Gresham Technologies : 2022 Half Year Results

Gresham Technologies plc

Interim Report 2022

"This has been another strong period of growth driven by a combination of new customer wins and growth within our installed base. The acquisition of Electra a year ago has been transformational in building operating scale and a more complete and competitive solution set for our joint customers, and we are clearly seeing the benefits in the market.

Looking to the second half, we see a substantial opportunity to take further market share in our core financial services segments. We now have excellent visibility into full year revenues and are focused on continuing the significant progress made building recurring revenues in line with our aspirations to create a global financial technology company of substantial scale."

Ian Manocha, CEO, Gresham

Overview

• Highlights

• Chief Executive review

• Financial review

Financial statements

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 cashflows
6. Notes to the interim report

• Gresham Technologies plc Interim Report 2022

Highlights

Clareti annualised recurring revenues

Group annualised recurring revenues

£26.1m£29.4m

Group revenues	Clareti revenues	Clareti recurring software revenues
£23.0m	£16.4m	£12.5m

Group adjusted EBITDA	Group cash EBITDA	Cash
£4.5m	£1.8m	£6.5m

	HY 2022	HY 2021	Growth	Like for like
	£m	£m	%	growth(i) %
Group annualised recurring revenues	29.4	25.7	14%	n/a(ii)
Clareti annualised recurring revenues	26.1	22.1	18%	n/a(ii)
Group revenues	23.0	14.8	55%	19%
Clareti revenues	16.4	9.9	66%	8%
Clareti recurring software revenues	12.5	6.9	81%	8%
Group adjusted EBITDA	4.5	2.8	61%	n/a(iIi)
Group cash EBITDA	1.8	0.8	125%	n/a(Iii)
Cash	6.5	8.1	(20)%	n/a

Adjusted EBITDA refers to earnings before interest, tax, depreciation and amortisation, adjusted for one-off exceptional items and share-based payments. Cash EBITDA refers to adjusted EBITDA less capitalised development spend and any IFRS 16 lease related cash payments.

1. Growth rates stated on a like-for-like basis have been adjusted to remove the contribution from both periods of the Electra business, acquired on 22 June 2021.
2. By their nature, forward looking annualised recurring revenue metrics included 12 months impact in both reported periods.
3. Post-acquisition,the integration of the Electra business into the Clareti business does not allow for meaningful standalone EBITDA measures to be reported.

• Gresham Technologies plc Interim Report 2022

Operational highlights

• Six new name Clareti customers in H1, with a seventh signed early in H2
• Incremental contract win with tier 1 banking customer, lifting customer ARR from £0.6m to £1.1m with further increase to £1.4m expected as project progresses
• 20+ other contract wins with existing customers driving incremental ARR
• Net Clareti ARR retention rate of 105% (on a constant currency basis)
• Transformative Electra acquisition of June 2021 now creating new opportunities
• Other (non-Clareti) portfolio continuing to prove resilient and outperforming original expectations.

Outlook

• Management confident in the strategy and outlook for the Group
• Demand remains robust, with stronger Clareti pipeline, supported by a structurally growing addressable market
• On track to comfortably meet full year market expectations.

• Gresham Technologies plc Interim Report 2022

Chief Executive review

Introduction

We are pleased with the progress made in the first half of this financial year as we continue to strengthen our position as the leading provider of reconciliation software to the financial sector, and drive organic growth across the Group, which now benefits from additional scale as a result of the Electra acquisition a year ago. This has been highlighted by the number of new client wins throughout the period as well as consistent growth within the installed base growth, which together with currency tailwinds delivered an 18% organic increase in forward looking ARR. The record levels of recurring revenue, a pipeline of new and up-sell contract opportunities, as well as a healthy renewal cycle across the non-Clareti businesses provide the Board with confidence in the second half outlook.

Business overview

In the first half of 2022 we continued to invest in our operations and people to grow our international footprint and take further market share in our core financial services market. Our Clareti technology solutions provide major banking and investment management clients with the tools to connect, reconcile and control their data, enabling them to automate their business processes and improve operational efficiency, giving them confidence in their digital operations and helping manage risk, regulation and reputation.

Clareti

Our Clareti platform is packaged into two primary offerings, Control and Connect. The acquired Electra offerings for investment managers have been similarly re-branded and provide for a more complete solution for our customers, as well bringing market share in North America. All our solutions are available in a customer's data centre or in a Gresham hosted cloud on a software- as-a-service basis, along with optional subscriptions for the collection and aggregation of external data and/or the provision of managed services.

Clareti Control

Control is an enterprise-grade business self-service platform for the reconciliation and control of "any and all" transaction data in financial markets. Control is now well established in the market for "non-core" problems such as inter-systems reconciliations, with a track-record of successful implementations since the initial release a decade ago. Our investment into additional "core" cash and securities processing functionality over the last three years means we have the only solution in the market that can handle all types of data reconciliations and controls on a single self-service platform that has been proven at scale.

Clareti Connect

Our Connect solutions allow customers to participate in the complex inter-connected global financial system without needing to be concerned with third party data access, integration risk, and cost and time to market. Our Connect solutions enable customers to interact with their bank partners, custodians, trading venues, regulatory reporting venues and other industry applications, and provide intelligent control over complex data and financial messaging flows. Our Connect Data solution is focused on the needs of the buy-side community and is used by fund managers and service providers to collect and aggregate data from third parties such as custodians.

Other (non-Clareti) business

The non-Clareti business now essentially comprises two distinct commercial arrangements under our long-standing prime- contractor relationship with ANZ. We provide on-goingsub-contracting services on a fixed margin basis and re-sell and support a third-party virtual banking solution that generates highly predictable and profitable recurring revenues. ANZ are also a key customer and innovation partner for the Clareti business and provide us with very good visibility into their overall plans.

Strategy and ambition

During the period, we expanded the capability of our software platform, completed the integration of Electra, invested in our sales and marketing efforts and delivered further growth in our key financial KPIs. Our continued success reflects the investment and efforts of our talented team in delivering differentiated solutions to major financial institutions that are proven at scale and backed by a high-quality global service capability.

Looking forward, the Board and management team remain focused on fostering a culture of innovation, supported by investment in our products, people and client relationships. This ensures we continue to deliver market-leading solutions to some of the

• Gresham Technologies plc Interim Report 2022