Reflecting COVID-19 risk to bookings

Osirium Technologies 19 May 2020 Update
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Osirium Technologies

Reflecting COVID-19 risk to bookings

FY19 results

Software & comp services

19 May 2020

Price

25.5p

Market cap

£5m

Net cash (£m) at end FY19

1.5

Shares in issue

19.5m

Free float

91%

Code

OSI

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(23.9)

10.9

(67.1)

Rel (local)

(26.9)

37.5

(60.1)

52-week high/low

90p

17p

Business description

UK-based Osirium Technologies designs and supplies subscription-based cybersecurity software. Its PAM platform includes privileged access, task, session and behaviour management. It recently launched a secure process automation solution (PPA) and a privileged endpoint management (PEM) solution.

Next events

H120 trading update

July 2020

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Osirium Technologies is a research client of Edison Investment Research Limited

Osirium’s FY19 results were broadly in line with forecasts. The company saw strong bookings growth in FY19 from a combination of new customers, renewals and expansion of existing contracts. The product suite was expanded to include privileged process automation and privileged endpoint management solutions. While COVID-19 disruption has not yet had a noticeable impact on demand, we are taking a more cautious approach to our bookings and revenue forecasts for FY20 before factoring in a reacceleration of growth in FY21.

Year end

Revenue (£m)

EBITDA*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

EV/Sales
(x)

12/18

0.96

(1.77)

(18.1)

0.0

N/A

3.6

12/19

1.17

(2.15)

(19.5)

0.0

N/A

3.0

12/20e

1.52

(2.01)

(17.4)

0.0

N/A

2.3

12/21e

2.10

(1.62)

(16.3)

0.0

N/A

1.7

Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

FY19 results broadly in line

FY19 bookings and revenues were broadly in line with the January trading update: bookings grew 54% y-o-y while a growing number of multi-year deals means that reported revenue grew 22% y-o-y. Due to the first time introduction of IFRS 16 and higher than forecast capitalised development costs, EBITDA was £222k ahead of our -€2.37m forecast. An operating loss of £3.98m was in line with our forecast. Net loss of £2.83m (our estimate £2.86m) benefited from a higher than forecast tax credit. Gross cash was £3.9m at the end of FY19, with net cash at £1.5m.

Factoring in some caution in FY20

With the number of people working from home substantially higher y-o-y and likely to remain high even once COVID-19 disruption has passed, the security of both administrator accounts and end-devices will be more important than ever. However, in the short term, although Osirium has not yet seen evidence of this, we believe some customers may delay investment decisions, and we have reduced our FY20 bookings and revenue forecasts accordingly. We expect demand to be robust once the economy moves to a normal footing. Our FY20 operating loss forecast increase by 3.8% to £3.78m and we introduce an FY21 operating loss forecast of £3.54m.

Valuation: Bookings the key driver

Osirium is trading at a discount to peers on an EV/Sales basis. As it is an early-stage company several years from profitability, we have performed a reverse DCF to analyse the assumptions factored into the current share price, using a WACC of 10% and a terminal growth rate of 3%. We estimate that the current share price is discounting average bookings growth of 19% for FY22–29e, break-even EBITDA in FY24, average EBITDA margins of 7.5% for FY22–29e and a terminal EBITDA margin of 30%. In our view, bookings growth is the key driver of share price performance.

Review of FY19 results

Exhibit 1: Osirium FY19 results highlights

£'000s

FY18a

FY19e

FY19a

Diff

y-o-y

Bookings

1,177.3

1,801.3

1,815.8

0.8%

54.2%

Revenues

957.5

1,149.7

1,171.6

1.9%

22.4%

EBITDA

(1,767.3)

(2,374.4)

(2,152.1)

(9.4%)

21.8%

EBITDA margin

-184.6%

-206.5%

-183.7%

(11.1%)

Normalised/reported operating profit

(2,674.8)

(3,388.0)

(3,399.7)

0.3%

27.1%

Normalised/reported operating margin

-279.4%

-294.7%

-290.2%

4.5%

Normalised/reported PBT

(2,675.4)

(3,425.8)

(3,451.9)

0.8%

29.0%

Normalised/reported net income

(2,267.8)

(2,857.1)

(2,829.4)

(1.0%)

24.8%

Normalised/reported basic EPS (p)

(18.14)

(19.49)

(19.45)

(0.2%)

7.2%

Gross cash

3,857.0

3,854.9

(0.1%)

Net debt/(cash)

(2,386.6)

(1,119.2)

(1,509.5)

34.9%

(36.8%)

Source: Osirium, Edison Investment Research

Osirium reported revenues and bookings substantially in line with the January trading update (revenues >£1.1m, bookings >£1.8m). Due to the number of multi-year deals signed in FY19, bookings growth exceeded revenue growth. Deferred income at the end of FY19 stood at £1.37m, 89% higher than a year ago. The company noted that it had a 100% subscription renewal rate in FY19.

EBITDA of -£2.15m was better than our forecast of -£2.37m. While operating costs were £200k lower than forecast, we estimate that c £50k of this was due to the first time application of IFRS 16, which removed lease costs, and the remainder was due to higher than expected capitalisation of development costs (£1.77m versus our £1.60m forecast). At the operating profit level, the difference was minimal, due to the £49k first-time depreciation of right-of-use assets and higher than expected amortisation (£1.14m versus our £963k forecast).

The company reported a tax credit of £623k (effective rate 18%), higher than our £569m forecast (effective rate 17%). Of this, £557m was an R&D tax credit and the remainder was a prior year adjustment. Overall, the reported net loss was 1% smaller than we had forecast.

Gross cash at year-end of £3.85m was substantially in line with our forecast. Net cash was better than forecast, as the company accounted for the convertible debt issued in October 2019 as a mixture of debt and equity, whereas we had treated it wholly as debt.

Business update

COVID-19: Increases risk, but no material impact yet

In its April update, the company noted that staff were working from home and continuing to support customers remotely. While it has become more difficult to build the new business pipeline through face-to-face activity such as conferences, the company has shifted its marketing and sales activity to make more use of digital channels. The company is closely controlling its cost base and will adapt accordingly.

Expanding the product portfolio

During FY19, the company launched two new products: Privileged Process Automation (PPA) in Q2 and Privileged Endpoint Manager (PEM) in Q4 and recorded its first PPA sale with an existing customer. Since year-end, the company has released v7.0 of its PAM platform, which introduces the concept of clustering. The company has developed the ability to cluster instances of Osirium servers together (‘mesh’) to ensure high availability. This means that a much higher number of devices can be managed by an installed instance. The goal is that the servers should be able to communicate with each other to enforce the rule that there is only one instance of an ID at any one time. This should also provide fault tolerance, with the ability to reconfigure the mesh in the event of any of the clustered servers failing.

The focus of R&D during FY20 will be the ongoing refinement of the platform’s technical specifications and user interface. The aim is to add new functionality and capabilities to the three core offerings, and the company will be exploring an offering targeted at managed service providers.

In January, the company signed a technology partnership with TSplus, a provider of remote access and application delivery solutions. TSplus technology is being used as a core component of the Osirium MAP Server, expanding the range of applications, devices and users that can benefit from Osirium’s privileged access management capabilities.

Growing the customer base

During FY19, the company added new customers in existing verticals (finance, NHS) and added customers in new verticals (fleet management services, central government). Since the year-end, the company has made further sales to the NHS and Ambulance Services. Customers totalled 50 at year-end, up from 36 at the end of FY18. During the year, the company saw fewer customers needing to undertake a proof of concept (POC) before signing up. Of those POCs that did happen in the year, 100% were converted to a sale.

Several contracts signed in FY19 were via channel partners including system integrators, managed service providers and managed security service providers. The company continues to build its channel partner relationships.

With 100% of contracts up for renewal in FY19 being renewed, the company also saw a number of customers increase the number of devices protected.

Post year-end, the company established a presence in Benelux and started sales and marketing activities in Benelux and the Nordics.

Outlook and changes to estimates

We have revised our FY20 forecasts to reflect FY19 results and have made the following changes:

Bookings: we have taken a more cautious approach as we assume that despite the obvious need for its technology, potential customers will be controlling their own cost bases more closely during the COVID-19 disruption and may delay making investment decisions.

Revenues: these are a function of bookings intake, so we have reduced our FY20 forecast. We introduce a forecast for 38% growth in FY21.

Costs: we factor in a slightly slower increase in headcount over the year. We also reflect IFRS 16 for the first time. Overall, we are factoring in slightly lower operating costs, slightly higher capitalised development costs and related amortisation, and depreciation of right-of-use assets.

Cash: we forecast a gross cash position of £0.93m by the end of FY20. We expect that the company will need to seek new financing in FY21 – we have modelled debt financing of £2.5m. If the company achieves faster bookings growth than we forecast, this will reduce the future funding requirement.

Exhibit 2: Changes to forecasts

£'k

FY20e

FY20e

FY21e

Old

New

Change

y-o-y

New

y-o-y

Bookings

2,341.6

2,179.0

(6.9%)

20.0%

2,941.6

35.0%

Revenues

1,882.7

1,521.5

(19.2%)

29.9%

2,096.2

37.8%

EBITDA

(2,375.1)

(2,222.8)

(6.4%)

3.3%

(1,783.9)

(19.7%)

EBITDA margin

-126.2%

-146.1%

15.8%

-85.1%

Normalised operating profit

(3,635.9)

(3,775.1)

3.8%

11.0%

(3,540.4)

(6.2%)

Normalised operating margin

-193.1%

-248.1%

(55.0%)

-168.9%

Reported operating profit

(3,635.9)

(3,775.1)

3.8%

11.0%

(3,540.4)

(6.2%)

Reported operating margin

-193.1%

-248.1%

(55.0%)

-168.9%

Normalised PBT

(3,838.4)

(3,979.7)

3.7%

15.3%

(3,745.0)

(5.9%)

Reported PBT

(3,838.4)

(3,979.7)

3.7%

15.3%

(3,745.0)

(5.9%)

Normalised net income

(3,262.6)

(3,382.7)

3.7%

19.6%

(3,183.3)

(5.9%)

Reported net income

(3,262.6)

(3,382.7)

3.7%

19.6%

(3,183.3)

(5.9%)

Normalised basic EPS (p)

(16.74)

(17.35)

3.7%

(10.8%)

(16.33)

(5.9%)

Normalised diluted EPS (p)

(16.74)

(17.35)

3.7%

(10.8%)

(16.33)

(5.9%)

Reported basic EPS (p)

(16.74)

(17.35)

3.7%

(10.8%)

(16.33)

(5.9%)

Gross cash

646.1

930.7

44.0%

901.3

Net debt/(cash)

2,294.1

1,617.2

(29.5%)

(207.1%)

4,349.1

168.9%

Source: Edison Investment Research

Valuation

The share price is essentially flat year to date, declining with the market in March to a low of 17p, then rebounding through April to reach a high of 39p before returning to the current level. Compared to cybersecurity peers trading on an average EV/Sales multiple of 4.6x this year’s revenues and 4.2x next year, Osirium is trading at a discount (FY20e 2.3x, FY21e 1.7x). In our view, the key factor to trigger upside will be evidence that bookings have not been materially negatively affected by COVID-19.

As we do not expect Osirium to reach profitability within our explicit forecast period, we use a reverse discounted cash flow analysis to calculate the assumptions underlying the current share price. With a WACC of 10% and a terminal growth rate of 3%, we arrive at the current share price using the following assumptions for the period after our 2020–21 explicit forecasts:

Bookings growth of 25% per year in 2022 and 2023, reducing every year thereafter to 15% by 2028, with 28% recognition in the year invoiced and 65% of deferred income unwinding each year.

Revenue growth: trending down from 32% in 2022 to 15% in 2029.

EBITDA margin: hitting break-even EBITDA in 2024, rising to 30% margin by 2029. 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 5.9%, well below established software vendors.

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

Capex (mainly capitalised development costs): we forecast this to reduce from 72% of sales in 2022 to 24% by 2029.

Exhibit 3: Financial summary

£'k

2013

2014

2015

2016

2017

2018

2019

2020e

2021e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

120.0

207.0

290.2

477.6

647.6

957.5

1,171.6

1,521.5

2,096.2

EBITDA

 

 

(366.7)

(327.1)

(377.9)

(1,136.7)

(1,609.4)

(1,767.3)

(2,152.1)

(2,222.8)

(1,783.9)

Normalised operating profit

 

 

(679.4)

(714.3)

(790.7)

(1,725.6)

(2,296.8)

(2,674.8)

(3,399.7)

(3,775.1)

(3,540.4)

Amortisation of acquired intangibles

0.0

0.0

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

0.0

0.0

Share-based payments

0.0

(184.3)

(56.4)

(96.9)

0.0

0.0

0.0

0.0

0.0

Reported operating profit

(679.4)

(898.5)

(847.1)

(1,822.5)

(2,296.8)

(2,674.8)

(3,399.7)

(3,775.1)

(3,540.4)

Net Interest

(35.2)

5.7

(9.9)

9.7

4.2

(0.6)

(52.2)

(204.6)

(204.6)

Joint ventures & associates (post tax)

0.0

0.0

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

0.0

0.0

Profit Before Tax (norm)

 

 

(714.6)

(708.5)

(800.7)

(1,715.9)

(2,292.6)

(2,675.4)

(3,451.9)

(3,979.7)

(3,745.0)

Profit Before Tax (reported)

 

 

(714.6)

(892.8)

(857.1)

(1,812.8)

(2,292.6)

(2,675.4)

(3,451.9)

(3,979.7)

(3,745.0)

Reported tax

137.7

134.1

121.0

453.3

409.4

407.6

622.5

597.0

561.8

Profit After Tax (norm)

(576.9)

(602.1)

(687.6)

(1,286.9)

(1,883.2)

(2,267.8)

(2,829.4)

(3,382.7)

(3,183.3)

Profit After Tax (reported)

(576.9)

(758.7)

(736.0)

(1,359.6)

(1,883.2)

(2,267.8)

(2,829.4)

(3,382.7)

(3,183.3)

Minority interests

0.0

0.0

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

0.0

0.0

Net income (normalised)

(576.9)

(602.1)

(687.6)

(1,286.9)

(1,883.2)

(2,267.8)

(2,829.4)

(3,382.7)

(3,183.3)

Net income (reported)

(576.9)

(758.7)

(736.0)

(1,359.6)

(1,883.2)

(2,267.8)

(2,829.4)

(3,382.7)

(3,183.3)

Basic ave. number of shares outstanding (m)

0

1

10

10

10

13

15

19

19

EPS - normalised (p)

 

 

N/A

N/A

(6.61)

(12.38)

(18.12)

(18.14)

(19.45)

(17.35)

(16.33)

EPS - normalised fully diluted (p)

 

 

N/A

N/A

(6.61)

(12.38)

(18.12)

(18.14)

(19.45)

(17.35)

(16.33)

EPS - basic reported (p)

 

 

(296.36)

(144.92)

(7.08)

(13.08)

(18.12)

(18.14)

(19.45)

(17.35)

(16.33)

Dividend (p)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

26.3

72.6

40.2

64.6

35.6

47.9

22.4

29.9

37.8

EBITDA Margin (%)

-305.7

-158.0

-130.2

-238.0

-248.5

-184.6

-183.7

-146.1

-85.1

Normalised Operating Margin

-566.3

-345.0

-272.5

-361.3

-354.7

-279.4

-290.2

-248.1

-168.9

BALANCE SHEET

Fixed Assets

 

 

815.7

805.2

799.7

1,178.8

1,812.1

2,360.2

3,124.4

3,469.2

3,647.0

Intangible Assets

808.6

795.7

793.3

1,134.5

1,731.9

2,307.2

2,936.5

3,349.7

3,595.9

Tangible Assets

7.2

9.5

6.4

44.3

80.2

52.9

187.9

119.5

51.0

Investments & other

0.0

0.0

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

1,646.4

3,134.6

4,837.3

2,031.1

2,206.4

Stocks

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Debtors

77.2

218.6

154.6

380.9

622.6

748.0

982.4

1,100.4

1,305.0

Cash & cash equivalents

32.2

50.6

273.5

3,572.8

1,023.8

2,386.6

3,854.9

930.7

901.3

Other

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Current Liabilities

 

 

(235.2)

(294.2)

(365.0)

(648.5)

(857.7)

(1,170.3)

(1,923.0)

(2,675.7)

(3,543.5)

Creditors

(235.2)

(294.2)

(365.0)

(648.5)

(857.7)

(1,170.3)

(1,889.1)

(2,641.8)

(3,509.6)

Tax and social security

0.0

0.0

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

0.0

0.0

0.0

0.0

Other

0.0

0.0

0.0

0.0

0.0

0.0

(33.9)

(33.9)

(33.9)

Long Term Liabilities

 

 

(952.5)

(487.6)

(163.3)

0.0

0.0

0.0

(2,422.4)

(2,591.0)

(5,259.5)

Long term borrowings

(789.0)

(323.7)

0.0

0.0

0.0

0.0

(2,345.4)

(2,547.9)

(5,250.4)

Other long term liabilities

(163.4)

(163.9)

(163.3)

0.0

0.0

0.0

(77.0)

(43.1)

(9.1)

Net Assets

 

 

(262.6)

292.6

699.5

4,483.9

2,600.8

4,324.5

3,616.3

233.5

(2,949.7)

Minority interests

0.0

0.0

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

2,600.8

4,324.5

3,616.3

233.5

(2,949.7)

CASH FLOW

Op Cash Flow before WC and tax

(366.7)

(327.1)

(377.9)

(1,136.7)

(1,609.4)

(1,767.3)

(2,152.1)

(2,222.8)

(1,783.9)

Working capital

66.3

3.8

120.7

226.8

85.5

187.2

633.7

634.7

663.1

Exceptional & other

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Tax

109.8

48.4

134.6

120.4

291.4

407.6

473.3

597.0

561.8

Net operating cash flow

 

 

(190.6)

(274.9)

(122.6)

(789.4)

(1,232.5)

(1,172.5)

(1,045.1)

(991.1)

(559.0)

Capex

(412.8)

(376.7)

(407.3)

(968.0)

(1,320.6)

(1,455.7)

(1,852.8)

(1,897.1)

(1,934.3)

Acquisitions/disposals

0.0

0.0

0.0

0.0

0.0

0.0

0.4

0.0

0.0

Net interest

(35.2)

5.7

(9.9)

9.7

4.2

(0.6)

0.0

0.0

0.0

Equity financing

0.0

639.3

762.8

5,047.1

0.0

3,991.5

1,726.4

0.0

0.0

Dividends

0.0

0.0

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

(60.6)

(36.0)

(36.0)

Net Cash Flow

(638.6)

(6.5)

222.9

3,299.3

(2,549.0)

1,362.8

(1,231.7)

(2,924.2)

(2,529.4)

Opening net (cash)/debt

 

 

118.3

756.9

273.1

(273.5)

(3,572.8)

(1,023.8)

(2,386.6)

(1,509.5)

1,617.2

FX

0.0

0.0

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)

354.6

(202.5)

(202.5)

Closing net (cash)/debt

 

 

756.9

273.1

(273.5)

(3,572.8)

(1,023.8)

(2,386.6)

(1,509.5)

1,617.2

4,349.1

Source: Osirium, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Osirium Technologies and prepared and issued by Edison, in consideration of a fee payable by Osirium Technologies. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Osirium Technologies and prepared and issued by Edison, in consideration of a fee payable by Osirium Technologies. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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