Registration number:
for the Year Ended 31 December 2023
OutSystems Limited
Contents
Company Information |
|
Strategic Report |
|
Directors' Report |
|
Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
|
Income Statement |
|
Statement of Comprehensive Income |
|
Statement of Financial Position |
|
Statement of Changes in Equity |
|
Statement of Cash Flows |
|
Notes to the Financial Statements |
OutSystems Limited
Company Information
Directors |
T A Occhiolini C M G Alves J D Duchesne |
Registered office |
|
Solicitors |
|
Auditors |
|
OutSystems Limited
Strategic Report for the Year Ended 31 December 2023
The directors present their strategic report for the year ended 31 December 2023.
Fair review of the business
Revenue decreased by 15% to £15,963,877 (2021: £18,690,032) primarily due to lower sales in the United Kingdom. The 11% decrease in gross profit to £7,977,737 (2022: £8,984,918) is mainly due to a combination of lower sales and the bigger decrease in staff costs.
Administrative expenses decreased to £7,217,556 (2022: £8,429,888) primarily due to the lower legal and professional fees, Share-based payment and lower allocation of expenditure from the Company’s affiliate companies.
Despite the decrease in Revenue, the Company’s operating profit has increased slightly to £760,181 (2022: £542,057).
The Company’s parent typically tracks performance metrics on a group wide basis.
Future developments
The Company continues to see a significant need for its services as there remains tremendous market momentum for the Group’s offerings in the United Kingdom since these address major industry challenges related to digital transformation, developer talent shortages, mobile development and the re-tooling of aging legacy systems. However, this momentum could be tempered by uncertainties discussed in the Principal risks and uncertainties section below.
Principal risks and uncertainties
Risk factors
The Company is in a stage of expansion and has developed a business plan to support this decision. The directors continue to believe that the Company currently enjoys a technological advantage over its competitors and thus understands the need for continued investment to maintain this position.
The directors believe that the risk factors below could materially affect the Company and its financial condition and financial performance:
• Scalability: The Company may not be able to scale the business to meet the growing needs of its customers and/or the rapid growth of the low-code software market and if the Company cannot grow effectively, financial results could be negatively impacted.
• Changing technology: The Company must continue to provide a platform that meets the constantly changing technology requirements of its customers.
• Competitors: The markets are highly competitive and rapidly evolving. The Company needs to strategically and effectively compete with respect to new and changing opportunities, technologies, standards, customer requirements and many other competitive factors to attract new customers and/or sustain existing customer relationships. Failure to compete would cause an adverse effect on the Company’s result of operations.
• Regulatory compliance: The Company business is subject to stringent and changing laws, regulations, standards, and contractual obligations related to data privacy and security which could result in additional costs and liabilities or inhibit future subscriptions to the Company’s platform.
OutSystems Limited
Strategic Report for the Year Ended 31 December 2023
• Economic conditions: The Company’s business could be materially and adversely affected because of developments in the global macro-economic environment, which may impact the purchasing behaviors of existing and potential customers. Challenging economic conditions have been exacerbated by uncertainties connected with Russia's illegal invasion of Ukraine and the Israel-Hamas War.
• Employee recruitment and retention: The Company’s business relies on the performance of highly skilled personnel, and the business could be harmed if the Company cannot attract and retain key personnel.
• Reliance on third parties for cloud offerings: The Company relies on third parties to operate the cloud offerings. Should these providers experience any compromise, disruption, or interference associated with their cloud offerings this could impact the Company’s ability to utilize those services and, therefore, may adversely impact the business.
The above list does not capture all risk factors the Company faces. Others are less pronounced and could potentially materially impact the Company’s business but are not considered significant at the present time. For example, at present the Company receives ample financial and operational support from its parent undertaking.
Approved by the
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OutSystems Limited
Directors' Report for the Year Ended 31 December 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
Directors' of the company
The directors, who held office during the year, were as follows:
The following director was appointed after the year end:
Principal activity
The principal activity of the company is the distribution of software along with the provision of ancillary services such as consulting and training in the low-code software market.
Information included in the Strategic Report
Information regarding likely future developments is disclosed in the Strategic Report.
Financial instruments
Objectives and policies
Details of risks and management policies relating to financial instruments are contained in note 23 to the financial statements.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.
Reappointment of auditors
In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Lambert Chapman LLP as auditors of the company is to be proposed at the forthcoming Annual General Meeting.
Approved by the
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OutSystems Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities for preparing the Annual 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. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the UK. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
• | select suitable accounting policies and apply them consistently; |
• | make judgements and accounting estimates that are reasonable and prudent; |
• | state whether applicable International Financial Reporting Standards (IFRSs) as adopted by the UK have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
OutSystems Limited
Independent Auditor's Report to the Members of OutSystems Limited
Opinion
We have audited the financial statements of OutSystems Limited (the 'company') for the year ended 31 December 2023, which comprise the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the UK.
In our opinion the financial statements:
• | give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended; |
• | have been properly prepared in accordance with International Financial Reporting Standards (IFRS); and |
• | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
OutSystems Limited
Independent Auditor's Report to the Members of OutSystems Limited
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
• | the financial statements are not in agreement with the accounting records and returns; or |
• | certain disclosures of directors’ remuneration specified by law are not made; or |
• | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor 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.
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. Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
• |
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations; |
• |
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the technology and software sector; |
• |
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, employment, health and safety legislation; |
• |
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and |
• |
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. |
OutSystems Limited
Independent Auditor's Report to the Members of OutSystems Limited
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by;
• |
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and |
• |
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. |
To address the risk of fraud through management bias and override of controls, we:
• |
performed analytical procedures to identify any unusual or unexpected relationships; |
• |
tested journal entries to identify unusual transactions; |
• |
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and |
• |
investigated the rationale behind significant or unusual transactions. |
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
• |
agreeing financial statement disclosures to underlying supporting documentation; |
• |
enquiring of management as to actual and potential litigation and claims. |
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing
standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the 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 an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
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For and on behalf of
3 Warners Mill
Silks Way
Essex
CM7 3GB
OutSystems Limited
Income Statement for the Year Ended 31 December 2023
Note |
2023 |
2022 |
|
Revenue |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Other losses |
- |
( |
|
Operating profit |
|
|
|
Finance income |
|
|
|
Profit before tax |
|
|
|
Income tax expense |
( |
( |
|
Profit for the year |
|
|
The above results were derived from continuing operations.
OutSystems Limited
Statement of Comprehensive Income for the Year Ended 31 December 2023
2023 |
2022 |
|
Profit for the year |
|
|
Total comprehensive income for the year |
|
|
OutSystems Limited
(Registration number: 08360814)
Statement of Financial Position as at 31 December 2023
Note |
31 December |
31 December |
|
Assets |
|||
Non-current assets |
|||
Property, plant and equipment |
|
|
|
Current assets |
|||
Trade and other receivables |
|
|
|
Income tax asset |
- |
|
|
Cash and cash equivalents |
|
|
|
|
|
||
Total assets |
|
|
|
Equity and liabilities |
|||
Equity |
|||
Share capital |
(100,000) |
(100,000) |
|
Capital contribution reserve |
(2,094,321) |
(1,759,322) |
|
Retained earnings |
(2,620,899) |
(2,004,288) |
|
Total equity |
(4,815,220) |
(3,863,610) |
|
Non-current liabilities |
|||
Deferred income |
( |
( |
|
Current liabilities |
|||
Trade and other payables |
( |
( |
|
Income tax liability |
( |
- |
|
Deferred income |
( |
( |
|
( |
( |
||
Total liabilities |
( |
( |
|
Total equity and liabilities |
( |
( |
Approved by the
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OutSystems Limited
Statement of Changes in Equity for the Year Ended 31 December 2023
Share capital |
Capital contribution reserve |
Retained earnings |
Total |
|
At 1 January 2023 |
|
|
|
|
Profit for the year |
- |
- |
|
|
Total comprehensive income |
- |
- |
|
|
Share based payment transactions |
- |
334,999 |
- |
334,999 |
At 31 December 2023 |
|
|
|
|
Share capital |
Capital contribution reserve |
Retained earnings |
Total |
|
At 1 January 2022 |
|
|
|
|
Profit for the year |
- |
- |
|
|
Total comprehensive income |
- |
- |
|
|
Share based payment transactions |
- |
683,766 |
- |
683,766 |
At 31 December 2022 |
100,000 |
1,759,322 |
2,004,288 |
3,863,610 |
OutSystems Limited
Statement of Cash Flows for the Year Ended 31 December 2023
2023 |
2022 |
|
Cash flows from operating activities |
||
Profit for the year |
|
|
Adjustments to cash flows from non-cash items |
||
Depreciation and amortisation |
|
|
Loss on disposal of property plant and equipment |
- |
|
Finance income |
( |
( |
Share based payment transactions |
334,999 |
683,766 |
Income tax expense |
|
|
|
|
|
Working capital adjustments |
||
Decrease/(increase) in trade and other receivables |
|
( |
Increase in trade and other payables |
|
|
Increase in deferred income |
|
|
Cash generated from operations |
|
|
Net income taxes (paid)/ received |
( |
( |
Net cash flow from operating activities |
|
|
Cash flows from investing activities |
||
Interest received |
|
|
Net increase in cash and cash equivalents |
|
|
Cash and cash equivalents at 1 January |
6,382,369 |
3,973,399 |
Cash and cash equivalents at 31 December |
14,282,334 |
6,382,369 |
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
General information |
The company is a private company limited by share capital, incorporated and domiciled in England & Wales.
The address of its registered office is:
England
The principal place of business is:
York House
221 Pentonville Road
Kings Cross
London
N1 9UZ
Accounting policies |
Statement of compliance
The company financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations adopted by the UK ("adopted IFRS's").
Summary of material accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with adopted IFRSs and under historical cost accounting rules, apart from share based payments which are accounted for under fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies.
Changes in accounting policy
New standards, interpretations and amendments not yet effective
The following newly issued but not yet effective standards, interpretations and amendments, which have not been applied in these financial statements, will or may have an effect on the company financial statements in future:
Amendments to IAS 1
The aim of the amendments is to assist with the classification of current and non-current liabilities. The amendments are effective for periods beginning on or after 1 January 2024 and the company will adopt these amendments from that date. The company expects no material effect as a result of adoption.
Amendments to IFRS 16
The aim of the amendments is to update accounting treatment for sale and leaseback transactions. The amendments are effective for periods beginning on or after 1 January 2024 and the company will adopt these amendments from that date. The company expects no material effect as a result of adoption.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Amendments to IAS 1
The aim of the amendments is to improve disclosure of terms of non-current liabilities with covenants. The amendments are effective for periods beginning on or after 1 January 2024 and the company will adopt these amendments from that date. The company expects no material effect as a result of adoption.
Amendments to IAS 7 and IFRS 7
The aim of the amendments is to improve disclosure of supplier finance arrangements. The amendments are effective for periods beginning on or after 1 January 2024 and the company will adopt these amendments from that date. The company expects no material effect as a result of adoption.
Amendments to IAS 21
The aim of the amendments is to improve consistency when determining exchange rates used by an entity and to provide appropriate disclosures. The amendments are effective for periods beginning on or after 1 January 2025 and the company will adopt these amendments from that date. The company expects no material effect as a result of adoption.
Revenue recognition
The Company sells products and services to end customers on behalf of the parent company under a limited risk distribution agreement, the Company is required to determine whether the nature of its promise is a performance obligation to:
1. Provide the specified good or services to the end customer (principal); or
2. Arrange a third party to provide those goods or services (agent).
An entity acting as a principal controls a good or service before the entity transfers the good or service to the customer. An entity that qualifies as a principal may satisfy a performance obligation by itself or engage another party to satisfy some or all of a performance obligation. When an entity is a principal, it recognizes revenue at the gross amount as it performs, or the agent performs each obligation. The obligation of the agent is to arrange for the provision of goods or services by another party. When an entity acts as an agent, it recognizes revenue up to the amount of any fee or commission that it is entitled to on the transaction.
The following indicators suggest that an entity is an agent:
1. Another third party is responsible for fulfilling the contract;
2. The entity has no inventory risk;
3. The entity has no discretion in determining price for the end customer;
4. The consideration is in the form of a commission.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Recognition
The principles in IFRS are applied to revenue recognition criteria using the following 5 step model:
1. Identify the contracts with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue when or as the entity satisfies its performance obligations
Subscription Revenues
Subscription revenues are comprised of fees that give customers access to the ordered subscription service, related support and updates if any, to the subscribed service, during the subscription term. The Company recognises subscription revenue rateably over the contract term beginning on the commencement date of each contract, which is the date the service is made available to the customer. Contracts with customers typically include a fixed amount of consideration and are generally non-cancellable and without any refund type provisions. Customers are generally invoiced in advance for subscription services upon execution of the initial contract or renewal.
Subscription revenues also include revenue from self-hosted offerings in which customers deploy all, or a portion of the subscription service internally or contract with a third-party to host the software. For these contracts, the software license element and the related support and updates are accounted for separately as they are distinct performance obligations. The transaction price is allocated to the separate performance obligations based on their relative standalone selling price (“SSP”) basis. Transaction price allocated to the software element is recognised upon delivery, which is when transfer of control of the software to the customer is complete. The transaction price allocated to the related support and updates are recognised rateably over the contract term.
Perpetual Software Licenses
The Company has a small amount of contracts with customers to provide a perpetual license to its software platform. Perpetual license revenues are recognised upon delivery, which is when transfer of control of the software to the customer is complete.
Professional services and other services
Professional service arrangements include both time and materials contracts and fixed price contracts. Time and materials contracts are recognised as the services are delivered. For fixed fee contracts, the Company generally recognises revenue on a proportional performance basis. In some instances, the Company must deliver certain milestones in order to be entitled to invoice a customer. In these instances, the Company defers revenue and the related costs until the milestone is achieved. For most professional services contracts, the Company invoices the customer over the term of the professional services contract. Other service revenues include training for on-site or on-line classes, for which revenue is recognised when the training is delivered.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Contracts with Multiple Performance Obligations
The Company enters into contracts that include combinations of multiple performance obligations, which are generally capable of being distinct and accounted for as separate performance obligations. Terms and conditions included within customer contracts to assure appropriate revenue recognition, including whether products and services are considered distinct performance obligations that should be accounted for separately versus together. For contracts with multiple performance obligations, the transaction price is allocated to the separate performance obligations based on a relative SSP basis. The Company determines SSP by considering various factors, including historical selling prices of each service, competitive pricing of similar products and current pricing practices.
Unbilled Receivables
Unbilled receivables represent subscription or professional service revenues that are recognised upon delivery of the software or professional services prior to invoicing of the customer. Unbilled receivables are presented in the balance sheets as Trade and other receivables.
Deferred Revenue
Deferred revenue consists primarily of payments received in advance of revenue recognition from contracts with customers and is recognised as revenue recognition criteria are satisfied. Deferred revenue is presented in the balance sheets as Deferred income.
Transaction price
To calculate the transaction price of contracts -
for example:-
The transaction price is the retail price of the product less discounts / offers and value added taxes.
The transaction price of fixed fee contracts is determined by the fee specified in the contract.
The transaction price for fee for service contracts is at rates specified in the contract.
Where discounts to the contract price are applied the company presents these as a discount from contract revenue at the point in time the discount terms are met by the customer.
Net basis of measurement of contract balances
Contract asset and contract liability positions are determined for each contract on a net basis. This is because the rights and obligations within each contract are considered inter-dependent. Where two contracts are with the same or related entities, an assessment is made of whether contract assets and liabilities are inter-dependent and if so, contract balances are reported net.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Impairment of contract related balances
At each reporting date, the company determines whether or not such assets are impaired by comparing the carrying amount of the asset to the remaining amount of consideration that the company expects to receive less the costs that relate to providing services under the relevant contract. In determining the estimated amount of consideration, the company uses the same principles as it does to determine the contract transaction price, except that any constraints used to reduce the transaction price will be removed for the impairment test.
Where the relevant contracts or specific performance obligations are demonstrating marginal profitability or other indicators of impairment, judgement is required in ascertaining whether or not the future economic benefits from these contracts are sufficient to recover these assets. In performing this impairment assessment, management is required to make an assessment of the costs to complete the contract. The ability to accurately forecast such costs involves estimates around cost savings to be achieved over time, anticipated profitability of the contract, as well as future performance against any contract-specific KPIs that could trigger variable consideration, or service credits. Where a contract is anticipated to make a loss, these judgements are also relevant in determining whether or not an onerous contract provision is required and how this is to be measured.
Deferred commissions
Deferred commissions consist primarily of sales commissions paid to our internal sales staff and referral fees paid to our third-party referral partners. The amounts eligible for deferral include only costs that are incurred for a contract that is actually won. Costs eligible for deferral are amortized over a period of benefit which the Company has determined to be five years, which approximates the life of our technology. Commissions earned upon the renewal of customer contracts are deferred and amortized over the actual or average renewal term. Additionally, for self-hosted offerings, consistent with the recognition of subscriptions revenue, a portion of the commission is recognized upfront when the self- hosted offering is made available. The period of benefit is determined by taking into consideration the estimated life of a customer, the life of the Group’s technology and other factors. Commissions are paid to both employees of the Company and to third parties in our partner network.
Foreign currency transactions and balances
Monetary assets and liabilities denominated in foreign currencies are retranslated at the currency spot rate of exchange ruling at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in the Income Statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or the Income Statement are also recognised in OCI or the Income Statement, respectively).
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the Income Statement, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Deferred income tax is recognised on material temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Property, plant and equipment
Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation.
Depreciation
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Office and computer equipment |
20% and 25% Reducing balance method |
Fixtures and fittings |
25% Reducing balance method |
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Payables are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Borrowings
All borrowings are initially recorded at the present value of future cashflows to settle the liability, discounted using the company's discount rate.
Interest expense is recognised on the basis of the effective interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Share capital
Ordinary shares are classified as equity.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
For defined contribution plans, contributions are paid into publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as an asset.
Share based payments
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments. These equity instruments are settled with the issuance of equity in the ultimate parent company, OutSystems Holdings S.A., and not in cash (equity-settled transactions).
The Company accounts for share-based payments in accordance with the guidance of IFRS 2, Share-based Payments. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The Company utilises a binomial options pricing model, which values the underlying instrument over a period of time rather than at a point in time. This method is considered most appropriate when valuing share-based awards that are exercisable at specific time periods, which is the structure of the Company’s share-based awards. The grant date fair value of each award is recognised in employee benefits expense, together with a corresponding increase in equity (other equity instruments), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest.
Modification of share-based awards that either increase the fair value of the share-based award or increase the number of equity awards granted are measured at the date of modification. The incremental fair value of the modification is amortised as employee benefits expense from the modification date over the remaining vesting period of the modified award.
No expense is recognised for awards that do not ultimately vest due to non-market performance and/or service conditions not being met.
Financial instruments
Initial recognition
Financial assets and financial liabilities comprise all assets and liabilities reflected in the statement of financial position, although excluding property, plant and equipment, investment properties, intangible assets, deferred tax assets, prepayments, deferred tax liabilities and employee benefits plan.
The company recognises financial assets and financial liabilities in the statement of financial position when, and only when, the company becomes party to the contractual provisions of the financial instrument.
Financial assets are initially recognised at fair value. Financial liabilities are initially recognised at fair value, representing the proceeds received net of premiums, discounts and transaction costs that are directly attributable to the financial liability.
Subsequent to initial measurement, financial assets and financial liabilities are measured at either amortised cost or fair value.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Classification and measurement
Financial instruments are classified at inception into one of the following categories, which then determine the subsequent measurement methodology:-
Financial assets are classified into one of the following three categories:-
· financial assets at amortised cost;
· financial assets at fair value through other comprehensive income (FVTOCI); or
· financial assets at fair value through the profit or loss (FVTPL).
Financial liabilities are classified into one of the following two categories:-
· financial liabilities at amortised cost; or
· financial liabilities at fair value through the profit or loss (FVTPL).
The classification and the basis for measurement are subject to the company’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, as detailed below:-
Financial assets at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:-
· the assets are held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
· the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
If either of the above two criteria is not met, the financial assets are classified and measured at fair value through the profit or loss (FVTPL).
If a financial asset meets the amortised cost criteria, the company may choose to designate the financial asset at FVTPL. Such an election is irrevocable and applicable only if the FVTPL classification significantly reduces a measurement or recognition inconsistency.
Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI only if it meets both of the following conditions and is not designated as at FVPTL:-
· the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
· the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the company may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.
If an equity investment is designated as FVTOCI, all gains and losses, except for dividend income, are recognised in other comprehensive income and are not subsequently included in the statement of income.
Financial assets at fair value through the profit or loss (FVTPL)
Financial assets not otherwise classified above are classified and measured as FVTPL.
Financial liabilities at amortised cost
All financial liabilities, other than those classified as financial liabilities at FVTPL, are measured at amortised cost using the effective interest rate method.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Financial liabilities at fair value through the profit or loss
Financial liabilities not measured at amortised cost are classified and measured at FVTPL. This classification includes derivative liabilities.
Derecognition
Financial assets
The company derecognises a financial asset when;
- the contractual rights to the cash flows from the financial asset expire,
- it transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred; or
- the company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of the consideration received is recognised as a gain or loss in the profit or loss.
Any cumulative gain or loss recognised in OCI in respect of equity investment securities designated as FVTOCI is not recognised in profit or loss on derecognition of such securities. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the company is recognised as a separate asset or liability.
The company enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not derecognised.
When the company derecognises transferred financial assets in their entirety, but has continuing involvement in them then the entity should disclose for each type of continuing involvement at the reporting date:
(a) The carrying amount of the assets and liabilities that are recognised in the entity’s statement of financial position and represent the entity’s continuing involvement in the derecognised financial assets, and the line items in which those assets and liabilities are recognised.
(b) The fair value of the assets and liabilities that represent the entity’s continuing involvement in the derecognised financial assets;
(c) The amount that best represents the entity’s maximum exposure to loss from its continuing involvement in the derecognised financial assets, and how the maximum exposure to loss is determined
(d) The undiscounted cash outflows that would or may be required to repurchase the derecognised financial assets or other amounts payable to the transferee for the transferred assets
If the terms of financial liabilities are modified, the company evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual obligations from the cash flows from the original financial liabilities are deemed to expire. In this case the original financial liabilities are derecognised and new financial liabilities are recognised at either amortised cost or fair value.
If the cash flows are not substantially different, then the modification does not result in derecognition of the financial liabilities. In this case, the company recalculates the gross carrying amount of the financial liabilities and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the statement of income.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Financial liabilities
The company derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire.
Modification of financial assets and financial liabilities
Financial assets
If the terms of a financial asset are modified, the company evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual rights to the cash flows from the original financial asset are deemed to expire. In this case the original financial asset is derecognised and a new financial asset is recognised at either amortised cost or fair value.
If the cash flows are not substantially different, then the modification does not result in derecognition of the financial asset. In this case, the company recalculates the gross carrying amount of the financial asset and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the statement of income.
Impairment of financial assets
Measurement of Expected Credit Losses
The company recognises loss allowances for expected credit losses (ECL) on financial instruments that are not measured at FVTPL, namely:
- Financial assets that are debt instruments
- Accounts and other receivables
- Financial guarantee contracts issued; and
- Loan commitments issued.
The company classifies its financial instruments into stage 1, stage 2 and stage 3, based on the applied impairment methodology, as described below:
Stage 1: for financial instruments where there has not been a significant increase in credit risk since initial recognition and that are not credit-impaired on origination, the company recognises an allowance based on the 12-month ECL.
Stage 2: for financial instruments where there has been a significant increase in credit risk since initial recognition but they are not credit-impaired, the company recognises an allowance for the lifetime ECL.
Stage 3: for credit-impaired financial instruments, the company recognises the lifetime ECL.
The company measures loss allowances at an amount equal to the lifetime ECL, except for the following, for which they are measured as a 12-month ECL:
- debt securities that are determined to have a low credit risk (equivalent to investment grade rating) at the reporting date; and
- other financial instruments on which the credit risk has not increased significantly since their initial recognition.
The company considers a debt security to have low credit risk when their credit risk rating is equivalent to the globally understood definition of ‘investment grade’.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
A 12-month ECL is the portion of the ECL that results from default events on a financial instrument that are probable within 12 months from the reporting date.
Provisions for credit-impairment are recognised in the statement of income and are reflected in accumulated provision balances against each relevant financial instruments balance.
Evidence that the financial asset is credit-impaired include the following;
- Significant financial difficulties of the borrower or issuer;
- A breach of contract such as default or past due event;
- The restructuring of the loan or advance by the company on terms that the company would not consider otherwise;
- It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
- The disappearance of an active market for the security because of financial difficulties; or
- There is other observable data relating to a group of assets such as adverse changes in the payment status of borrowers or issuers in the company, or economic conditions that correlate with defaults in the company.
For trade receivables, the company applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The company has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 48 months before 31 December 2023 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables, where material. The company has identified the GDP and the unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors, where material.
Accounting estimates and assumptions
Provisions for impairment
In determining impairment of financial assets, judgement is required in the estimation of the amount and timing of future cash flows as well as an assessment of whether the credit risk on the financial asset has increased significantly since initial recognition and incorporation of forward-looking information in the measurement of ECL.
Fair value of financial assets and liabilities
Where the fair value of financial assets and liabilities cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is derived from observable markets where available, but where this is not feasible, a degree of judgement is required in determining assumptions used in the models. Changes in assumptions used in the models could affect the reported fair value of financial assets and liabilities.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Critical accounting judgements and key sources of estimation uncertainty |
The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of asset or liability affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
|
|
|
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
|
|
Revenue |
The analysis of the company's revenue for the year from continuing operations is as follows:
2023 |
2022 |
|
Commissions |
|
|
Other gains and losses |
The analysis of the company's other gains and losses for the year is as follows:
2023 |
2022 |
|
Gain or (loss) on disposal of property, plant and equipment |
- |
( |
Operating profit |
Arrived at after charging/(crediting)
2023 |
2022 |
|
Depreciation expense |
|
|
Loss on disposal of property, plant and equipment |
- |
|
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Finance income and costs |
The analysis of the company's Finance income and expenses, net for the year is as follows:
2023 |
2022 |
|
Finance income |
||
Interest income on bank deposits |
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2023 |
2022 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Other short-term employee benefits |
|
|
Pension costs, defined contribution scheme |
|
|
Redundancy costs |
|
|
Share-based payment expenses |
|
|
|
|
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
2023 |
2022 |
|
Administration and support |
|
|
Sales |
|
|
Marketing |
|
|
Customer success |
|
|
|
|
Directors' remuneration |
The directors of the company are remunerated elsewhere within the group and no specific recharge has been made from the group to the company and as such the directors do not consider there is any directors remuneration paid within the company.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Auditors' remuneration |
2023 |
2022 |
|
Audit of the financial statements |
|
|
Income tax |
Tax charged/(credited) in the income statement
2023 |
2022 |
|
Current taxation |
||
UK corporation tax |
|
|
UK corporation tax adjustment to prior periods |
( |
( |
|
|
The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2022 - the same as the standard rate of corporation tax in the UK) of 25% (2022 - 19%).
The differences are reconciled below:
2023 |
2022 |
|
Profit before tax |
|
|
Corporation tax at standard rate |
|
|
(Over) provision of current tax in the prior period |
( |
( |
Increase from effect of capital allowances depreciation |
|
|
Decrease from effect of different UK tax rates on some earnings |
( |
- |
Increase/(decrease) from effect of expenses not deductible in determining taxable profit/ (tax loss) |
|
( |
Tax decrease/ (increase) from general provisions |
( |
|
Total tax charge |
|
|
The main rate of Corporation Tax payable in the UK changed to 25% with effect from 1 April 2023. A hybrid rate was payable on the profits for the year where both rates were in effect for parts of the year.
Deferred tax
There are £
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Property, plant and equipment |
Office and computer equipment |
Fixtures and fittings |
Total |
|
Cost or valuation |
|||
At 1 January 2022 |
|
|
|
Disposals |
( |
( |
( |
At 31 December 2022 |
|
- |
|
At 1 January 2023 |
|
- |
|
At 31 December 2023 |
|
- |
|
Depreciation |
|||
At 1 January 2022 |
|
|
|
Charge for year |
|
|
|
Eliminated on disposal |
( |
( |
( |
At 31 December 2022 |
|
- |
|
At 1 January 2023 |
|
- |
|
Charge for the year |
|
- |
|
At 31 December 2023 |
|
- |
|
Carrying amount |
|||
At 31 December 2023 |
|
- |
|
At 31 December 2022 |
|
- |
|
At 1 January 2022 |
|
|
|
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Trade and other receivables |
Current |
31 December |
31 December |
Trade receivables |
|
|
Provision for impairment of trade receivables |
( |
( |
Net trade receivables |
|
|
Receivables from related parties |
|
|
Accrued income |
|
|
Prepayments |
|
|
Other receivables |
|
|
|
|
The trade and other receivables classified as financial instruments are disclosed below.
The company's exposure to credit and market risks, including maturity analysis, relating to trade and other receivables is disclosed in note 23 "Financial risk review".
2023 |
2022 |
|||||
At amortised cost |
Gross carrying amount |
ECL allowance |
Carrying amount |
Gross carrying amount |
ECL allowance |
Carrying amount |
Customers |
|
|
|
|
|
|
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Cash and cash equivalents |
31 December |
31 December |
|
Cash at bank |
|
|
Share capital |
Allotted, called up and fully paid shares
31 December |
31 December |
|||
No. |
£ |
No. |
£ |
|
|
|
100,000 |
|
100,000 |
Rights, preferences and restrictions
Ordinary shares have the following rights, preferences and restrictions: |
Reserves |
Share capital
The share capital reserve represents the aggregate amount of shares issued in the company as at the date of the accounts.
Retained earnings
The retained earning reserve represents the aggregate profit and loss less distributions of retained earnings since incorporation.
Capital contribution reserve
The capital contribution reserve represents the amount provided as share-based awards in the parent company as an expense in the company.
Leases |
Total cash outflows related to leases
Total cash outflows related to leases are presented in the table below:
Payment |
31 December |
31 December |
Short term leases |
352,800 |
262,050 |
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Trade and other payables |
31 December |
31 December |
|
Trade payables |
|
|
Accrued expenses |
|
|
Amounts due to related parties |
- |
|
Social security and other taxes |
|
|
Outstanding defined contribution pension costs |
|
|
Other payables |
|
|
|
|
The company's exposure to market and liquidity risks, including maturity analysis, relating to trade and other payables is disclosed in note Financial risk review - "Financial risk review".
Included within Accrued expenses is £4,649,829 (2022 - £nil) of accrued transfer pricing costs yet to be invoiced by the parent company. Further information can be found within note 26 - "Related party transactions".
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £159,911 (2022 - £195,415).
Contributions totalling £
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Share-based payments |
Details on Share Based Payment Schemes
The company remunerates various individuals, at its discretion, as part of the equity incentive plan which is an equity settled scheme, using shares in the ultimate parent company, OutSystems Holdings S.A.
Prior to April 2021, grants had been issued under the 2017 Equity Incentive Plan. The maximum period of the plan is 10 years from the plan implementation date of 1 June 2017. Share options are either granted as time-based, 10 year maturity exercisable from the 2nd year of employment with the company in a 2 month period every year until they expire, or performance based, 10 year maturity exercisable after 5 years (with a possibility of accelerated vesting if further performance conditions are met) in a 2 month period every year until they expire. All share options are Bermuda type share options.
The 2017 Equity Investment Plan share options granted generally vest over four years, with 25% vesting on the first anniversary of the first of the month following the grantee’s hire date, and with the remainder vesting at a rate of 1/36 per month over the remaining three years.
On April 20, 2021, the Company's shareholders approved 2021 Equity Incentive Plan (the “2021 Plan”). No grants were made under the 2021 Plan prior to its effectiveness and, following its effectiveness, no further grants will be made under the 2017 Plan. The 2021 Plan provides for the grant of incentive share options, non-statutory share options, Restricted Stock Units (RSUs), and other forms of equity compensation to employees, including officers, non-employee directors, and consultants.
The share options granted generally vest over four years, with 25% vesting on the first anniversary of the first of the month following the grantee’s hire date, and with the remainder vesting at a rate of 1/36 per month over the remaining three years.
For the year-ended 31 December 2023, no share options and 78,555 shares of RSUs were granted to employees in the company. A total of 13,715 options were transferred from the entity to other group entities and were included in the number of forfeited options below.
The movements in the number of share options during the year were as follows:
31 December |
31 December |
|
Outstanding, start of period |
|
|
Granted during the period |
- |
|
Forfeited during the period |
( |
( |
Exercised during the period |
( |
( |
Outstanding, end of period |
|
|
Exercisable, end of period |
|
|
|
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
The weighted average exercise prices associated with the above movements during the year were as follows:
31 December |
31 December |
|
Outstanding, start of period |
|
|
Granted during the period |
- |
|
Forfeited during the period |
|
|
Exercised during the period |
|
|
Outstanding, end of period |
|
|
Exercisable, end of period |
|
|
|
The weighted average exercise prices are also shown below in € being the base currency of OutSystems Holdings S.A. being the ultimate parent company whose shares are being used in the company share option scheme.
31 December |
31 December |
|
Outstanding, start of period |
5.19 |
6.68 |
Granted during the period |
0.00 |
13.59 |
Forfeited during the period |
4.32 |
8.58 |
Exercised during the period |
1.14 |
1.61 |
Outstanding, end of period |
6.17 |
5.19 |
Exercisable, end of period |
5.44 |
3.81 |
|
The weighted average share price at date of exercise of share options exercised during the year was £
The total unrecognized compensation expense relating to Share Options is €64,322 (2022 - €352,084).
Outstanding share options
The options outstanding at 31 December 2023 had an exercise price of between £0.65 and £12.01/ €0.75 and €13.85 (2022 - £0.67 and £12.29/ €0.75 and €13.85) and a weighted average remaining contractual life of 5.64 years (2022 - 6.83 years).
Charge/credit arising from share-based payments
The total charge/(credit) for the year for share-based payments was £141,032 (2022 - £364,629), of which £141,032 (2022 - £364,629) related to equity-settled share-based payment transactions.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
The Company has utilised a binomial method to value share options. Main assumptions used in the valuation are listed below:
• Current Underlying Share Price - the value determined by the Board of Directors based on accredited third-party valuations of the Common Stock of the Parent Company.
• Volatility - based on an group of comparable companies, consisting of peer technology companies.
• Risk Free Interest Rate - based on 10 years German Government bonds.
• Dividend Yield - expected to be 0%.
The Company applies a forfeiture rate of 23.3%.
Share option grants to date have included service vesting conditions and performance vesting conditions. The performance vesting conditions are entirely attributable to individual sales performance target achievement for sales personnel, and are not in any way related to the market price of the Parent Company’s equity instruments. Therefore, these performance vesting conditions are not considered to be a market vesting condition, and are not taken into consideration in the valuation of the share option.
The movements in the number of RSUs during the year were as follows:
31 December |
31 December |
|
Outstanding, start of period |
|
- |
Granted during the period |
|
|
Forfeited during the period |
( |
( |
Outstanding, end of period |
|
|
|
The movements in the weighted average exercise price of RSUs during the year were as follows:
31 December |
31 December |
|
Outstanding, start of period |
|
- |
Granted during the period |
|
|
Forfeited during the period |
|
|
Outstanding, end of period |
|
|
|
The weighted average exercise prices are also shown below in € being the base currency of OutSystems Holdings S.A. being the ultimate parent company whose shares are being used in the company share option scheme.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
31 December |
31 December |
|
Outstanding, start of period |
13.83 |
0.00 |
Granted during the period |
13.85 |
13.83 |
Forfeited during the period |
13.84 |
13.77 |
Outstanding, end of period |
13.83 |
13.83 |
|
There were no grant exercises during year 2023 and 2022.
Outstanding Restricted Stock Units
The fair value of the RSUs granted equates to the fair value of the underlining ordinary shares. The total unrecognized compensation expense related to RSUs is €1,187,456 which will be recognized over the weighted average remaining contractual life of 1.92 years (2022 - 1.85 years).
Charge/credit arising from share-based payments
The total charge/(credit) for the year for share-based payments was £193,967 (2022 - £319,137), of which £193,967 (2022 - £319,137) related to equity-settled share-based payment transactions.
Commitments |
Other financial commitments
The total amount of other financial commitments not provided in the financial statements was £
The company is party to a group level guarantee given over assets and further detail is given within note 26 - "Related party transactions".
Fair value measurement |
The company does not have any transactions at fair value through the statement of profit or loss (FVTPL) excluding share based payments and trade receivables which have disclosure exemptions under IFRS 2 and 9 and information can be found in note 20 and 25 respectively.
Financial instruments are shown at amortised cost as management consider their carrying value to be an approximation of their fair value, largely due to the short term maturity of the instruments.
Financial risk review |
This note presents information about the company’s exposure to financial risks and the company’s management of capital.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Credit risk
This risk is mainly associated with the accounts receivable resulting from the Company's operations. This risk is monitored on a regular basis by the Company with the aim of:
- Ensure compliance with defined payment policy;
- Evaluation of credit granted to each customer;
- Analyse the financial conditions of its customers on a regular basis.
An impairment analysis is performed at each reporting date on an individual basis. The Company evaluates the collectability and recognise an impairment on a case by case/individual basis.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operates in largely independent markets.
Liquidity risk
The Company's policy to manage liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stress conditions. The Company does not have any borrowings.
Market risk
The Company is mainly exposed to market risk related to changes in exchange rates.
The activity of the Company is exposed to exchange rate risk, related to the transactions made by the other Group companies.
Foreign exchange risk |
Foreign exchange risk is the risk that the fair value or future cash flows of an asset or liability will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency).
The Company does not hedge its exposure to fluctuations on the translation into sterling of its foreign operations.
Sensitivity analysis
The Company has not prepared a sensitivity analysis in respect of foreign exchange risk as it does not consider the risk to be material as the only material transactions in foreign currency are with other group companies which are consolidated in the parent company's accounts. Therefore management does not consider there to be any material risk in these accounts.
Capital risk management |
Capital components
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Credit loss expense |
Trade and other receivables |
12 month ECL |
Total |
Total prior year |
Balance at 1 January 2023 |
60,099 |
60,099 |
182,224 |
Transfer from 12 month ECL |
(48,220) |
(48,220) |
(122,125) |
Balance at 31 December 2023 |
11,879 |
11,879 |
60,099 |
|
Financial instruments |
Financial assets |
Financial assets at fair value through profit or loss |
Carrying value |
Fair value |
|||
31 December |
31 December |
31 December |
31 December |
|
£ |
£ |
£ |
£ |
|
Cash and cash equivalents |
14,282,334 |
6,382,369 |
14,282,334 |
6,382,369 |
Trade and other receivables |
7,664,837 |
9,854,739 |
7,652,958 |
9,794,640 |
|
|
|
|
Financial liabilities |
Financial liabilities at amortised cost |
Carrying value |
Fair value |
|||
31 December |
31 December |
31 December |
31 December |
|
£ |
£ |
£ |
£ |
|
Trade and other payables |
9,204,270 |
5,330,252 |
9,204,270 |
5,330,252 |
Related party transactions |
Key management personnel
Key management of the company are employed and remunerated by other group entities. An apportionment of costs paid on behalf of the company by other group entities cannot be reliably made. Details of group-level key management compensation is disclosed in the consolidated accounts of the parent company.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Summary of transactions with immediate and ultimate parent companies
2023 |
2022 |
|
As at 1 January |
6,166,025 |
3,642,544 |
Rendering of services |
16,643,825 |
18,614,200 |
Acquisition of services |
(36,551,950) |
(32,040,125) |
Settlement of liabilities |
13,742,100 |
15,949,406 |
As at 31 December |
- |
6,166,025 |
The intercompany balances with the immediate and ultimate parent entities have been offset with the transfer pricing accrued income and accrued expenditure in the 2023 and 2022 year following the change to the agent (net) approach.
This has resulted in a net accrued transfer pricing cost of £4,649,829 (2022 - nil) shown within trade and other payables.
The company has pledged assets as security on behalf of its parent company, OutSystems Holdings S.A., as part of a group guarantee.
Summary of transactions with other related parties
Other related parties consist of fellow subsidiaries within the group.
2023 |
2022 |
|
Other related parties |
||
As at 1 January |
(332,160) |
(316,637) |
Rendering of services |
1,519 |
24,500 |
Acquisition of services |
(100,682) |
(3,436) |
Settlement of liabilities |
432,842 |
(36,587) |
As at 31 December |
1,519 |
(332,160) |
Parent and ultimate parent undertaking |
The company's immediate parent is
The ultimate parent is
The most senior parent entity producing publicly available financial statements is
In the opinion of the directors, there is no ultimate controlling party.
OutSystems Limited
Notes to the Financial Statements for the Year Ended 31 December 2023
Relationship between entity and parents
The parent of the largest and smallest group in which these financial statements are consolidated is
The address of OutSystems Holdings S.A. is:
L-2411 Luxembourg
Non adjusting events after the reporting period |
|