Annual Report 2021 Osirium 2021REPORTS AND ACCOUNTS I am pleased to report on a year of significant growth in customers and market reach for the Group, underpinned by high customer retention and ongoing product innovation. This progress is the result of the hard work of everyone at Osirium, and I would like to thank the whole team for their efforts. David Guyatt Co-Founder & CEO Table of Contents osirium annual report 2021 strategic report Operational Highlights 6 strategic report Privileged Access Security 8 strategic report Chairman & Chief Executive’s Statement governance report Corporate Governance Report governance report Senior Management Team financials Independent Auditor’s Report to the Members of Osirium Technologies PLC financials Consolidated Statement of Changes in Equity other information Notice of Annual General Meeting 19 24 30 42 47 80 14 23 28 37 46 76 governance report Financial Review governance report How Osirium Manages Risk governance report Report of the Directors financials Consolidated Statement of Comprehensive Income financials Consolidated Statement of Cash Flows & Consolidated Reconciliation of Net Debt other information Company Information strategic report The Need for Privileged Security and IT Automation governance report Key Performance Indicators governance report Board of Directors financials Directors’ Responsibilities in Preparation of the Financial Statements financials Consolidated Statement of Financial Position financials Notes to the Financial Statements 10 22 26 36 43 50 3 osirium annual report 2021 About Osirium Technologies PLC Osirium Technologies plc (AIM: OSI) is a leading UK-based cybersecurity software vendor delivering Privileged Access Management (PAM), Privileged Endpoint Management (PEM) and Osirium Automation solutions that are uniquely simple to deploy and maintain. With privileged credentials involved in over 80% of security breaches, customers rely on Osirium PAM’s innovative technology to secure their critical infrastructure by controlling 3rd party access, protecting against insider threats, and demonstrating rigorous compliance. Osirium Automation delivers time and cost savings by automating complex, multi-system processes securely, allowing them to be delegated to Help Desk engineers or end-users and to free up specialist IT resources. The Osirium PEM solution balances security and productivity by removing risky local administrator rights from users, while at the same time allowing escalated privileges for specific applications. Founded in 2008 and with its headquarters in Reading, UK, the Group was admitted to trading on AIM in April 2016. For further information please visit www.osirium.com. Strategic Report 4 5 strategic report Operational Highlights TOTAL BOOKING 2021: £1,600,000 (2020: £1,570,000) TOTAL REVENUE 2021: £1,470,000 (2020: £1,430,000) DEFERRED REVENUE 2021: £1,640,000 (2020: £1,500,000) OPERATING LOSS 2021: £3,230,000 (2020: £2,870,000) CASH BALANCES AND DEBTORS 2021: £714,000 (2020: £1,588,000) Financial Highlights • • • • • Total bookings in line with previous year at £1.60 million (2020: £1.57 million) Total recognised revenue of £1.47 million (2020: £1.43 million) Deferred revenue up by 9.3% to £1.64 million (2020 £1.50 million) Operating loss of £3.23 million (2020: £2.87 million) Cash balances and debtors at 31 December 2021 of £0.71 million (31 December 2020: £2.30 million), and cash and debtors at 31 March 2022 of £1.04 million Operational Highlights • Customer base more than doubled despite COVID impact, driven by targeting of key sectors and expansion of the Group’s channel partner network • • Significant number of customer wins with NHS trusts in line with increased funding for privileged access solutions in this sector Presents exciting opportunity for up-selling and cross-selling through the Group’s land-and-expand strategy • • • • Customer renewal rate remains strong at 95% for 2021 Success of cross-selling strategy with increase in licenses for Group’s PPA and PEM add-on products sold to existing customers Overseas expansion continues to accelerate, with first wins in Africa, Asia-Pacific and in new European territories Continued innovation in the Group’s product suite to ensure Osirium’s offering remains as simple and compelling as possible Post-period and Outlook Return to bookings momentum in Q1 2022 as customer purchasing patterns normalise post-pandemic, with five new deals signed in 2022 of a greater value than any deal in 2021 Maintained strong customer acquisition into 2022 • Continued strong prospects across the healthcare, higher education, and commercial sectors Successful £1.0m fundraise in February 2022 to support the Group’s growth strategy across sales and marketing, investments, and its channel partner network Growing demand for the Group’s additional PPA and PEM products as standalone products as well as add-ons, representing an exciting opportunity for further customer acquisition Market demand remains strong as customers renew focus on investments in IT projects • • • • • 6 strategic report £3,230,000 £2,870,000 £1,570,000 £1,600,000 £1,500,000 £1,640,000 £1,430,000 £1,450,000 Total Revenue 2020 £1.43 million Total Revenue 2021 £1.47 million Total Bookings 2020 £1.57 million Total Bookings 2021 £1.60 million Deferred Revenue 2020 £1.50 million Operating Loss 2020 £2.87 million Deferred Revenue 2021 £1.64 million Operating Loss 2021 £3.23 million ↑ ↑ ↑ ↑ £0.04 million Increase £0.03 million Increase £0.14 million Increase £0.36 million Increase 7 strategic report strategic report Privileged Access Security We make it easy for organisations to protect their most valuable IT systems and automate IT operations. Osirium and What We Do: Protecting IT Systems How Osirium Protects IT Systems Every IT system – ERP, CRM, e-commerce, HR, Finance, network devices, cloud services … the list is endless – depend on management Osirium Privileged Access Security provides multi-tiered defence against ransomware and malware attacks. or administrator accounts. Indeed, all cybersecurity tools, which play a critical role in protecting IT systems, also have these administrator accounts. Administrator accounts have access to the most valuable data. They also have the power to change system configuration, so these credentials are the “golden ticket” attackers desire. Osirium Privileged Access Security reduces the risk of attacks entering the business, protects shared IT systems, and prevents privileged access abuse. A Typical Attack Journey Attacks enter through email attachments, infected software install, hijacked web link, … Infected documents or applications get shared on file stores, cloud storage etc. Osirium PPA Automate the admin’s work to prevent unnecessary risk Osirium PAM “Virtual air gap” separation of people from admin credentials Osirium PEM Prevent s/w install & configuration changes All the time, credentials and data are being exfiltrated out of the business. Administrators get infected and valuable access and power is granted to the attacker. Critical infrastructure such as domain controllers, hypervisors, and backups are attacked to maximise damage. Privileged Access Management (PAM) PAM defends backend systems while The best protection against attacks or protects the shared services, systems, Privileged Endpoint Management (PEM) accidental misuse of privileged access and devices at the heart of every IT protects the entry point for most attacks: is to automate the work done while using organisation. At its core, PAM separates user workstations. PEM lets IT remove privileged access. Privileged Process users from the valuable administrator risky local admin accounts without Automation (PPA) is a flexible, lightweight usernames and passwords on those affecting how the users do their work. automation framework that is built with the systems. It can monitor and record admin When malware can’t be installed, it can’t starting point of secure connections to IT sessions making it ideal for controlling go on to infect corporate systems. systems. Users can only perform the tasks access by suppliers and remote workers. they should, and policies are always enforced, and end-to-end audit trails are maintained. 8 9 strategic report Privileged Access Security Automate IT Operations Osirium Innovation Most IT operations need expert administrators to do the work. It’s no surprise, as mistakes can be risky and expensive. But those David Guyatt and Kev Pearce founded Osirium in 2008. Both had experts are over-worked and want to focus on strategic projects rather than frequent updates like resetting a user’s password or outstanding track records in creating and growing successful granting access to a printer. cybersecurity software businesses and had recognised the opportunity within the privileged access space In the IT Automation Survey (independent research commissioned by Osirium), although most IT leaders (92%) said they delegate some of this work to IT Help Desks, less than half (43%) delegate most of the work. The most cited reasons for not delegating more were security Following two years of product development, the business risk (51%) and compliance risk (45%). Lack of knowledge in the Help Desk team and not trusting others to do the work also hold back secured its first customer in 2010. Further investment followed as delegating more of these management tasks. the Business built-out the product and acquired more customers All the signs point to the need for more automation in IT. Secure IT automation with PPA addresses all the concerns of security, Growth accelerated in 2016 following Osirium’s listing on AIM (the compliance, and trust. How Osirium Automates IT Process PPA can be used directly or integrated with customer service desk tools or corporate intranet PPA has a flexible plug-in architecture with pre-built playbooks and plug-ins in the PPA Resource Hub Approval Credential Vault Vaults and more... API Plugins Existing Systems UK’s secondary stock market), which provided increased capital for product development and market development The business has continued to expand and today employs 48 staff, with an experienced management team and a growing international customer base and partner network. 2020 First customer in South-East Asia 2019 Osirium Automation (PPA) Betarelease to first customer 2020 Osirium PEM Beta release to first customer 2019 PAM available on AWS 2019 50 Osirium customers 2017 Gartner ‘Cool vendor’ award for Privileged Task Management 2019 First customer in North America strategic report 2021 Version 8.0 released 2021 Osirium PPA launched 2021 90+ Osirium customers 2020 21 new NHS customers added in Q1 2021 Osirium PEM launched Automation is used by Admins, Help Desk and End-Users Schedule Playbooks Audit Trail and more... 2018 First customer in the Middle East 2016 AIM listing Osirium PPA is a lightweight, flexible, and secure automation platform ideally suited for IT operations as it’s quick to deploy and fast to build new automation scripts, unlike robotic process automation (RPA). A rich library of pre-built system connectors and playbooks means that organisations can automate day-to-day management tasks from day one. Three free licenses for PPA are bundled with Osirium PAM to encourage PAM users to extend their security and accelerate IT operations. 10 11 strategic report strategic report The Need for Privileged Security and IT Automation 74% Of organisations say data breaches are the result of giving too much privilege to third parties (1) $5.40 BILLION Estimated PAM market value by 2025 (2) 49% Of security leaders say their top priority is improving the protection of confidential and sensitive data (4) $3.86 MILLION The average cost of a data breach (3) 70% Of large commercial organizations have dozens of hyperautomation initiatives underway (5) >50% Of G2000 will have a dedicated automation group by 2025, up from < 10% in 2020 (6) 69% Of organisations say they don’t invest sufficiently to protect against ransomware (7) 53% Of audits aren’t completed on time (8) 105% Increase in ransomware volume 2021, 3x volume seen in 2019 (9) PAM market size 2020 $2.2 BILLION 20% CAGR $5.4 BILLION PAM market size 2025 (10) Digital Process Automation Market 2020 $7.8 BILLION 13% CAGR $16.1 BILLION Digital Process Automation Market in 2026 (11) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Ponemon/Securelink, A crisis in third-party remote access, 2021 Kuppingercole trends in Privileged Access Management for the digital Enterprise, 2020 Ponemon, cost of data breaches report, 2020 IGD Security Priorities 2020 report Gartner, Top 10 Strategic Technology Trends 2021 How to Start Executing a successful automation strategy, Gartner April 2020 Osirium Ransomware Index, September 2021 Osirium IT Automation Survey, Feb 2022 SonicWall Cyber Threat Report, Feb 2022 Source: KuppingerCole: Understanding the PAM market October 2021 Mordor Intelligence, Digital Process Automation market size – growth trends, COVID19 Impact and forecasts (2021-2026) 12 13 strategic report Chairman & Chief Executive’s Statement e e L n o m S i n e m r i a h C O E C & r e d n u o F - o C t t a y u G d i v a D strategic report The Group is pleased to report continued momentum in customer As reported at the 2020 final results, digital marketing has acquisition into the new financial year, while expanding its emerged in recent years as a pivotal element of the Group’s services to existing customers. Q1 2022 was a record first quarter strategy, enabling it to market the Group and develop new for bookings as the Group has maintained its focus on landing business. It is expected that the number of in-person events and projects with NHS customers, while expanding its reach in the trade shows will continue to normalise in 2022, and the increased higher education sector and commercial markets. digital marketing activity will continue in parallel to continue to drive up the volume and quality of new customer leads. Results Market The Group’s total bookings for the period was £1.60 million, in line with the previous year (2020: £1.57 million). Recognised revenue was Giving customers confidence in their IT also in line with 2020 at £1.47 million (2020: £1.43 million). Deferred revenue as at 31 December 2021 was £1.64 million. Debtors and cash The market for Privileged Security has continued grow, in line balances as at 31 December 2021 was £0.70 million. The Group’s with the increasing awareness of these services globally. North loss before tax for the period was £3.43 million (2020: £3.10 million). America often represents the first stage of adoption for many In line with its focus on product innovation, the Group continues to is more broadly deployed across smaller and medium-sized invest in R&D for direct staff and contractor costs, spending £1.85m companies, and the take-up of this technology flowing through (2020: £1.81m) on direct staff and contractor costs for research to Europe and other geographies. Privileged Security has now cybersecurity and IT products, with demand growing as a product Overview upselling and cross-selling. The Group has proven successful in and development, of which all was capitalised in both periods. This become a highly sought-after product in North America, with providing additional services to existing customers in 2021. In expenditure covers the development of Osirium’s new and enhanced a PAM solution often seen as a requirement for cybersecurity Osirium further established itself as leading mid-market provider addition to the continued momentum in our Privileged Access software offerings. Investment into the Group’s new product insurance on the continent. Osirium is increasingly seeing this of Privileged Access Security in 2021, expanding market reach Management (PAM) solution, our add-on products Privileged development continues, along with the modification and improvement need for Privileged Security in line with this direction of travel of and building on our technology capabilities. Against a market Process Automation (PPA) and Privileged Endpoint Management of the current product base in line with technological advances, technology, and management remain confident in the continued backdrop of prolonged uncertainty as a result of the ongoing (PEM) solutions are also gaining traction. customer needs and the market requirements of the consistently adoption across Europe, Asia and Africa. effects of the pandemic, the Osirium team worked tirelessly to evolving cybersecurity market. support customers with mission-critical technology and best- We have seen an increase in paying customers for our PPA product in-class customer service, which is reflected in the Group’s during 2021, with new customers buying as part of an initial consistently high customer retention rates. combined PAM and PPA purchase, as well as customers buying PPA solely as a stand-alone product. We expect to see a strong pipeline Business Model Ransomware continues to be the predominant threat for IT departments. The Ransomware Index 2021 (independent research commissioned by Osirium) shows that nearly 80% of businesses in the UK have been the victim of an attack, yet only 31% say Significant progress was achieved against the Group’s land-and-expand strategy, with the Group more than doubling its customer base in the year to over 100 customers with multiple opportunities ahead for this solution, alongside the Osirium’s revenue model is built around its software they invest sufficiently to protect against such attacks. The emergence of PEM, as the next product to complete the Group’s subscriptions, with its licensing models adapted to best suit Index also highlighted that while 98% say backups are critical to solution. Additionally, where these products are not cross sold, they regional and customer needs. The Group’s PAM product is recovery after an attack, only 11% use PAM to protect backup function as an important tool for gaining an initial touchpoint with charged per device being protected, whereas the PPA product is systems even though the National Cybersecurity Centre have our customers with a view to expanding to other services. charged per user and number of transaction when integrated with highlighted the critical need for that extra security. This research a customers’ infrastructure, and our PEM product charged is per demonstrates not only the relevance of Osirium’s solution, but the Our domestic and international partnerships have continued to protected endpoint. Osirium’s service revenue comes both from potential market opportunity ahead. Significant progress was achieved against the Group’s land-and- strengthen, and we saw real traction in sales overseas, including first new customers setting out on their initial Osirium deployments expand strategy, with the Group more than doubling its customer sales in new regions such as South Africa and Asia-Pacific, as well as and existing customers growing and expanding their use of COVID has undoubtedly accelerated the awareness of Privileged base in the year to over 100 customers, reflecting the growing within new countries in Europe such as Ireland, Poland, and Hungary. Osirium's software solutions. From the end of 2021 and into 2022, Security as an essential cybersecurity product in line with more awareness and demand for Privileged Security in line with the the Group has seen increasing automation add-on sales to its staff working remotely. Market indications are that, although market maturation. We achieved this through the expansion of We have continued to invest in our staff and product suite, focusing PAM customers, and we expect that progress to be seen with its many will return to offices in 2022, hybrid or fully remote working key sectors alongside a widening of the customer base through on enhancements across our PAM, PPA and PEM solutions. The PEM product as well. the Group’s partner network. Healthcare proved to be a substantial Group’s technology suite continues to be a key differentiator in is a permanent change for most organisations. Throughout the year, many customers sought our services as part of a wider market for the Group during the period, with a number of contracts the market, characterised by its robust functionality yet ease of Throughout 2021, innovative sales packages of software configuration on how to operate their IT systems with home signed with NHS trusts. The Group continues to focus on this area implementation. Customers are looking for quick improvements subscriptions, production support and implementation services working long-term. alongside other UK public sector areas such as the education in security posture and minimal effort in deployment and on-going in the Group’s PAM and PPA solutions were developed to target sector which present an equally exciting opportunity for growth. management; both areas where the Group’s customers have shown specific opportunities. This approach was devised initially for Whilst growth of the customer base was coupled with lower initial subsequently targeting other markets such as education. These contract values, a result of a slowdown in customer decision Looking beyond PAM, our automation technology helps customers packages make it easy for new customers to acquire Osirium making in an uncertain economic environment, these new to simplify their processes, empower their teams and protect their PAM or PPA for a small team and establish a base for future add- customers pave the way for further expansion long-term through businesses further reducing cost and effort. on sales supporting the Group’s “land and expand” strategy. success as demonstrated in our published case studies. the opportunities in healthcare with NHS trusts early in 2021 and 14 15 strategic report Chairman & Chief Executive’s Statement Growth Strategy There were four major software releases for this solution during the year, with a particular emphasis around the ease of The Group’s growth strategy is centred around three core areas: provisioning new users into the PEM system. innovation, customer focus and market expansion. Commitment to innovation – unlocking incremental value creation Customer focus – providing foundations for land-and-expand opportunity A core tenet of Osirium’s strategy is to ensure excellent levels The Group continues to make investments into its product suite of customer support in tandem with the ease of implementation as part of its strategy, ensuring its offering remains a cutting- of its platform. During the year, the Group achieved a 95.4% edge option for organisations looking to address their Privileged customer renewal rate. Access Security needs. strategic report Innovation in Privileged Access Management, the Group’s primary This forum provides important feedback into the company for future Right: Africa Reseller Recruitment Webinar The Osirium Customer Network continued to meet during 2021. Left: Partner Marketing Activity - Joint Webinar with PwC product, has continued during the year. Improvements made to development but also helps customers ensure they are making this service include the introduction of SAML Single Sign On (SSO) the most of their investment. Topics include using the automation capability, which allows us to integrate our solutions with identity support packaged with PAM (as described earlier) which in turn providers – making PAM easier to adopt by our customers that encourages the need for further automation licenses later. The higher education sector is also emerging as an important The Group’s network produced a number of sales in new regions already have SSO infrastructure. Building on the new browser-based area of expansion for the Group, as there have been a series of throughout the year, including in Europe with the Netherlands, client in PAM, a desktop version was introduced for those users that Another core focus is on increasing our customer communications high-profile breaches and education institutions are typically Poland, Hungary and Ireland, Singapore, and in South Africa prefer a local client and more flexibility. Based on extensive user and support to existing customers to support our consistently high highly complex and fluid organisations. The Group signed a with our first sale to one of the leading mobile networks on the experience research, further enhancements we have made to the renewal levels. We remain committed to ensuring customers are number of new customers in this sector during the year and has African continent. This area is underserved by larger providers of client have focused on improving admin productivity. getting the most out of their investment and we are enhancing this added further customers post-period. The Group sees a strong Privileged Security, and the Group intends to fully capitalise on the activity in 2022 with dedicated customer success resources. pipeline of opportunity in this sector and has developed a tailored greenfield opportunity in this region and beyond. As PAM is a critical security service – the gateway through which all admin access to devices should be routed – the availability of PAM is key. With PAM v7.0, we have introduced server clustering that does not depend on expensive external database licensing or Market expansion – opening new opportunities for growth through direct and partner channels product package to target further customers in this sector. Alongside expansion in the public sector, the Group continues to experience good traction in the commercial sector. During the People complex network configuration. In 2021, we took this further by introducing third-party database replication to enhance resilience Direct and simplify product upgrades. While clustering support is built-in, year, the Group signed a number of key deals, including a London- 2021 was another challenging year for many, with the first half of based law firm, a financial services firm and the cross-sell of our the year characterised by lockdown and restrictions across the UK PPA solution to a major UK communications provider, an existing and abroad. We would like to wholeheartedly thank all our staff in some territories we introduced add-on pricing to recognise Osirium has established itself as an agile player across mid-tier PAM customer. its value and that smaller organisations do not need the extra and upper mid-tier organisations and is recognised for its swift management required. This change is being rolled out to all and straightforward installation process, enabling customers territories in 2022 as another route for add-on sales. to quickly protect their Privileged Security without unnecessary Partner and Reseller Network Expansion for their support during this challenging period, whose resilient performance has seen us double our customer base whilst providing excellent services to our existing base. An additional core focus during the period has been across the public and private sectors, but during the year further The Group’s partner and reseller network is comprised of software firms from wage inflation and staff churn, we are pleased to improvements to PPA, the Group’s platform for automating identified a number of key underserviced areas ripe for expansion. distributors and resellers based across five continents. This report we saw limited staff changeover during the period, having essential IT processes. The Group introduced authentication tools network has emerged as a pivotal tool for customer acquisition retained the core of our teams across both our technology and such as Kerberos authentication with Windows devices, increased One significant area of growth during the period was healthcare, in recent years and continuing to grow this partner and reseller commercial departments. This is a further credit to the loyalty and management integration, future task scheduling capability and a in which the Group achieved a substantial number of bookings network is a primary objective for Osirium. dedication of our staff. hassle. The Group remains sector-agnostic, serving organisations While Osirium is not immune to the wider pressures on technology simplified process for on-boarding users. Investments were also following on from an NHS Digital initiative at the end of 2020, which made into the Group’s software development kit (SDK), ensuring provided funding to NHS trusts for privileged access solutions The Group achieved substantial progress growing and deepening a simple and secure interface for users to perform complex, to address the mounting challenge from ransomware targeting this network in 2021, including the displacement of the Group’s operations on multiple third-party systems. backup systems. The Group has responded proactively to this NHS competitors in some instances. New partnerships secured during customer opportunity, signing a significant number of NHS trusts the period include software distribution firm, Prianto, which has a Investments into PEM, our solution for Privileged Endpoint in 2021 alone and aided by its bespoke product package for this large network of mid-market customers in Europe as well as in the Management which allows customers to increase productivity sector. Healthcare remains a significant opportunity for the Group in USA, representing an exciting opportunity for further expansion in while simultaneously increasing security, have also continued. 2022, with eight new NHS trusts signed in the year so far. North America. 16 17 strategic report Chairman & Chief Executive’s Statement Financial Review strategic report Current Trading and Outlook Overview Taxation Entering the new financial year, the Group achieved a record first quarter for bookings in Q1 2022, with five of the new deals signed The Group has materially grown its customer base, revenue, and The Group has benefited from the tax relief given on development during this period each of a greater value than any customer order signed in 2021. As previously reported, the Group believes this bookings during the period, demonstrating greater customer expenditure, resulting in a research and development tax credit reflects a wider return to pre-pandemic average contract values. The Board expects to see these larger average contract values continue engagement and investment. Bookings represent a key financial of £594,562 being claimed in respect of the year to 31 December as the Group pursues further new business, providing a growing and valuable base from which to pursue its land-and-expand strategy. measure for the Group and demonstrate the Company's progress 2021, compared with £591,436 for the previous year to 31 Osirium’s customer acquisition continues to be strong, with 20 new customer contracts closed in the year as at 31 March 2022. The December 2021, represented by total invoiced sales for annual made in the Group’s innovative cybersecurity product and its pipeline for continued customer wins remains healthy and, while maintaining a broad, sector-agnostic approach, Osirium continues its subscriptions, were £1.60 million, an increase from £1.57 million pioneering qualities that is expected to continue going forwards. in the period under review. Bookings for the 12 months ended 31 December 2020. The relief illustrates the consistent investment focus on landing projects with NHS customers, while expanding its reach in the higher education sector and commercial markets. Osirium is also seeing an increasing demand for its additional services, PPA and PEM, with some customers now seeking out these services as standalone products rather than as add- ons, representing an exciting opportunity for further customer acquisition and another touchpoint for cross-selling and up- selling our services. Post-period end, the Group signed its first contract in which the PPA order was significantly larger than the PAM component, demonstrating the Group’s growing capabilities around the provision of a complete toolkit of privileged protection solutions. Customer renewals also represent a significant opportunity for Osirium as part of its land and expand strategy, and the Group’s value under contract provides good visibility into the new financial year, combined with a strengthened balance sheet as a result of the £1.0 million fundraise in February 2022. The Board would like to thank its shareholders for their continued support. Above: Fast Protect Offer over the previous year. The headline bookings total reflected an increase of over 50% in total customer numbers to 105. The Group’s revenue recognition policy recognises revenue in Loss per Share equal annual instalments over the course of multi-year contracts. Loss per share for the year on both a basic and fully diluted basis was Revenue for the year was £1.47 million, an increase from 1.43 11p. In the prior year, the basic and diluted loss per share was 13p. million) over the previous year. Loss after tax for the group was £2.83m, increased from the loss of £2.50 million for the year to 31 December 2020. The losses Results and Dividend of the Group have increased slightly following the company The Directors are unable to recommend the payment of a final emerging from the COVID-19 pandemic and expenditure levels dividend (2020: £nil). returning to a more normal level. That spending reflects the significant investment in increasing headcount and activity levels in the business's sales, pre-sales, marketing and engineering departments, building momentum during 2021, ready for 2022. Revenue Analysis Research and Development & Capital Expenditure The group spent £1.85million (2020: £1.81 million) on direct staff and contractor costs for research and development, all of which was capitalised in both periods. This expenditure pertains Below: Ransomware Index Coverage Revenue for the 12 months ended 31 December 2021 was £1.47m to developing the Group’s new and enhanced software offerings. Looking ahead, the market for Privileged Security remains as promising as ever. With the growing prominence of the Group’s complementary product proposition, coupled with increasing momentum across bookings values and pipeline, and supported by a high base of customer renewals, the Board looks ahead to the rest of 2022 and beyond with increasing confidence. As announced at the time of the fundraise in February, the Board continues to assess the Group’s go-to-market strategies in order to deliver long term shareholder value. In order to achieve this, the Board considers that the Company will be required to raise additional capital during the second half of 2022. Simone Lee, Chairman David Guyatt, CEO 10 May 2022 (2020: £1.43m). The Group’s total customer count increased The Group continues to invest in new product development and by 55 for the year ended 31 December 2021, up by over 50% the continual modification and improvement of its current product compared to 2020. This customer growth reflects the growing base to meet technological advances, customer requirements, sales momentum experienced by the business as the Group and ever-expanding new market requirements of the rapidly broadens its customer base. The demand for our PAM, PPA and evolving cybersecurity market. PEM solutions continues to increase. The Company’s deferred revenues as at 31 December 2021 were £1.6 million, compared with deferred revenues at the end Future Developments of December 2020 of £1.50 million, helping provide a degree of The Group has undertaken a strategy to extend its activities visibility and certainty over our future revenue streams. to provide a full range of Privileged Access Security solutions. Alongside accelerating the expansion into new geographies and industry sectors, the Group will continue to invest in developing innovative and differentiated solutions for its growing customer base. 18 19 strategic report Going Concern Cash Flow As part of their going concern review, the Directors have followed The Group’s cash balances at 31 December were £0.38 million the guidelines published by the Financial Reporting Council (2020: £1.48 million). entitled “Guidance on the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity Risks (2016)”. The Directors The Group’s cash reserves have since been boosted by the fund have prepared detailed financial forecasts and cash flows raise post year end that raised £1.00 million gross cash (before looking beyond 12 months from the date of this Annual Report. In expenses, fees and commissions) in February and March 2022. developing these forecasts, the Directors have made assumptions based on their view of the current and future economic conditions Cash used in operations for the period was £1.10 million that will prevail over the forecast period. (2020: £0.41 million). The Group incurred a loss of £2.83 million in the year ended 31 December 2021 and had net current liabilities of £0.71 million at Rupert Hutton, CFO that date. The Group’s cash and cash equivalents decreased by 10 May 2022 £1.1 million in the same period. Cash and cash equivalents at 31 December 2021 were £0.38 million. Subsequent to the balance sheet date, the Group raised £1.00 million via a share placing and subscription. In its assessment, the Board has included consideration of the potential ongoing impact of COVID-19 and factored this into the financial assessment of the Group. Trading conditions started to normalise in the latter part of the year ended 31 December 2021. This level of enhanced bookings has carried through to the start of the new financial year, with a strong start to the year and a record Q1 recorded. This early trading momentum increased the number of customers further, and a strong pipeline of new business supports the Board’s business forecasts and underlines their confidence in the Group’s ongoing momentum. As noted above, the Board considers that the Company will be required to raise additional capital during the second half of 2022 in order to deliver on its growth expectations. Coupled with the above projections, the Directors are confident that Osirium has sufficient working capital to honour all of its obligations to creditors as and when they fall due. The Directors consider it appropriate to continue to adopt the going concern basis in preparing the Financial Statements. Accordingly, the financial statements do not include any adjustments required if the going concern basis of preparation was deemed inappropriate. However, if the Group is unable to deliver the anticipated order book and revenue growth, and raise additional capital during the going concern period, it would give rise to a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. This additional funding is not guaranteed, however to date the Group has been successful in securing funding when required. Corporate Governance Report 20 21 governance report governance report Key Performance Indicators Corporate Governance Report Financial KPIs The company has adopted the 2018 Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) in line with the London Stock Exchange’s changes to the AIM Rules requiring all AIM quoted companies to adopt and comply with a recognised corporate The Group’s progress against its strategic objectives is monitored by the Board of Directors by reference to KPIs. Progress made is a governance code and detail how it complies with that code, and where it departs from its chosen corporate governance code an reflection of the performance of the business since publicly listing and the Group’s achievement against its strategic plans. The Group explanation of the reasons for doing so. The underlying principle of the QCA Code is that “the purpose of good corporate governance is to considers major KPIs to be bookings, revenue, loss before tax, channel partners, new customers and sectors, customer renewals, and ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer software evaluations. term”. The Board believes this continues to be the most appropriate governance framework for the business. The Board is committed to the ongoing development of our governance reporting to support the ongoing growth of the business. For further details see the Osirium • Bookings: are monitored on a monthly basis and reported in detail at board meetings. Bookings have increased by 2% to £1.60 Corporate Governance statement at: https://osirium.com/investors/corporate-governance. million (not audited) for the year to 31 December 2021 from £1.57 million for the year ended 31 December 2020, a KPI that masks the fact that customer accounts more than doubled to 105 with 55 new customers accounts added during 2021, despite a COVID affected year the business enjoyed a record Q1 and Q4 Board Structure and Committees be chaired by the Chairman of the company. The Directors have considered the membership of the Audit Committee carefully and • Revenue: As a result of the increase in customer numbers, the revenue KPI is performing well, with total revenue up 3% to £1.47 The Board is responsible to shareholders for the proper have concluded that, given the current composition of the Board, million (2020: £1.43 million). management of the company. The Board comprises five (5) Simon is the most appropriate choice to be its Chairman. The directors, two of whom are Executive Directors and three of Board regularly reviews the effectiveness of the Audit Committee. • Operating Loss: the board are pleased with the small increase in operating loss of £3.23 million (2020: £2.87 million), in line with whom are Non-Executive Directors, reflecting a blend of different Once any further appointments have been made to the Board, the management expectations, caused by a combination of increasing revenues and tight cost control during the COVID-19 pandemic. experience and backgrounds. The Board considers Simon Lee, Audit Committee will be reviewed to bring its composition into line Non-financial KPIs include: Steve Purdham and Simon Hember to be independent Non- with corporate governance best practice guidance. Executive Directors under the criteria identified in the QCA Code. The Board meets regularly and is responsible for strategy, Remuneration Committee • Channel partners: the Group has added many additional reseller partners globally, with a focus on Europe and MEA to meet our performance, approval of any major capital expenditure and the plan and have also been establishing agreements with both resellers and distributors, who we see as key to opening up new framework of internal controls. To enable the Board to discharge The Remuneration Committee has responsibility for reviewing and • • revenue streams. New customers and sectors wins: its duties, all Directors receive appropriate and timely information. determining, within agreed terms of reference, the Group’s policy on the Briefing papers are distributed to all Directors in advance of Board remuneration of Senior Executives, Directors and other key employees meetings. The Board has established Audit and Remuneration and specific remuneration packages for Executive Directors, including • New customers and sectors wins: we were pleased to add customers in 2021 in new sectors such as Ambulance Services and Committees with formally delegated duties and responsibilities pension rights and compensation payments. It is also responsible for Private Sector Health Care as well as customers in existing strong sectors. We expect this growth to continue as PAM becomes and written terms of reference. Each of these Committees meets making recommendations for grants of options under the New Share mainstream and we can independently upsell our PPA and PEM solutions as the first Osirium product into new customer accounts. regularly and at least twice a year. From time to time, separate Option Scheme. It has met not less than twice a year. The remuneration committees may be set up by the Board to consider specific of Non-Executive Directors is a matter for the Board, and no Director • Customer retention: 95% of customers were retained in the year, which compares favourably with our SaaS peers highlighting the issues when the need arises. Further details on the Audit and may be involved in any discussions as to their own remuneration. The ‘mission-critical’ nature of our solution and customer satisfaction. Remuneration Committees are set out below. Remuneration Committee comprises Steve Purdham, Simon Lee and Simon Hember and chaired by Steve Purdham. • Software Evaluations: growing company reputation in the PAM marketplace means that customers are increasingly willing to purchase Osirium solutions without requiring a Proof of Concept (POC), however this remains a significant part of the sales process for some customers that we are happy to provide. Audit Committee Determination of Directors’ and Senior Management’s Salaries The Group also measures and monitors brand recognition and momentum increases in the Osirium name as we continue to build a The duties of the Audit Committee are to consider the global brand. Brand recognition includes monitoring Osirium’s Search Engine Optimisation Position and quarterly growth in qualified appointment, re-appointment and terms of engagement of, and The Remuneration Committee believes that the interests of sales leads with a quantified ‘call to action’. keep under review the relationship with, the Group’s auditors, to the executive directors, other Group Company directors, senior review the integrity of the Group’s financial statements, to keep management and staff and those of the shareholders and other under review the consistency of the Group’s accounting policies stakeholders are best aligned by a remuneration policy that provides and to review the effectiveness and adequacy of the Group’s a base salary together with awards under the Group’s Share Option internal financial controls. In addition, it has received and reviewed Scheme and/or the award of bonuses paid for through the issue such reports as it from time to time requests from the Group’s of shares. The Remuneration Committee reviews and annually management and auditors. The Audit Committee has met at least determines directors’ and senior management’s salaries concerning twice a year and has unrestricted access to the Group’s auditors. the tasks and responsibilities involved and the level of comparable The Audit Committee comprises Steve Purdham, Simon Lee and salaries in the marketplace. In particular, the Committee seeks to Simon Hember and has been chaired by Simon Lee. The Directors ensure that salaries are competitive. In its final determination of acknowledge that relevant corporate governance guidelines, salaries, the Committee’s conclusions are set within what including the QCA Code, state that the Audit Committee should not is affordable. 22 23 governance report How Osirium Manages Risk governance report Principal Risks and Uncertainties Commercial Relationships The Group’s success depends on its ability to maintain This nevertheless means that the Group’s continuing right to use relationships, renew contracts with existing customers, and such Software is dependent on the relevant licensors continuing The Board of Directors, who are responsible for the Group’s risk The Osirium software products are developed and released attract and be awarded contracts with new customers. A to licence Software to the Group. Again, as is usual, such management and control system, have established a process for using open source. To mitigate against this risk, all elements and substantial portion of the Group’s future revenues will be directly agreements may be terminated by the licensors due to a breach identifying and providing oversight to manage principal risks and components used within the software are kept under constant review. or indirectly derived from existing contractual relationships as of their terms by the Group. uncertainties that could have a material impact on the Group’s The Group continues to expand the various sales channels and well as new contracts driven at least in part by the Group’s ability performance. Apart from the normal commercial and economic reseller network, so the Group is not dependent on any one partner. to penetrate new partners, verticals and territories. The loss of Any failure by the Group to comply with the terms of the risks facing any UK based business looking to not only become the dominant company in its home market but also expand into overseas territories, the major risks to the Group are the: Personnel/Key Executives key contracts and/or an inability to successfully penetrate new licences granted could, therefore, result in such licences being verticals or deploy its skill sets into new territories could have a terminated and the Group no longer being entitled to continue significant impact on the future performance of the Group. to use the Software in question. Also, use outside of the terms • Coronavirus remains a commercial risk continuing to affect The Group’s future performance is substantially dependent on its the UK and World economies and business, as does the continued services and performance of its Directors and senior Reputation of any relevant licence could expose the Group to legal action for infringement of the rights of the licensor(s). Further, and in any event, the Group may not have adequate measures in place remaining unknown effects of Brexit and the continuing war management and its ability to attract and retain suitably skilled The Group’s reputation, regarding the service it delivers, how it to ensure that its use of third party software complies with all in Ukraine that are all still to be fully understood. and experienced personnel. Although certain key executives and conducts its business, and the financial results it achieves, are terms under which such software has been licensed to the Group. • • • Loss of a major client and supporter personnel have joined Osirium since flotation, there can be no central to the Group’s future success. Operations The Group’s facilities could be disrupted by events Loss of a relationship with a major supplier and assurance that the Group will retain their services. The loss of beyond its control, such as fire, pandemics and other issues. Development of new technologies that may adversely impact any key executives or personnel may have a material adverse We run regular security tests on our infrastructure, including The Group undertake nightly backups in ‘the cloud’ and prepares the group’s proprietary software effect on the business, operations, relationships and/or prospects reviews of our resilience and backup procedures. The Group’s recovery plans for the most foreseeable situations so that its These do not constitute all the risks that the Board has identified incentivisation structures to attract and retain the calibre of defects when first introduced, and problems may be discovered but those the Directors currently consider the most material. As employees necessary to ensure the efficient management and from time to time in existing, new or enhanced product iterations. This strategic report, as set out on pages 6 to 20, was approved of the Group. The Group believes that it has the appropriate services and software are complex and may contain undetected business operations would be able to continue. part of this risk mitigation planning, the Board has continued development of the Group. However, any difficulties encountered Undetected errors could damage the Group’s reputation, ultimately by the board on 10 May 2022. to ensure during 2021 that the marketing and sales teams in hiring appropriate employees and the failure to do so may have leading to an increase in the Group’s costs or a reduction in its have found new ways of finding and closing new customers a detrimental effect on the trading performance of the Group. The revenues. Other issues that may give rise to reputational risk Rupert Hutton, CFO who are ready to buy our products and services. The board has ability to attract new employees with the appropriate expertise include, but are not limited to, failure to deal appropriately with 10 May 2022 also ensured specific relationship management systems are in and skills cannot be guaranteed. To this end, the Group has legal and regulatory requirements in any jurisdiction (including place for managing both new and existing client and supplier introduced a new and enhanced set of benefits for employees as may result in the issuance of a warning notice or sanction by relationships, including establishing a new Technical Account which we believe act as a further incentive for gifted employees to a regulator or an offence (whether, civil, criminal, regulatory or Management role in the business. In addition, research and stay and build their careers at Osirium. development into various technologies on an ongoing basis is a key pillar of the Board’s strategy. Other Risks Include: Competitor Risk Customer Attraction, Retention and Competition The Group’s future success depends on its ability to increase sales of its products to new prospects. The rate at which new other) being committed by a member of the Group or any of its employees or directors), money-laundering, bribery and corruption, factually incorrect reporting, staff difficulties, fraud (including on the part of customers), technological delays or malfunctions, the inability to respond to a disaster, privacy, recordkeeping, sales and trading practices, the credit, liquidity and market risks inherent in the Group’s business. and existing end customers purchase products and existing Further reputational risks include failure to meet the customers, The market for Cyber security software is becoming increasingly customers renew subscriptions depends on several factors, operators, suppliers, employees, and intellectual property and competitive. To mitigate against this risk, management feels including the efficiency of the Group’s products and the technology expectations. The Group’s technology is primarily that the years of investment ahead of the maturing Privileged development of the Group’s new offerings, as well as factors comprised of software and other code (“Software”). Some of the Access Management market and the continued investment in outside of the Group’s control, such as end customers’ perceived Software has been developed internally and is owned by the Group. the products will maintain Osirium’s leadership position. The need for security solutions, the introduction of products by Also, some of the Software has been developed by third parties Group also has an increasingly growing customer base that is the Group’s competitors that are perceived to be superior to that have licensed rights in the Software to the Group or provided becomingly diversified, with more ‘uses cases ‘ for the product the Group’s products, end customers’ IT budgets and general access under free and open source licence. However, a significant suite. The Group maintains a customer-centric focus to ensure economic conditions. A failure to increase sales due to any of proportion of the Software has been developed by third parties strong relationships are maintained and deepened across the the above could materially adversely affect the Group’s financial and is provided to the Group under licence. It is not uncommon customer base. condition, operating results and prospects. for any company’s technology, particularly where it is primarily embodied in Software, to comprise both owned and licensed code. 24 25 governance report Board of Directors governance report David Guyatt Co-founder and Chief Executive Officer Co-founder of Osirium, the management team is led by David Guyatt, who has over 30 years of experience turning next-generation IT products into successful technology businesses. He is a recognised pioneer in establishing the content security software market, being a co-founder and CEO of the Content Technologies group, which created MIMEsweeper and became the recognised world leader in content security solutions, with a 40 per cent global market share, and was sold for $1Bn within five years, the largest European cyber security acquisition at the time. Previously, David was Sales & Marketing Director at Integralis from 1990 to 1996, as it established itself as Europe’s leading IT security integrator - now part of the NTT group. Simon Lee Chairman Simon Lee is an International Advisor to Fairfax Financial where he sits on the Boards of Brit Syndicates Ltd and Fairfax International (Barbados) Ltd. He is chairman of PPHC Inc. and also on the Advisory Boards of Sherpa Technology and Perfect Cellar, and President of Hospice in the Weald. Until December 2013, Simon was Group Chief Executive of RSA Insurance Group PLC, a FTSE 100 company operating at the time in 32 countries, employing around 23,000 people, writing c. £9 billion p.a. in premiums with assets of c. £21 billion. Previously, Simon spent 17 years with NatWest Group, working in various roles, including Chief Executive NatWest Offshore, Head of US Retail Banking, CEO NatWest Mortgage Corporation (US) and Director of Global Wholesale Markets. Rupert Hutton Chief Financial Officer Rupert’s most recent deal was while working at Artilium Plc and was instrumental in the sale to NYSE listed Pareteum for $104.7 million (or £78.0 million). Rupert previously served for 12 years as Finance Director of AIM-quoted Atlantic Global PLC, a cloud-based project portfolio management software company, before being sold in February 2012 to KeyedIn Solutions, an international, US private equity-backed software business based in Bloomington, Minnesota. Rupert’s early career was served as Group Finance Director of the Milton Keynes and North Bucks Chamber of Commerce Training and Enterprise. Rupert trained with Grant Thornton, has an AMBA accredited Masters in Business Administration and is a fellow of the Association of Chartered Certified Accountants. Simon Hember Non-executive Director Simon is the Founder and Managing Director of Acumin Consulting. Established in 1998, Acumin is a leading specialist for cybersecurity and information risk management recruitment and executive search operating throughout Europe and the US. Acumin has established relationships with end-user organisations, system integrators, consultancies and vendors across the security industry. Simon has expertise consulting around mergers and acquisitions, facilitating European market entry for high growth companies and working closely with industry leaders and venture capital to create new ventures and business development networks globally. Simon is also Co-Founder and Director of RANT Events, the leading community of senior information security professionals who work within end-user organisations and a Director of Red Snapper Recruitment, which merged with Acumin in July 2015. Steve Purdham Non-executive Director Steve loves building technology companies from nothing to something. He has successfully been involved with building and exiting several businesses, locally and globally, including, building from scratch, a FTSE 250 company, SurfControl PLC, which reached a £1bn valuation at its peak and sold for over $400m to Websense Inc in 2007. Other businesses include Indentum Ltd which was acquired by Trend Micro, B2C Internet music service WE7 Ltd which was sold to Tesco in 2012 and more lately 3ring Care Ltd which was a simple idea to help families care for their ageing loved ones. Over the years, Steve has won many business awards and awarded an Honorary Doctorate of Business at Teesside University in 2012. Steve is currently Non-Executive Chair of Westfield Health a 102 year old Health and Wellbeing business headquartered in Sheffield whose ethos is to build and grow a sustainable business with the sole objective of giving back to make a difference to peoples lives each and every day. 26 27 governance report Senior Management Team Andy Harris Chief Technical Officer In a long and distinguished career, including being Technical Director at Integralis, Andy has invented many leading-edge technologies, including IP Network Translation Gateway, Print Symbiont Technologies for LANbased printers and Disaster Master, a technique of continuously updating a backup site with mirrored data. As one of the Co-Founders and CTO of MIMEsweeper, Andy created the world’s first content security solution, which became the default product in its space. Andy went on to start WebBrick Systems, which was one of the pioneering Home Automation technologies, also a forerunner to what we know as IoT devices today. As Engineering Director, Andy has created and patented several core components in the Osirium product family. Stuart McGregor Sales Director Stuart has over 20 years in the IT industry with a breadth of experience in leading direct and channel sales teams of SaaS and on-premise solutions into mid- market and enterprises across EMEA. He was Sales Director for Privileged Access Management vendor Bomgar (now BeyondTrust), where he established an EMEA operation and led the UK and Northern Europe sales teams. Stuart saw local revenues grow by over 600% and sales operations created in UK, Netherlands, Germany and France. Stuart was also a member of Bomgar’s Global Leadership team and managed the integration of sales operations of the acquired Lieberman, Avecto and BeyondTrust businesses. Stuart has also held successful sales and consulting management positions at EMC, UK start-up software company Thunderhead, BroadVision and Oracle. Barry Scott Customer Services Director Barry’s career in IT infrastructure and operations spans over 30 years, across a wide range of verticals and many different technologies. For the last 16 years, Barry has worked for startup software vendors in the Identity and Access Management (IAM), Privileged Access Management (PAM) and Identity as a Service (IDaaS) fields. Barry helped to grow those companies across EMEA by building technical teams to fulfil customer pre- and postsales needs, speaking at events across the region and blogging on topics such as GDPR. governance report Catherine Jamieson Chief Operating Officer With over 25 years of experience growing start-up businesses, Catherine’s skill set is perfectly suited to driving Osirium in both sales and operational roles. Starting with Integralis in 1988, she joined the start-up team and quickly adopted a sales and customer services role which ended up being a key factor in the growth of the business. Moving to more senior sales roles in the early 90s, she established the City Business Unit at Integralis, before accepting the Sales Manager role when the MIMEsweeper solution launched in 1995. In 1997, Catherine became the SVP Europe at MIMEsweeper. Under her leadership from 1997-2000, she grew the European business from $3million to over $15 million in three years, consistently achieving revenue growth of over 100% p.a. with over 50 channel partners in 12 countries. The MIMEsweeper business was sold for $1Bn in 2000. She has since been involved with a few smaller start-up organizations before joining Osirium in 2010, where she has been responsible for the acquisition of early adopter customers and providing operations support to the business. Kev Pearce Professional Services Director Kev, who co-founded Osirium with David Guyatt, has over 25 years of experience planning, deploying, and managing corporate IT infrastructure and security projects. Kev was previously the Head of Consulting at Integralis, Europe’s largest Security Solution Provider, which he joined in 1996. Kev has a BEng (Hons) degree in Microelectronic Engineering from Brunel University in 1997, is also a Chartered Engineer (CEng), a Certified Information Systems Security Professional (CISSP), and holds many vendor-specific certifications. Mark Warren Marketing Director Mark has over 30 years of experience in product development and marketing leadership at global software organizations. At Osirium, he leads the Marketing team, focusing on field and product marketing, demand generation and developing the Osirium brand and market presence. Before Osirium, Mark lead product management and marketing teams in different industry sectors at international organizations including, SITA, 1E, Perforce Software, Serena, and Micro Focus. 28 29 governance report Report of the Directors governance report Strategic Report Information on research and development activities and future developments is not included within the Directors’ Report as it is instead included within the Strategic Report on pages 4 to 21 in accordance with S414c(11) of the Companies Act 2006. The directors present their report with the financial statements of the company for year ended 31 December 2021. Financial Risk Management Policies Principal Activity Details of the main Financial risks facing the Group and the policies to manage these risks are contained in Note 22 of these Financial statements; The company's principal activity in the year under review was that of a UK-based software developer and vendor of Privileged Access Security solutions. Osirium’s products can be deployed in the cloud or on-premises to protect critical IT assets, infrastructure and devices by preventing targeted cyber-attacks from directly accessing Privileged Accounts. The products remove unnecessary access Section 172 Companies Act Statement and powers of Privileged Account users, deterring legitimate Privileged Account users from abusing their roles and containing the The statements below are designed to address the reporting requirements of the Board under Section 172 of the Companies Act and effects of a breach if one does happen. the Companies (Miscellaneous Reporting) Regulations 2018. The Directors are well aware of their duty under section 172 to act in the way which they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a Osirium has defined and delivered what the Directors view as the next generation Privileged Access Management (PAM) solution. whole and, in doing so, to have regard (amongst other matters) to the areas set out in section 172. Osirium’s Privileged Access Security portfolio looks beyond traditional PAM with automation of privileged processes and management of privileged application execution on users’ workstations. Building on Osirium’s Privileged Task Management module, in May 2019, As a people business, the impact of business decisions on our principal stakeholders is always central to the decision making process. Osirium launched Privileged Process Automation (PPA), providing a highly flexible platform for automating essential IT processes to set a new benchmark in IT Process Automation. This was followed by the Privileged Endpoint Management (PEM) launch in December Our key stakeholders and how we engage is summarised in the below table: 2019, bringing the total portfolio to three complimentary solutions. Directors The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report. D A Guyatt, R G Hutton, S P G Lee, S Purdham, S E H Hember. Directors Interests in Shares Stakeholder Engagement Table stakeholder group why they are important type of engagement Employees The key to delivering the Board’s organic growth strategy Our Company’s culture governs how the Group engages is to continue to recruit and retain high-quality staff. In with employees – which is to treat all members of the order for Osirium to be an attractive place for high calibre Company fairly and consistently. staff to work, it is essential that Osirium maintains its Ordinary shares of 1p each as at 31 December 2021. D A Guyatt* (1,579,776), R G Hutton* (137,142), S P G Lee (406,083), S Purdham reputation for delivering software and IT projects of The Board’s intention is to behave responsibly and (102,597), S E H Hember (103,571). * And spouses Substantial Shareholdings as at 9 may 2022 ordinary shares of 1p 2021 percentage holding David Guyatt Maven Capital Partners Intrinsic Capital Octopus Investments Harwell Capital SPC Unicorn Asset Management 4,913,109 2,051,947 1,576,875 1,547,550 1,531,890 1,387,293 10.67% 4.46% 3.42% 3.36% 3.33% 3.01% the highest quality. Osirium’s most valuable asset is ethically at all times, in line with Company values, and to its people, be it the development, sales and marketing, ensure that the management teams operate the business consulting or presales teams or the support staff. in a responsible manner, maintaining a reputation for the highest standards of business conduct and good governance as set out in our report and accounts. The Board has demonstrated over the years how much it values its employees. Actions include introducing enhanced employee benefits as the company has grown and resources allow, regular Personnel reviews and Corporate Events - all designed to attract and retain the best staff to Osirium Investors/ Our investors’ continued support is important to the The Board engages with shareholders through the annual Shareholders success of the Group and has provided a source of equity and half year results and trading updates, the Annual to help fund the growth of the business. Shareholders General Meeting and investor roadshows. The Company also continue to be a conduit to the Executive Directors provides information to all shareholders and other third on equity market dynamics. parties on an equal basis using the RNS news service. 30 31 governance report Report of the Directors governance report Stakeholder Engagement Table Key Decisions Made in 2021 Impacting Stakeholders stakeholder group why they are important type of engagement significant event/ decision key stakeholders actions and impacts Customers/ As a business, we understand the need to foster the The Group dedicates substantial time, effort and COVID-19 Employees, Customers, Investors / Shareholders, • Offices were closed ahead of the Government Suppliers/ Company’s business relationships with suppliers, resources in working to develop and maintain strong Pandemic Customers / Supplier / Partners guidance to ensure staff safety and security with Partners customers and partners to operate a successful relationships from which all stakeholders benefit. We remote and flexible working extended business. Our business is centred on high-quality have established the Osirium Customer Network, an customer service, based on being a trusted partner. informal forum for meeting and introducing customers Suppliers and partners are important in our service to each other for sharing best practices with Osirium delivery and to expand the Group’s market reach. technology. These events are well attended by both new and longer-standing Osirium customers. Our customers' feedback is that these briefings and interactive workshops have real value. Likewise, Osirium runs regular joint seminars with its partners and joint marketing and training events. These enable partners to become skilled in Osirium technologies, differentiate themselves from their competitors, and open up new revenue streams Community The Board is aware of the Group’s environmental The nature of the Group’s business is fundamentally and responsibilities to ensure the well-being of the wider low impact to the community and the environment. The Environment community and the continued viability of the Group. Osirium working model has always enabled the team to deliver their services using technology that further reduces the environmental impact. As an illustration, many of the team have never needed to commute to work on a daily basis. New Product Launches Osirium has a clearly stated long term organic growth and a “ land and expand” strategy. As such, all significant business decisions consider both the short medium and long term consequences of each decision as part of the strategic decision-making process. The Board’s governance framework shows how the Board delegates its authority, and each business decision is debated and agreed at a Board meeting and suitably recorded for review. The Board has held 11 board meetings over the year to discuss and agree on key decisions made and assess the impact of these decisions on key stakeholder groups. We have considered the key decisions taken by the Board which will have an impact on the longer-term performance and prospects of the Group. This is summarised in the table on the next page: • A Salary Sacrifice scheme continued until February 2021 to ensure no staff were furloughed • Customers were consulted to assess how the Group’s technology could facilitate their remote working set-ups as they themselves faced new priorities as a result of the pandemic and new Cyber threats • The Group’s marketing efforts were quickly and successfully pivoted to digital marketing and virtual events to drive new business • The Board quickly made a number of decisions to conserve cash and preserve liquidity • The Board considered its actions to be in the long- term Employees, Customers, Investors / Shareholders • Product enhancements and new product development was rolled out in line with customer feedback to ensure it matches customer needs • Development teams were consulted, sales and presales and marketing teams trained to work with the expanded product range. • Investment in product development is continually reviewed as a pillar of Group’s growth strategy 32 33 governance report Report of the Directors Statement of Disclosure of Information to the Auditor The Directors who were in office at the date of approval of these financial statements confirm that, as far as they are aware, there is no relevant information of which the auditor is unaware. Each of the Directors confirms that they have taken all the steps that they ought to have taken to make themselves aware of any relevant audit information and establish that it has been communicated to the auditor. Post Year End Osirium has experienced continued trading momentum with a record first quarter for bookings and continued business momentum, customer acquisition and further sales with a substantial number of contract wins, particularly with NHS trusts, Higher education Establishments, and Commercial bookings. Osirium has a growing pipeline with quality and volume of leads improving as end markets continue to stabilise with increased engagement with new and existing channel partners. The board is also pleased to report a successful fundraise of £1.00 million in February and March 2022 which enables the Group to continue to scale its business in PAM and digital automation, expand the Group’s channel partner network and accelerate recruitment, including new hires in the sales, engineering and R&D teams. Annual General Meeting A resolution to reappoint PKF Littlejohn LLP as auditor will be put to the members at the Annual General meeting of the Company which will be held on 7 June 2022 at 11:00 am. On Behalf of the Board of Directors David Guyatt, CEO 10 May 2022 Financials 34 financials financials Directors’ Responsibilities in Preparation of the Financial Statements Independent Auditor’s Report to the Members of Osirium Technologies PLC The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. The Opinion directors have been elected under company law and the AIM Rules of the London Stock Exchange to prepare the financial statements We have audited the financial statements of Osirium Technologies PLC (the ‘parent company’) and its subsidiary (‘the group’) for the in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. year ended 31 December 2021 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company The financial statements are required by law and UK-adopted international accounting standards to present fairly the financial position Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and and performance of the company and group. The Companies Act 2006 provides in relation to such financial statements that references Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards, Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. of the state of affairs of the company and group and of the profit or loss of the group for that period. 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 December In preparing the financial statements, the directors are required to: 2021 and of the group’s loss for the year then ended; a. select suitable accounting policies and then apply them consistently; b. make judgements and accounting estimates that are reasonable and prudent; • • the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards; the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the Companies Act 2006; and c. state whether they have been prepared in accordance with UK-adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements; • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. Basis for opinion The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company and group’s We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Osirium ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and Technologies Plc website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may appropriate to provide a basis for our opinion. differ from legislation in other jurisdictions. Material uncertainty related to going concern We draw attention to note 1 in the financial statements, which indicates that the group will require further funds to be raised over the next 12 months in order for the group and parent company to continue as a going concern. As stated in note 1, these events or conditions, along with the other matters as set forth in note 1, indicate that a material uncertainty exists that may cast significant doubt on the group’s and parent company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included a review of the assessment prepared by the Board of directors and the cash flow forecasts. We have reviewed the forecasts to ensure that the inputs were accurate and held discussions with management around the current and expected revenue. We also gained an understanding of the external funding available to the group and parent company in the forecast period. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 36 37 financials financials Independent Auditor’s Report to the Members of Osirium Technologies PLC Our application of materiality key audit matter revenue recognition how our scope addressed this matter We identified revenue recognition as one of the most significant We performed the following work to address the identified risk: assessed risks of material misstatement due to fraud. As disclosed in note 2 of the financial statements, the group’s environment in operation for the material income streams • Updating our understanding of the internal control For the purposes of determining whether the financial statements are free from material misstatements, we define materiality as principal revenue stream relates to sales of software licence and undertaking a walk-through to ensure that the key the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable person, relying subscriptions to customers as well as revenue from software controls within these systems were operating in the period on the financial statements, would be changed or influenced. We also determine a level of performance materiality which we use to installations. The Group’s activities of supplying the software under audit; assess the extent of testing needed to reduce to an appropriate level the probability that the aggregate of uncorrected and undetected licences are considered to be a single performance obligation misstatements exceeds materiality for the financial statements as a whole. When establishing our overall audit strategy, we determined which is satisfied over a period of time. The group also • Substantive transactional testing of income recognised in a magnitude of uncorrected misstatements that we judged would be material for the financial statements as a whole. performs installations for which a separate charge and invoice the financial statements, including deferred and accrued We determined materiality for the group to be £29,000 (2020: £43,400), which is based on 2% of revenue. We consider revenue to be the the installation. performance measure used by the shareholders as Osirium Technologies Plc is a trading entity, and its revenue-generating ability is a • Cut off testing around year end to ensure that the revenue is raised fully on completion and acceptance by the customer of income balances recognised at the year-end; significant point of interest for investors. Given the nature of the group’s revenue being several various recorded from contracts is recorded with in the correct contracts commencing at different starting points, we identified accounting period; and We set the group performance materiality at £20,300 (2020: £30,380) which was 70% of overall financial statements materiality to the risk of fraud and error was in the cut-off assertion, where reflect the risk associated with the judgemental and key areas of management estimation in the financial statements. income was being recognised in the incorrect period, making • Reviewed post-year end receipts to ensure completeness of this a key focus area for the audit. income recorded in the accounting period. We agreed with those charged with governance that we would report all audit differences in excess of £1,350, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. recognition, valuation and impairment of intangible assets We determined materiality for the parent company to be £17,195 (2020: £21,551), with a performance materiality of £12,037 (2020: As disclosed in note 9 of the financial statements, the group We performed the following work to address the identified risk: £16,100). We agreed with those charged with governance that we would report all audit differences in excess of £860, as well as differences reported £3,557,310 (2020: £3,335,455) of intangible assets as below that threshold that, in our view, warranted reporting on qualitative grounds. Materiality was based upon 2% of total expenditure. at 31 December 2021. • Substantively tested a sample of development expenditure to Our approach to the audit There is a risk that the software development costs may not be correctly capitalised in accordance with IAS 38 ‘Intangible • Re-performed the calculation of the amortisation charge in Assets’. Additionally, there is a risk that projects under accordance with the disclosed accounting policy; assess its eligibility for capitalisation under IAS 38; Our audit is risk based and is designed to focus our efforts on the areas at greatest risk of material misstatement, aspects subject to development are not fully recoverable and whether impairment significant management judgement as well as greatest complexity, risk and size. In designing our audit, we determined materiality and assessed the risk of material misstatement in the group and parent company indicators exist for commercially available products which have not been identified by management. • • Substantively tested additions in the year; Assessed compliance of the capitalised IP expenditure financial statements. We looked at areas involving significant accounting estimates and judgements by the directors and considered The subjectivity of the judgements and estimates, together with with the recognition criteria under IAS 38 and challenged future events that are inherently uncertain, in particular with regard to the recognition and valuation of intangible assets. We also the significant carrying value of the intangible assets, makes management on areas involving significant judgement; and assessed the risk of management override of internal controls, including among other matters consideration of whether there was this area a key focus for the audit. evidence of bias that represented a risk of material misstatement due to fraud. • Inquired into any indications of impairment for IP which is commercially available and subject to amortisation. In addition to the parent company, one material component was identified. As the finance function is centralised and UK based, all audit work is undertaken by the London based group audit team. Key audit matters Other information Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are described in the Material uncertainty related to going concern section we have determined the matters described below to be the key required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we audit matters to be communicated in our report. have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report We have nothing to report in this regard. 38 39 financials financials Independent Auditor’s Report to the Members of Osirium Technologies PLC Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research and our experience of the sector. • We determined the principal laws and regulations relevant to the Group and Parent company in this regard to be those arising from Companies Act 2006, UK-adopted international accounting standards, AIM Rules, QCA Corporate Governance Code, UK • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are employment rules and UK tax legislation. prepared is consistent with the financial statements; and • the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. the group and parent company with those laws and regulations. These procedures included, but were not limited to, enquiries of • We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the management, review of board minutes and a review of legal correspondence. • We communicated relevant laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with law and regulations throughout the audit. audit, we have not identified material misstatements in the strategic report or the directors’ report. • We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that revenue recognition and the 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, impairment assessment of intangible assets represented the highest risk of management bias. Please refer to the key audit in our opinion: matters section above. • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received • We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, 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 but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to we have not received all the information and explanations we require for our audit. become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, • • • Responsibilities of directors as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. 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. As explained more fully in the directors’ responsibilities statement in preparation of the financial statements, the directors are responsible for the preparation of the group and parent company 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. Use of our report In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s and parent This report is made solely to the 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 company’s members those matters we are required to state to them in company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going 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, concern basis of accounting unless the directors either intend to liquidate the group and parent company or to cease operations, or other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. have no realistic alternative but to do so. 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. David Thompson, Senior Statutory Auditor For and on behalf of PKF Littlejohn LLP Statutory Auditor 10 May 2022 40 41 financials financials Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Operations Revenue Gross Profit Other operating income Administrative expenses Operating Loss Net finance costs Loss Before Tax Taxation Loss for the Year Attribuatable to the Owners of Osirium Technologies PLC Loss per Share from Operations Basic and Fully Diluted loss per Share notes year ended 31-12-2021 £ year ended 31-12-2020 £ 2 5 6 7 8 8 1,474,504 1,434,875 1,474,504 1,434,875 13 700 (4,705,350) (4,307,952) (3,230,833) (2,872,377) (197,030) (222,322) (3,427,863) (3,094,699) 594,562 590,223 (2,833,301) (2,504,476) (11)p (11)p (13)p (13)p ASSETS Non-current Assets Intangible assets Property, plant & equipment Right-of-use asset Total non-current Assets Current Assets Trade and other receivables Cash and cash equivalents Total current assets Total Assets LIABILITIES Current Liabilities Trade and other payables Lease liability Total current liabilities Non-current Liabilities Deferred tax Lease liability Convertible loan notes Total non-current liabilities Total Liabilities EQUITY Share Holders Equity Called up share capital Share premium Share option reserve Merger reserve Convertible note reserve Retained earnings Total Equity attributable to the owners of Osirium Technologies PLC Total Equity and Liabilities notes 31-12-2021 £ 31-12-2020 £ 9 10 11 13 14 16 17 21 17 18 3,557,310 3,335,455 79,588 12,266 90,530 61,329 3,649,164 3,487,314 1,082,260 383,854 1,466,114 818,445 1,482,376 2,300,821 5,115,278 5,788,135 2,158,450 2,088,752 15,765 54,958 2,174,215 2,143,680 - - 2,708,886 2,708,886 - 15,765 2,502,883 2,518,648 4,883,101 4,662,328 19 293,820 194,956 12,462,319 10,635,500 365,535 351,547 4,008,592 4,008,592 394,830 394,830 (17,292,919) (14,459,618) 232,177 5,115,278 1,125,807 5,788,135 The financial statements on pages 45 to 78 were approved and authorised for issue by the board of directors on 10/05/2022. The accompanying notes are an integral part of these financial statements. On Behalf of the Board of Directors David Guyatt, CEO 10 May 2022 42 43 financials Company Statement of Financial Position Company Statement of Changes in Equity financials called up share capital £ share premium £ share option reserve £ convertible note reserve £ retained earnings £ total equity £ Balance at 1 December 2020 194,956 10,635,500 337,559 394,830 (7,970,078) 3,592,767 Changes in Equity Total comprehensive loss Share option charge - - - - - 13,988 - - (2,754,028) (2,754,028) - 13,988 Balance at 31 December 2020 194,956 10,635,500 351,547 394,830 (10,724,106) 852,727 Changes in Equity Total comprehensive loss Issue of share capital Issue costs Share option charge - - 98,864 2,076,135 (249,316) - - - 13,988 - - - - - - - (2,578,457) (2,578,457) - - - 2,174,999 (249,316) 13,988 Balance at 31 December 2021 293,820 12,462,319 365,535 394,830 (13,302,563) 213,941 Registered number: 09854713 ASSETS Non-current Assets Investment in subsidiary Current Assets Trade and other receivables Cash and cash equivalents Total current assets Total Assets LIABILITIES Current Liabilities Trade and other payables Total current liabilities Non-current Liabilities Deferred tax Convertible loan notes Total non-current liabilities Total Liabilities EQUITY Share Holders Equity Called up share capital Share premium Share option reserve Convertible note reserve Retained earnings Total Equity attributable to the owners of Osirium Technologies PLC Total Equity and Liabilities notes as at 31-12-2021 £ as at 31-12-2020 £ 12 13 14 16 21 18 18 354,445 354,445 2,470,509 2,147,012 244,582 956,482 2,715,091 3,103,494 3,069,536 3,457,939 146,709 146,709 102,329 102,329 - 2,708,886 2,708,886 - 2,502,883 2,502,883 2,855,595 2,605,212 293,820 194,956 12,462,319 10,635,500 365,535 394,830 351,547 394,830 (13,302,563) (10,724,106) 213,941 852,727 3,069,536 3,457,939 The financial statements on pages 45 to 78 were approved and authorised for issue by the board of directors on 10/05/2022. The accompanying notes are an integral part of these financial statements. The company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the parent company profit and loss account. The loss for the parent company for the year was £2,578,457 (2020: £2,754,028). On Behalf of the Board of Directors David Guyatt, CEO 10 May 2022 44 45 financials financials Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows & Consolidated Reconciliation of Net Debt called up share capital £ share premium £ merger reserve £ share option reserve £ convertible note reserve £ retained earnings £ total equity £ notes year ended 31-12-2021 £ year ended 31-12-2020 £ Balance at 1 January 2020 194,956 10,635,500 4,008,592 337,559 394,830 (11,955,142) 3,616,295 Cash flows used in operating activities Changes in Equity Total comprehensive loss Share option charge - - - - - - - 13,988 - - (2,504,476) (2,504,476) Net cash used in operating activities - 13,988 Cash flows used in investing activities Cash used in operations Tax received Balance at 31 December 2020 194,956 10,635,500 4,008,592 351,547 394,830 (14,459,618) 1,125,807 Purchase of intangible fixed assets (2,833,301) (2,833,301) Interest received Purchase of property, plant and equipment Sale of property, plant and equipment Changes in Equity Total comprehensive loss Issue of share capital Issue costs Share option charge - - 98,864 2,076,135 - - (249,316) - - - - - - - - 13,988 - - - - - - - 2,174,999 (249,316) 13,988 Balance at 31 December 2021 293,820 12,462,319 4,008,592 365,535 394,830 (17,292,919) 232,177 Net cash used in investing activities Cash flows used in financing activities Share issue Share issue costs Payment of lease liabilities (net of interest) Allocation of loan note interest Net cash used in financing activities Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 15 7 9 10 10 6 (1,695,291) 591,436 (1,103,855) (967,180) 557,251 (409,929) (1,837,104) (1,806,146) (37,469) 208 - (68,994) 17,537 - (1,874,365) (1,857,603) 2,174,999 (249,316) (60,731) 14,746 - - (48,484) (56,530) 1,879,698 (105,014) (1,098,522) (2,372,546) 1,482,376 3,854,922 383,854 1,482,376 Consolidated Reconciliation of Net Debt as at 01-01-2021 £ cash flows £ non-cash charges £ as at 31-12-2021 £ Cash and cash equivalents Cash Borrowings Lease Liability Loan notes 1,482,376 (1,098,522) - 383,854 (70,723) (2,502,883) 60,731 (5,773) (15,765) - (206,003) (2,708,886) (2,573,606 ) 60,731 (211,776 ) (2,724,651) 46 47 financials financials Company Statement of Cash Flows & Company Reconciliation of Net Debt Cash flows used in operating activities Cash used in operations Interest paid Net cash used in operating activities Cash flows used in financing activities Share issue (net of issue costs) Allocation of loan note interest Net cash used in financing activities Decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year notes 15 7 year ended 31-12-2021 £ year ended 31-12-2020 £ (2,652,328) (2,693,546) - - (2,652,328) (2,693,546) 1,925,682 14,746 1,940,428 - (56,530) (56,530) (711,900) (2,750,076) 956,482 3,706,558 244,582 956,482 Company Reconciliation of Net Debt as at 01-01-2021 £ cash flows £ non-cash charges £ as at 31-12-2021 £ Cash and cash equivalents Cash Borrowings Loan notes 956,482 (711,900) - 244,582 (2,502,883) - (206,003 ) (2,708,886) 48 49 financials financials Notes to the Financial Statements Osirium Technologies PLC is a company incorporated in the United Kingdom under the Companies Act 2006 and listed on the AIM The Board considers that the Company will be required to raise Market. The address of the registered office is One Central Square, Cardiff, CF10 1FS. additional capital during the second half of 2022. Coupled with Functional and Presentational Currency Items included in the Financial Statements of Osirium are measured 1. Significant Accounting Policies Basis of Preparation Non-controlling interest in the results and equity of subsidiaries to creditors as and when they fall due. The Directors consider information is presented in UK sterling (£), which is the functional are shown separately in the statement of profit or loss and other it appropriate to continue to adopt the going concern basis in and presentational currency of Osirium. comprehensive income, statement of financial position and preparing the Financial Statements. Accordingly, the financial statement of changes in equity of the consolidated entity. Losses statements do not include any adjustments required if the going The financial statements have been prepared on a going concern incurred by the consolidated entity are attributed to the non- concern basis of preparation was deemed inappropriate. However, basis under the historical cost convention, and in accordance with controlling interest in full, even if that results in a deficit balance. if the Group is unable to deliver the anticipated order book and Financial Instruments Financial assets and financial liabilities are recognised in UK-adopted International Accounting Standards that are effective revenue growth, and raise additional capital during the going Osirium’s statement of financial position when Osirium becomes or issued and early adopted as at the time of preparing these Where the consolidated entity loses control over a subsidiary, it concern period, it would give rise to a material uncertainty which party to the contractual provisions of the instrument. Financial Financial Statements and in accordance with the provisions of the derecognises the assets including goodwill, liabilities and non- may cast significant doubt about the Group’s ability to continue assets are de-recognised when the contracted rights to the cash Companies Act 2006. controlling interest in the subsidiary together with any cumulative as a going concern. This additional funding is not guaranteed, flows from the financial asset expire or when the contracted translation differences recognised in equity. The consolidated however to date the Group has been successful in securing rights to those assets are transferred. Financial liabilities are entity recognises the fair value of the consideration received and funding when required. de-recognised when the obligation specified in the contract is the above projections, the Directors are confident that Osirium using the currency of the primary economic environment in has sufficient working capital to honour all of its obligations which the entity operates (‘the functional currency’). The financial discharged, cancelled or expired. Financial assets Trade and Other Receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less the provision for impairment. Appropriate provisions for estimated irrecoverable amounts are recognised in the statement of comprehensive income when there is Basis of Consolidation The consolidated financial statements incorporate the assets and liabilities of the subsidiary of Osirium Technologies PLC (‘company’ or ‘parent entity’) as at 31 December 2021 and the fair value of any investment retained together with any gain or loss in profit or loss. the results of the subsidiary for the year then ended. Osirium Technologies PLC and its subsidiary together are referred to in Going concern As part of their going concern review the Directors have followed New and Amended Standards and Interpretations There are no new standards or amendments to standards adopted with effect from 1 January 2021, or effective in future accounting periods, which had or are expected to have a material impact on these financial statements as the ‘Group’. the guidelines published by the Financial Reporting Council the Group and Company financial statements. Subsidiaries are all those entities over which the consolidated Reporting on Solvency and Liquidity Risks (2016)”. The Directors entity has control. The consolidated entity controls an entity when have prepared detailed financial forecasts and cash flows looking the consolidated entity is exposed to, or has rights to, variable beyond 12 months from the date of these Financial Statements. In returns from its involvement with the entity and has the ability to developing these forecasts, the Directors have made assumptions affect those returns through its power to direct the activities of based upon their view of the current and future economic entitled “Guidance on the Going Concern Basis of Accounting and 2. Accounting Policies Revenue Recognition Revenue represents net invoiced sales of services, excluding objective evidence that the assets are impaired. The amount of the provision is the difference between the carrying amount the entity. Subsidiaries are fully consolidated from the date on conditions that will prevail over the forecast period. value added tax. Sales of software licence subscriptions are and the present value of estimated future cash flows interest which control is transferred to the consolidated entity. They are recognised over the period of the contract with the deferred income is recognised by applying the effective interest rate, de-consolidated from the date that control ceases. The Group incurred a loss of £2.83 million in the year ended 31 income being recognised in the statement of financial position. except for short term receivables when the recognition of interest December 2021 and had net current liabilities of £0.71 million at Sales of one-off installation services are invoiced and recognised would be immaterial. The directors have made an assessment Intercompany transactions, balances and unrealised gains that date. The Group’s cash and cash equivalents decreased by fully on completion of the installation. on transactions between entities in the Group are eliminated. £1.1 million in the same period. Cash and cash equivalents at 31 Unrealised losses are also eliminated unless the transaction December 2021 were £0.38 million. Subsequent to the balance provides evidence of the impairment of the asset transferred. sheet date the Group raised £1.00 million via a share placing. Accounting policies of subsidiaries have been changed where Contract Assets and Liabilities Contract assets are recognised when Osirium has transferred group undertaking will not be received, the directors have deemed it prudent to account for an impairment of £1,595,620 with this on the amounts due from group undertakings under IFRS 9 for impairment of financial assets. As Osirium is loss making and the likelihood is that a proportion of the amount due from the necessary to ensure consistency with the policies adopted by the In its assessment, the Board has included consideration of the goods or services to the customer but where Osirium is yet to being looked at every 12 months on a continuous basis. consolidated entity. potential ongoing impact of COVID-19, and factored this into the establish an unconditional right to consideration. Contract assets financial assessment of the Group. Trading conditions started are treated as financial assets for impairment purposes. Contract The acquisition of subsidiaries is accounted for using the to normalise in the latter part of the year ended 31 December liabilities are recognised when Osirium receive payment in advance acquisition method of accounting. A change in ownership 2021. This level of enhanced bookings has carried through to the of satisfaction of its performance obligations. Contract liabilities interest, without the loss of control, is accounted for as an equity start of the new financial year, with a positive start to the year are included as financial liabilities in deferred income. transaction, where the difference between the consideration and a record first quarter recorded. This early trading momentum transferred and the book value of the share of the non-controlling increased the number of customers further, and a strong pipeline interest acquired is recognised directly in equity attributable to of new business supports the Board’s business forecasts and Rounding The figures in the financial statements of Osirium for the current the parent. underlines their confidence in the Group’s ongoing momentum. and preceding year are rounded to nearest whole pound. 50 51 financials financials Notes to the Financial Statements Such assets and liabilities are not recognised if the temporary • The availability of adequate technical, financial and other difference arises from the initial recognition of goodwill or from resources to complete the development and to use or sell the the initial recognition (other than in a business combination) of intangible asset. other assets and liabilities in a transaction that affects neither the • Its ability to measure reliably the expenditure attributable to taxable profit not the accounting profit. the intangible asset during its development. Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand, demand Borrowings Borrowings are recognised initially at fair value less transactions The carrying of deferred tax assets is reviewed at each statement Internally-generated development intangible assets are amortised deposits held on call with banks, and other short- term highly costs incurred. Borrowings are subsequently stated at amortised of financial position date and reduced to the extent that it is no on a straight-line basis over their useful lives. Amortisation liquid investments with original maturities of three months or less cost; any difference between the proceeds (net of transaction longer probable that sufficient taxable profits will be available to commences in the financial year of capitalisation. Where that are readily convertible to a known amount of cash and are costs) and the redemption value is recognised in the statement allow all or part of the asset to be recovered. no internally-generated intangible asset can be recognised, subject to an insignificant risk of changes in value. Cash and cash of comprehensive income over the period of borrowings using the development expenditure is recognised as an expense in the year in equivalents are shown in the financial statements as ‘cash and effective interest method. Deferred tax is calculated at the tax rates that are expected which it is incurred. The amortisation cost is recognised as part of cash equivalents’. to apply in the year when the liability is settled or the asset is administrative expenses in the statement of comprehensive income. Impairment of Financial Assets Osirium recognises a loss allowance for expected credit losses on The component of the convertible notes that exhibits realised based on tax laws and rates that have been enacted characteristics of a liability is recognised as a liability in the at the Statement of Financial Position date. Deferred tax is Development costs - 20% per annum, straight line statement of financial position, net of transaction costs. charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited in other financial assets which are either measured at amortised cost or On the issue of the convertible notes the fair value of the liability comprehensive income, in which case the deferred tax is also fair value through other comprehensive income. The measurement component is determined using a market rate for an equivalent dealt with in other comprehensive income. of the loss allowance depends upon Osirium’s assessment at nonconvertible bond and this amount is carried as a non-current Impairment of Tangible and Intangible Assets At each statement of financial position date, Osirium reviews the carrying amounts of its assets to determine whether there is any the end of each reporting period as to whether the financial liability on the amortised cost basis until extinguished on Deferred tax assets and liabilities are offset when it is a legally indication that those assets have suffered an impairment loss. If instrument’s credit risk has increased significantly since initial conversion or redemption. The increase in the liability due to the enforceable right to set off the current tax assets against current any such indication exists, the recoverable amount of the asset is recognition, based on reasonable and supportable information that passage of time is recognised as a finance cost. The remainder tax liabilities and when they relate to income taxes levied by the estimated in order to determine the extent of the impairment loss is available, without undue cost or effort to obtain. of the proceeds are allocated to the conversion option that is same taxation authority and Osirium intends to settle its current (if any). Where the asset does not generate cash flows that are recognised and included in shareholders equity as a convertible tax assets and liabilities on a net basis. independent from other assets, Osirium estimates the recoverable Where there has not been a significant increase in exposure to note reserve, net of transaction costs. The carrying amount of the credit risk since initial recognition, a 12-month expected credit loss conversion option is not premeasured in the subsequent years. allowance is estimated. This represents a portion of the asset’s The corresponding interest on convertible notes is expensed to lifetime expected credit losses that is attributable to a default profit or loss. event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based Equity Equity instruments issued by Osirium are recognised at fair value on the asset’s lifetime expected credit losses. The amount of on initial recognition net of transaction costs. expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. Property, Plant and Equipment Plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Depreciation amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment at least annually and whenever there is an indication that the asset may be impaired. is provided at the following annual rates in order to write off each The recoverable amount is the higher of fair value less costs to asset over its estimated useful life. Fixtures and fittings - 25% on cost Computer equipment - 33% on cost sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. Taxation The tax currently payable is based on taxable profit for the year. Osirium has elected not to recognise a right-of-use asset and For financial assets mandatorily measured at fair value through statement because it excludes items of income or expense that months or less and leases of low-value assets. Lease payments on is estimated to be less than its carrying amount, the carrying other comprehensive income, the loss allowance is recognised are taxable or deductible in other years and it further excludes these assets are expensed to profit or loss as incurred. amount of the asset (cash-generating unit) is reduced to its Taxable profit differs from net profit as reported in the income corresponding lease liability for short-term leases with terms of 12 If the recoverable amount of an asset (or cash-generating unit) in other comprehensive income with a corresponding expense items that are never taxable or deductible. Osirium’s liability for through profit or loss. In all other cases, the loss allowance current tax is calculated using tax rates that have been enacted or reduces the asset’s carrying value with a corresponding expense substantively enacted by the dates of the Statements of Financial through profit or loss. Position. Internally-generated Development Intangible Assets An internally-generated development intangible asset arising from Osirium’s product development is recognised if, and only if, recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Financial Liabilities and Equity differences between the carrying amounts of assets and liabilities in the financial information and the corresponding tax bases Trade and Other Payables Trade payables are initially measured at fair value and are used in the computation of the taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities subsequently measured at amortised cost using the effective are generally recognised for all taxable temporary differences and interest rate method; this method allocates interest expense over deferred tax assets are recognised to the extent that is probable • • • • The technical feasibility of completing the intangible asset so the revised estimate of its recoverable amount, but so that the that it will be available for use of sale. increased carrying amount does not exceed the carrying amount Its intention to complete the intangible asset and use or sell it. that would have been determined had no impairment loss been Its ability to use or sell the intangible asset. recognised for the asset (or cash-generating unit) in prior years. A How the intangible asset will generate probable future reversal of an impairment loss is recognised immediately in profit amount of the asset (or cash-generating unit) is increased to Deferred tax is the tax expected to be payable or recoverable on Osirium can demonstrate all of the following: Where an impairment loss subsequently reverses, the carrying the relevant period by applying the ‘effective interest rate’ to the that taxable profits will be available against which is deductible economic benefits. carrying amount of the liability. temporary differences can be utilised. or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 52 53 financials financials Notes to the Financial Statements Right of Use Assets A right-of-use asset is recognised at the commencement date Employee Benefit Costs Osirium operates a defined contribution pension scheme. The directors provide principals for overall risk management, as well as policies covering specific areas, such as, interest rate risk, IFRS 16 Leases Right-of-use assets and corresponding lease liabilities are of a lease. The right-of-use asset is measured at cost, which Contributions payable to Osirium’s pension scheme are charged non-derivative financial instruments and investment of excess recognised in the statements of financial position. Straight comprises the initial amount of the lease liability, adjusted to the Statement of Comprehensive Income in the year to which liquidity. for, as applicable, any lease payments made at or before the they relate. commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost Earnings per Share Basic earnings per share is calculated by dividing the profit operating costs) and an interest expense on the recognised lease liabilities (included within finance costs). For classification within line operating lease expense recognition is replaced with a depreciation charge for the right-of-us assets (included in of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the Share-based Payments Osirium issues equity-settled share-based payments to certain attributable to the owners of Osirium Technologies plc, excluding the statement of cash flows, the interest portion is disclosed any costs of servicing equity other than ordinary shares, by the in operating activities and the principal portion of the lease site or asset. employees and others under which Osirium receives services weighted average number of ordinary shares outstanding during payments are separately disclosed in financing activities Right-of-use assets are depreciated on a straight-line basis over Equity-settled share-based payments are measured at fair value issued during the financial year. as consideration for equity instruments (options) in Osirium. the financial year, adjusted for bonus elements in ordinary shares the unexpired period of the lease or the estimated useful life at the date of grant by reference to the fair value of the equity of the asset, whichever is the shorter. Where Osirium expects instruments granted. The fair value determined at the grant date to obtain ownership of the leased asset at the end of the lease of equity-settled share-based payments is recognised as an term, the depreciation is over its estimated useful life. Right- expense in Osirium’s Statement of Comprehensive Income over Critical Accounting Estimates and Judgements The preparation of the Financial Statements requires 3. Segment Information and Revenue Management information is provided to the chief operating decision maker as a whole. As a result Osirium is a single operating segment. All revenue is derived from the sale of of use assets are subject to impairment or adjusted for any the vesting period on a straight-line basis, based on Osirium’s management to make judgements and estimates that affect the software subscriptions and consultancy services to the remeasurement of lease liabilities. estimate of the number of instruments that will eventually vest reported amounts of assets and liabilities at each statement customers in the UK, and is recognised over time. Lease Liability The lease liability is initially measured at the present value of the lease payments during the lease term discounted using the with a corresponding adjustment to equity. The expected life of financial position date and the reported amounts of revenue used in the valuation is adjusted, based on management’s best during the reporting periods. Actual results could differ from The Group had one (2020: one) customer that represented over estimate, for the effect of non-transferability, exercise restrictions, these estimates. The directors consider the key areas to be in 10% of total revenue. The total revenue for this customer was and behavioural considerations. respect of the valuation of intangible assets and impairment of £206,807 (2020: £248,000) which represents 14% (2020: 17%) of intercompany receivables. Information about such judgements the Group’s total income for the year. interest rate implicit in the lease, or the incremental borrowing Non-vesting and market vesting conditions are taken into account and estimations are contained in individual accounting policies rate if the interest rate implicit in the lease cannot be readily when estimating the fair value of the options at grant date. and trade and other receivables (Note 4). determined. The weighted average lessee’s incremental borrowing Service and non-market vesting conditions are taken into account rate applied to the lease liabilities on 1 January 2019 was 7.5%. by adjusting the number of options expected to vest at each The lease term is the non-cancellable period of the lease plus reporting date. When the options are exercised Osirium issues extension periods that the Group is reasonably certain to exercise new shares. The proceeds received net of any directly attributable 4. Employees and Directors and termination periods that the Group is reasonably certain not transaction costs are credited to share capital (nominal value) The aggregate remuneration for employees of the Group during the year was as follows: to exercise. and share premium. Leases are cancellable when each party has the right to terminate the lease without permission of the other party or incurring more than an insignificant penalty. The lease term includes any rent- free periods. Subsequent measurement of the lease liability The lease liability is subsequently increased for a constant periodic rate of interest on the remaining balance of the lease liability and reduced for lease payments. Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions. Interest on the lease liability is recognised in profit or loss, unless Financial Risk Factors Osirium’s activities expose it to a variety of financial risks: interest is directly attributable to qualifying assets, in which market risk, credit risk and liquidity risk. Osirium’s overall risk case it is capitalised in accordance with the Group’s policy on management programme focuses on the unpredictability of Wages and Salaries Social Security Costs Other Pension Costs Less R&D capitalised amounts borrowing costs. 54 financial markets and seeks to minimise potential adverse effects on Osirium’s financial performance. Risk management is carried out by management under policies approved by the directors. year ended 31-12-2021 £ year ended 31-12-2020 £ 2,933,718 2,790,593 347,096 199,186 322,321 177,805 3,480,000 3,290,719 (1,649,511) (1,673,990) 1,830,489 1,616,729 55 financials financials Notes to the Financial Statements 4. Employees and Directors The average number of employees of the Group during the year was as follows: Directors and management Development Sales and presales Support Marketing year ended 31-12-2021 £ year ended 31-12-2020 £ 5 19 10 8 4 46 5 21 9 7 4 46 Key Management Personnel The directors are considered to be the key management personnel, of the Group and Company along with Kevin Pearce (Professional Services Director), Andrew Harris (Chief Technical Officer), Catherine Jamieson (Chief Operating Officer), Stuart McGregor (Sales Director), and Barry Scott (Customer Services Director). The remuneration of key management is as follows: Remuneration Social security costs Pension contributions GROUP year ended 31-12-2021 £ year ended 31-12-2020 £ 864,518 108,330 57,317 792,910 98,549 42,773 Total key management personnel compensation 1,030,166 934,232 Osirium currently has no post-employment benefits other than the defined contribution pension scheme which all employees are eligible for. Directors’ Remuneration The directors' remuneration of the Group during the year was as follows: Director’s Interest in Share Options The directors’ interest in share options is as follows: salaries 2021 bonus & commission 2021 car benefit 2021 pension 2021 benefit in kind 2021 total 2021 total 2020 S P G Lee D A Guyatt R G Hutton S Purdham S E H Hember 46,667 133,159 86,292 24,167 18,366 - 37,930 7,580 - - - 12,000 7,000 - - - 11,213 15,850 - 1,547 - - 420 - - 46,667 194,302 117,142 24,167 19,913 43,333 172,706 71,631 22,292 18,368 Total 308,650 45,510 19,000 28,610 420 402,190 328,330 The figures in the table above are exclusive of Employer’s National Insurance but inclusive of Employer’s pension contributions. The number of directors to whom retirement benefits were accruing under was as follows: Defined contribution schemes GROUP as at 31-12-2021 as at 31-12-2020 3 3 S P G Lee D A Guyatt R G Hutton S Purdham S Hember award date price on award date exercise price options at 31-12-2020 exercisable from 06-APR-16 04-DEC-20 £1.56 £0.04 06-APR-16 06-APR-16 04-DEC-20 £1.56 £1.56 £0.04 04-DEC-20 £0.04 04-DEC-20 £0.04 04-DEC-20 £0.04 58p 35p 58p 41p 35p 35p 35p 35p 120,000 26,125 31-DEC-19 04-DEC-25 146,125 410,100 176,316 475,000 1,061,416 31-DEC-19 31-DEC-19 04-DEC-25 147,250 04-DEC-25 26,125 04-DEC-25 26,125 04-DEC-25 No directors exercised any share options in the year (2020: none). 56 57 financials financials Notes to the Financial Statements The auditors remuneration for 2020 represents amounts due to its former auditors RSM UK Audit LLP, together with the fees for other of the group as follows: services in 2021 and 2020. Auditors remuneration for these accounts 40,000 40,500 Rate of corporation tax of 19% (2020: 19%) GROUP year ended 31-12-2021 £ year ended 31-12-2020 £ Loss before tax Loss before tax multiplied by the applicable 4,000 2,000 - 10,400 5,500 5,000 46,000 61,400 Expenses not deductible for tax purposes Unrelieved tax losses Adjustment for prior year tax R&D tax credit relief Tax Income 7. Income Tax Analysis of Tax Income GROUP Adjustment for prior year tax Current Tax: Tax Total current tax year ended 31-12-2021 £ year ended 31-12-2020 £ 1,615,169 1,407,164 1,105 47,306 49,063 (208) 10,768 2,912 49,738 49,063 (14,819) (656) Total credit in the statement of comprehensive income (594,562) (590,223) For the year ended 31 December 2020 successful R&D tax claims were submitted and paid by HM Revenue & Customs. Management intends to submit similar claims for the 2021 financial year. Factors Affecting the Tax Income Tax on the loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to losses year ended 31-12-2021 £ year ended 31-12-2020 £ (594,562) (591,436) - 1,213 (594,562) (590,223) year ended 31-12-2021 £ year ended 31-12-2020 £ (3,427,863) (3,094,699) (651,294) (587,993) - 651,294 - - 587,993 1,213 (594,562) (591,436) (594,562) (590,223) As at 31 December 2021 the group had unutilised tax losses of £10,819,902 (31 December 2020: £9,940,849) available to offset against future profits. A deferred tax asset has been recognised in respect of tax losses carried forward to the extent that it offsets the deferred tax liabilities in respect of research and development credits and accelerated capital allowances (see note 21). year ended 31-12-2021 £ year ended 31-12-2020 £ A reduction in the UK corporation tax rate from 19% to 17% effective 1 April 2020 was substantively enacted on 6 September 2016. The March 2020 Budget announced that a rate of 19% would continue to apply with effect from 1 April 2020. An increase in the UK corporate tax rate from 19% to 25% (effective from 1 April 2023) was substantively enacted on 14 May 2021. 191,257 5,773 - 214,005 8,317 - 197,030 222,322 5. Loss from Operations This is stated after charging/(crediting): Amortisation of Development costs Depreciation of fixtures and fittings Depreciation of computer equipment Depreciation of right-of-use assets (Profit) / loss on disposal of fixed assets Foreign exchange differences Auditors remuneration for other services EIS fees Interim review fee Tax fees Total 6. Net Finance Costs Net finance costs Loan note interest Lease interest Deposit interest received The company had no finance income in the year (2020: £nil). 58 59 financials financials Notes to the Financial Statements 8. Earnings per Share 9. Intangible Fixed Assets year ended 31-12-2021 £ year ended 31-12-2020 £ Cost Weighted average no. of shares in issue 25,857,807 19,495,655 At 1 January 2020 Additions to 31 December 2020 Weighted average no. of shares for the purposes of basic earnings per share 25,857,807 19,495,655 Effect of dilutive potential ordinary shares: Share options - Additions to 31 December 2021 At 1 January 2021 - Weighted average no. of shares for the purposes of diluted earnings per share 25,857,807 19,495,655 Basic losses attributable to equity shareholders (2,833,301) (2,504,476) Losses for the purposes of diluted earnings per share (2,833,301) (2,504,476) Basic loss per share Diluted loss per share (11)p (11)p (13)p (13)p Earnings per share has been calculated using the following methodology: At 31 December 2021 Amortisation At 1 January 2020 Charge to 31 December 2020 At 1 January 2021 Charge to 31 December 2021 At 31 December 2021 Net book value At 31 December 2020 Basic losses per share are calculated by dividing the losses attributable to ordinary shareholder by the number of weighted average At 31 December 2021 ordinary shares during the year. development £ 7,692,829 1,806,146 9,498,975 1,851,024 11,349,999 4,756,356 1,407,164 6,163,520 1,629,169 7,792,689 3,335,455 3,557,310 Following Share option grants in the period on 14 October 2020 and 4 December 2020, at 31 December 2021, there were 2,979,425 All development costs are amortised over their estimated useful lives, which is on average 5 years. This reflects the management’s best share options outstanding that could potentially dilute basic earnings or losses per share in the future, but are not included in the estimate of the period of time over which the group will benefit from the amounts capitalised. calculation of diluted losses per share because they are anti-dilutive for the years presented. All amortisation has been charged to administrative expenses in the consolidated statement of comprehensive income. The company had no intangible fixed assets as at 31 December 2021. 60 61 financials financials Notes to the Financial Statements 11. Right of Use Assets 10. Property, Plant & Equipment Cost At 31 December 2019 Additions Disposal At 31 December 2020 Additions Disposal At 31 December 2021 Depreciation At 31 December 2019 Charge for year Depreciation eliminated on disposal At 31 December 2020 Charge for year Depreciation eliminated on disposal At 31 December 2021 Net Book Value At 31 December 2020 At 31 December 2021 fixtures and fittings £ computer equipment £ totals £ 17,753 - - 17,753 - - 229,412 68,994 (12,212) 286,194 37,469 (959) 247,165 68,994 (12,212) 303,947 37,469 (959) 17,753 322,704 340,457 13,015 2,912 - 15,927 1,105 - 17,032 156,616 49,738 (8,864) 197,490 47,306 (959) 243,837 169,631 52,650 (8,864) 213,417 48,410 (959) 260,869 Cost At 31 December 2019 Additions At 31 December 2020 Additions At 31 December 2021 Depreciation At 31 December 2019 Charge for year At 31 December 2020 Charge for year At 31 December 2021 Net Book Value At 31 December 2020 At 31 December 2021 The group leases land and buildings for its office under an agreement for 4 years running from 2018 to 2022. 1,826 88,704 90,530 12. Investment in Subsidiary 721 78,867 79,588 Osirium Technologies PLC has the following investment in a subsidiary: leases and buildings £ 159,455 - 159,455 - 159,455 49,063 49,063 98,126 49,063 147,189 61,329 12,266 The company had no property, plant & equipment as at 31 December 2021. Depreciation is charged to administrative costs in the consolidated statement of comprehensive income. Osirium Limited One Central Square, Cardiff, CF10 1FS country of incorporation england & wales class of share held ownership ordinary 100% Osirium Limited’s business activities are the development, sale and consultancy services related to the company’s own software products. Movement on cost and net book value of investments in subsidiary: Net book value of investment in subsidiary 354,445 354,445 osirium limited 2021 £ osirium limited 2020 £ 62 63 financials financials Notes to the Financial Statements 13. Trade and Other Receivables GROUP COMPANY as at 31-12-2021 £ as at 31-12-2020 £ as at 31-12-2021 £ as at 31-12-2020 £ Current: Trade receivables Other receivables Prepayments Amounts due from group undertakings 329,965 594,562 157,733 - 105,553 591,436 121,456 - - - - 6,884 13,671 15. Reconciliation of Loss before Income Tax to Cash Used in Operations Loss before tax Depreciation charges Amortisation charges Share option charge Profit on disposal of fixed assets Net finance costs GROUP COMPANY as at 31-12-2021 £ as at 31-12-2020 £ as at 31-12-2021 £ as at 31-12-2020 £ (3,427,863) (3,094,699) (2,578,457) (2,754,028) 97,291 101,713 1,615,249 1,407,164 13,988 (208) 13,988 (14,189) - - - - 13,988 13,988 - - 197,030 222,322 191,257 214,005 (1,504,513) (1,363,701) (2,373,213) (2,526,035) - 2,463,625 2,133,341 (Increase)/decrease in trade and other receivables (260,689) 196,895 (323,497) (149,812) 1,082,260 818,445 2,470,509 2,147,012 Increase/(decrease) in trade and other payables 69,912 199,626 44,382 (17,699) Cash used in operations (1,695,291) (967,180) (2,652,328) (2,693,546) As at 31 December 2021 Osirium had no material receivables past due but not impaired (31 December 2020: £nil). The directors have made an assessment on the amounts due from group undertakings under IFRS 9 for impairment of financial assets. As Osirium is loss making and the likelihood is that a proportion of the amount due from the group undertaking will not be received, the directors have deemed it prudent to account for an impairment of £1,595,620 (2020: £1,916,126) with this being looked at every 12 months on a continuous basis. The Directors consider that the carrying value of trade and other receivables approximates their fair value. Allowance for Expected Credit Losses on Trade Receivables The group has assessed the expected credit losses for the year ended 31 December 2021 and concluded that there is no material impairment against trade receivables. 14. Cash and Cash Equivalents 16. Trade and Other Payables Current: Trade payables Social security and other taxes Other creditors Accruals and deferred income GROUP COMPANY as at 31-12-2021 £ as at 31-12-2020 £ as at 31-12-2021 £ as at 31-12-2020 £ 209,027 124,943 29,160 117,817 190,852 30,807 79,275 13,836 - - - - 1,795,320 1,749,246 67,435 88,493 2,158,450 2,088,721 146,710 102,329 GROUP COMPANY as at 31-12-2021 £ as at 31-12-2020 £ as at 31-12-2021 £ as at 31-12-2020 £ The Directors consider that the carrying value of trade and other payables approximates their fair value. The amounts above in trade and other payables are all non-interest bearing. Cash and cash equivalents 383,854 1,482,376 244,582 956,482 17. Lease Liabilities The Directors consider that the carrying value of cash and cash equivalents approximates their fair value. 64 Current: Lease liability Non- current: Lease liability GROUP as at 31-12-2021 £ as at 31-12-2020 £ 15,765 - 54,958 15,765 65 financials financials Notes to the Financial Statements 18. Borrowings Non-current liabilities - borrowings Balance at 1 January Re-allocation of prepayments Interest payable Balance at 31 December 19. Called up Share Capital Allotted, issued and fully paid. Nominal Value £0.01 per share 2021 £ 2020 £ 2,502,883 2,345,408 On incorporation on 3 November 2015 14,746 191,257 (56,530) 214,005 Shares issued as consideration for Osirium Limited on 6 April 2016 Shares issued on listing on AIM Exchange on 15 April 2016 Shares issued on AIM Exchange on 28 March 2018 2,708,886 2,502,883 Shares issued on AIM Exchange on 25 October 2019 Share capital at 31 December 2019 Share capital at 31 December 2020 On 21 October 2019 the consolidated entity issued 270 7.5% convertible notes, with a face value of £10,000 each, for total proceeds of Shares issued on AIM Exchange on 28 April 2021 £2,700,000. Interest is paid on the redemption date at a rate of 7.5% per annum based on the face value. The notes are convertible into Shares issued on AIM Exchange on 18 May 2021 ordinary shares of the parent entity, at any time at the option of the holder, or repayable on 28 October 2024. Share capital at 31 December 2021 The Conversion Rate is whichever of the following ratios includes the lowest principal amount of Notes to be converted into 1 Ordinary Share: • • 40p principal amount of Notes for each 1 Ordinary Share; and In the case of an Exit Event: (a) an amount (in pence) of principal amount of Notes which is equal to the price per Ordinary Share determined by the Exit Event, less a discount of 25% for each 1 Ordinary Share; and Voting rights Shares rank equally for voting purposes. Each member will have one vote per share held. Dividend rights Each share ranks equally for any dividend declared. no. of shares 100 6,548,102 3,846,153 3,159,856 5,941,444 19,495,655 19,495,655 3,899,100 5,987,259 29,382,014 £ 1 65,481 38,462 31,599 59,413 194,956 194,956 38,991 59,873 293,820 (b) an amount (in pence) of principal amount of Notes which is equal to the placing price of the most recent placing by the Company of Ordinary Shares prior to the Exit Event, less a discount of 25% for each 1 Ordinary Share; and 20. Reserves • In the case of a Corporate Event or Early Conversion Event, an amount (in pence) of principal amount of Notes which is Share Premium Share premium represents the aggregate amount of premiums received on issuing shares after deduction of attributable expenses and equal to the placing price of the most recent placing by the Company of Ordinary Shares prior to the Corporate Event or commission. Early Conversion Event (as applicable); and • In the case of a Redemption Conversion: (a) An amount (in pence) of principal amount of Notes which is equal to the placing price of the most recent placing by the Company of Ordinary Shares prior to the Redemption Conversion; and Share Option Reserve The share option reserve represents the cumulative amount charged to the income statement in respect of the company’s share options. Merger Reserve The merger reserve represents the balance of Osirium Limited’s reserves after application of merger accounting as part of the group (b) An amount (in pence) equal to the average quoted mid-market price of Ordinary Shares over the 90 Business reorganisation. Days immediately preceding the Redemption Conversion. Retained Earnings Retained earnings is the balance of profit or loss retained by the group and company net of any distributions made. Convertible Note Reserve The convertible note reserve represents the equity element of the loan notes that were raised in previous year. 66 67 financials financials Notes to the Financial Statements 21. Deferred Tax Liquidity Risk Liquidity risk is the risk that Osirium will not be able to meet its financial obligations as they fall due. Osirium’s approach to managing Deferred tax of £693,341 is provided at 31 December 2021 (2020: £662,589) in respect of timing differences arising on the recognition liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed of development costs and other fixed assets with a net book value of £3,649,164 (2020: £3,487,314). conditions, without incurring unacceptable losses or damage to Osirium’s reputation. The Directors manage liquidity risk by regularly reviewing Osirium’s cash requirements by reference to short term cash flow forecasts and medium term working capital projections A deferred tax asset has been recognised in respect of tax losses carried forward to the extent that it offsets the deferred tax liabilities prepared by the Directors. in respect of research and development credits and accelerated capital allowances. Accelerated capital allowances Research and development tax credits Tax losses 22. Financial Risk Management as at 01-01-2021 £ movement in year £ as at 31-12-2021 £ 28,853 633,736 (662,589) (11,401) 42,153 (30,752) 17,452 675,889 (693,341) - - - Consolidated Maturity of Financial Assets and Liabilities As at 31 December 2020 Financial Assets: Loans and receivables Trade and other receivables Cash and cash equivalents Total Financial Liabilities: Financial liabilities amortised at cost Osirium’s activities expose it to a variety of financial risk: financial instrument risk, credit risk and liquidity risk. Osirium’s overall risk Trade & other payables management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Total Osirium’s financial performance. Osirium’s policies for financial risk are outlined below. Financial Instruments Risk In common with all other businesses, Osirium is exposed to risks that arise from its use of financial instruments. This note describes Osirium’s objectives, policies and processes for managing those risks and the methods used to measure them. The principal financial instruments used by Osirium, from which finance instrument risk arises, are as follows: • • • Trade and other receivables Cash at bank Trade and other payables Credit Risk Credit risk is the risk of financial loss to Osirium if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from Osirium’s receivables from customers and deposits with financial institutions. Osirium’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Osirium has an established credit policy under which each new customer is analysed for creditworthiness before Osirium’s standard payment and delivery terms and conditions are offered. Osirium’s review includes external ratings, and in some cases bank references. An allowance for impairment is made when there is an identified loss event, which based on previous experience, is evidence in the recoverability of the cash flows. The Directors consider the above measures to be sufficient to control the credit risk exposure. As at 31 December 2021 Financial Assets: Loans and receivables Trade and other receivables Cash and cash equivalents Total Financial Liabilities: Financial liabilities amortised at cost Trade & other payables Total less than 1 month £ 1 month to 1 year £ greater than 1 year £ no stated maturity £ total £ 105,553 1,482,376 1,587,929 394,434 394,434 less than 1 month £ 1 month to 1 year £ 329,965 383,854 713,819 378,896 378,896 - - - - - - - - - - greater than 1 year £ - - - - - - - - - - no stated maturity £ - - - - - - - - - - 105,553 1,482,376 1,587,929 394,434 394,434 total £ 329,965 383,854 713,819 378,896 378,896 68 69 financials financials Notes to the Financial Statements 24. Related Party Disclosures The following balances were owed to directors in relation to expenses claimed: Company maturity of financial assets and liabilities As at 31 December 2020 Financial Assets: Loans and receivables Trade and other receivables Cash and cash equivalents Total Financial Liabilities: Financial liabilities amortised at cost Trade & other payables Total As at 31 December 2021 Financial Assets: Loans and receivables Trade and other receivables Cash and cash equivalents Total Financial Liabilities: Financial liabilities amortised at cost Trade & other payables Total less than 1 month £ 1 month to 1 year £ greater than 1 year £ no stated maturity £ total £ - 2,133,341 956,482 956,482 - 2,133,341 102,329 102,329 - - less than 1 month £ 1 month to 1 year £ greater than 1 year £ - 4,059,245 244,582 244,582 - 4,059,245 146,710 146,710 - - - - - - - - - - - - no stated maturity £ - - - - - - - - - - 2,133,341 956,482 3,089,823 102,329 102,329 total £ 4,059,245 244,582 4,303,826 146,710 146,710 S P G Lee D A Guyatt R G Hutton S Purdham K L Pearce Total expenses claimed in the year were as follows: S P G Lee D A Guyatt R G Hutton S Purdham K L Pearce year ended 31-12-2021 £ year ended 31-12-2020 £ 72 1,638 - - - - 6,483 - - - year ended 31-12-2021 £ year ended 31-12-2020 £ 72 3,816- - - 117 206 6,483 - 347 950 Directors’ remuneration has been disclosed in Note 4. Catherine Jamieson, a spouse of a director, was paid a total salary of £110,084 (2020: £116,075). Amounts owed to Catherine Jamieson as at 31 December 2021 were £nil (2020: £nil). Tom Guyatt, an employee of Osirium Limited and son of a Director, was paid a gross salary of £94,999 in 2021 (2020: £69,386). Amounts owed to Tom Guyatt as at 31 December 2021 were £nil (2020: £nil). Simon Hember is a director in Rant Events Limited which invoiced Osirium Limited £nil (2020: £nil) in the year for cyber events. There was £nil owing to Rant Events Limited as at 31 December 2021 (2020: £nil). All financial assets and liabilities above are held at amortised cost. Simon Hember is also a director in Red Snapper Recruitment Limited which invoiced Osirium Limited £nil (2020: £18,000) in the year. There was £nil owing to Red Snapper Recruitment Limited as at 31 December 2021 (2020: £nil). 23. Capital Management The prime objective of Osirium’s capital management is to ensure that it maintains the financial flexibility needed to allow for value- creating investments as well as healthy statement of financial position ratios. The capital structure of Osirium consists of net debt Related Party (borrowings after deducting cash and cash equivalents) and equity (comprising issued capital, capital commitment, reserves and retained earnings). Related party share options issued: S P G Lee (Non-executive chairman) D A Guyatt (Chief executive officer) R G Hutton (Chief financial officer) S Purdham (Non-executive director) S Hember (Non-executive director) K L Pearce (Director in Osirium Limited) C Jamieson (spouse of director) T Guyatt (son of director) 70 year ended 31-12-2021 £ year ended 31-12-2020 £ 146,125 146,125 1,061,416 1,061,416 147,250 26,125 26,125 360,634 180,000 85,500 147,250 26,125 26,125 360,634 180,000 85,500 71 financials financials Notes to the Financial Statements 25. Share Options The charge for the prior years is in relation to the remaining value of the pre-existing share options in Osirium Limited which were replaced by the options in Osirium Technologies Plc issued at 6 April 2016. No charge has been recognised in respect of options The company issues equity-settled share based payments to certain employees of the group under which the group receives services granted in the year to 31 December 2016 due to a combination of the share option exercise price being well above the historical average as consideration for equity instruments (options). Options are exercisable at 35p, 42p, 58p, £1.90 and £1.92 per share. share price and the uncertain timing of the meeting of all vesting conditions, including group turnover of £12,000,000. YEAR ENDED 31-DEC-21 YEAR ENDED 31-DEC-20 options weighted average exercise price £ options weighted average exercise price £ Granted 6 April 2016 Granted 6 April 2016 Granted 12 September 2016 Granted 26 September 2016 Granted 14 October 2020 Granted 4 December 2020 Forfeited in prior year year Exercised during the year 374,046 739,254 584,673 25,985 985,500 880,625 0.42 0.58 1.90 1.92 0.35 0.35 374,046 739,254 584,673 25,985 985,500 880,625 (610,658) (3.82) (610,658) - - - Outstanding at 31 December 2021 Exercisable at 31 December 2021 2,979,425 0.42 2,979,425 - - As at 31 December 2021 none of the share options have been exercised. 0.42 0.58 1.9 1.92 0.35 0.35 (3.82) - 1.21 - 26. Ultimate Controlling Party As at 31 December 2021 Osirium Technologies Plc had no ultimate controlling party. 27. Contingent Liability The company is included in a group registration for VAT purposes with its fellow subsidiary. All members of the VAT group are jointly and severally liable for the total amount of VAT due and at 31 December 2021, the contingent liability in respect of this group registration was £20,897 (2020: £99,126). 28. Covid and Potential Effects This past year has seen substantial progress achieved against our growth plans with an expanded product suite, a confident team, and accelerating traction in terms of our market presence. As previously reported, our priority since the pandemic outbreak has been to protect our colleagues, customers and other stakeholders. The vesting conditions of the share options issued prior to the year ended 31 December 2020 require the group to achieve a turnover target Due to the hard work and dedication of our colleagues, we are proud to report that there has been no compromise on service levels or of £12m. delivery during the crisis. The vesting conditions of the share options issued in the year to 31 December 2020 require the Total Shareholder Return (TSR) is met. The TSR condition is based on the volume weighted average share price (VWAP) over the preceding 30 days. We took immediate action to protect our financial position, introducing temporary salary sacrifices at all levels and putting a temporary freeze on new recruitment. As a result, we were not required to make additional cuts, use any government financial support, or furlough The estimated fair value of the options granted in the 2016 financial year were calculated by using the Black-Scholes model with the fair value any staff members. of the options granted in the year to 31 December 2020 being estimated using a Monte Carlo Simulation. The following inputs were used: Grant Date: 06-APR-16 06-APR-16 14-OCT-20 04-DEC-20 29. Events Subsequent to the Balance Sheet Date Weighted average share price Weighted average exercise price Expected volatility Expected life Risk free rate Expected dividend yield £1.56 0.58p 40% 3.74 yrs 0.50% 0% £1.56 0.42p 40% 3.74 yrs 0.50% 0% £0.23 0.35p 78% 5 yrs 0.65% 0% £0.22 0.35p 78% 5 yrs 0.61% 0% Expected volatility was determined by calculating the historical volatility of similar companies share prices over the previous 4-5 years, or over such shorter periods as the available data permitted. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. In the year ended 31 December 2021 the share based payment charge is £13,988 (year ended 31 December 2020: £13,988) in relation to the options granted on 14 October 2020 and 4 December 2020. The share based payment charge has been charged to administrative expenses in the statement of comprehensive income and total comprehensive loss. The board is also pleased to report that, subsequent to the balance sheet date, the Group raised £1.00 million via a share placing and subscription. 72 73 financials 74 Notice of Annual General Meeting other information Osirium Technologies plc (Incorporated and registered in England and Wales with registered number 09854713) Such authority, unless previously renewed, extended, varied or revoked by the Company in general meeting, shall expire 15 months after the passing of this resolution or, if earlier, at the conclusion of the next annual general meeting of the Company to be held after the passing of this resolution, save that the Company may, prior to the expiry of such authority, make an offer or agreement which would or might require other information NOTICE OF ANNUAL GENERAL MEETING equity securities in the Company to be allotted after the expiry thereof and the Directors may allot equity securities in the Company in pursuance of such offer or agreement notwithstanding the expiry of the authority given by this resolution. NOTICE is hereby given that the 2022 Annual General Meeting of Osirium Technologies plc (the "Company") will be held at the Company's offices at Theale Court, 11-13 High Street, Theale, RG7 5AH at 11:00 am on Tuesday, 7 June 2022 for the purpose of considering and, if Dated: 6 May 2022 thought fit, passing the following resolutions of which Resolutions 1 to 5 (inclusive) will be proposed as ordinary resolutions and Resolution 6 will be proposed as a special resolution: Ordinary Resolutions By order of the Board, Martin Kay Company Secretary Registered Office: One Central Square Cardiff CF10 1FS 1. THAT the Company's annual accounts for the financial year ended 31 December 2021 together with the Directors' Report and Notes: Auditor's Report on those accounts be received, considered and adopted. 2. THAT PKF Littlejohn LLP be re-appointed as auditors of the Company from the conclusion of this meeting until the conclusion Company comprised 46,048,681 ordinary shares of 1 pence each and the total number of voting rights was 46,048,681. There of the next general meeting at which accounts are laid before the Company, and the Directors be authorised to determine their are no shares in the capital of the Company held by the Company in treasury. 1. As at 6 May 2022 (being the latest practicable date before publication of this document), the issued share capital of the remuneration. 3. THAT David Guyatt who, being eligible, is offering himself for election, be re-appointed as a director of the Company. of their rights to attend, speak and vote (including on a poll) on their behalf at the meeting and at any adjournment of it. A 2. Shareholders entitled to attend and vote at the Annual General Meeting are entitled to appoint a proxy to exercise all or any personalised form of proxy will be sent to shareholders and a form for use is also available for download at www.osirium.com/ 4. THAT Stephen (Steve) Purdham who, being eligible, is offering himself for election, be re-appointed as a director of the Company. investors/reports-accounts/ (the "Form of Proxy"). A shareholder may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. 5. THAT the Directors be and are hereby generally and unconditionally authorised pursuant to section 551 of the Companies Each proxy should be appointed by a separate Form of Proxy. Please indicate the proxy holder's name and the number of shares Act 2006 to allot shares (or to grant rights to subscribe for or to convert any security into shares) in the Company for all and any in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of ordinary purposes approved by the Directors, up to an aggregate nominal value equal to the sum of £306,991, representing two-thirds of shares held by you). Alternatively, shareholders can appoint a proxy electronically at www.sharegateway.co.uk using the personal the Company’s issued share capital at the date of this Notice, plus such additional amount as may be required for the allotment of proxy registration code as shown on their Form of Proxy. ordinary shares of £0.01 each in the capital of the Company to satisfy the conversion of loan notes issued under the terms of the Note instrument dated 21 October 2019 of the Company constituting up to £2,700,000 Convertible Unsecured 7.5% Notes due 2024 3. It is currently envisaged that the Annual General Meeting will be run as an open meeting. However, the Company reserves and so that such authority shall, save to the extent that it is earlier renewed or extended by resolution passed at a general meeting, the right to put in place appropriate COVID-19 security measures, including maintaining social distancing, the wearing of face expire 15 months after the date of the passing of this resolution or, if earlier, at the conclusion of the next annual general meeting of coverings where appropriate, mandatory temperature checks as a condition of admission or requiring attendees to produce a the Company to be held after the passing of this resolution but the Company may, prior to the expiry of such authority, make an offer recent, valid COVID-19 negative test result, and asking attendees to confirm that they (or members of their household, support or agreement which would or might require shares (or rights to subscribe for or to convert any security into shares) in the Company bubble or childcare bubble etc.) have not recently developed symptoms or been exposed to someone who has tested positive or to be allotted after the expiry thereof and the Directors may allot shares (or grant rights) in pursuance of such offer or agreement is displaying symptoms. notwithstanding the expiry of the authority given by this resolution. Special Resolution 4. Shareholders are encouraged to vote by proxy and appoint the Chairman of the meeting as their proxy for this purpose (rather than their own choice of person) to ensure that their vote is counted if they are unable to attend the meeting. 6. THAT, subject to and conditional upon the passing of Resolution 5 above and in addition to any existing authorities in that regard, 5. To be valid any Form of Proxy or other instrument appointing a proxy must be received by post at, or (during normal business the Directors be and are hereby empowered pursuant to section 570 of the Companies Act 2006 (the "Act") to allot equity securities hours) delivered by hand to, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, West Midlands, B62 8HD by (as defined in section 560(1) of the Act) which are the subject of the authority given in accordance with Resolution 5 above for cash, no later than 11:00 am on Wednesday, 1 June 2022, together with, if appropriate, the original power of attorney or other authority as if section 561 of the Act did not apply to any such allotment, provided that this power shall be limited to: (if any) under which the Form of Proxy is signed or a duly certified copy of that power or authority. In the case of a corporation, (a) the grant of options to subscribe, and the allotment of, ordinary shares of £0.01 each in the capital of the Company an alternative to completing your hard-copy proxy form, you appoint a proxy electronically at www.sharegateway.co.uk, using the pursuant to (i) the Osirium Technologies plc Enterprise Management Incentive (EMI) Share Option Plan 2016 adopted personal proxy registration code as shown on your Form of Proxy, to be valid your appointment must be received by no later than the Form of Proxy must be executed under its common seal or under the hand of any officer or attorney duly authorised. If, as by resolution of the Board on 6 April 2016 and (ii) the Osirium Technologies plc Enterprise Management Incentive (EMI) 11:00 am on Wednesday, 1 June 2022. Share Option Plan 2020 – 2025 adopted by resolution of the Board on 31 March 2020; (b) the allotment of ordinary shares of £0.01 each in the capital of the Company pursuant to conversion of loan notes voting in person if he/she wishes to do so. Any shareholder who appoints a proxy but who attends in person shall have his/her issued under the terms of the Note instrument dated 21 October 2019 of the Company constituting up to £2,700,000 proxy terminated automatically. If a shareholder submits more than one valid proxy appointment, the appointment received last Convertible Unsecured 7.5% Notes due 2024; and before the latest time for the receipt of proxies will take precedence. 6. The return of a completed Form of Proxy or other such instrument will not prevent a shareholder attending the meeting and (c) the allotment otherwise than pursuant to sub-paragraphs (a) and (b) above of equity securities up to an aggregate 7. If two or more persons are joint holders of a share then, in voting on any question, the vote of the senior who tenders a nominal value of £92,097, representing 20% of the Company’s issued share capital at the date of this Notice. vote (whether in person or by proxy), shall be accepted to the exclusion of the votes of the other joint holder(s). Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding (the first-named being the most senior). 76 77 other information 8. A vote withheld option is provided on the Form of Proxy to enable you to instruct your proxy not to vote on any particular resolution, however, it should be noted that a vote withheld in this way is not a 'vote' in law and will not be counted in the calculation of the proportion of the votes 'For' and 'Against' a resolution. If no voting indication is given, your proxy will vote or abstain from voting at his/her discretion. Your proxy will vote (or abstain from voting) as he/she thinks fit in relation to any other matter which is put before the Annual General Meeting. 9.Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those members registered in the Company's register of members at the close of business on 1 June 2022 (or, in the event of any adjournment, at the close of business on the date which is two business days before the time of the adjourned meeting) shall be entitled to attend, speak and vote at the Annual General Meeting. Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting. Further Explanatory Notes: Resolutions 3 and 4 Under the Company' articles of association directors are required to retire every three years. David Guyatt and Steve Purdham were last re-elected in 2019 and, accordingly, retire at this year's AGM and are standing for re-election. If re-elected they will not be required to stand for re-election until 2025. Resolution 3 proposes the re-appointment of David Guyatt as a director. David's brief biographical details can be viewed at https://osirium.com/osirium/people/david-guyatt/. Resolution 4 proposes the re-appointment of Steve Purdham as a director. Steve's brief biographical details can be viewed at https://osirium.com/osirium/people/steve-purdham/. These Resolutions renew the Directors' authorities to allot shares in the capital of the Company and to disapply existing shareholders' Resolutions 5 and 6 pre-emption rights. Resolution 5 seeks renewal of the authority of the Directors to allot shares in the capital of the Company (or to grant rights to subscribe for or convert any securities into shares in the capital of the Company) up to two-thirds of the Company’s issued share capital at the date of this Notice in line with guidance issued by the Investment Association plus an additional amount to authorise allotment of shares to satisfy conversion of the Company's £2,700,000 Convertible Unsecured 7.5% Notes due 2024 issued under the Convertible Loan Note Instrument of the Company dated 21 October 2019 (the "Company's CLNs"). This authority will expire 15 months after the passing of the resolution or, if earlier, at the conclusion of the next annual general meeting of the Company to be held after the passing of the resolution. Resolution 6 seeks disapplication of shareholders' pre-emption rights in relation to: (i) option grants under the Company's share option scheme adopted at the time of its IPO in 2016 and the Company's Enterprise Management Incentive (EMI) Share Option Plan 2020 – 2025 adopted by resolution of the Board on 31 March 2020; (ii) share issues on conversion of the Company's CLNs; and (iii) share issues for cash up to a nominal value of £92,097, representing 20% of the Company's issued share capital as at today's date and in line with the Pre-Emption Group 1 April 2020 statement to permit flexibility for a fundraise without the need to convene a shareholders' meeting following the Company's fundraise earlier this year and its stated intention to conduct a further fundraise later this year. This authority will expire 15 months after the passing of the resolution or, if earlier, at the conclusion of the next annual general meeting of the Company to be held after the passing of the resolution. 78 Company Information other information Company information other information Nomad & Broker Allenby Capital Limited 5 St Helen’s Place London EC3A 6AB Solicitors Blake Morgan LLP Six New Street Square London EC4A 3DJ Directors D.A. Guyatt R.G. Hutton S.P.G. Lee S. Purdham S.E.H. Hember Company Secretary M. Kay Registered Office One Central Square Cardiff CF10 1FS Registered Number 09854713 (England & Wales) Accountants Randall & Payne LLP Chargrove House Shurdington Road Cheltenham Gloucestershire GL51 4GA Independent Auditor PKF Littlejohn LLP 15 Westferry Circus London E14 4HD United Kingdom 80