Diverse customer base highlights the opportunity

Osirium Technologies 27 October 2017 Update
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Osirium Technologies

Diverse customer base highlights the opportunity

Initiating forecasts

Software & comp services

27 October 2017

Price

167.7p

Market cap

£17m

Net cash (£m) at end H117

2.0

Shares in issue

10.4m

Free float

85%

Code

OSI

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.8

58.7

(10.8)

Rel (local)

12.6

57.4

(18.1)

52-week high/low

183.5p

93.0p

Business description

UK-based Osirium Technologies designs and supplies subscription-based cyber security software. It has four products: privileged access management (PAM), privileged task management (PTM), privileged session management (PSM) and privileged behaviour management (PBM).

Next events

FY17 trading update

January 2018

Analysts

Katherine Thompson

+44 (0)20 3077 5730

Bridie Barrett

+44 (0)20 3077 5700

Osirium Technologies is a research client of Edison Investment Research Limited

Osirium is making good progress in renewing contracts and signing new customers. We are initiating forecasts based on the assumption that the company will grow bookings at a rate of 63% in FY17, 50% in FY18 and 40% in FY19. We forecast that this will result in an EBITDA loss of £1.9m in FY17 reducing to £1.6m by FY19. We estimate that the current share price is factoring in longer-term bookings growth of 29% (average FY20-26) which, based on the company’s ‘land and expand’ strategy and focus on selling to the mid-market via distributors, appears achievable in our view.

Year end

Revenue (£m)

EBITDA*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

EV/Sales
(x)

12/16**

0.48

(1.14)

(12.4)

0.0

N/A

29.0

12/17e

0.62

(1.90)

(21.1)

0.0

N/A

22.5

12/18e

0.98

(1.80)

(21.7)

0.0

N/A

14.1

12/19e

1.45

(1.56)

(21.0)

0.0

N/A

9.6

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **14-month period ended 31 December 2016.

Making good progress with renewals

Osirium has recently received a variety of contract renewals across its customer base. This highlights the wide-ranging verticals that the company serves as well as the range of company sizes, from a global aerospace and defence company to a UK-based company taking a licence for the minimum number of devices. The company continues to sign up new customers, recently announcing that a global insurance group had signed a 12-month contract.

Initiating forecasts

We forecast bookings growth of 63% in FY17, 50% in FY18 and 40% in FY19. This results in revenue growth of 29%, 59% and 47% respectively. The majority of hiring has been completed, hence we forecast a relatively stable cost base in FY18 and FY19. We forecast an EBITDA loss of £1.9m for FY17, reducing to £1.6m by FY19. We note that bookings intake may not follow a smooth path, as one large contract can skew the growth rates in a given period. In addition, the rate at which channel partners will sign up customers is uncertain. With net cash forecast to reach £1.1m by the end of FY17, we expect the company to require additional funding in H118.

Valuation: Bookings growth is key sensitivity

We have performed a reverse DCF to analyse the assumptions factored into the current share price, using a WACC of 11% and a terminal growth rate of 3%. We estimate that the share price is discounting average bookings growth of 29% for FY20-26, break-even EBITDA in FY22, average EBITDA margins of 5% for FY20-26 and a terminal EBITDA margin of 40%. Increasing bookings growth to 40% over FY20-26 results in a value per share of 381.3p; conversely, reducing bookings growth to 20% results in a value per share of 39.4p.

Recent contract wins and renewals

Since it reported H117 results in September, the company has received several contract renewals:

A leading telecommunications group, for 12 months, using all modules.

A global aerospace & defence company, for 24 months, using all modules.

Think Money, a UK-based banking services provider, for 12 months. Think Money has implemented a secure subsystem to protect 50 multi-platform servers, back-end databases, firewalls and other network and security devices.

M-Netics, a mobile technology solutions provider, for 12 months. M-Netics uses Osirium to control off-domain access to servers on separate networks in multiple locations.

The company also announced that a global insurance group has signed up to use its PAM/PSM/PTM modules on a 12-month basis.

Initiating forecasts

With increasing visibility due to recent contract wins and renewals, we are initiating forecasts on the company.

Revenue model

Osirium sells its software on a subscription basis. Customers typically buy a licence for 12 months and pay in full upfront. A small number of customers sign up for three years, with some paying the whole amount in advance and others being billed annually. There are one or two customers paying on a monthly basis as device numbers increase. The majority of customers deploy the software on-premise. Licences are typically priced on the basis of the number of devices managed, with the minimum licence for 50 devices. Currently, the PAM and PTM modules come under one licence, with PSM requiring a separate additional licence. PBM is currently bundled in with PAM/PTM, but the company plans to make this available as a standalone module.

The company generates some service-based revenues, but this is not a target area for substantial growth – with the channel strategy, Osirium would expect the channel partner to undertake the implementation work.

Osirium has a ‘land and expand’ strategy. It typically aims to sell a licence to a customer for a minimum number of devices to resolve a specific problem; once the customer is comfortable with the technology, this can be expanded to include more devices, and additional modules such as PSM.

Revenue and bookings forecasts

In the table below, we have made assumptions on the annual growth in invoiced sales (ie bookings), the rate at which invoiced sales are recognised as revenue and the pace at which deferred revenues unwind for FY17-19.

Exhibit 1: Top-down revenue forecast

£

2016*

2017e

2018e

2019e

Bookings (invoiced sales)

540,836

881,563

1,322,344

1,851,282

Monthly bookings rate

38,631

73,464

110,195

154,273

Deferred income at year-end

275,650

540,492

879,690

1,283,866

Reported SaaS revenues

440,582

512,554

883,146

1,347,105

Professional services rev

36,995

104,167

100,000

100,000

Total revenue

477,577

616,721

983,146

1,447,105

Breakdown of reported SaaS revenues

From deferred income

159,294

248,085

486,443

791,721

From current year invoiced sales

281,288

264,469

396,703

555,384

Total reported SaaS revenues

440,582

512,554

883,146

1,347,105

Growth in reported SaaS revenues

75%

16%

72%

53%

Growth in bookings

102%

63%

50%

40%

% bookings recognised

52%**

30%

30%

30%

% deferred income unwind in current year

75%**

90%

90%

90%

Source: Osirium, Edison Investment Research. Note: *14-month period to 31 December 2016. **Edison estimate.

In order to verify whether our top-down assumptions for bookings growth could be supported by customer and device growth, we have also built a bottom-up model. This takes into account our estimate for customer numbers, average devices secured per customer, ASP per device secured and customer retention rates (the company does not provide these data points on a regular basis). We assume 95% customer retention from FY18 (the company has achieved 100% year to date). We assume an increase in devices per customer of 25% in FY17, moderating to 10% for FY18 and FY19 (reflecting the land and expand strategy). We forecast a 10% per annum decline in ASP reflecting a growing proportion of sales from the indirect channel and volume discounts on larger contracts.

Exhibit 2: Bottom-up bookings model

2016*

2017e

2018e

2019e

No. direct customers at year-end

15

24

38

53

New customers

5

9

15

17

Existing customer

10

15

23

36

Ave. no customers

12.5

19.5

31

45

Ave. no. devices per customer

700

875

963

1059

ASP (£)

50

45

41

36

Invoiced SaaS sales (£)

510,417

767,813

1,204,521

1,750,315

Bookings as per top down model, excluding Professional Services (£)

503,841

777.396

1,222,344

1,751,282

Source: Osirium, Edison Investment Research. Note: *14-month period to 31 December 2016.

We do not believe that these are aggressive assumptions, and note that this is just one of many possible outcomes, depending on the pace and size of customer wins. For example, one direct customer may take the minimum requirement of 50 devices for 12 months, whereas another may be a managed security services provider providing the software to its own client base, resulting in thousands of devices being licensed. In addition, Osirium’s channel partners have only been signed up in the last year, so it is not yet clear at what rate they will be able to sign up customers.

Cost base

Osirium’s largest cost is for staff: at IPO the company had 18 direct employees and three contractors; this has now risen to 34 direct employees and six contractors (including regional business development directors). In the short term, the company does not expect to increase headcount materially. Included in other operating costs are premises costs (rent of headquarters in Theale), sales and marketing costs and other admin costs. We would expect any material increase in the cost base to be triggered by faster bookings growth. The company capitalises development costs – in FY16 close to half of staff costs were capitalised. These are amortised over a five-year period, starting in the year of capitalisation. The table below shows our cost assumptions for FY17-FY19.

Exhibit 3: Cost forecasts

£000s

FY16*

FY17e

FY18e

FY19e

Staff costs - gross

1,561.0

2,625.2

2,764.2

2,837.5

Capitalised development costs

(755.5)

(1,080.0)

(1,080.0)

(1,080.0)

Staff costs - net

805.5

1545.2

1684.2

1757.5

Other operating costs

808.8

1294.0

1423.4

1565.8

Depreciation

14.6

27.0

30.0

30.0

Amortisation

574.3

659.7

817.7

984.0

Share-based payments

96.9

320.0

320.0

320.0

Total costs

2,300.1

3,845.9

4,275.3

4,657.3

Source: Osirium, Edison Investment Research. Note: *14-month period to 31 December 2016.

Making use of R&D tax credits

As the company is loss-making, it is making use of the ability to claim tax credits for its R&D expenditure. In 2017, the company expects to receive a £290k cash credit in respect of 2016 costs. We have forecast that this increases to nearer £400k in FY17 reflecting headcount increases, and to stay at this level in FY18 and FY19 due to stable R&D headcount.

The table below summarises our profitability forecasts.

Exhibit 4: Profitability forecasts

£000s

FY16*

FY17e

FY18e

FY19e

Revenues

477.6

616.7

983.1

1,447.1

EBITDA

(1,136.7)

(1,902.5)

(1,804.5)

(1,556.2)

Adjusted EBITDA**

(1,892.2)

(2,982.5)

(2,884.5)

(2,636.2)

Normalised operating loss

(1,725.6)

(2,589.2)

(2,652.1)

(2,570.2)

Reported operating loss

(1,822.5)

(2,909.2)

(2,972.1)

(2,890.2)

Normalised net income

(1,286.9)

(2,198.3)

(2,254.3)

(2,184.6)

Reported net income

(1,359.6)

(2,499.3)

(2,556.0)

(2,485.5)

Source: Osirium, Edison Investment Research. Note: *14-month period to 31 December 2016. **Before development costs are capitalised.

Cash flow

The company operates with negative working capital as it receives cash upfront for its licences. The table below shows the key cash flow lines. We expect the cash balance to have reduced to £1.1m by the end of FY17 and to move to a net debt position by the end of FY18. The company will require additional funding before it reaches break-even, which could result in dilution for existing shareholders.

Exhibit 5: Summary cash flow

£000s

FY16*

FY17e

FY18e

FY19e

Normalised operating loss

(1,725.6)

(2,589.2)

(2,652.1)

(2,570.2)

Depreciation & amortisation

588.9

686.7

847.7

1,014.0

Working capital

226.8

477.3

330.1

362.0

Tax paid

120.4

290.0

406.9

416.1

Cash flow from operations

(789.4)

(1,135.2)

(1,067.5)

(778.1)

Capex - tangible assets

(52.5)

(100.0)

(100.0)

(100.0)

Capex - intangible assets

(915.5)

(1,200.0)

(1,200.0)

(1,200.0)

Net interest received

9.7

3

0

0

Cash flow from investing

(958.3)

(1,297.0)

(1,300.0)

(1,300.0)

Equity financing

5,047.1

0.0

0.0

0.0

Cash flow from financing

5,047.1

0.0

0.0

0.0

Net cash flow

3,299.3

(2,432.2)

(2,367.5)

(2,078.1)

Net (cash)/debt b/f

273.5

(3,572.8)

(1,140.6)

1,226.9

Net (cash)/debt c/f

(3,572.8)

(1,140.6)

1,226.9

3,305.0

Source: Osirium, Edison Investment Research. Note: *14-month period to 31 December 2016.

Valuation

As we do not expect Osirium to reach profitability within our three-year forecast period, we use a reverse discounted cash flow analysis to calculate the assumptions underlying the current share price. We then flex these assumptions to show the sensitivity of the valuation to key factors such as bookings growth, revenue growth and EBITDA margins.

Reverse DCF factoring in strong revenue growth

With a WACC of 11% and a terminal growth rate of 3%, we arrive at the current share price using the following assumptions for the period after our 2017-2019 explicit forecasts:

Bookings growth: 35% in 2020, 30% per annum from 2021 to 2024, 25% in 2025 and 20% in 2026 with 30% recognition in the year invoiced and 90% of deferred income unwinding each year.

Revenue growth: trending down from 39% in 2020 to 18% in 2027, with a CAGR of 28.9% for 2020-27.

EBITDA margin: hitting positive EBITDA in 2022, rising to 40% margin by 2027. This assumes the company continues to capitalise development costs at a similar rate over the period of the analysis. We note that this equates to a terminal EBIT margin of 26.5%. It also assumes that the company does not grow its cost base significantly until it has reached break-even.

Working capital: negative working capital requirements due to the upfront payment subscription model.

Capex: we forecast this to reduce from 65% of sales in 2020 to 14% by 2027.

The valuation also assumes that Osirium is able to obtain funding until it is cash generative.

Exhibit 6: Sensitivity to WACC and terminal growth rate

Terminal growth rate

167.7p

1.00%

2.00%

3.00%

4.00%

5.00%

WACC

13.0%

84.0

93.7

105.5

119.8

137.7

12.5%

93.3

104.5

118.0

134.7

155.9

12.0%

103.9

116.7

132.4

151.9

177.1

11.5%

115.7

130.5

148.8

171.9

202.2

11.0%

129.1

146.3

167.7

195.3

232.0

10.5%

144.4

164.3

189.7

222.8

267.9

10.0%

161.7

185.2

215.3

255.6

311.9

9.5%

181.6

209.3

245.6

295.1

366.5

9.0%

204.6

237.6

281.7

343.4

435.9

8.5%

231.2

270.9

325.1

403.4

526.5

Source: Edison Investment Research

We have re-run the DCF to reflect a bull case (bookings growth of 40% pa 2020-26) and a bear case (bookings growth of 20% pa 2020-26).

Exhibit 7: Scenario analysis

Bear

Base

Bull

Bookings growth 20-26 (ave)

20%

29%

40%

Revenue growth 20-26 (ave)

22%

31%

40%

EBITDA margins 20-26 (ave)

-12%

5%

10%

Terminal EBITDA margin

35%

40%

45%

Valuation (p per share)

39.4

167.7

381.3

Source: Edison Investment Research

Lack of profitability makes peer comparison difficult

The peer group table shows the operating and valuation metrics for a range of UK software companies and international cybersecurity companies. There are no pure-play PAM software companies listed in the UK – we include the only listed pure-play PAM software companies globally, CyberArk (Nasdaq) and Wallix (Euronext Growth). We also include UK and international cybersecurity software companies with market caps below £5bn as well as UK SaaS software companies. The PAM software companies are showing strong revenue growth. As a well-established company, CyberArk is already achieving EBIT margins in the high teens and is forecast to achieve margins of 22.7% by 2019. Wallix is not forecast to reach EBITDA profitability until 2019.

We have looked at the progression of revenues and EBITDA for FreeAgent, a recently listed UK SaaS company. The company grew revenues at a CAGR of 36% from FY14-17 and is forecast to generate revenue growth of 29% in FY18 and 28% in FY19. It is forecast to achieve EBITDA profitability in FY18, although when capitalised development costs are taken into account, adjusted EBITDA appears to be further away from profitability. FreeAgent currently trades on an EV/Sales multiple of 2.6x FY18e and 2.0x FY19e and an EV/EBITDA multiple of 139.4x FY18e and 12.7x FY19e. This demonstrates the kind of growth rates achievable for software companies selling via a subscription model, and highlights that the assumptions underlying our DCF are not unreasonable.

Exhibit 8: FreeAgent revenue and profitability development

£m

FY14

FY15

FY16

FY17

FY18e

FY19e

Revenues

3.16

4.18

5.68

8.01

10.30

13.20

Revenue growth

32%

36%

41%

29%

28%

EBITDA

(0.47)

-0.18

-0.24

-0.7

0.19

2.09

EBITDA margin

-14.9%

-4.3%

-4.2%

-8.7%

1.8%

15.8%

Capitalised development costs

0.7

0.7

1.0

0.4

Adjusted EBITDA

-1.1

-0.9

-1.2

-1.1

Adjusted EBITDA margin

-36.1%

-21.3%

-21.3%

-13.5%

Source: Company reports, Bloomberg

Based on the assumptions in our base case DCF analysis, Osirium is trading on an EV/Sales multiple of 4.0x FY22e revenues and 3.1x FY23e revenues. FY22 is the year in which we expect the company to reach EBITDA profitability – this equates to an EV/EBITDA multiple of 398x FY22e and 19.1x FY23e, a similar profile to FreeAgent’s valuation for the period in which it is expected to reach EBITDA profitability.

Exhibit 9: Peer operating and valuation metrics

Company

Market cap

Revenue growth

EBITDA margin

EBIT margin

(m)

FY1

FY2

FY3

FY1

FY2

FY3

FY1

FY2

FY3

Osirium

£17

29.1%

59.4%

47.2%

(309%)

(184%)

(108%)

(420%)

(270%)

(178%)

UK cybersecurity

Sophos Group

£2,761

18.8%

17.0%

14.9%

9.9%

13.3%

14.4%

3.0%

5.4%

8.8%

GB Group

£629

32.8%

12.8%

12.0%

22.0%

22.4%

21.7%

19.2%

19.9%

20.5%

Intercede Group

£24

56.9%

30.0%

(20.5%)

0.7%

(22.8%)

(1.1%)

Corero Network Security

£21

35.7%

(31.9%)

(58.8%)

UK SaaS software

Craneware

£431

15.1%

14.9%

13.2%

31.4%

31.7%

31.2%

27.8%

28.1%

28.5%

dotDigital Group

£251

24.0%

18.5%

30.4%

31.2%

24.1%

24.8%

Ideagen

£162

28.7%

10.0%

31.5%

32.6%

28.0%

28.4%

FreeAgent Holdings

£31

28.6%

28.2%

1.8%

15.8%

(8.3%)

6.4%

PAM software

CyberArk Software

$1,512

17.6%

19.4%

16.6%

21.6%

22.8%

23.9%

18.4%

19.9%

22.7%

Wallix Group

€ 76

44.6%

44.1%

33.9%

(26.9%)

(9.5%)

2.1%

Global cybersecurity <£5bn market cap

Proofpoint

$4,135

35.6%

27.3%

27.0%

12.9%

13.6%

14.6%

8.0%

9.5%

11.7%

FireEye

$3,031

3.9%

8.6%

7.5%

9.0%

11.6%

19.3%

(3.5%)

0.9%

6.5%

Commvault Systems

$2,635

10.7%

7.3%

5.7%

14.2%

15.3%

Qualys

$1,932

15.1%

15.9%

17.5%

33.0%

33.9%

35.7%

23.7%

24.3%

25.2%

Mimecast

$1,718

33.7%

21.5%

18.9%

9.1%

11.7%

16.2%

2.0%

6.9%

11.7%

Imperva

$1,483

21.8%

18.0%

15.4%

10.9%

13.7%

16.5%

3.8%

12.0%

15.1%

Barracuda Networks

$1,234

6.9%

7.6%

6.2%

18.0%

20.4%

22.3%

15.7%

17.9%

19.3%

SecureWorks Corp

$878

8.2%

9.0%

10.0%

(3.9%)

0.3%

5.0%

(7.6%)

(2.9%)

1.4%

F-Secure OYJ

€ 697

8.7%

10.3%

9.7%

10.0%

15.2%

20.0%

7.1%

12.3%

17.0%

VASCO Data Security Intl

$500

(2.8%)

6.7%

7.9%

7.7%

10.0%

12.7%

Average

22.2%

17.2%

14.4%

9.5%

16.1%

18.3%

4.2%

12.8%

15.5%

Median

20.3%

15.9%

13.2%

10.4%

15.2%

17.9%

5.5%

12.0%

15.1%

Company

Market cap

EV/Sales (x)

EV/EBITDA (x)

P/E (x)

(m)

FY1

FY2

FY3

FY1

FY2

FY3

FY1

FY2

FY3

Osirium

£17

22.5

14.1

9.6

neg.

neg.

neg.

neg.

neg.

neg.

UK cybersecurity

Sophos Group

£2,761

6.3

5.4

4.7

63.2

40.4

32.4

116.7

79.0

56.7

GB Group

£629

5.4

4.8

4.3

24.5

21.2

19.6

34.1

29.7

26.3

Intercede Group

£24

1.4

1.0

neg.

159.9

neg.

neg.

Corero Network Security

£21

1.9

neg.

neg.

UK SaaS software

Craneware

£431

7.7

6.7

6.0

24.7

21.3

19.1

39.0

34.2

30.0

dotDigital Group

£251

5.8

4.9

19.2

15.8

30.4

25.0

Ideagen

£162

4.5

4.1

14.4

12.6

19.4

17.7

FreeAgent Holdings

£31

2.6

2.0

139.4

12.7

neg.

37.8

PAM software

CyberArk Software

$1,512

4.8

4.0

3.5

22.3

17.7

14.5

41.7

33.6

27.0

Wallix Group

€ 76

6.7

4.7

3.5

neg.

neg.

162.4

neg.

neg.

Global cybersecurity <£5bn market cap

Proofpoint

$4,135

8.0

6.3

4.9

61.7

46.1

33.7

123.7

90.6

60.1

FireEye

$3,031

3.9

3.6

3.4

43.5

31.2

17.5

neg.

neg.

86.7

Commvault Systems

$2,635

3.0

2.8

2.6

21.1

18.3

46.5

40.0

38.7

Qualys

$1,932

7.3

6.3

5.3

22.0

18.5

14.9

57.2

50.0

41.1

Mimecast

$1,718

6.5

5.3

4.5

71.3

45.6

27.7

539.3

171.7

98.2

Imperva

$1,483

3.6

3.1

2.6

33.2

22.3

16.0

52.1

45.8

36.8

Barracuda Networks

$1,234

2.7

2.5

2.4

15.1

12.4

10.7

30.9

26.5

25.1

SecureWorks Corp

$878

1.7

1.5

1.4

neg.

463.6

28.0

neg.

neg.

225.6

F-Secure OYJ

€ 697

3.6

3.3

3.0

36.0

21.4

14.9

60.1

37.5

24.8

VASCO Data Security Intl

$500

1.8

1.7

1.6

23.9

17.2

12.6

38.3

31.9

28.3

Average

4.5

3.9

3.6

39.7

55.4

30.3

87.8

50.1

53.8

Median

4.2

4.0

3.5

24.6

21.3

18.3

44.1

37.5

36.8

Source: Edison Investment Research, Bloomberg (as at 24 October). Note: FY1 = current fiscal year forecast.

Exhibit 10: Financial summary

£'000s

2013

2014

2015

2016*

2017e

2018e

2019e

31 October/31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

120.0

207.0

290.2

477.6

616.7

983.1

1,447.1

EBITDA

 

 

(366.7)

(327.1)

(377.9)

(1,136.7)

(1,902.5)

(1,804.5)

(1,556.2)

Normalised operating profit

 

 

(679.4)

(714.3)

(790.7)

(1,725.6)

(2,589.2)

(2,652.1)

(2,570.2)

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Share-based payments

0.0

(184.3)

(56.4)

(96.9)

(320.0)

(320.0)

(320.0)

Reported operating profit

(679.4)

(898.5)

(847.1)

(1,822.5)

(2,909.2)

(2,972.1)

(2,890.2)

Net Interest

(35.2)

5.7

(9.9)

9.7

3.0

0.0

0.0

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(714.6)

(708.5)

(800.7)

(1,715.9)

(2,586.2)

(2,652.1)

(2,570.2)

Profit Before Tax (reported)

 

 

(714.6)

(892.8)

(857.1)

(1,812.8)

(2,906.2)

(2,972.1)

(2,890.2)

Reported tax

137.7

134.1

121.0

453.3

406.9

416.1

404.6

Profit After Tax (norm)

(576.9)

(602.1)

(687.6)

(1,286.9)

(2,198.3)

(2,254.3)

(2,184.6)

Profit After Tax (reported)

(576.9)

(758.7)

(736.0)

(1,359.6)

(2,499.3)

(2,556.0)

(2,485.5)

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(576.9)

(602.1)

(687.6)

(1,286.9)

(2,198.3)

(2,254.3)

(2,184.6)

Net income (reported)

(576.9)

(758.7)

(736.0)

(1,359.6)

(2,499.3)

(2,556.0)

(2,485.5)

Basic average number of shares outstanding (m)

0

1

10

10

10

10

10

EPS - normalised (p)

 

 

N/A

N/A

(6.61)

(12.38)

(21.15)

(21.69)

(21.02)

EPS - normalised fully diluted (p)

 

 

N/A

N/A

(6.61)

(12.38)

(21.15)

(21.69)

(21.02)

EPS - basic reported (p)

 

 

(296.36)

(144.92)

(7.08)

(13.08)

(24.05)

(24.59)

(23.91)

Dividend (p)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

26.3

72.6

40.2

64.6

29.1

59.4

47.2

EBITDA Margin (%)

-305.7

-158.0

-130.2

-238.0

-308.5

-183.5

-107.5

Normalised Operating Margin

-566.3

-345.0

-272.5

-361.3

-419.8

-269.8

-177.6

BALANCE SHEET

Fixed Assets

 

 

815.7

805.2

799.7

1,178.8

1,792.1

2,244.4

2,530.5

Intangible Assets

808.6

795.7

793.3

1,134.5

1,674.8

2,057.1

2,273.1

Tangible Assets

7.2

9.5

6.4

44.3

117.3

187.3

257.3

Investments & other

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Current Assets

 

 

109.3

269.2

428.1

3,953.7

1,674.2

1,391.2

1,397.0

Stocks

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Debtors

77.2

218.6

154.6

380.9

533.6

618.1

702.0

Cash & cash equivalents

32.2

50.6

273.5

3,572.8

1,140.6

773.1

695.0

Other

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Current Liabilities

 

 

(235.2)

(294.2)

(365.0)

(648.5)

(1,161.7)

(3,567.0)

(6,024.4)

Creditors

(235.2)

(294.2)

(365.0)

(648.5)

(1,161.7)

(1,567.0)

(2,024.4)

Tax and social security

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Short term borrowings

0.0

0.0

0.0

0.0

0.0

(2,000.0)

(4,000.0)

Other

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Long Term Liabilities

 

 

(952.5)

(487.6)

(163.3)

0.0

0.0

0.0

0.0

Long term borrowings

(789.0)

(323.7)

0.0

0.0

0.0

0.0

0.0

Other long term liabilities

(163.4)

(163.9)

(163.3)

0.0

0.0

0.0

0.0

Net Assets

 

 

(262.6)

292.6

699.5

4,483.9

2,304.6

68.6

(2,097.0)

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

(262.6)

292.6

699.5

4,483.9

2,304.6

68.6

(2,097.0)

CASH FLOW

Op Cash Flow before WC and tax

(366.7)

(327.1)

(377.9)

(1,136.7)

(1,902.5)

(1,804.5)

(1,556.2)

Working capital

66.3

3.8

120.7

226.8

477.3

330.1

362.0

Exceptional & other

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Tax

109.8

48.4

134.6

120.4

290.0

406.9

416.1

Net operating cash flow

 

 

(190.6)

(274.9)

(122.6)

(789.4)

(1,135.2)

(1,067.5)

(778.1)

Capex

(412.8)

(376.7)

(407.3)

(968.0)

(1,300.0)

(1,300.0)

(1,300.0)

Acquisitions/disposals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net interest

(35.2)

5.7

(9.9)

9.7

3.0

0.0

0.0

Equity financing

0.0

639.3

762.8

5,047.1

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net Cash Flow

(638.6)

(6.5)

222.9

3,299.3

(2,432.2)

(2,367.5)

(2,078.1)

Opening net (cash)/debt

 

 

118.3

756.9

273.1

(273.5)

(3,572.8)

(1,140.6)

1,226.9

FX

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

0.0

490.3

323.8

0.0

0.0

0.0

0.0

Closing net (cash)/debt

 

 

756.9

273.1

(273.5)

(3,572.8)

(1,140.6)

1,226.9

3,304.9

Source: Osirium, Edison Investment Research. Note: *14 months ended 31 December.

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Osirium Technologies and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Osirium Technologies and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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