found on
pages 34-35.
Relevant Directors and employees, such as the CEO, are invited to
meetings where appropriate.
Responsibilities
The Committee’s terms of reference largely follow the best practice
guidance issued by ICSA on Remuneration Committees and are
available on the Group’s website.
Blue Prism Group plc
Annual Report and Accounts 2018
Shareholder consultation
The Committee consulted with major shareholders concerning the
introduction of the new share incentives’ policy, and as a result
reflected the views expressed by shareholders when formulating
the performance conditions to be applied.
Performance during 2017/18 and decisions taken
during year
As reflected earlier in this report, the Company performed strongly
during the year in terms of sales, revenue, new customers, upsells
and renewals.
The salary of the CEO was increased at the start of the year to
£200,000 and the new CFO was appointed in January 2018 with a
salary of £155,000 and an award of market value options.
In the light of strong commercial progress, annual bonuses were
paid to the CEO and CFO at 78.7% of salary against an on target and
maximum bonus of 50% and 100%. Annual bonus was based on
Group net new sales targets for the 2017/18 period.
Other than options held by our former CFO, Gary Johnson, who
retired during the year as a good leaver, no options held by
executives vested during 2017/18. Option awards made on IPO are
due to vest in March 2019.
An award of market value options was made to executives in
January 2018. This was the first award across the executive team
since the Company’s IPO in March 2016. These awards will vest
three years from the date of award.
Decisions for 2018/19
In October 2018, the Committee considered the salaries of the
Executive Directors as detailed later in this report. The annual
bonus plan will operate as detailed in the policy section of this
report. The Committee expects that LTIP awards will be made to
executives early in 2019 in line with the new policy detailed below.
I hope that you find the report helpful and informative and I look
forward to receiving feedback from our investors on the
information presented.
Charmaine Carmichael
Chair of the Remuneration Committee
44
Remuneration Committee report continued
Review of executive remuneration
As well as the change of CFO, there have been a number of other
changes to the executive management of the Group immediately
below Board level during the year. There have also been several key
appointments made to strengthen management at all levels of the
Group and to support the global expansion of the Group’s business.
An important part of the Committee’s work this year has therefore
been to advise and support the CEO in ensuring appropriate and
effective remuneration structures are adopted across the executive
management of the Group, and indeed for the recruitment and
retention of key staff at all levels.
In respect of the Executive Directors, the Committee undertook a
broad review of overall remuneration during the year, taking into
account the significant changes in the scale of the Group’s business.
The aim of the review was to ensure that the Group’s remuneration
policy remained effective in attracting, retaining and motivating
the talent required to deliver on the Group’s strategic ambitions,
while continuing to link overall pay with performance and to align
the interests of Directors with the interests of shareholders in the
long-term growth of the Group’s business.
The outcome of the review of Executive Director remuneration
was in general a continuation of the fundamental principles of
remuneration strategy and policy, which are described in the policy
section below, but a number of changes were made in the application
of the policy to ensure that it remained both effective and
appropriate in the changed circumstances of the Group’s business.
Share incentives
The Group has always had a policy of using share-based incentives
widely across all levels of employees. In the Committee’s view this
has been not only an important element of the Group’s employer
proposition as it seeks to recruit and retain the breadth and depth
of talent required to deliver the Board’s ambitions for the growth of
the business in a highly competitive environment, but also a crucial
motivational incentive to reinforce the sense of common purpose
among the Group’s worldwide employees.
A key focus for the Committee during the year has been to review
the structure and operation of all of the Group’s share plans and
to consider how best they can be developed for the future. The
Committee has considered Executive Director remuneration as part
of that exercise, but firmly set within the context of the operation of
the plans for staff across the Group.
As result of the review, the Committee concluded that share-based
incentives should remain a key part of the remuneration mix across
the Group, for the reasons described above. The structure and
focus of the plans will evolve however, in line with the evolution of
the Group’s business, so that we will move away from using market
value options and towards regular share awards. At the executive
and senior management level, those awards will be made subject to
challenging objective long-term performance conditions.
The feedback the Committee receives from the Group’s employees
via the executive management continues to be that the Group’s
approach to share-based incentives is valued by employees and that
they find it to be an attractive and motivational reward. I am also
pleased to note that levels of take-up of the Group’s two employee
share purchase plans have been high, with 55% of eligible UK
employees saving regularly into the UK SIP and 63% of eligible US
employees saving regularly into the US ESPP as of 31 October 2018.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
45
Remuneration policy
The aim of the Group’s Remuneration Policy for its Executive Directors is to ensure overall remuneration is set at a level that allows the
Group to recruit and retain the talent required to deliver on the Board’s strategy for the global growth of the Group’s business. The
Committee is responsible for ensuring that the policy is applied in such a way as to ensure that remuneration is set at a level no higher
than is necessary to achieve that aim, and that overall pay is linked closely to performance.
The Committee believes that remuneration policy should be reflective of the high-growth nature of the Group’s business. As such, the
general strategy aims to set Executive Director remuneration at or below the median of comparable companies for base salary and
benefits, but to place greater emphasis on annual bonus and in particular on long-term incentives that ensure pay is linked to performance
and that align executive remuneration directly with long-term value creation for shareholders.
The Committee engaged the services of remuneration consultancy h2glenfern during the year. Advice provided by h2glenfern included
conducting a benchmarking of overall Executive Director remuneration, as well as advice on changes to the Group’s policy on the use and
structuring of share and option awards for all employees.
The policy on each element of remuneration is described in more detail below.
Operation in 2018/19
• As a result of the review and benchmarking exercise, the base salary for the
CEO remained unchanged at £200,000. The base salary for the CFO was
increased to £220,000.
In line with policy.
•
• The Group matches employee and Director pension contributions up to 5%
of base salary.
• For 2018/19, targets have been set based on stretching revenue growth goals.
This is a change to prior years when targets were based on internal sales
goals.
• For 2018/19 the on-target bonus for the CEO is 125% of base salary and the
maximum bonus potential is capped at 250% of base salary. This represents
an increase compared to the on-target bonus of 50% and cap of 100% that
applied during 2017/18. This change was made as part of the annual review
of compensation for the CEO in which no change was made to base salary
and therefore represents a deliberate shift in the balance of CEO
compensation from fixed to variable.
• For 2018/19 the on-target bonus for the CFO is 50% of base salary and the
maximum bonus potential is capped at 100% of base salary. This is
unchanged from 2017/18.
Policy
Base salary
• Base salary should be set at a level that is
sufficiently competitive to allow the Group to
recruit and retain the necessary talent, but also to
act as a point of reference for remuneration of
other executives and management in the Group.
• The Committee aims to set base salary at a level
that it considers to be at or below the median level
for comparable roles.
Pension and benefits
• The Executive Directors receive a range of other
customary benefits in addition to base salary,
including life assurance, pension contributions,
and provision of a car or car allowance.
• These benefits are in line with those provided to
other managers in the Group and are intended to
ensure that the Group’s overall employment
proposition remains competitive.
Annual bonus
• An annual bonus is intended to provide a focused
incentive tied to achievement of the Group’s annual
financial targets.
• Targets for the annual bonus are set annually in the
context of the development of the Group’s business
plan for the year.
• The on-target payment will be made if the Group
achieves the level of revenue set in its internal
business plan target. This figure is not being
disclosed in advance as it is considered to be
commercially sensitive.
• Over-achievement against the target will result in
an upwards adjustment on a straight-line basis,
subject to a maximum cap.
• No payment will be made under the bonus if
revenues are at or below a minimum collar level.
Achievement between the target and the collar will
result in a downwards adjustment of the bonus on a
straight-line basis.
• Annual bonuses are paid in cash following
completion of the audit and are subject to
customary claw-back provisions.
Blue Prism Group plc
Annual Report and Accounts 2018
46
Remuneration Committee report continued
Operation in 2018/19
• For 2019, the performance conditions for two-thirds of each LTIP award
are set based on stretching compound annual growth rate targets for
recognised revenues over three years. These targets are not being disclosed
in advance as the Group considers them to be commercially sensitive.
• The performance condition for the remaining third of each 2019 LTIP award
is set based on relative total shareholder return over three years compared
to a group of comparator companies in the software and technology sectors
of the LSE Main Market and AIM. The group selected consists of: Accesso,
Avast, Aveva, Computacenter, Craneware, EMIS, First Derivatives, GB
Group, Kainos, IMImobile, Iomart, Learning Technologies, Micro Focus,
Microgen, NCC Group, Sage, SDL, Softcat. Median TSR performance
compared to this group will result in 25% vesting of this portion of the
award (there is no vesting below median). Top quartile performance will
result in full vesting of this part of the award.
• For 2019, the Committee has approved an award of Performance Shares
to the CEO equal to 200% of base salary and to the CFO equal to 150% of
base salary.
Policy
Long-Term Incentive Plan (“LTIP”)
• The objective of the LTIP is to attract, retain and
motivate the talent needed to successfully realise
the Board’s ambitions for the global growth of
the Group.
• The LTIP should incentivise and align the
Executive Directors with the long-term interests
of shareholders in promoting the success of
the Group.
• The design of the LTIP should also align with the
Group’s policy of using a wide distribution of
equity incentives among all staff, and the level
and structure of awards should sit consistently in
that context.
• For 2018/19 onwards, the Committee has approved
a change in the Group’s approach to LTIP awards to
the Executive Directors (and other senior
management).
• Whereas from the time of the IPO until 2018, the
LTIP policy was structured on the basis of market-
value share options without further performance
conditions, the Group will now cease using those
instruments for Executive Directors and senior
management.
• Under the new policy, the LTIP will be based on
awards of shares or nil-cost options that vest
after a performance period of three years,
subject to the achievement of appropriate
performance conditions.
• Customary clawback provisions shall apply.
• The Group also operates a Share Incentive Plan
(“SIP") for all UK employees under which small
awards of shares are made annually. There are no
performance conditions to the vesting of SIP
awards, but they are subject to a vesting period of
three years and to the statutory cap (currently
£3,600 per employee). SIP rules require shares to be
offered to all eligible UK employees on the same
basis. The Directors therefore receive such awards
on the same basis as other UK employees. In 2019
this will result in a SIP award equal to 1.7% of base
salary (subject to the statutory cap).
• The Group also operates share purchase plans that
are open to all employees in the US and UK. Further
details of those plans are set out in the notes to the
financial statements on pages 68-71. Neither of the
Executive Directors currently participates in
those plans.
Annual Report on Remuneration
Service contracts and letters of appointment
The Executive Directors both have signed service contracts that are not fixed in duration and may be terminated by either party with
12 months’ notice or less. The terms of employment and service contracts of the Executive Directors are determined by the Committee.
The Chairman’s letter of appointment has a term of three years and may be terminated by either party on three months’ notice.
The remuneration of the Chairman is determined by the Committee.
Each other Non-Executive Director’s letter of appointment has a term of three years and may be terminated by either party on one month’s
notice. The remuneration of the Non-Executive Directors is determined by the Board.
No Director is involved in the decision-making process for his or her own remuneration.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
47
Remuneration of Directors for the year ending 31 October 2018
Director
Salary/Fees
Bonus
Pension
Other benefits
Total for 2018
Total for 2017
Jason Kingdon
Alastair Bathgate1
Ijoma Maluza (appointed 25 January 2018)²
Gary Johnson (resigned 25 January 2018)³
Chris Batterham
Charmaine Carmichael
Ken Lever
£55,000
£200,000
£118,656
£26,498
£50,000
£50,000
£50,000
–
£157,314
£121,918
–
–
–
–
–
£10,000
£4,542
-
–
–
–
–
£8,148
£8,000
£2,245
–
–
–
£55,000
£375,462
£253,116
£28,743
£50,000
£50,000
£50,000
£55,000
£221,786
–
£182,036
£50,000
£50,000
£50,000
Total
£550,154
£279,232
£14,542
£18,393
£862,321
£608,822
1 Alastair Bathgate received a payment during the year of £66,950 in respect of bonus earned during the 2016/17 financial year.
2
Ijoma Maluza served as an employee for a period prior to his appointment as a Director. He received £15,850 salary, £nil pension and £645 other benefits in respect
of that period.
3 Following his resignation as a Director on 25 January 2018, Gary Johnson continued to serve as an employee of the Group until his retirement on 30 April 2018.
He received a payment of £30,152 in salary and £2,554 in other benefits in respect of his services as an employee during that period.
Gary Johnson did not receive any bonus in respect of the year. He was paid £35,000 in January 2018 in respect of bonus earned during the 2016/17 financial year.
No severance payments were made.
Upon his retirement as an employee, 402,564 market value share options, which had been granted to Gary Johnson at IPO in 2016, vested in
accordance with the terms of the Employee Share Plan, retirement being one of the specified “good leaver” scenarios under the Plan Rules.
The options had been granted at the IPO market price of £0.78 per share and the closing mid-market price on 30 April 2018 was £14.04.
Salaries
The salary of the CEO was increased at the start of the year to £200,000, reflecting the increased scale and complexity of the Group, and the
new CFO was appointed in January 2018 with a salary of £155,000. There were no changes made to the fees paid to Non-Executive Directors
during the year.
Bonuses 2017/2018
The Executive Directors were eligible to earn a bonus of 50% of salary, based on achievement of a target for total Group net new sales,
with the potential to over-achieve for sales in excess of the target subject to a maximum cap of 100% of base salary. Based on the Group’s
over-achievement against its internal sales target, the annual performance bonus for the Executive Directors was 78.7% of the base salary
of the CEO and CFO respectively. These bonuses were due for payment in January 2019.
Share incentives
Under the umbrella Employee Share Plan adopted by the Group at its IPO in March 2016, various types of share or option awards are
possible, including market value share options, nil-cost options and contingent share awards.
An award of market value share options was made to the senior management of the Group in February 2018, including Alastair Bathgate.
An award of market value options was made to Ijoma Maluza upon his appointment to the Board in January 2018. No performance conditions
were attached to these awards in line with the Company’s previous policy. Details of these awards, and of awards made to the CEO on IPO,
are set out in the table below.
The total share awards and share options held by the Executive Directors at 31 October 2018 were as follows:
Director
Type of award
Number
Date of award
Vesting date
Lapse date
Exercise price
Alastair Bathgate
Market value share option
497,436
18 March 2016
18 March 2019
18 March 2026
Ijoma Maluza
Market value share option
41,284
31 January 2018
31 January 2021
31 January 2028
Market value share option
6,418 28 February 2018 28 February 2021 28 February 2028
£0.78
£15.58
£13.60
Directors’ interests in shares
The interests held as at 31 October 2018 by each Director who served during the financial year were as follows:
Director
Shares beneficially owned
Unvested share options
Performance shares
Total
Jason Kingdon
Alastair Bathgate
Ijoma Maluza
Gary Johnson (resigned 25 January 2018)
Chris Batterham
Charmaine Carmichael
Ken Lever
5,729,822
4,653,224
634
207,537
219,238
356,717
37,643
–
503,854
41,284
–
–
–
–
–
–
–
–
–
–
–
5,729,822
5,157,078
41,918
207,537
219,238
356,717
37,643
Blue Prism Group plc
Annual Report and Accounts 2018
48
Directors’ report
The following information is provided in the Strategic Report (on pages 2-31) and is incorporated into the Directors’ Report by way
of reference:
• Likely future developments in the business
• Research & development activities
• Business developments
• Details of branches outside the UK
• Details of any important post year events
Information on financial risks and uncertainties is contained within the risk report on pages 28-31.
Directors and their interests
The following Directors served within the 2018 financial year:
Jason Kingdon
Alastair Bathgate
Ijoma Maluza (appointed 25 January 2018)
Charmaine Carmichael
Ken Lever
Chris Batterham
Gary Johnson (resigned 25 January 2018)
The rules concerning the appointment and removal of a Director are contained in the Articles of Association which are available on our
website (www.blueprism.com).
Directors interests and shareholdings are contained within the remuneration report on page 43-47. No changes took place between
31 October 2018 and the date of this report.
Dividends
No dividends have been recommended by directors or paid to shareholders in this financial year.
Disclosure to external auditors
In accordance with section 418 of the Companies Act 2006, the Directors of the Company confirm that the external auditors have been
provided with all relevant information within the Directors’ knowledge. The Directors have taken all reasonable steps to ascertain
relevant information and ensure the auditors were made aware of such information.
Directors’ indemnities
The Group maintains appropriate Directors and Officers insurance and has done so throughout the financial year. This policy is still in
place as at the date of this report.
Political donations
No political donations have been made during the 2018 financial year (2017: nil).
Employees
The Company operates an equal opportunities policy which includes those who are classed as disabled. Individuals who identify as
disabled are given equal opportunities with other employees in relation to training, development and promotion.
Further detail on how we communicate with our employees is provided in the Corporate Governance Statement on pages 38-39.
Share capital
As at 31 October 2018 Blue Prism had 67,047,399 Ordinary Shares (£0.01) in issue listed on AIM. These shares hold the right to vote at a
general meeting. The closing market price on the 31 October 2018 was 1734p (1404p: 2017).
The Company also has 105,269,845 of deferred shares that do not have any voting rights. There are no specific restrictions on the transfer
of shares. The Articles of Association for the Company can be accessed on the website at www.blueprism.com.
The Company has not purchased any of its own shares during the year.
Details of the number of share options held under the employee scheme is available on pages 69-71.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
49
Shareholders
The following shareholders owned more than 3% of the Company’s share capital as at 31 October 2018:
Name
Merian Global Investors (UK) Limited
Jason Kingdon
Alastair Bathgate
Abrams Bison Investments
OppenheimerFunds
David Moss
Independent Investment Trust
Hargreave Hale
No of Ordinary
Shares
Percentage of
Ordinary Shares
12,740,878
5,729,822
4,653,224
3,622,000
3,000,000
2,521,872
2,200,000
2,087,855
19.01%
8.6%
7.0%
5.4%
4.5%
3.8%
3.3%
3.1%
Going Concern statement
After making enquiries, the Directors have confidence that the Group has adequate resources to continue in operational existence for the
forseeable future. For this reason they continue to adopt the going concern basis in preparing the Annual Report and Accounts.
Annual General Meeting
The Company will hold the 2018 AGM on Tuesday 19 March 2019. The Notice of the Meeting accompanies the Annual Report and Accounts.
Independent auditors
BDO, the Company’s auditors have confirmed they wish to remain the Company’s external auditors for a further twelve-month term. The
Board, having assessed their effectiveness and independence, support this and will be proposing a resolution at the 2018 AGM.
By order of the Board
John Warrick
Company Secretary
24 January 2019
Blue Prism Group plc
Annual Report and Accounts 2018
50
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected
to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (“IFRSs”) as
adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period.
The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies
trading securities on the Alternative Investment Market.
select suitable accounting policies and then apply them consistently;
In preparing these financial statements, the Directors are required to:
•
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures
disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue
in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions
and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial
statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial
statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the
Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial
statements contained therein.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
51
Independent auditor’s report
to the members of Blue Prism Group plc
Opinion
We have audited the financial statements of Blue Prism Group plc (the “Parent Company”) and its subsidiaries (the “Group”) for the year
ended 31 October 2018 which comprise the consolidated statement of profit or loss and comprehensive income, the consolidated statement
of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity, the Company statement of
financial position, the Company statement of cash flows, the Company statement of changes in equity, and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International
Financial Reporting Standards (“IFRSs") as adopted by the European Union and, as regards the Parent Company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 October 2018
and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
•
•
•
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
•
the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about
•
the Group’s or the Parent Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve
months from the date when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition
Key audit matter
International Standards on Auditing (UK) (“ISAs (UK)”) note that there is a presumed significant audit risk
arising from inappropriate or incorrect recognition of revenue unless conditions exist that permit the rebuttal
of that risk.
Due to the different elements of the contracts entered into by the Group and the length of those contracts also
varying, the key risk of material misstatement arises both from the recognition of revenue around the year
end (cut-off) and the revenue recognition policy itself, as detailed within note 1 of these financial statements,
ensuring it is in line with International Financial Reporting Standards (“IFRS") as adopted by the European
Union.
Cut-off risk arises around the correct apportionment of revenue to the correct accounting period and
subsequent amount deferred at the year end.
How the key audit
matter was addressed
by our audit scope
Our procedures included reviewing the Group’s adopted revenue recognition policy in accordance with the
requirements of IAS 18 – Revenue. We have reviewed the adopted policy, and confirmed for a sample of
contracts that application has been adhered to throughout the year.
Furthermore, we have performed specific substantive testing over each revenue stream, including the
following:
• Generating expectations of contract revenue recognised during the period based upon both ongoing
contracts entered into in the prior period and contracts entered into during the current period, taking into
consideration the revenue days applicable to the financial year. Inputs into this calculation have been tested
substantively including selecting a sample of items and tracing to source documentation such as customer
contracts. We have also traced from the source listing of revenue generating items back into the population
used to generate expectations to ensure completeness. For those contracts spanning over the year end, a
sample of the balances deferred were re-calculated.
• Critically reviewed the existence and accuracy of deferred revenue balances shown in the statement of
financial position at year end to ensure no material misstatements were identified by vouching deferred
revenue calculation inputs to supporting documentation.
Blue Prism Group plc
Annual Report and Accounts 2018
52
Independent auditor’s report continued
to the members of Blue Prism Group plc
Introductory commissions payable
Key audit matter
How the key audit
matter was addressed
by our audit scope
Blue Prism Group plc provide commission to sales personnel who introduce the first sales contract with a new
customer to the business. This commission is accrued from the point at which a contract is signed, and is paid
upon receipt of the cash from the first invoice raised against the contract as detailed in the policy for
Introductory commissions within note 1 of the financial statements.
Each new sale will earn commission for a number of sales people who were involved in its origination, and each
sales person will have an agreed rate of commission earned for each deal, which may differ throughout the
year from customer to customer depending on the significance of each introduction. The additional
consideration is the proportion of the contract value to which the commission rate is applied. This can range
from the total contract value to half of the total contract value.
Given the number of contracts that one employee may work on, the number of different rates that can be agreed,
and the agreed proportion of total contract value to which these are applied over, this calculation is complex.
There is therefore a risk of understatement of the year end accrual for introductory commissions payable and
the completeness of commissions expense throughout the year.
The focus of the audit for the completeness of commissions payable at year end and expense for the year
included confirmations from all sales employees with regards to the amount they earned in commission during
the year from the contracts that they were involved with and the amount they had actually received in
commission payments during the year against the total payable. This provided audit evidence over both the
income and expenditure charge for the year, and the amounts outstanding at the year end included in the
commissions accrual.
Furthermore, given the inputs feeding into this calculation are factual, we have performed the following
specific substantive testing to further support the overall confirmations:
• Sampled the sales workforce substantively, looking at the breakdown of commissions earned for the sample,
and agreed the rates applied to signed commission statements agreed as part of the rate setting exercise for
a sales person’s performance for the year.
• For the sample identified, we agreed the total contract values of the sales these individuals had introduced to
the business.
• Reviewed payments made in the year against the brought forward position and commissions earned to
re-calculate the closing position.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. At the
planning stage we set an overall level of materiality for the financial statements as a whole based on our understanding of the elements of
the financial statements that are likely to be of greatest significance to users. In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account
of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the
financial statements as a whole.
Materiality
Planning materiality for the Group as a whole was set at £830,000 (2017: £368,000), which represents 1.5% (FY2017: 1.5%) of Group revenue.
Revenue provides us with a consistent year on year basis for determining materiality and has been concluded as the most relevant
performance measure to the stakeholders of the Group, while also providing a more stable measure year on year when compared to the
Group loss before tax. Parent Company materiality has been set at £750,000, reflecting 1.5% (FY2017: 1.5%) of total assets of the entity,
which has been deemed the most suitable benchmark for a non-trading holding Parent Company.
Performance materiality
Based upon our assessment of the risks within the Group and the Group’s control environment, performance materiality for the financial
statements has been set at £580,000 (FY2017: £276,000), being 70% (FY2017: 75%) of planning materiality. Parent Company performance
materiality has been set at £525,000, reflecting 70% (FY2017: 75%) of planning materiality.
Performance materiality levels used for the 2 key components identified within the Group were based upon the same benchmarks and
percentages detailed for the Group, due to each component being consistent in both nature, audit risks identified and control environment
to the Group as a whole. In the current year, the range of planning materiality and performance materiality allocated to components was
£510,000 to £310,000 (FY2017: £234,000 to 134,000) £357,000 to £217,000 (FY2017: £175,500 to £100,500) respectively.
Reporting threshold
The reporting threshold is the amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £24,000 (FY2017: £18,400),
which is set at 3% (FY2017: 5%) of planning materiality, as well as differences below that threshold that, in our view, warranted reporting
on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
53
Scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the financial statements at the Group level.
In determining the scope of our audit we considered the size and nature of each component within the Group to determine the level of
work to be performed at each in order to ensure sufficient assurance was gained to allow us to express an opinion on the financial
statements of the Group as a whole.
We obtained an understanding of the internal control environment related to the financial reporting process and assessed the
appropriateness, completeness and accuracy of Group journals and other adjustments performed on consolidation.
Classification of component
Two components were identified as significant (defined as those that contributed greater than 15% of Group revenue) and have been
audited for Group reporting purposes.
The 2 significant components audited for Group reporting purposes accounted for 100% (FY2017: 100%) of the Group’s revenue, 55%
(FY2017: 86%) of the Group’s loss before tax and 53% (FY2017: 59%) of the Group’s total assets and have been subject to a full scope audit.
The Group audit team carried out these audits using materiality levels specified above.
Significant costs were also identified in 2 further components, which were tested substantively to component materiality as part of the
Group audit by the Group audit team. Total coverage over the cost base of the Group tested after these 2 components were taken into
account amounted to 96%.
The remaining 5 components, which were not identified as significant, have been reviewed, by the Group audit team, for Group reporting
purposes, using analytic procedures to corroborate the conclusions reached that there were no significant risks of material misstatement
of the aggregated financial information of those components.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report,
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the Directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
•
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from
branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and returns; or
•
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Blue Prism Group plc
Annual Report and Accounts 2018
54
Independent auditor’s report continued
to the members of Blue Prism Group plc
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities.This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Nicole Martin (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
24 January 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 October 2018
Revenue
Cost of sales
Gross profit
Operating expense
Operating expenses before share based payments
Share-based payments
Operating expenses
Operating loss
Interest received on bank deposits
Loss before tax
Tax expense
Loss from operations
Other comprehensive income
Exchange (losses)/gains on translation of foreign operations
Total other comprehensive (loss)/income
Total comprehensive loss for the year
Note
4
5
6
17
8
55
Restated 2017
£'m
24.5
–
24.5
(34.6)
(32.9)
(1.7)
(34.6)
(10.1)
–
(10.1)
(0.3)
(10.4)
0.3
0.3
2018
£'m
55.2
–
55.2
(81.2)
(77.2)
(4.0)
(81.2)
(26.0)
–
(26.0)
(0.2)
(26.2)
(0.7)
(0.7)
(26.9)
(10.1)
Basic and diluted loss per share attributable to shareholders (p)
9
(39.96)
(16.67)
The notes on pages 59 to 72 form part of these financial statements.
Blue Prism Group plc
Annual Report and Accounts 2018
56
Consolidated statement of financial position
at 31 October 2018
Non-current assets
Intangible assets
Property, plant and equipment
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Deferred revenue
Total current liabilities
Non-current liabilities
Deferred revenue
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity attributable to shareholders
Called up share capital
Share premium
Merger reserve
Foreign Exchange reserve
Share based payment reserve
Accumulated losses
Total equity
Note
2018
£'m
Restated 2017
£'m
10
11
13
22
14
16
16
18
18
18
18
0.2
0.9
1.1
28.1
50.5
78.6
79.7
20.0
42.1
62.1
5.8
5.8
67.9
11.8
1.7
50.2
0.4
(0.4)
4.2
(44.3)
11.8
–
0.4
0.4
14.9
16.3
31.2
31.6
9.1
23.0
32.1
4.3
4.3
36.4
(4.8)
1.7
9.6
0.4
0.3
1.3
(18.1)
(4.8)
The financial statements on pages 55 to 78 were approved and authorised for issue by the Board of Directors on 24 January 2019 and were
signed on its behalf by:
Ijoma Maluza
Director
The notes on pages 59 to 72 form part of these financial statements.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
Consolidated statement of cash flows
for the year ended 31 October 2018
Cash flows from operating activities
Loss for the year
Adjustments for:
Amortisation of intangible fixed assets
Depreciation of property, plant and equipment
Finance income
Share-based payment expense
Income tax expense
Increase in trade and other receivables
Increase in trade and other payables
Increase in deferred revenue
Cash (used in)/generated from operations
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of intangible fixed assets
Purchases of property, plant and equipment
Interest received
Net cash used in investing activities
Financing activities
Issue of Ordinary Shares
Issue costs
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange on cash & cash equivalents
Cash and cash equivalents at end of year
The notes on pages 59 to 72 form part of these financial statements.
57
Note
2018
£'m
Restated 2017
£'m
(26.2)
(10.4)
11
17
8
11
22
0.1
0.3
–
3.0
0.2
(22.6)
(13.1)
9.7
20.6
(5.4)
–
(5.4)
(0.3)
(0.8)
–
(1.1)
41.9
(1.3)
40.6
34.1
16.3
0.1
50.5
–
0.1
–
1.1
0.3
(8.9)
(9.3)
5.7
16.9
4.4
–
4.4
–
(0.4)
–
(0.4)
0.4
0.4
4.4
11.8
0.1
16.3
Blue Prism Group plc
Annual Report and Accounts 2018
58
Consolidated statement of changes in equity
for the year ended 31 October 2018
Equity as at 31 October 2016
Comprehensive income for 2017
Loss
Other comprehensive income
Total comprehensive income for the year
Contributions by and distributions
to owners
Exercise of options
Share based payments – restated
Forfeit of share options
–
–
–
–
–
–
Equity as at 31 October 2017 – restated
1.7
Comprehensive income for 2018
Loss
Other comprehensive income
Total comprehensive income for the year
Contributions by and distributions
to owners
Exercise of options
Issue of shares
Cost of share issue
Share based payments
Forfeit of share options
–
–
–
–
–
–
–
–
Equity as at 31 October 2018
1.7
Share
capital
£'m
1.7
Share
premium
£’m
9.2
Share
based
payment
reserve
£’m
0.3
Foreign
exchange
reserve
£’m
–
–
0.3
0.3
–
–
–
0.3
–
(0.7)
(0.7)
–
–
–
–
–
Merger
reserve
£’m
0.4
–
–
–
–
–
–
Accumulated
losses
£’m
(7.7)
(10.4)
–
(10.4)
–
–
–
0.4
(18.1)
–
–
–
–
–
–
–
–
(26.2)
–
(26.2)
–
–
–
–
–
(0.4)
0.4
(44.3)
Total
equity
£’m
3.9
(10.4)
0.3
(10.1)
0.4
1.1
(0.1)
(4.8)
(26.2)
(0.7)
(26.9)
1.9
40.0
(1.3)
3.0
(0.1)
11.8
–
–
–
0.4
–
–
9.6
–
–
–
1.9
40.0
(1.3)
–
–
50.2
–
–
–
–
1.1
(0.1)
1.3
–
–
–
–
–
–
3.0
(0.1)
4.2
The notes on pages 59 to 72 form part of these financial statements.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
Notes forming part of the financial statements
for the year ended 31 October 2018
59
1 Accounting policies
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 Company has
undertaken a thorough review of the impact of IFRS 15, which will become effective for the accounting period beginning 1 November 2018.
The standard has the potential to impact revenue recognition and accounting for commission on sales.
• Revenue recognition: Under the prior standard, IAS 18, revenue was recognised rateably/straight line over the life of the contract. IFRS
15 requires us to make more detailed judgments and the implication is that a small portion of licence revenues must be recognised at
the point in time that a licence key is issued to a customer. In FY2018 the impact to revenues (had they been reported under IFRS 15)
would have been an uplift in the range of £1–2m.
• Accounting for commission on sales: previously commission on sales was recognised in its entirety on completion of the sale. This will
change under IFRS 15, and sales commission will be capitalised and then amortised over time in line with the revenue treatment for the
contract it relates to. In FY2018 this would have reduced commissions expense by £8–10m had Blue Prism reported under IFRS 15.
• The combined effect of the above would have improved the operating loss by £9–12m.
• Additionally, Blue Prism would have reported an asset on the balance sheet related to capitalisation of commissions. At the end of the
financial year this would have been in the range of £14–16m.
IFRS 9 Financial Instruments, effective for periods commencing on or after 1 January 2018. The impact of this standard is not considered
material on these financial statements.
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 2019.
Changes to the accounting policy for national insurance on share based payments
The Group has amended its accounting policy for national insurance on share based payments following a Group review of the policy with
regards to all available guidance. Following the adoption of this updated policy the Group is now accruing for national insurance as part of
its share based payments charge in line with IFRS 2, in each accounting period. A prior year restatement has been made following this
change in accounting policy.
The impact of the change in accounting policy on the consolidated income statement for 2017 is:
Total previous loss before tax
Share-based payments charge
Total adjustment to loss before tax
The impact of the change in accounting policy on previously reported total equity may be summarised as follows:
Total equity as previously reported
Re-statement for change in accounting policy
Loss and total comprehensive income for the period
Total equity as restated
2017
£'m
(9.5)
(0.6)
(10.1)
2017
£'m
(4.2)
(0.6)
(4.8)
The impact of the change in accounting policy on the previously reported consolidated statement of financial position as at 31 October 2017
may be summarised as follows:
Trade and other payables
As previously
reported
£’m
Impact of
restatements
£’m
Restated
£’m
(8.5)
(0.6)
(9.1)
Blue Prism Group plc
Annual Report and Accounts 2018
60
Notes forming part of the financial statements continued
for the year ended 31 October 2018
1 Accounting policies 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 reduced
the net asset position 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.
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 IFRS 3 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 licence is reached,
allowing them access to the software for the licence period.
Revenue includes the provision of a licence through a software key, follow up support, and maintenance, throughout the term of the
licence. 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 licence and follow up services is recognised from the licence start date over the period of the licence, 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 revenue is accrued
throughout the licence term on an ongoing basis. Support is provided throughout the licence period, and varies depending on how the
customer chooses to deploy the software.
Revenue for these licences, 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.
The Group also recognises revenue from Blue Prism World events which are held annually in multiple geographies. This revenue mainly
relates to sponsorship revenue received from various partners and external organisations participating in the Blue Prism World events.
Introductory commission
Introductory 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.
Blue Prism Group plc
Annual Report and Accounts 2018
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61
During the prior period the Board 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 functional currency changed 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 3 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.
National Insurance on share options which will incur future National Insurance on exercise, is accrued for the future cost of National
Insurance from the point the options are granted over their vesting period. This accrual is then reviewed and amended at each subsequent
balance sheet date under IFRS 2.
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
Blue Prism Group plc
Annual Report and Accounts 2018
62
Notes forming part of the financial statements continued
for the year ended 31 October 2018
1 Accounting policies continued
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.
Any capitalised development expenditure will be amortised on a straight-line method when the services are ready for sale or use. If it is no
longer probable that the expected future economic benefits will be recovered, the development expenditure would be written down and
amortised to its recoverable amount. If the capitalisation criteria are met, development expenditure may be measured at cost less
accumulated amortization and impairment losses, if any.
Its intention to complete the intangible asset and use or sell it.
Its ability to use or sell the intangible asset.
Criteria for recognition of intangible assets
Internally-generated RPA development costs qualify for capitalisation when Blue Prism can demonstrate all of the following:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale.
•
•
• How the intangible asset will generate probable future economic benefits.
• The existence of a market or, if it is to be used internally, the usefulness of the intangible asset.
• 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 development.
Generally, commercial viability of new RPA innovations and product enhancements is not proven until development issues have been resolved
through testing pre-launch versions. Blue Prism assesses the eligibility of development costs for capitalisation on a project-by-project basis.
Development costs which are incurred after the release of internally-generated RPA or costs which are incurred in order to enhance
existing RPA products are expensed in the period in which they are incurred and included within research and development expense in
the consolidated statement of profit or loss and other comprehensive income.
Amortisation of intangible assets
Amortisation is charged to the income statement on a straight-line basis over the estimated useful life of internally generated RPA.
Blue Prism currently only has intangible assets with finite lives.
The estimated useful life of internally generated RPA is 18 months to 2 years depending on the intangible asset.
2 Key accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
• 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 licence period, and varies depending on
how the customer chooses to deploy the software. The key judgements are that the different elements are bundled together due to the
fact the 2 parts are intertwined with each constituent part been deemed to have no value as a stand alone function, and as such all
elements are recognised together, spread over the licence period.
• Research and development costs – Under IAS 38, Research and development costs, internally generated technology should be
capitalised if the capitalisation criteria are met. Assumptions and judgements are made with regard to assessing the expected future
economic benefits, the economic useful life and the level of completion of the databases. Under IAS 38, at the point where activities no
longer relate to development but to maintenance, capitalisation is to be discontinued. In accordance with IAS 38 Blue Prism will only
recognise the costs of an intangible asset if and only if:
1. It is more likely than not that the expected future economic benefits that are attributable to the asset will flow to the entity; and
the cost of the asset can be measured reliably.
2. If the costs associated with the potential recognition of an intangible asset do not meet both criteria 1 and 2 set out above, then no
intangible asset will be recognised.
3. The above criteria will also need to be satisfied and performed each time an entity incurs potentially eligible expenditures relating
to expenditure in connection with a potential acquisition or internally generated expenditure in respect of an intangible asset.
4. Blue Prism’s policy which is in accordance with IAS 38 states that if criteria 1 and 2 above are not met at the time that the
expenditure is incurred an expense is recognised and such costs are never reinstated as an intangible asset in the future.
5. Blue Prism undertakes ongoing research and development expenditure in respect of the internally generated robotic process
automation (“RPA") software. To avoid the inappropriate recognition of an intangible asset, IAS 38 requires that internally generated
assets need to meet the general requirements for recognition and initial measurement, but also meet criteria which confirm that the
related activity is at a sufficiently advanced stage of development, is both technically and commercially viable and includes only
directly attributable costs.
Blue Prism Group plc
Annual Report and Accounts 2018
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Financial statements
63
The key judgements here are defining the cut-off point between when research ends and development starts, and reliably measuring
the expenditure attributable to the asset. An assessment is made when looking at the costs incurred and criteria for development costs,
including the commercial and technical viability of the costs being assured. The main costs attributed to research and development costs
is that of payroll, with research and development team tasked with other aspects of quality assurance, customer support, project
management, along with other tasks.
3 Financial instruments – risk management
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the
Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative
information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for
managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
Capital risk management
The Group manages its capital to ensure that all Group entities will be able to continue on a going concern basis while maximising its long-term
return to shareholders. The capital structure of the Group consists of Company equity only, comprising issued capital, share premium,
reserves and retained earnings. The Group is not exposed to any externally imposed capital requirements and has no borrowings.
Financial instruments by category
Financial assets
Trade receivables
Other debtors
Cash and cash equivalents
Total financial assets
Financial liabilities
Trade and other payables
Accruals and other payables
Total financial liabilities
2018
£’m
22.5
0.5
50.5
73.5
2018
£’m
4.1
13.7
17.8
Restated 2017
£’m
13.6
0.7
16.3
30.6
2017
£’m
1.6
5.8
7.4
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining
ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective
implementation of the objectives and policies to the Group’s finance function.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy to assess the credit risk of new customers
before entering contracts.
The Board has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s
standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when available.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial
institutions, only independently rated parties with minimum rating “A” are accepted.
Further disclosures regarding trade and other receivables, which are neither past due nor impaired, are provided in note 13.
Cash at bank and short-term deposits
The Group’s cash is held on deposit with the Group’s principal bankers.
Foreign exchange risk
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional
currency. The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency, with
the cash generated from their own operations in that currency. Where Group entities have liabilities denominated in a currency other
than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency
will, where possible, be transferred from elsewhere within the Group.
During the year the Group’s potential exposure to currency risk has increased due to the increased level of business in the US. The Group
is predominantly exposed to currency risk on the balances held in working capital within the Group and the exposure is concentrated
therefore in the movement of the US dollar against sterling. The effect of a strengthening and weakening of 10% of the US dollar against
sterling at the reporting date on the working capital balances held at this date, on the basis that all other variables remained constant,
would have resulted in the following pre-tax profit or (loss) impact for the year as follows:
Blue Prism Group plc
Annual Report and Accounts 2018
64
Notes forming part of the financial statements continued
for the year ended 31 October 2018
3 Financial instruments – risk management continued
US dollar to sterling
10% strengthening
£’m
10% weakening
£’m
0.4
(0.4)
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve
this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 90 days.
The maximum exposure to liquidity risk is the trade payables and sales introduction commissions accrued at the year end, these are all
current and expected to be settled within 90 days of the year end.
The Board receives rolling 12-month cash flow projections on a monthly basis as well as information regarding cash balances. At the end
of the financial year, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under
all reasonably expected circumstances for at least 12 months from the date of signing these financial statements.
4 Segmental analysis
The Group has one operating segment being the licensing of Robotic Process Automation (“RPA") software used to automate routine,
rules-based back office processes.
The Group operates across three regions: EMEA, The Americas and APAC. The Board of Directors only monitors revenue on this basis.
Business performance is otherwise monitored by reference to total results against budget. Revenue for each of the geographical areas is
as follows:
Revenue from EMEA Operations
Revenue from The Americas Operations
Revenue from APAC Operations
Total
Revenues from each country where more than 10% of the Group revenues:
UK
US
Nordic countries
Australia and Middle East
Canada
South Africa
Rest of world
Total
2018
£’m
26.8
21.3
7.1
55.2
13.1
16.6
3.8
3.3
3.0
1.3
14.1
55.2
2017
£’m
13.7
9.0
1.8
24.5
7.3
7.2
–
–
–
–
10.0
24.5
Revenue
The Group currently has 2 key sources of revenue:
• Licencing – for the provision of software licences, where the agreement is established of a legally binding contract between the Group
and its customers. Standard maintenance and support services are included in the licence fee.
• Professional services, training, events and sponsorship – where the customer requires consultancy or training on a project by project
basis, or sponsorship for the Blue Prism World events.
Licences
Professional services, training, events and sponsorship
2018
£’m
51.7
3.5
55.2
2017
£’m
22.3
2.2
24.5
There are no customers who generate 10% or more of the Group’s revenues.
Assets, liabilities and sources of revenue are not analysed by geography as the business performance measure utilised by the chief
operating decision maker, the Board of Directors, is the total business result.
5 Cost of sales
Recharged costs
Blue Prism Group plc
Annual Report and Accounts 2018
2018
£’m
–
2017
£’m
–
Strategic report
Governance
Financial statements
65
6 Operating loss
Operating loss is after charging:
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
Fees payable to the Company’s auditor for other services:
Audit of the accounts of subsidiaries
Audit-related assurance services
Tax services
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets
Staff costs (note 7)
Travel and entertaining
Legal costs in respect of contracts
R&D expenses
Marketing expenses
Operating lease expense: Other
7 Staff costs
Staff costs (including Directors emoluments) comprise:
Wages and salaries
Social security contributions and similar taxes
Share-based payment expense
Pension costs
Other staff costs
Total staff costs
2018
£’m
Restated 2017
£’m
0.1
0.1
–
–
0.3
0.1
57.5
8.1
1.0
4.0
6.3
2.0
–
0.1
–
–
0.1
–
25.4
3.2
2.6
2.1
2.6
0.4
2018
£’m
Restated 2017
£’m
44.1
3.4
4.0
1.4
4.6
57.5
17.6
3.3
1.7
0.6
2.2
25.4
Staff costs include sales introduction commissions in the amount of £15.4m (FY2017: £7.9m). Other staff costs are made up of recruitment
costs and other miscellaneous staff costs.
Average monthly number of employees (including Directors) during the period:
Directors*
Staff
Administration
Sales and marketing
Technical services
2018
Number
7
28
222
61
318
2017
Number
6
11
67
50
134
*
For 2017 Directors denotes the average number of Blue Prism Group plc Directors including 3 Non-Executive Directors. The remuneration of the highest paid Director
is shown in the Directors’ Report.
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of
the Group, including the Directors of the Company listed on page 36 to 37, and the Directors of Blue Prism Limited.
Salary
Bonuses
Commission
Pension contributions
Employers NI contributions
Car allowances
2018
£’m
1.6
0.7
0.5
0.1
0.3
0.1
3.3
2017
£’m
1.2
0.3
0.4
0.1
0.2
0.1
2.3
The fair value of the share options issued to the key management personnel in FY2018 is £nil (FY2017: £nil), with one third charged to the
profit and loss each year. The profit and loss charge for the year ended 31 October is £0.2m (FY2017: £0.2m).
Blue Prism Group plc
Annual Report and Accounts 2018
66
Notes forming part of the financial statements continued
for the year ended 31 October 2018
8 Tax expense
Current tax expense
Current tax on loss for the year
Foreign tax
Total current tax
Deferred tax expense
Release of deferred tax assets in respect of prior periods
Total deferred tax
Total tax expense
2018
£’m
–
0.2
–
–
–
2017
£’m
–
0.3
–
–
–
0.2
0.3
No deferred tax asset has been recognised in the year ended 31 October 2018 (FY2017: £nil) in relation to tax losses available due to the
uncertainty of their utilisation in the near future.
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom
applied to losses for the year are as follows:
Loss before tax
Tax at domestic rate 19% (FY2017: 19.41%)
Effects of:
Expenses not deductible for tax purposes
Tax on share options exercised in the period
Differences on foreign tax rates
Share options exercised in the period
Deferred tax not recognised
Foreign tax on UK income
Deferred tax asset released during the period
Capital allowances in (excess)/deficit of depreciation
Adjustments in respect of previous years
Total tax expense
2018
£’m
Restated 2017
£’m
(26.0)
(4.9)
(10.1)
(2.0)
1.4
–
–
(0.4)
4.6
(0.4)
–
–
(0.1)
0.2
–
0.2
0.3
(0.4)
2.2
–
–
–
–
0.3
The Blue Prism Group plc has tax losses of approximately £43.2m (31 October 2017: £29.6m) to carry forward against future profits.
The tax value of such losses amounted to £5.5m (31 October 2017: £7.0m). The UK tax losses have no expiry date. US tax losses expire
after 20 years if not utilised.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which temporary
differences can be utilised. On the basis there is insufficient evidence that future taxable profits will be available to utilise the tax losses,
(note 15) no deferred tax asset has been recognised in respect of the trading losses carried forward.
9 Basic and diluted loss per share
Numerator
Loss for the year and earnings used in basic EPS
Denominator
Weighted average number of shares used in basic EPS
Basic and diluted weighted losses per share (pence)
Denominator
Potential diluted average number of shares
2018
£’m
Restated 2017
£’m
(26.2)
(10.4)
‘000
65,560
(39.96)
‘000
86,489
‘000
62,371
(16.67)
‘000
67,940
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
10 Intangible fixed assets
Cost
At 1 November 2017
Additions
At 31 October 2018
Accumulated depreciation and impairment
At 1 November 2017
Amortisation
At 31 October 2018
Net book value
At 31 October 2017
At 31 October 2018
11 Property, plant and equipment
Cost
At 1 November 2016
Additions
At 31 October 2017
At 1 November 2017
Additions
Disposals
Foreign exchange movements
At 31 October 2018
Accumulated depreciation and impairment
At 1 November 2016
Depreciation
At 31 October 2017
At 1 November 2017
Depreciation
Disposals
Foreign exchange movements
At 31 October 2018
Net book value
At 31 October 2017
At 31 October 2018
67
Total
£’m
–
0.3
0.3
£’m
–
0.1
0.1
–
0.2
Total
£’m
0.3
0.3
0.6
0.6
0.8
(0.1)
–
1.3
£’m
0.1
0.1
0.2
0.2
0.3
(0.1)
–
0.4
0.4
0.9
Plant,
machinery
£’m
Leasehold
improvements
£’m
0.3
0.3
0.6
0.6
0.7
(0.1)
–
1.2
£’m
0.1
0.1
0.2
0.2
0.3
(0.1)
–
0.4
0.4
0.8
–
–
–
–
0.1
–
–
0.1
£’m
–
–
–
–
–
–
–
–
–
0.1
12 Subsidiaries
The subsidiaries of Blue Prism Group plc, all of which have been included in these consolidated financial statements, are as follows:
Name
Country of incorporation and principal place of business
Blue Prism Limited
Blue Prism Software Inc*
Blue Prism Pty Ltd*
Blue Prism K.K.*
Blue Prism India Pvt Ltd*
Blue Prism GmbH*
Blue Prism SARL*
Blue Prism Pte. Ltd*
Blue Prism HK Limited*
United Kingdom
United States
Australia
Japan
India
Germany
France
Singapore
Hong Kong
*
Indirectly held through Blue Prism Limited.
Proportion of ownership
interest at 31 October
2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
2017
100%
100%
100%
100%
100%
N/A
N/A
N/A
N/A
Blue Prism Group plc
Annual Report and Accounts 2018
68
Notes forming part of the financial statements continued
for the year ended 31 October 2018
12 Subsidiaries continued
The registered addresses of each of the subsidiaries are shown below:
Name
Registered address
Blue Prism Limited
Blue Prism Software Inc*
Blue Prism Pty Ltd*
Blue Prism K.K.*
Blue Prism India Pvt Ltd*
Blue Prism GmbH
Blue Prism SARL
Blue Prism Pte. Ltd
Blue Prism HK Limited
2 Cinnamon Park, Crab Lane, Warrington, WA2 0XP
1688 Meridian Avenue, Suite 700 Miami Beach, Florida, 33139
Level 16, 201 Elizabeth Street, Sydney, NSW 2000
Tokyo Club Building, 11F, 3-2-6 Kasumigaseki, Chiyoda-ku, Tokyo
2nd Floor, Plot No. 19/4&27, Varthur Hobli, Bangalore 560103
Maximilianstraße 54, 80538 München
50 Rue de la Victoire, 75009 Paris
38 Beach Road, South Beach Tower, #29-11, Singapore, 189767
31/F., Tower Two, Times Square, Matheson Street, Causeway Bay, Hong Kong
13 Trade and other receivables
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Prepayments and other debtors
Total trade and other receivables
2018
£’m
22.6
(0.1)
22.5
5.6
28.1
2017
£’m
13.6
–
13.6
1.3
14.9
As at 31 October 2018 trade receivables of £7.8m (FY2017: £4.1m) were past due but not impaired. They relate to customers with no default
history. An impairment of £0.1m was recognised in the year in respect to the provision for impairment of trade receivables. The ageing
analysis of these receivables is as follows:
Up to 30 days overdue
30 to 60 days overdue
90 days or more and overdue
14 Trade and other payables
Trade payables
Other payables
Accruals
Total trade and other payables
2018
£’m
4.7
1.2
1.9
7.8
2018
£’m
4.1
1.1
14.8
20.0
2017
£’m
1.7
1.4
1.0
4.1
Restated 2017
£’m
1.6
1.7
5.8
9.1
15 Deferred tax assets
No deferred tax asset has been recognised in the year ended 31 October 2018 (FY2017: £nil) in relation to trading losses available due to the
uncertainty of their utilisation in the near future.
16 Share capital
Allotted and fully paid up
Ordinary Share capital
Deferred shares
Total
Total Ordinary Shares at 31 October 2016
Share options exercised in the year
Shares issued under the Company Share Investment Plan
Total Ordinary Shares at 31 October 2017
Share options exercised in the year
Shares issued under the Company Share Investment Plan
Shares issued under the Company Employee Stock Purchase Plan
Shares placed in the year
Cost of share placing
Number
62,210,968
452,665
586
62,664,219
1,157,141
17,466
33,969
3,174,604
–
2018
£'m
0.7
1.0
1.7
2017
£'m
0.7
1.0
1.7
Issued and fully paid
Share capital
£'m
Share premium
£'m
0.6
0.1
–
0.7
–
–
–
–
–
9.2
0.4
–
9.6
1.9
–
–
40.0
(1.3)
50.2
Total Ordinary Shares at 31 October 2018
67,047,399
0.7
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
69
Ordinary Shares are classed as equity
As part of the Group restructure, the preference shares of £1.00 each and the B preference shares of £1.00 held by shareholders were
converted into Ordinary Shares and deferred shares of £0.01. The conversion resulted in those shares converting into 2,994,755 Ordinary
Shares and 105,269,845 deferred shares of £0.01 as follows:
Deferred shares
Number of
deferred
shares
Nominal
value
105,269,845
1,052,698
The deferred shares carry no voting rights, no rights to income and the right to a return of a maximum of £0.001 on a winding up of
the Company.
17 Share options
The Group operates an Employee Share Plan and a Non-Employee Share Plan (together the “Share Plans”). The Employee Share Plan is
administered by the remuneration committee of the Board and the Non-Employee Share Plan is administered by the Board. Awards under
the Share Plans take the form of options to acquire Ordinary Shares with an exercise price equal to the market value of an Ordinary Share
on the date of grant. All employees of the Group may be granted awards under the Employee Share Plan. Non-Executive Directors and
consultants of the Group may be granted awards under the Non-Employee Share Plan. All options under the Share Plans are 10-year
options. The Employee Share Plan options for staff vest over a 3-year period, one third each year. Directors options under the Employee
Share Plan vest at the end of the 3-year period. Options awarded under the Non-Employee Share Plan vest over 3 years, one third each year.
The Group also operates a Company Share Option Plan (the “CSOP”). The CSOP is administered by the remuneration committee of the
Board. The CSOP has been designed so as to be capable of being certified as a “Schedule 4 CSOP” (as described in schedule 4 of the Income
Tax (Earnings and Pensions) Act 2003). The rules of the CSOP have been drafted so as to mirror those of the Employee Share Plan save
where a different approach is required to ensure that the CSOP may qualify as a Schedule 4 CSOP. The Awards under the CSOP take the
form of options to acquire Ordinary Shares with an exercise price equal to the market value of an Ordinary Share on the date of grant.
The CSOP is used in conjunction with the Employee Share Plan when making Awards to the Group’s UK employees, such that for staff the
total number of options in an Award (under the Employee Share Plan and CSOP combined) vest over a 3-year period, one third each year,
although the relative proportions of options due to vest under the CSOP and the Employee Share Plan may vary from year to year. Directors
options under the CSOP vest at the end of the 3-year period from the date of grant.
For the Group’s UK employees, the Company operates a Share Incentive Plan (the “SIP”). The SIP has been designed so as to be capable of
being certified as a “Schedule 2 SIP” (as described in schedule 2 of the Income Tax (Earnings and Pensions) Act 2003). The SIP is open to
all of the Group’s UK employees. Participating employees may elect to save funds by means of deductions from pre-tax salary up to a
maximum contribution per employee of £1,800 per tax year. Funds thus deducted are held for the benefit of the employee under a UK
resident trust established for the purpose (the “SIP Trust”). The trustee of the SIP Trust uses the accumulated funds each month to make
market purchases of Ordinary Shares to be held under the SIP Trust for the employee (“Partnership Shares”). For each Partnership Share
purchased under the SIP, the Company awards one free matching Ordinary Share, also to be held under the SIP Trust (a “Matching Share”).
Matching Shares must normally be retained within the SIP Trust for 3 years from the date they are awarded.
For the Group’s US employees, the Company operates an Employee Stock Purchase Plan (the “ESPP”). The ESPP is designed to be a
qualified employee stock purchase plan within the meaning of Section 423 of the US Internal Revenue Code of 1986. Participating
employees may elect to save funds by means of deductions from post-tax salary to be accumulated towards the purchase of Ordinary
Shares up to a maximum contribution per employee of $25,000 per tax year. Funds are accumulated during a series of “Offering Periods”,
normally of 6 months each, at the end of which the employee may use the accumulated funds to purchase Ordinary Shares or to have the
funds repaid to them without interest. If the funds are used to purchase Ordinary Shares, the purchase may be made at a discount of 15%
from whichever is the lower of the market value of Ordinary Shares at the beginning or the end of the Offering Period.
During the year 1,013,419 (FY2017: 1,193,203) share options have been granted under the above schemes. The cost of these options in the
first year under the Black-Scholes option-pricing model was £1,257,063 (FY2017: £1,512,703). Of this £1,257,063 has been charged to the
profit and loss for the year (FY2017: £1,131,433).
The exercise price of options outstanding at 31 October 2018 ranged between 78p and 2500p (FY2017: 78p and 1344p) and average
contractual life left for all options is 8.24 years (FY2017: 8.65 years).
Blue Prism Group plc
Annual Report and Accounts 2018
70
Notes forming part of the financial statements continued
for the year ended 31 October 2018
17 Share options continued
Share options on £1 Ordinary Shares outstanding at 1 November 2015
Share options on £1 Ordinary Shares exercised on 21/12/15
£1 Ordinary Share options cancelled on 01/12/15
Share options on £1 Ordinary Shares exercised on IPO
Balance of share options outstanding at IPO
Share options on 1p Ordinary Shares granted at IPO on 18/3/16
Share options on 1p Ordinary Shares granted on 9/8/16
Share options on 1p Ordinary Shares granted on 5/10/16
Share options on 1p Ordinary Shares granted on 27/10/16
Share options forfeited in the period
Share options on 1p Ordinary Shares outstanding at 1 November 2016
Share options awarded during in the period
Share options forfeited in the period
Share options exercised in the period
Share options outstanding at 31 October 2017
Share options awarded in the period
Share options forfeited in the period
Share options exercised in the period
Share options outstanding at 31 October 2018
Number
of options
154,155
(1,000)
(800)
(152,355)
–
4,861,859
567,947
25,352
24,430
(42,735)
5,436,853
1,193,203
(118,749)
(457,665)
6,053,642
1,013,419
(47,218)
(1,169,246)
5,850,597
Weighted
average
option price
(£)
1.03
1.00
1.25
1.03
–
0.78
2.236
3.085
3.07
0.78
0.95
7.50
1.05
0.96
2.24
17.28
2.53
1.30
4.99
Of the 5,850,597 share options outstanding at 31st October 2018, 1,064,910 have vested and are exercisable (31 October 2017: 477,310 vested
and exercisable).
The weighted average fair value of each option granted during the year was 4.99 (2017: 2.24).
The fair value of share options issued in the year has been measured using the Black-Scholes model using the following key assumptions:
Assumption
Volatility
Description and purpose
In the absence of historic volatility data, expected volatility has been estimated using the volatility of
comparable companies. The volatility used was between 30% and 31%.
Expected time to exercise The expected time to exercise used was 5 years.
Dividends
It was assumed no dividend would be paid.
Option exercise price
The option exercise price determined was the share price at the date of the award for the US awards and the price
on the day before the date of the award for the non US awards, in accordance with the US ISO option rules.
Risk free rate
The risk free rate applied was based on the 5-year UK government bond yields at the time of the valuation.
Retention of employees
It is assumed 100% retention of employees.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
71
The fair value of options awarded during the year is as follows:
Valuation date
30/01/2018
31/01/2018
27/02/2018
28/02/2018
28/03/2018
29/03/2018
26/04/2018
27/04/2018
23/05/2018
24/05/2018
28/06/2018
29/06/2018
30/07/2018
31/07/2018
31/07/2018
30/08/2018
31/08/2018
10/09/2018
28/09/2018
28/09/2018
30/10/2018
31/10/2018
EMI
options
Unapproved
options
Unapproved
non–staff
options
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
120,363
–
78,091
–
48,591
–
44,274
–
40,948
–
49,115
–
47,810
1,789
–
53,615
25,894
75,020
–
–
21,750
607,260
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
CSOP
options
–
22,896
–
5,050
–
8,540
–
4,282
–
5,186
–
7,217
–
12,854
–
–
16,977
–
11,522
–
–
2,847
97,371
ISO
options
44,938
–
35,507
–
19,422
–
18,012
–
10,416
–
21,504
–
54,988
–
–
45,468
–
–
–
30,782
27,751
–
Fair value
per option
Fair value
of holding
3.72
4.54
4.42
4.66
4.02
4.09
4.19
4.05
4.77
4.84
5.02
5.58
5.31
5.36
5.49
6.38
6.91
7.42
7.41
6.60
4.83
5.59
167,169
650,396
156,941
387,437
78,076
233,666
75,470
196,652
49,684
223,289
107,950
314,333
291,986
325,159
9,822
290,086
487,791
192,133
641,276
203,161
134,037
137,497
308,788
5,354,011
The above options have the following different vesting conditions:
Option type
CSOP
Vesting conditions
CSOP Options vest 100% after 3 years.
Unapproved options
Unapproved options vest either over either 2 or 3 years, or 100% after 3 years.
ISO
EMI
ISO Options vest equally over 3 years.
EMI Options vest equally over either 2 or 3 years.
National Insurance on share options which will incur future National Insurance on exercise, is accrued in accordance with IFRS 2 from
the point the options are granted over their vesting period. This accrual is then reviewed and amended at each subsequent balance sheet
date using the fair value of the option at that date.
Assumption
Volatility
Description and purpose
In the absence of historic volatility data, expected volatility has been estimated using the volatility of
comparable companies. The volatility used was between 30% and 31%.
Expected time to exercise The expected time to exercise used was five years.
Dividends
It was assumed no dividend would be paid.
Option exercise price
The option exercise price determined was the share price at the date of the award for the US awards and the
price on the day before the date of the award for the non US awards, in accordance with the US ISO option rules.
Risk free rate
The risk free rate applied was based on the five year UK government bond yields at the time of the valuation.
Retention of employees
It is assumed 100% retention of employees.
Share-based payments
National Insurance on share-based payments
Total share-based payment charge
2018
£m
3.0
1.0
4.0
2017
£m
1.1
0.6
1.7
Blue Prism Group plc
Annual Report and Accounts 2018
72
Notes forming part of the financial statements continued
for the year ended 31 October 2018
18 Reserves
The following describes the nature and purpose of each reserve within equity:
Reserves
Description and purpose
Share premium
Amount subscribed for share capital in excess of nominal value.
Share based payment reserve
The share based payment reserve represents equity settled share based employee remuneration until
such share options are exercised.
Merger reserve
Amounts arising on share for share exchange.
Accumulated losses
All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
Foreign exchange reserve
Gains or losses arising in retranslation of the net assets of the overseas operations into sterling.
19 Leases
Operating leases – lessee
The Group maintains a number of short-leased properties.
The total future value of minimum lease payments is due as follows:
Not later than 1 year
Later than 1 year and not later than 5 years
20 Related party transactions
The key management compensation is disclosed in note 7.
2018
£'m
1.6
2.2
3.8
2017
£'m
0.3
–
0.3
Blue Prism Limited purchased £8,560 (FY2017: £7,712) of services from NCC Group, for whom Chris Batterham is a Non-Executive Director.
At the year end a balance of £nil was due to the entity.
21 Post balance sheet events
The Group is looking to place approximately £100m (before transaction fees) by way of a primary fundraising. The Directors anticipate that
approximately half of the proceeds of the Placing will be deployed in the current financial year to underwrite the Group’s global growth
activities and product development with the balance being used to further strengthen the Group’s balance sheet and provide Blue Prism
with the financial flexibility to address new opportunities as they emerge.
investing in marketing initiatives to communicate the Group’s value proposition clearly and effectively;
Specific areas of investment include:
• expanding the Group’s sales reach to address the global market opportunity;
•
• continuing to invest in product such as further improvements to the Six Intelligent Automation Skills it has previously defined as critical to a
truly intelligent workforce. The Group’s R&D team will be engaged in both continuous product innovation and long-term research initiatives;
investing in enhancements to the DX;
•
• continuing to develop the Group’s customer initiatives by scaling the Customer Success function; and
•
investing further in the Group’s people, processes and systems to support international growth.
The Directors expect that these investments will increase EBITDA loss ahead of the levels guided to in the last trading update (announced
on 27 November 2018) and should start generating incremental revenue during the financial year ending 31 October 2020.
22 Notes supporting statement of cash flows
Cash and cash equivalents for purposes of the statement of cash flows comprises:
Cash at bank available on demand
Short-term deposits
23 Controlling party
At the year end the Directors are of the opinion that there is no ultimate controlling party.
2018
£'m
6.5
44.0
50.5
2017
£'m
16.3
–
16.3
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
Company statement of financial position
as at 31 October 2018
Company number: 09759493
Non-current assets
Property, plant and equipment
Investment in subsidiary
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables falling due within one year
Total current liabilities
Net current assets
Net assets
Equity attributable to shareholders
Called up share capital
Share premium
Merger reserve
Share based payment reserve
Retained losses
Total equity
Note
5
6
7
73
Restated
2017
£’m
–
1.3
1.3
0.2
8.4
8.6
9.9
1.3
1.3
7.3
8.6
1.7
9.6
(1.4)
1.3
(2.6)
8.6
2018
£’m
–
4.1
4.1
10.2
36.2
46.4
50.5
1.0
1.0
45.4
49.5
1.7
50.2
(1.4)
4.3
(5.3)
49.5
The Parent Company reported a loss for the period of £2.7m (FY2017: £1.5m).
The financial statements of Blue Prism Group plc were approved and authorised for issue by the Board of Directors on 24 January 2019 and
were signed on its behalf by:
Ijoma Maluza
Director
The notes on pages 76 to 78 form part of these financial statements.
Blue Prism Group plc
Annual Report and Accounts 2018
74
Company statement of cash flows
for the period ended 31 October 2018
Cash flows from operating activities
Loss for the year
Adjustments for:
Depreciation
Finance income
Share-based payment expense
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchases of property, plant and equipment
Investment in subsidiaries
Interest received
Net cash flow from investing activities
Financing activities
Issue
Cost of issue
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 76 to 78 form part of these financial statements.
2018
£’m
(2.7)
–
–
0.2
(2.3)
(10.0)
(0.4)
(12.9)
–
(12.9)
–
–
–
–
41.9
(1.3)
40.6
27.7
8.5
36.2
Restated
2017
£’m
(1.5)
–
–
0.1
(1.6)
(0.2)
0.4
(1.2)
–
(1.2)
–
–
–
–
0.4
–
0.4
(0.8)
9.3
8.5
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
Company statement of changes in equity
for the year ended 31 October 2018
Equity as at 31 October 2016
Loss and total comprehensive income for the period to
31 October 2017
Exercise of Options – restated
Share based payment
Equity as at 31 October 2017 – restated
Loss and total comprehensive income for the period to
31 October 2018
Exercise of Options
Share based payment
Issue of shares
Cost of share issue
Equity as at 31 October 2018
Share
capital
£’m
1.7
–
–
–
1.7
–
–
–
–
–
1.7
Share
premium
£’m
Share based
payment
reserve
£’m
9.2
–
0.4
–
9.6
–
1.9
–
40.0
(1.3)
50.2
0.3
–
–
1.0
1.3
–
–
3.0
–
–
4.3
Merger
reserve
£’m
(1.4)
–
–
–
(1.4)
–
–
–
–
–
(1.4)
Accumulated
losses
£’m
(1.2)
(1.5)
–
0.1
(2.6)
(2.7)
–
–
–
–
(5.3)
The notes on pages 76 to 78 form part of these financial statements.
75
Total
£’m
8.6
(1.5)
0.4
1.1
8.6
(2.7)
1.9
3.0
40.0
(1.3)
49.5
Blue Prism Group plc
Annual Report and Accounts 2018
76
Notes to the Company financial statements
at 31 October 2018
1. Accounting policies
The Company has applied the Group accounting polices consistently during the period.
Basis of preparation
The financial statements are for the period ended 31 October 2018. 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 accounting policies set out in note 1 of the consolidated financial statements have been applied in the preparation of these
financial statements.
Investments
The initial investment arising on the share for share exchange at the IPO was recognised at £nil in accordance with IAS 27.13 as Blue
Prism Limited had net liabilities at the date of acquisition. Subsequent investments in subsidiary undertakings are stated at cost less any
adjustments for impairment.
Changes in accounting policies
New standards, interpretations and amendments not yet effective
IFRS 9 Financial Instruments, effective for periods commencing on or after 1 January 2018. The impact of this standard is not considered
material on these financial statements.
Changes to the accounting policy for national insurance on share based payments
The Company has amended its accounting policy for national insurance on share based payments following a Company review of the
policy with regards to all available guidance. Following the adoption of this updated policy the Company is now accruing for national
insurance as part of its share based payments charge in line with IFRS 2, in each accounting period. A prior year restatement has been
made following this change in accounting policy.
The impact of the change in accounting policy on the consolidated income statement for 2017 is:
Total previous loss before tax
Share-based payments charge
Total adjustment to loss before tax
The impact of the change in accounting policy on previously reported total equity may be summarised as follows:
Total equity as previously reported
Re-statement for change in accounting policy
Loss and total comprehensive income for the period
Total equity as restated
2017
£'m
(1.3)
(0.2)
(1.5)
2017
£'m
8.8
(0.2)
8.6
The impact of the change in accounting policy on the previously reported consolidated statement of financial position as at 31 October 2017
may be summarised as follows:
Trade and other payables
As previously
reported
£’m
Impact of
restatements
£’m
Restated
£’m
(1.2)
(0.3)
(1.5)
2. Loss for the year
As permitted by section 408 of the Companies Act 2006, the Parent Company has elected not to present its own profit and loss account
for the year.
The auditor’s remuneration for audit and other services is disclosed in note 6 to the consolidated financial statements.
3. Financial instruments – risk management
The use of financial instruments and capital is managed by the Board to reduce the financial risks being faced, which primarily relate to
credit and liquidity.
Credit risk
Financial instruments which potentially expose Blue Prism to credit risk consist primarily of cash equivalents. The maximum exposure to
credit risk is represented by the carrying amount of each financial asset. Cash equivalents are deposited only with independent major
financial institutions with minimum rating credit of “A".
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its
financial obligations, including balances due to wholly owned subsidiaries, as they fall due. The Group manages its cash requirements by
preparing and reviewing cash flows to ensure working capital requirements can be met as required.
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
Financial instruments by category
Financial assets
Cash and cash equivalents
Amounts owed from Group undertakings
Total financial assets
Financial liabilities
Trade and other payables
Amounts owed to Group undertakings
Total financial liabilities
77
2017
£’m
8.5
–
8.5
Restated
2017
£’m
0.6
0.9
1.5
2018
£’m
36.2
8.2
44.4
2018
£'m
1.0
–
1.0
Capital risk management
The Company manages its capital to ensure that it will be able to continue on a going concern basis while maximising its long-term return
to shareholders. The Company is not exposed to any externally imposed capital requirements and has no borrowings.
4. Employees
The average number of employees employed by the Company during the year was:
Directors and Company Secretary*
* This includes 3 Non-Executive Directors and the Chairman.
5. Investment in subsidiary
Cost brought forward
Share based payments during period for employees of subsidiaries
Cost carried forward at 31 October
Details of the Group’s subsidiaries at 31 October 2018 are included in note 12 of the consolidated financial statements.
6. Trade and other receivables
Amounts owed from Group undertakings
Other taxes and social security
Prepayments and other debtors
Amounts payable to Group undertakings are repayable on demand and unsecured.
7. Trade and other payables
Amounts owed to Group undertakings
Trade creditors and accruals
Other creditors, taxes and social security
Amounts payable to Group undertakings are repayable on demand and unsecured.
2018
Number
2017
Number
7
7
2018
£’m
1.3
2.8
4.1
2018
£’m
8.2
1.6
0.4
10.2
2018
£’m
–
–
1.0
1.0
7
7
2017
£’m
0.3
1.0
1.3
2017
£’m
–
0.2
–
0.2
Restated
2017
£’m
0.9
0.2
0.2
1.3
Blue Prism Group plc
Annual Report and Accounts 2018
78
Notes to the Company financial statements
at 31 October 2018
8. Related party transactions
Blue Prism Group plc has a related party relationship with its subsidiaries and with its Directors and members of key management.
There are no transactions with related parties who are not members of the Blue Prism Group. The remuneration paid to members of key
management is disclosed within note 7 of the consolidated financial statements and remuneration of individual Directors is disclosed
within the Directors’ Report.
The following balances are due from/(to) wholly owned subsidiaries at the period end:
Blue Prism Limited
Blue Prism Software Inc.
During the year, the Company had the following expenses recharged from/(to) wholly owned subsidiaries as follows:
Blue Prism Limited
Blue Prism Software Inc.
2018
£’m
8.0
0.2
8.2
2018
£’m
–
0.1
0.1
2017
£’m
(0.8)
(0.1)
(0.9)
2017
£’m
–
–
–
Blue Prism Group plc
Annual Report and Accounts 2018
Strategic report
Governance
Financial statements
79
Company information
Position
Chairman
CEO & Founder
CFO (appointed 25 January 2018)
Resigned 25 January 2018
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company number
09759493
Directors
Name
Jason Kingdon
Alastair Bathgate
Ijoma Maluza
Gary Johnson
Ken Lever
Chris Batterham
Charmaine Carmichael
Company Secretary
John Warrick
Registered office
2 Cinnamon Park
Crab Lane
Warrington
WA2 0XP
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Registrars
Link Market Services Ltd
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Financial PR
FTI Consulting LLP
200 Aldersgate
Aldersgate Street
London
EC1A 4HD
Nominated advisor and broker
Investec plc
2 Gresham Street
London
EC2V 7QP
Blue Prism Group plc
Annual Report and Accounts 2018
80
Notes
Blue Prism Group plc
Annual Report and Accounts 2018
B
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Blue Prism Group plc
2 Cinnamon Park
Crab Lane
Warrington
WA2 0XP
0870 879 3000
blueprism.com