Gresham Technologies : 2023 Annual Financial Report

20

23

ANNUAL FINANCIAL REPORT

Strategic report

CORPORATE STATEMENT, MISSION AND VALUES

CORPORATE STATEMENT

Gresham Technologies plc is a global leader in mission- critical software and automation solutions for financial services. Our award-winning Clareti platform helps firms operate efficiently, manage risk, stay compliant, and focus on their customers knowing that their data and digital processes are under control. Listed on the main market of the London Stock Exchange ("GHT.L") and headquartered in the City of London, our industry-recognised Connect and Control Solutions, Data and Managed Services are proven at nearly 300 organisations worldwide, including many of the world's largest banks, investment managers and corporates.

OUR VISION

To remove friction from today's data
challenges to unlock tomorrow's	OUR MISSION
business opportunities.
	We empower businesses to simplify
	complexity and break down barriers
	to profitable growth.

OUR VALUES

EMBRACE LEARNING

Harness the value of different perspectives, backgrounds and experience. Everyone has the potential for extraordinary ideas and action.

BE THE CHAMPION

Take ownership for delivering success, delighting our customers, and helping our business and our people to grow and flourish.

CREATE TOGETHER

The sum is greater than its parts. Lean in and together we will find innovative solutions for today's problems and tomorrow's opportunities.

FIND THE FRICTION

We can always be better. Focus where it matters most and seek the 1% improvement every day - in the big things and the small things.

CONTENTS

STRATEGIC REPORT

IFC Corporate statement, mission and values

1. Investment case

1. Highlights

1. At a glance

1. Chair's statement

1. Business model

1. CEO's statement

1. Strategy

1. Strategy in action

1. Key performance indicators

1. Stakeholder engagement

1. Environmental, social and governance

1. Task force on climate-related financial disclosures

1. Financial review

1. Principal risks and uncertainties

GOVERNANCE

1. Chair's introduction to governance

1. Board of Directors

1. Corporate Governance Report

1. Audit Committee Report

1. Nomination Committee Report

1. Introduction to the Remuneration Report
2. Remuneration Report

1. Directors' Report

1. Statement of Directors' responsibilities

FINANCIAL STATEMENTS

75 Independent auditor's report

1. Consolidated Income Statement
2. Consolidated Statement of
   Comprehensive Income
3. Consolidated Statement of Financial Position
4. Consolidated Statement of Changes in Equity
5. Consolidated Statement of Cashflow
6. Notes to financial statements

122 Company Balance Sheet

123 Company Statement of Changes in Equity

124 Notes to the Company financial statements IBC Corporate information

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Gresham Technologies plcAnnual Financial Report 2023 01

Strategic report

INVESTMENT CASE

REASONS TO INVEST IN GRESHAM

We are a global leader in mission-critical software and automation solutions for financial services. We have an enviable blue-chip customer list and an absolute commitment to market leadership through innovation. Supported by our global operating platform, our proven, scalable business model is consistently generating high levels of recurring revenues and delivering profitable growth.

GLOBAL FINTECH LEADER

We have deep domain expertise and support 270 customers across 30 countries, including several of the world's largest banks.

A CULTURE OF INNOVATION

Our 220 staff across ten offices are amongst the most talented in the world, with strong values and a commitment to innovation. This keeps us at the heart of customer workflows.

LONG-TERM MARKET DRIVERS

Our addressable market is expanding as systemic data challenges persist and firms increasingly turn to modern automation solutions to secure operational efficiencies, meet regulatory obligations and customer demands.

SCALABLE SAAS BUSINESS MODEL

Our best-in-class software subscriptions are delivering high-quality,high-growth recurring revenues and strong margins, with 21% organic ARR growth in the last five years.

AMBITIOUS

We are aiming to build a £100m+ ARR SaaS business through a five-pillar growth strategy. We have a highly experienced management team fully committed to delivering shareholder value.

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20tn

In mission-critical data

assets moved daily

10%

CLARETI REVENUE GROWTH(1)

8%

CLARETI ARR GROWTH(2)

21%

CASH ADJUSTED EBITDA GROWTH

4,500+

Unique and accessible data feeds

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Financial review

Page 35

ESG

Page 25

CEO's statement

Page 12

1. Excluding abandoned operations.
2. On a constant currency basis.

Gresham Technologies plcAnnual Financial Report 2023 03

Strategic report

HIGHLIGHTS

STRONG CLARETI RECURRING

REVENUES DRIVING

PROFITABLE GROWTH

Group revenue					Clareti revenue	Clareti recurring revenue
£49.0m +2%					£36.3m +10%	£29.6m +10%
2023									49.0		2023	36.3		2023	29.6
2022									48.2		2022	32.9					2022	26.9
2021	37.0							2021	23.4						2021	18.8
2020	24.8									2020	15.2									2020	11.5
2019	25.0									2019	15.5									2019	10.4
Adjusted EBITDA					Cash adjusted EBITDA	Adjusted diluted earnings per share
£10.7m +9%					£4.7m +21%	6.32p (10)%
2023									10.7	2023	4.7		2023	6.32
2022									9.8			2022	3.9				2022	7.03
2021	7.2							2021	2.5							2021	5.02
2020	4.5									2020		0.3									2020	3.96
2019	4.1										2019		0.3									2019		1.99
Clareti ARR					Clareti ARR net retention rate	Cash
£29.5m +5%				105% +3%					£4.8m (24)%
2023									29.5		2023	105		2023	4.8
2022									28.1				2022	102				2022	6.3
2021	24.0						2021	106		2021	9.1
2020	12.3																						2020	8.9
2019	9.5																								2019	9.6

1. 2022 financials have been restated. Refer to Financial Review and to note 3 of the Group financial statements for full details.
2. Adjusted EBITDA refers to earnings before interest, tax, depreciation and amortisation, adjusted for one-off exceptional charges, share-based payments and foreign exchange differences on intercompany balances (see note 5 of the Group financial statements).
3. Adjusted EBITDA less capitalised development spend and any IFRS 16 lease-related cash payments.
4. Diluted earnings per share, adjusted to add back share-based payment charges, exceptional items, amortisation from acquired intangible assets and foreign exchange differences on intercompany balances.
5. Excludes any IFRS 16 lease-related payables.
6. Percentage increases stated above are based on rounding to the nearest £'000 as disclosed at detailed level within this report.

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FINANCIAL(1)

• Forward-lookingClareti Annualised Recurring Revenue ("ARR") up 5% to £29.5m (2022: £28.1m) as at 31 December 2023.
• Group revenues up 2% to £49.0m (2022: £48.2m).
• Clareti revenues up 10% to £36.3m (2022: £32.9m).
• Clareti recurring revenues up 10% to £29.6m (2022: £26.9m).
• Adjusted EBITDA(2) up 9% to £10.7m (2022: £9.8m).
• Cash adjusted EBITDA(3) of £4.7m, an increase of 21% on the prior year (2022: £3.9m).
• Profit before tax as reported up £2.2m to £4.1m (2022: £1.9m), including
  expenses adjusted in EBITDA metrics above of £2.4m (2022: £4.4m).
• Adjusted diluted earnings per share(4) at 6.3 pence (2022: 7.0 pence).
• Cash at 31 December 2023 of £4.8m and no debt after payment of £4.0m in contingent consideration for previous acquisitions (2022: £6.3m and no debt)(5).
• Interim dividend declared at 0.75 pence per share (2022: £nil).

OPERATIONAL

• Standalone Clareti business continuing to grow after becoming cash profitable for the first time in 2022, generating cash EBITDA(3) of £1.6m (2022: £0.6m), as growth, scale and operating leverage begin to take effect.
• Twelve new-name wins, including several global Tier 1 financial institutions, bringing total direct customers to 270 across 30 countries.
• Electra business integration completed and delivering initial cross-sells and operating synergies.
• Strong growth in Cloud and other recurring revenues.
• Net ARR retention for the year of 105% (2022: 102%), highlighting growth within existing customer base.
• Continued growth and development of key accounts.
• Excellent economic returns being realised by Tier 1 firms replacing legacy reconciliation software with Control.
• Digital corporate banking product developed with Australia and New
  Zealand Banking Group deployed into production use.

OUTLOOK

• Larger, more resilient Group, with more than £38m of FY24 revenues under contract upon entering the year, providing significant visibility and a robust platform to execute growth strategy.
• Management confident about the ongoing execution of its strategy for the
  Group and the potential for further value creation over the longer term.

RECOMMENDED OFFER

• On 9 April 2024, the Boards of Gresham and Alliance Bidco Ltd ("Bidco") announced the recommended acquisition of Gresham by Bidco at a price of 163 pence per Gresham share, plus the interim dividend of 0.75 pence per Gresham share declared today. The transaction is conditional on, amongst other things, the approval of Gresham shareholders by the requisite majorities of resolutions to be proposed at a Court Meeting and a General Meeting, both convened for 16 May 2024. The scheme document ("Scheme Document") and other documentation in this regard were published on 18 April 2024 and are available on the Investor Hub on the
  Gresham website.

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

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Strategic report

AT A GLANCE

A GLOBAL PLATFORM FOR GROWTH

We are building a global fintech champion.

105% 32%

ARR NET	FIVE-YEAR
RETENTION	ARR CAGR

We are made up of three regional hubs:

EMEA

• London
• Bristol
• Solihull
• Southampton
• Luxembourg

82

CONTRACTS

155

EMPLOYEES

AMERICAS

• New York
• Florida

265

CONTRACTS

61

EMPLOYEES

ASIA PACIFIC

• Australia
• Singapore
• Malaysia

11

CONTRACTS

24

EMPLOYEES

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TECHNOLOGY SOLUTIONS FOR CONTROL AND AUTOMATION IN FINANCIAL SERVICES

Our technology continuously ensures that customers' actions and decisions are based on data and trustworthy processes.

OUR PLATFORM

CLARETI IS OUR ENTERPRISE-GRADE SAAS PLATFORM TO CONNECT, RECONCILE AND CONTROL "ANY AND ALL" DATA AND PROCESSES.

OUR SOLUTIONS

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

RECONCILIATION	REGULATORY	CLOUD CONNECTIVITY	DATA EXCHANGE
Simplify the complexity	REPORTING	Drag and drop canvas enabling	Post-trade data validated,
of buy-side and sell-	Deliver accurate, on-time	customers to connect to all	transformed, and delivered
side reconciliations and	reports through connectivity	industry venues and regulatory end	through cloud-native
trade reporting to scale	with multiple trading	points. Operating pre-trade, post-	APIs and Kafka, from over
growth with end-to-end	and reporting venues,	trade and in payments, Connect	3,500 data providers, the
automation, intelligent	real-time matching, and	offers in the cloud Connectivity to	industry's largest provision
matching, and accelerated	consolidation across multiple	350+ industry end points across	and dissemination of critical
onboarding.	regulatory regimes.	North America, Europe and Asia.	financial information.

OUR INDUSTRIES

BANKING

BROKERS

INVESTMENT

PAYMENTS, FINTECH AND

MANAGEMENT

DIGITAL ASSETS

INSURANCE

ENERGY AND COMMODITIES

CORPORATES

GOVERNMENT

GROWTH STRATEGY

Our growth strategy is based on five pillars:

• Cross-industry- we have an immediate addressable market of 500 banks globally and over 1,000 buy-side firms. We are already regarded as an innovative partner to many of the world's largest financial institutions, coupled with incremental opportunity from new industry verticals.
• Land and expand - by delivering ROI every day we believe we can increase revenues with our existing clients as they roll out our solutions across business lines and geographies.

• International - we have grown organically and entered new international markets over the last decade. Through the acquisition of Electra in June 2021, we have a large footprint in North America which gives us an important platform for growth.
• Cross-selland solutions - we have a continuous programme of re-investment into product innovation, providing incremental growth opportunities and ensuring our market leadership position is maintained.
• M&A - in addition to strong organic growth, we have made a number of successful acquisitions and have the financial strength and trusted partner relationships to engage in further consolidation.

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Strategic report

CHAIR'S STATEMENT

WITH CLEAR OPPORTUNITY FOR OUR PRODUCTS AND A STRONG OPERATIONAL FOUNDATION, THE POTENTIAL FOR GRESHAM IS CLEAR

It is a pleasure to be presenting my maiden results as Chair of Gresham, having been drawn to the business by the strength of our product set, highly skilled and motivated team, and a clear market opportunity to meet the need to digitise the operations of financial institutions, globally.

In spite of a turbulent financial services and banking environment in 2023, Gresham continued to make solid progress with that momentum continuing into the new year, supported by recurring revenue growth."

DEAR SHAREHOLDER

OVERVIEW

I am pleased to present my first annual results as Chair

of Gresham, having joined the Group in October. At the time of my appointment, the Group was making good progress against its strategic objectives, and I am delighted to report that this has continued with the Group closing the year on a high. Alongside eight new customer wins and meaningful strategic progress, whilst navigating through a challenging market environment, the Group delivered a robust financial performance with increased recurring revenues, enhanced profitability and cash ahead of expectations.

A major development in the year was the accelerated transition of the Group to a pure-play SaaS business, a transformation the Board has led over the last decade, utilising the Group's cashflows to invest in its next generation Clareti platform. This journey culminated with a decision in the latter part of FY23 to discontinue the Group's legacy, non-core IT sub-contracting business, enabling the Group to intensify focus on the high- margin Clareti opportunity.

Over those ten years we have invested to evolve towards an own-IPpure-play software business model, characterised by higher margins, sustained growth, multi-year recurring revenue contracts and significantly reduced customer concentration, enhancing our position and resilience in the market.

Against the backdrop of a turbulent financial services and banking environment in the first half of 2023, this has been a busy and productive year for Gresham and is testament to the quality of our team. We remain focused on building a supportive and rewarding environment, ensuring we maintain our excellent culture as we scale. As such, we were pleased to see our Employee Engagement Survey producing an overall engagement score of 76% (2022: 82%), with our employee turnover rate of 15.3% (2022: 16.3%).

FIRST IMPRESSIONS

In taking up the position as Chair, there were a number of qualities that attracted me to the Group.

The first thing was the scale of the opportunity. The highly complex data landscape in financial markets means that generic, legacy IT systems that dominate the sector are not fit for purpose. This is exacerbated by accelerating growth in data volumes, predicted to increase 40% by 20251 in the financial services sector, along with changing regulation. The scope to drive efficiencies, improved resilience, adherence to compliance and improved decision-making through the application of automation and modern technology is substantial, and I believe we are only seeing the start of this journey in our target markets.

Furthermore, I have been impressed by the professionalism and dedication of our team. Our people exhibit a depth of expertise and a commitment to serving our clients and developing software that can genuinely make a difference to our clients' operations. The quality and reliability of our solutions and services has consistently been reflected in the year-on-year growth in our client numbers and ARR.

• BFSI Security Market Size & Share Report, 2025

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