TIDMGHT
RNS Number : 6866T
Gresham Technologies PLC
26 July 2022
26 July 2022
Gresham Technologies plc
Interim Report Announcement
Gresham Technologies plc (LSE: "GHT", "Gresham", "Company" or
the "Group"), the leading software and services company that
specialises in providing solutions for data integrity and control,
banking integration, payments and cash management, announces its
unaudited half year results for the six months ended 30 June
2022.
The Group is pleased to report 66% growth in Clareti revenues,
driving 55% growth in total Group revenues and 125% growth in Group
cash EBITDA against the first half of 2021. Forward-looking Clareti
ARR growth of 18% driven by new customer wins, growth within the
installed base, and favourable currency movements.
Financial highlights
HY 2022 HY 2021 Growth Like for
GBPm GBPm % like growth(i)
%
------------------------------ -------- -------- ------- ----------------
Clareti annualised recurring
revenues 26.1 22.1 18% N/a(ii)
Group annualised recurring
revenues 29.4 25.7 14% N/a(ii)
============================== ======== ======== ======= ================
Group revenues 23.0 14.8 55% 19%
Clareti revenues 16.4 9.9 66% 8%
Clareti recurring 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
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 GBP0.6m to GBP1.1m with
further increase to GBP1.4m 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 has outperformed original expectations
Outlook
-- Management confident in the strategy and outlook for the Group
-- Demand remains robust, with a strong Clareti pipeline,
supported by a structurally growing addressable market
-- On track to comfortably meet full year market expectations
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.
(i) 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.
(ii) By their nature, forward looking annualised recurring
revenue metrics included 12 months impact in both reported
periods.
(iii) Post-acquisition, the integration of the Electra business
into the Clareti business does not allow for meaningful standalone
EBITDA measures to be reported.
Ian Manocha, Gresham CEO, commented:
"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
focussed on continuing the significant progress made building
recurring revenues in line with our aspirations to create a global
financial technology company of substantial scale."
As announced on 15 July 2022, a presentation for analysts will
be held today at 9.30 a.m. (BST) via conference call, with a
separate presentation for private and retail investors to be held
today at 2 p.m. (BST) via the Investor Meet Company platform.
Admittance for these events is strictly limited to those who
register their participation in advance.
For analyst conference call details and to register attendance,
please email gresham@almapr.co.uk. Information on how to register
attendance for the private and retail investor presentation is set
out in the Company's announcement of 15 July 2022. A copy of the
presentation to be tabled at both sessions will be made available
on Gresham's website at 9.00 a.m. (BST) today.
Enquiries
+44 (0) 207 653
Gresham Technologies plc 0200
Ian Manocha / Tom Mullan
Singer Capital Markets (Financial Adviser and +44 (0) 207 496
Broker) 3000
Shaun Dobson / Tom Salvesen / Jen Boorer
+44 (0) 203 405
Alma PR 0205
Josh Royston / Hilary Buchanan / Hannah Campbell
Note to editors
Gresham Technologies plc is a leading software and services
company that specialises in providing real-time solutions for data
integrity and control, banking integration, payments and cash
management. Listed on the main market of the London Stock Exchange
(GHT.L) and headquartered in the City of London, its customers
include some of the world's largest financial institutions and
corporates, all of whom are served locally from offices located in
the UK, Europe, North America and Asia Pacific.
Gresham's award-winning Clareti software platform is a highly
flexible and scalable platform, available on-site or in the cloud,
designed to address today's most challenging financial control,
risk management, data governance and regulatory compliance
problems. Learn more at www.greshamtech.com .
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-going sub-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 largest
companies in the world who engage with us to solve critical
challenges within their businesses and licence our software
solutions to remain agile, competitive and compliant. Our strategy
is not only to grow our footprint of financial clients globally,
but to expand and deepen engagement across our existing customer
base of over 270 clients across 30 countries.
This provides the building blocks of a scalable fintech platform
with a market-leading product portfolio, highly invested cloud
architecture and an ambitious, proven management team. We are
ideally placed to pursue our growth aspirations, underpinned
organically by a repeatable, high margin revenue model and a track
record of identifying strategically valuable acquisitions. We are
focused on a GBP0.5bn financial services data control market
opportunity and our medium-term target remains a 25% market share
and building a GBP100m ARR business.
Half year results
The Group delivered strong revenue growth of 55% to GBP23.0m
(GBP22.5m on a constant currency basis), including a positive
contribution from Electra Information Systems Inc which became part
of the Group on 22 June 2021. Excluding the contribution from
Electra, year-on-year Group organic revenue growth was 19%
(constant currency also 19%), representing an improvement on the
organic growth rate in the equivalent period last year of 14%.
In line with the Board's strategy to build sticky subscription
revenues, forward looking Clareti Annual Recurring Revenue
increased to GBP26.1m at period end, representing an organic
increase of 18% on the position as at 30 June 2021.
The non-Clareti business has performed slightly ahead of plan in
the first half of the year and we are confident in comfortably
meeting expectations for the remainder of the financial year.
The Group retains a strong balance sheet with net cash of
GBP6.5m and no debt as at 30 June 2022 (GBP8.1m 30 June 2021).
The financial performance in the first six months of the year
reflects the strength of our growth strategy and we confidently
expect this to continue into the second half.
Operating review
Contract wins
In the first six months we secured six new names, and a further
new name was signed in the first week of July.These wins came from
our targeted segments of banking and investment management in the
UK, Europe and North America. As is typical, these wins involved
competitive RFP processes during which we were able to
differentiate with our unique technology and deep industry
expertise.
In addition to these new names wins, we signed more than 20
upgrade or cross-sell contracts within the existing installed base.
One of these contracts related to the significant Tier 1 bank win
announced in May 2022. W e first engaged with the client, one of
the world's largest commercial and retail banks, to deploy Clareti
Control within its UK operations in 2020. As a result of the
success of the initial project, the bank has chosen to adopt the
technology as its single enterprise control platform across the
entirety of its UK business, including retail accounts, cards,
payments and commercial banking. The platform will be used to
deploy a range of new controls, as well as replace existing manual
processes and legacy vendor solutions. The contract extends and
significantly upgrades existing software subscription commitments
for a minimum period of approximately five years, with a total
contract value of GBP6.3m, including an expected GBP3.5m of new
incremental subscriptions over the term. This win is a clear
endorsement of our unique technology offering as we continue to
consolidate our leading market position.
Our success is reflected in our Clareti ARR net retention of
105% on a constant currency basis. This strong net retention rate
was across all customers; despite being slightly suppressed by the
cancellation of two sanctioned Russian owned businesses. The
transformational building blocks put in place last year with the
acquisition of Electra, which brought us scale and a greater
international footprint, have enabled us to drive these new growth
opportunities and build high-quality subscription earnings.
Electra
As previously reported, the integration of the sales and
marketing, consulting, customer support and business operations
teams, the re-branding of our solutions, and the development of a
strategic R&D roadmap was materially completed at the end of
last year in line with our stated plans.
The enlarged Gresham now operates as one team in the global
market and, in the first year since the acquisition, we have
successfully signed several new clients for Electra products in the
US, Canada and Europe; and we have seen very good levels of
retention across the acquired client base. The joint product set is
highly complementary, in particular the combination of Connect Data
and Control, where our pipeline now contains a number of such
opportunities. This brings further competitive differentiation to
our offering and enables us to solve a greater proportion of our
customers' data challenges.
Innovation
The current focus for our Control solutions is in two primary
areas. Firstly, to meet the extreme performance requirements that
we are starting to see in the market as customers seek to deploy
data controls at scale for use cases such as faster payments, or
intra-day risk management. Use cases such as these are not
currently supported by third party products in the market and
provide us with further differentiation, particularly in banking.
Secondly, we are investing to enable greater business self-service,
and introducing enhanced investigations and exception management
functionality, all delivered through easy-to-use web interfaces. As
this work progresses, the Control solution acquired with Electra
will evolve to share common micro-services and components with the
rest of our platform, thereby reducing our maintenance costs and
speeding up the cycle of new feature delivery.
Our Connect and Data offerings are already functionally rich
across a variety of use cases. In the first six months of the year,
we added connectivity to additional trading venues, completed a
full suite of ISO 20022 transformations and introduced a natural
language rules engine to offer customers a greater level of
self-service. We are progressively migrating our customers to a
consolidated cloud service, utilizing a next generation of tooling
originally prototyped within the acquired Inforalgo business. Of
note, we have introduced an API for our Data service which is now
being tested by two customers and readied for market launch.
Over the last three years our partnership with ANZ Banking Group
to develop a new digital corporate banking solution leveraging our
innovation model and technology experience has progressed extremely
well. Gresham owns the IP for the jointly developed technology,
which provides the foundations of a new generation of client monies
and corporate cash management solutions. ANZ's first customer is
moving towards go-live, and we expect to announce the general
availability of the offering to other institutions in H2. We are
currently developing the launch plans for the solution under a new
product brand which we expect to drive further growth for the Group
on top of current Clareti offerings.
People
We continue to leverage our technology infrastructure and
investment in our people and have maintained a hybrid working
approach in the first half of this year. We have implemented a
"trust first, customer first" approach, where our teams work where
best for clients and colleagues as well as themselves, making use
of the Group's hubs around the world. This, together with our
supportive management culture, competitive remuneration and
share-based retention schemes, has had a positive impact and helped
us navigate on-going sector-wide recruitment and cost challenges.
During the first half we have refined our post-integration
operating model and prioritised incremental hiring into sales,
marketing and revenue-generating product development. Our
experienced team is very well regarded in the market and, mindful
of inflationary pressures and the war for tech talent, we continue
to invest in our people and aim to provide an outstanding
environment for them to develop their careers. Following the easing
of travel restrictions across our international operations,
regional and global internal events will take place to align our
team, drive collaboration across our new hybrid-workforce, as well
as support various learning and development initiatives
ESG
We are also committed to ensuring we grow responsibly, to
enhance the long-term value generated by our business for all of
our stakeholders aligned to our three-pillar ESG strategy focused
on our customers, people and the world around us. In the second
half of the year, we are expanding on our initial ESG work,
focusing on governance, KPIs and TCFD. We look forward to providing
further updates in the annual report.
We continue to invest in our culture and education throughout
the group. All our people now have access to unlimited training via
the Udemy platform. This year we are running our leadership
development programmes and training all our people in business
ethics and standards of conduct. We have taken on a further
graduate intake into development and consulting. We took swift
action to cancel projects and software licences with two Russian
owned entities and continue to monitor sanctions developments. Our
people also responded to the Ukraine crisis raising a total of
GBP8,000 for humanitarian causes which was matched by the
Group.
Markets
Despite the wider backdrop of economic uncertainty, our core
markets remain robust, driven by the continued structural shift to
digital infrastructures and greater automation within the financial
services sector. These drivers have been compounded by growing
regulatory pressures and scrutiny, increasing our customers' needs
for timely and accurate processing coupled with greater
transparency and accountability. This means our customers need to
have complete confidence in their data and processes in order to
make good decisions and ensure optimal outcomes, including
protecting their reputations.
An initial wave of regulation around the world over the last
five years has forced all banks to find quick fixes to close risk
and control gaps, ensure compliance and improve visibility.
Medium-term there is a second wave of opportunity as institutions
seek proven, industrialised solutions that can deliver operational
efficiencies and greater agility across their enterprise. Firms are
looking to upgrade these quick fixes and replace previous
generations of batch-based reconciliation systems and automate
their remaining manual processes. In addition, a new class of
opportunity is emerging in digital banking and payments.
These drivers support a structural growth in the overall size of
the addressable market for our Clareti software, and as the
competitiveness of our offerings continually improves and expands,
we are well placed to participate in a growing market
opportunity.
Outlook
In the first half we have helped boards of some of the largest
companies in the world manage their financial, operational and
reputational risk by providing timely insight into their data and
processes. The up-sell and cross-sell contract wins with some of
these clients has evidenced the value of our solutions and this,
together with the overwhelming market drivers, underpins our
medium-term ambitions.
We start the second half in a strong position with products well
aligned with market requirements, an experienced and motivated
management team, a record level of contracted revenue, and most
importantly, a strong pipeline of opportunities.
This position, coupled with our robust balance sheet and growing
recurring revenues, provide the Board with confidence in the
remainder of the year and beyond.
Thank you for your support,
Ian Manocha
Chief Executive Officer
25 July 2022
Financial review
Forward-looking annualised recurring revenue "ARR"
Our ARR is an aggregated value of all recurring revenues that
are either fully or partially contracted for the next twelve months
and/or are highly expected to renew in the next twelve months.
Future uplifts in variable usage or contingent recurring fees are
not included in ARR, unless they are contractually certain with all
deliverables having already been met.
Our ARR from our strategic growth business, Clareti, is a
critical KPI for the Group as it provides a forward-looking view of
the minimum expected revenues in the next twelve months which gives
confidence to business planning and investment decisions.
ARR H1 H1 Variance %
2022 2021
Clareti ARR at
Clareti ARR start of period GBPm 24.0 12.3 11.7 95%
Acquired with
Electra GBPm - 9.2 (9.2) (100%)
Organic increase
in ARR GBPm 2.1 0.6 1.5 250%
------ ------ --------- -------
Clareti ARR at
end of period KPI GBPm 26.1 22.1 4.0 18%
------ ------ --------- -------
Other ARR Other ARR GBPm 3.3 3.6 (0.3) (8)%
------ ------ --------- -------
Group ARR Group ARR GBPm 29.4 25.7 3.7 14%
The Electra acquisition was completed in June 2021 and was
transformative to our Clareti ARR. The focus since then has been on
driving organic growth and lifting the Electra ARR growth rate up
from c. 10% pre acquisition to levels comparable with the existing
Clareti business. It is therefore pleasing to see the combined
Clareti ARR growth rate at 18% (GBP4.0m) year on year, which
includes the effect of foreign exchange tailwinds experienced over
that period that significantly impact the Electra, largely USD
denominated, business. The foreign exchange tailwinds contributed
approximately a third of the Clareti ARR growth rate of 18%. Our
retention and upsell measures remain strong, with the trailing
twelve-month net Clareti ARR retention rate being 105%, a reduction
of 1% from 31 December 2021, which is largely as a result of our
cancellation of agreements with two sanctioned Russian customers.
We calculate our net ARR retention rate, on a constant currency
basis, as ARR at the end of period from customers existing at the
start of the period divided by ARR at the start of the period.
There remains a significant market opportunity to both upsell and
cross-sell to our continually growing existing customer base that
we're strategically investing in capturing; and it is worth noting
that the trailing 12 months net retention rates from our six
largest customers is 123% (on a constant currency basis).
Coincidentally, these retention rates are the same as those
reported as at 31 December 2021.
ARR from our Other businesses has also reduced to GBP3.3m from
GBP3.6m at 30 June 2022 as expected. Part of this reduction comes
from the ongoing reduction of our last remaining legacy IP software
business called 'EDT' which will cease altogether at the end of
FY22, which contributed approximately GBP0.3m of ARR twelve months
ago. The remaining Other ARR comes from our long-standing software
reselling business. The Group has benefitted from the longevity of
these business lines for many years and the remaining ARR from our
reselling business continues to provide predictability and further
ability to invest with confidence in the Clareti business.
Income Statement
Revenue
Our income is analysed between revenues from Clareti Solutions
and from our 'Other' non-strategic solutions and services, revenues
from each business of these business segments are then broken
into:
- Recurring revenues - generated for software and
software-related services such as support, maintenance, and other
ongoing managed services; all of which are contracted or expected
to continue for the foreseeable future.
- Non-recurring revenues - professional services, contracting,
training and other services that are expected to be one-off or
periodic in nature.
Given the transformational nature of the Electra acquisition, we
have also broken out the Clareti business to show the Electra
revenues (and gross margin in the Earnings section below) as
individual line items within the Clareti business.
H1 H1 Variance %
2022 2021
Clareti solutions Recurring GBPm 7.1 6.6 0.5 8%
Recurring - Electra GBPm 5.4 0.3 5.1 N/a
-------------------------- ------ ------ --------- -----
Recurring - Clareti
total KPI GBPm 12.5 6.9 5.6 81%
Non-recurring GBPm 3.6 3.0 0.6 20%
Non-recurring -
Electra GBPm 0.3 - 0.3 N/a
-------------------------- ------ ------ --------- -----
Non-recurring -
Clareti total GBPm 3.9 3.0 0.9 30%
-------------------------- ------ ------ --------- -----
Total Clareti
revenues KPI GBPm 16.4 9.9 6.5 66%
----- --------------------------- ------ ------ --------- -----
Other solutions
& services Recurring GBPm 2.0 2.2 (0.2) (9)%
Non-recurring GBPm 4.6 2.7 1.9 70%
---------------------------- --------------------------- ------ ------ --------- -----
Total GBPm 6.6 4.9 1.7 35%
---------------------------- -------------------------- ------ ------ --------- -----
Group Total KPI GBPm 23.0 14.8 8.2 55%
--------------------- ----- ------- ------ ------ --------- -----
Clareti Solutions
Clareti recurring revenues increased by 81%, up from GBP6.9m to
GBP12.5m on the first half of 2021. This included a contribution of
GBP5.4m from Electra in the period which only contributed GBP0.3m
in the prior year equivalent period, representing the nine days
since the acquisition occurred in late June 2021. Excluding the
impact of Electra, Clareti recurring revenues increased by 8%, or
GBP0.5m, since the prior half year. These increases were as a
result of new recurring revenue sales, increased consumption of
Clareti solutions from our existing customers, and the foreign
exchange tailwinds that provided assistance to the USD denominated
Electra business.
Clareti non-recurring revenues increased by 30%, up GBP0.9m on
the prior first half, which did not contain any material revenue
from Electra. Excluding the impact of Electra, the increase was
20%. This increase is being driven by new implementations
associated with the increase in Clareti recurring revenues and a
return to more 'normal' levels of services work, in comparison with
the first half of 2021 that remained somewhat depressed due to the
pandemic.
Other Solutions & Services
Total revenues from Other solutions and services increased by
35% to GBP6.6m, exceeding our original expectations. This business
line includes revenues from a legacy partner relationship where we
act as a reseller of third-party software; our sole remaining, own
IP, legacy software product; and our contracting services business
where we provide services at a fixed margin of 13% under
twelve-month contractual terms. Recurring revenues within the Other
solutions and services portfolio decreased by 9% to GBP2.0m,
largely as a result of expected reductions in our high margin
own-IP revenues, a business which is no longer material (full year
2022 expected revenues of GBP0.2m) and which we plan to close at
the end of this fiscal year. The increase since the first half of
2021 in non-recurring revenues of 70%, or GBP1.9m, came from our
fixed margin contracting business revenues, as our single customer
in this business segment ramped up post pandemic. The mix of
revenues within the Other solutions and services portfolio
continues to evolve, and we continue to manage the portfolio
carefully benefitting from good visibility of customer
intentions.
Earnings
H1 H1 2021 Variance %
2022
Clareti
Solutions Gross margin (*) GBPm 9.0 8.1 0.9 15%
Gross margin -
Electra GBPm 5.0 0.3 4.7 N/a
--------------------------- ------------------------------- ------ -------- --------- -----
Gross margin -
Clareti total
(*) GBPm 14.0 8.4 5.6 70%
Gross margin (*) % 85% 85% - -
Gross margin - % 86% N/a N/a N/a
Electra
--------------------------- ----- ------- ------ -------- --------- -----
Gross margin -
Clareti total
(*) % 85% 85% -% N/a
Other solutions
& services Gross margin (*) GBPm 1.7 1.6 0.1 6%
Gross margin (*) % 26% 33% (6)% -
Group Gross margin (*) GBPm 15.7 10.0 5.7 57%
Gross margin (*) % 68% 68% -% N/a
Adjusted EBITDA KPI GBPm 4.5 2.8 1.7 61%
Adjusted EBITDA KPI % 20% 19% 1% N/a
--------------------------- ----- ------------------------- ------ -------- --------- -----
Cash Adjusted
EBITDA KPI GBPm 1.8 0.8 1.0 125%
Cash Adjusted
EBITDA KPI % 8% 6% 2% N/a
--------------------------- ----- ------------------------- ------ -------- --------- -----
Statutory profit/(loss)
after tax GBPm 1.5 (0.6) 2.1 350%
--------------------------- ------------------------------- ------ -------- --------- -----
Adjusted diluted
EPS KPI pence 3.9 2.2 1.7 77%
Gross margin and reporting reclassification - note,
reclassification as reported in the 31 December 2021 Annual Report
for the full year (*)
Across all business segments, the majority of our cost of sales
is made up of: (i) the customer-specific third party costs incurred
in providing our hosted cloud solutions; (ii) third party
contractor costs incurred by our contracting services business; and
(iii) in the 2021 Annual Report we reclassified fixed-term
payrolled employees that provide fixed margin
contracting/recruitment services to ANZ from operating expenses to
cost of sales as we consider this a better reflection of our gross
margin. The full year 2021 comparative was restated and explained
in the 2021 Annual report. The impact of this restatement to the H1
2021 comparatives stated above was GBP1.1m, GBP0.3m in Clareti and
GBP0.8m within the Other Solutions and Services, the value of this
of H1 2021 gross margin is GBP0.8m.
The acquisition of Electra has accelerated the growth of our
high gross margin Clareti business, which in line with long
standing Group strategy, offsets the continued and expected decline
in gross margin being generated from the legacy Other solutions and
services businesses. At a group level, including the impact of the
Electra acquisition, gross margins have remained static at 68%. The
gross margin within Clareti and Electra are consistent at 85%-86%
both across businesses and first half reporting periods.
As planned and described in the revenue section above, the Other
solutions and services business mix has continued to move in
balance towards the lower margin software reselling and contracting
services business lines from our higher margin legacy owned IP,
which is no longer material, and we plan to close at the end of
this fiscal year.
Adjusted EBITDA
Adjusted EBITDA (earnings before interest, tax, depreciation and
amortisation) is analysed excluding exceptional items, share-based
payment charges, amortisation from acquired intangible assets and
impairment of development costs; which is consistent with the way
in which the Board reviews the financial results of the Group.
Group adjusted EBITDA has improved by GBP1.7m, or 61%, since the
prior year with the margin improving by 1% to 20% in 2022. This is
as a result of the existing higher margin Clareti business
continuing to grow and beginning to drive improved operational
leverage as it scales along with the impact of the Electra
acquisition, which offset the continued reducing margin of the
Other solutions and services business lines. Whilst we will ensure
that we maximise the current market opportunity through appropriate
strategic investments, we do expect to continue to see improvements
to these margins in future years.
Cash Adjusted EBITDA
Cash adjusted EBITDA refers to adjusted EBITDA reduced by the
value of capitalised development spend and any IFRS16 lease-related
cash expenses classified as depreciation and interest. We consider
this a good measure of cash profitability for modern SaaS business
who continue to invest in product development to ensure they remain
market leading.
Group cash adjusted EBITDA has also improved since the prior
year, with GBP1.0m of the GBP1.7m improvement in adjusted EBITDA
(mentioned above) dropping through to improvement cash EBITDA. The
GBP0.7m difference between the improvements in the two EBITDA
measures is as a result of capitalised development spend and IFRS
16 lease-related cash expenses in the acquired Electra business as
well as increased customer-funded investment in our Clareti
innovation initiatives with ANZ. This has resulted in a cash
adjusted EBITDA margin of 8%, an improvement of 2% from a margin of
6% in the prior year. Like adjusted EBITDA, we expect to see
continued improvements in these margins in future years.
Due to the natural hedging that exists throughout the Group, the
impact of foreign exchange tailwinds on all earning measures was
immaterial totalling GBP0.1m at both an adjusted EBITDA and cash
adjusted EBITDA level.
Statutory profit/(loss) after tax and Adjusted diluted EPS
There has been an increase in statutory profit after tax to
profit of GBP1.5m from a prior year loss of GBP0.6m. This
improvement of GBP2.1m is largely due to the growth and improved
profitability of the Group discussed above.
Adjusted diluted EPS has improved by 77% to 3.9 pence per share.
Adjusted earnings used in this calculation adjust the statutory
result after tax for exceptional items; amortisation of acquired
intangibles and share-based payments. Exceptional expenses in the
period were GBP0.1m, GBP1.4m lower than the prior first half which
included significant Electra acquisition related one-off costs;
amortisation of acquired intangibles increased to GBP1.2m from
GBP0.5m, again as a result of the Electra acquisition; and the
share-based payment charges have increased to GBP0.4m from GBP0.2m
largely as a result of the inaugural use of the discretionary
performance share plan in October 2021.
Cashflow
H1 H1 Variance %
2022 2021
Opening cash & cash equivalents
at 1 January GBPm 9.1 8.9 0.2 2%
Operating cash flow excluding
exceptional items GBPm 4.5 2.3 2.2 95%
Operating cash flow from
exceptional items GBPm (0.2) (0.5) 0.3 60%
Total operating cash flow
excluding working capital GBPm 4.3 1.8 2.5 161%
Movement in working capital GBPm (3.2) (1.7) (1.5) (88)%
------------------------------------------ ------ ------ ------- --------- -------
Cash inflow from operations GBPm 1.1 0.1 1.0 1000%
Net tax (payments)/receipts GBPm (0.1) (0.6) 0.5 83%
Capital expenditure - development
costs GBPm (2.4) (1.8) (0.6) 33%
Capital expenditure - other GBPm (0.3) - (0.3) -
Principal paid on lease
liabilities GBPm (0.3) (0.3) - -
Inforalgo acquisition (deferred
consideration) GBPm (0.4) - (0.4) -
Electra acquisition (net
of cash acquired) GBPm - (17.7) 17.7 -
Shares issued - Electra
acquisition (net of costs) GBPm - 20.2 (20.2) -
Shares issued - upon option GBPm - - - -
exercises
Dividend GBPm (0.6) (0.5) (0.1) (20)%
Other GBPm 0.4 (0.2) 0.6 300%
------------------------------------------ ------ ------ ------- --------- -------
Net increase/(decrease)
in cash and cash equivalents GBPm (2.6) (0.8) (1.6) (200)%
------------------------------------------ ------ ------ ------- --------- -------
Closing cash & cash equivalents
at 30 June KPI GBPm 6.5 8.1 (1.6) (20)%
The Group continues to be funded from operating cash and has no
debt, with the cash performance of the business being aligned with
management's expectations.
Operating cashflow remains strong with the improvement on the
equivalent period in the prior year, being consistent with the
improvement in cash EBITDA (see Income Statement narrative above).
Exceptional items were significantly lower than the prior period
which included costs associated with the Electra acquisition.
The movement in working capital remains negative for the first
half, which is aligned with the traditional half year working
capital cycle due to the unwinding of the significant deferred
revenue position that builds up during the fourth quarter each
year.
Net tax payments of GBP0.1m were made during the first half
(2021: net tax payments of GBP0.6m). Gross tax payments were made
in the period of GBP1.2m (2021: GBP0.6m), the increase on the prior
first half largely as a result of increased profitability in the US
and Australia, with gross tax receipt of GBP1.1m received in the
first half in relation to the surrender of tax losses generated
from R&D activity (2021: nil, with the equivalent amount being
received from HMRC during late 2020).
The final deferred consideration payment in relation to the
Inforalgo acquisition of July 2020 was made in full during the
first quarter of 2022.
At the time of the Electra acquisition, the Group established a
USD 15m multi-currency revolving debt facility. This facility was
put in place in case required to satisfy deferred consideration
payments in relation to the Electra acquisition. It is likely that
the first deferred consideration payment of approximately GBP4m
will be made in full during the third quarter of 2022. This payment
coincides with our low cash point in our annual working capital
cycle, therefore is expected to be drawn upon to a small degree,
for a short period of time, to ensure sufficient currency holdings
are maintained before the annual build-up of cash reserves occurs,
although this currently remains under review.
Capital expenditure in relation to development and tangible
items increased from GBP1.8m to GBP2.7m, largely in relation to
development activities at Electra, which was not acquired until
late June 2021.
Currency revaluations in the first half amounted to a gain of
GBP0.4m (2021: a loss of GBP0.2m).
Balance Sheet
The balance sheet remains strong, with the only significant
movement that is not explained above being trade and other payables
of GBP16.6m (2021: GBP19.7m) which is due to the prior half year
including GBP3.2m of one-off accruals in relation to the
acquisition of Electra that were paid in Q3 of 2021.
Financial Outlook
The ongoing strong growth in the high margin recurring Clareti
business and the outperformance in the non-Clareti business gives
management confidence in comfortably meeting expectations for the
year. The low margin contracting line of non-Clareti business has
the potential to continue performing well, the extent to which is
dependent upon the value of significant annual renewals, which we
expect to finalise in late Q3 and early Q4. The Clareti pipeline is
in a stronger position than ever before at this stage in the
year.
The Group's revenues and forward-looking ARR have benefitted
from foreign exchange tailwinds over the past 12 months. Whilst a
level of natural foreign exchange hedging exists at earnings level
due to the significant portion of the cost base being denominated
in USD and AUD, the Group will monitor fluctuations and consider
whether the use of hedging instruments may be appropriate.
We have invested and will continue to further invest for growth
in the Clareti business. This investment will continue to be
focussed on distribution, product and customer success; to drive
revenue synergies to ensure we are best placed to take advantage of
the significant market opportunities. At a Group level we plan to
balance this investment with ongoing incremental improvements to
all earnings margins, with our main focus being on the cash EBITDA
margin. We look forward to providing further updates throughout the
year and remain confident in our long-term strategy and outlook
Tom Mullan
Chief Financial Officer
25 July 2022
Consolidated income statement
Notes 6 months As restated
ended 6 months 12 months
30 June ended ended
2022 30 June 31 December
Unaudited 2021 2021
Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------- ------ ----------- ------------- ------------------
Revenue 2 22,979 14,791 37,026
Cost of sales (7,244) (4,746) (11,799)
-------------------------------------- ------ ----------- ------------- ------------------
Gross profit 15,735 10,045 25,227
Adjusted administrative expenses (12,837) (8,685) (21,146)
-------------------------------------- ------ ----------- ------------- ------------------
Adjusted operating profit 2,898 1,360 4,081
-------------------------------------- ------ ----------- ------------- ------------------
Adjusting administrative items:
Exceptional costs 2 (145) (1,482) (1,821)
Exceptional income 2 - - 330
Amortisation on acquired intangibles (1,157) (516) (1,673)
Share-based payments (436) (174) (369)
-------------------------------------- ------ ----------- ------------- ------------------
(1,738) (2,172) (3,533)
-------------------------------------- ------ ----------- ------------- ------------------
Total administrative expenses (14,575) (10,857) (24,679)
-------------------------------------- ------ ----------- ------------- ------------------
Operating profit/(loss) 1,160 (812) 548
Finance revenue 3 3 4
Finance costs (99) (28) (121)
-------------------------------------- ------ ----------- ------------- ------------------
Profit/(loss) before taxation 1,064 (837) 431
Taxation 3 480 256 (1,443)
-------------------------------------- ------ ----------- ------------- ------------------
Profit/(loss) after taxation -
Attributable to owners of the
Parent 1,544 (581) (1,012)
-------------------------------------- ------ ----------- ------------- ------------------
Earnings per share
Statutory
Basic earnings per share - pence 4 1.85 (0.82) (1.31)
Diluted earnings per share - pence 4 1.81 (0.82) (1.31)
-------------------------------------- ------ ----------- ------------- --------------------
Adjusted
Basic earnings per share - pence 4 3.94 2.25 5.08
Diluted earnings per share - pence 4 3.85 2.21 5.02
-------------------------------------- ------ ----------- ------------- --------------------
Consolidated statement of comprehensive income
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ----------- -------------
Profit/(loss) after taxation attributable
to the Parent 1,544 (581) (1,012)
-------------------------------------------- ----------- ----------- -------------
Other comprehensive (expense)/income
Items that will or may be re-classified
into profit or loss:
Exchange differences on translating
foreign operations (907) 11 (184)
-------------------------------------------- ----------- ----------- -------------
Total other comprehensive (expense)/income (907) 11 (184)
-------------------------------------------- ----------- ----------- -------------
Total comprehensive income/(expense)
for the period 637 (570) (1,196)
-------------------------------------------- ----------- ----------- -------------
Consolidated statement of financial position
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- ------------
Assets
Non-current assets
Property, plant and equipment 415 191 218
Right-of-use assets 1,181 1,657 1,466
Intangible assets 62,356 61,568 62,267
Deferred tax assets 1,239 1,010 232
--------------------------------- ----------- ----------- ------------
65,191 64,426 64,183
Current assets
Trade and other receivables 5,851 5,364 5,403
Contract assets 1,922 2,617 1,665
Income tax receivable 417 - 1,204
Cash and cash equivalents 6,504 8,084 9,139
--------------------------------- ----------- ----------- ------------
14,694 16,065 17,411
Total assets 79,885 80,491 81,594
--------------------------------- ----------- ----------- ------------
Equity and liabilities
Equity attributable to owners
of the Parent
Called up equity share capital 4,168 4,166 4,168
Share premium account 23,876 23,856 23,876
Own share reserve (298) (510) (609)
Other reserves 536 536 536
Foreign currency translation
reserve (1,285) (183) (378)
Retained earnings 19,798 18,524 18,288
Total equity attributable to
owners of the Parent 46,795 46,389 45,881
--------------------------------- ----------- ----------- ------------
Non-current liabilities
Contract liabilities 571 - 60
Lease liabilities 545 923 770
Deferred tax liability 6,639 5,214 6,831
Provisions 146 146 144
Contingent consideration 3,978 2,581 3,575
11,879 8,864 11,380
-------------------------------- ----------- ----------- ------------
Current liabilities
Trade and other payables 16,619 19,706 19,616
Lease liabilities 614 662 642
Income tax payable - 117 131
Contingent consideration 3,978 4,753 3,944
21,211 25,238 24,333
-------------------------------- ----------- ----------- ------------
Total liabilities 33,090 34,102 35,713
--------------------------------- ----------- ----------- ------------
Total equity and liabilities 79,885 80,491 81,594
--------------------------------- ----------- ----------- ------------
Consolidated statement of changes in equity
Share Share Own Other Currency Retained Total
capital premium shares reserves translation earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------------- --------- -------- ---------- ------------- ---------- --------
At 1 January 2021 3,508 4,341 (778) 536 (194) 19,453 26,866
Attributable loss
for the period - - - - - (581) (581)
Other comprehensive
income - - - - 11 - 11
----------------------- ------------- --------- -------- ---------- ------------- ---------- --------
Total comprehensive
expense - - - - 11 (581) (570)
Issue of equity shares 656 20,344 - - - - 21,000
Share issue costs - (870) - - - - (870)
Exercise of share
options 2 41 - - - - 43
Share-based payment
expense - - - - - 174 174
Issue of shares held
by Employee Share
Ownership Trust - - 268 - - - 268
Dividend - - - - - (522) (522)
At 30 June 2021 4,166 23,856 (510) 536 (183) 18,524 46,389
----------------------- ------------- --------- -------- ---------- ------------- ---------- --------
Attributable loss
for the period - - - - - (431) (431)
Other comprehensive
expense - - - - (195) - (195)
----------------------- ------------- --------- -------- ---------- ------------- ---------- --------
Total comprehensive
expense - - - - (195) (431) (626)
Exercise of share
options 2 20 - - - - 22
Share-based payment
expense - - - - - 195 195
Issue of shares held
by Employee Share
Ownership Trust - - (99) - - - (99)
At 31 December 2021 4,168 23,876 (609) 536 (378) 18,288 45,881
----------------------- ------------- --------- -------- ---------- ------------- ---------- --------
Attributable profit
for the period - - - - - 1,544 1,544
Other comprehensive
expense - - - - (907) - (907)
----------------------- ------------- --------- -------- ---------- ------------- ---------- --------
Total comprehensive
(expense)/income - - - - (907) 1,544 637
Share-based payment
expense - - - - - 436 436
Issue of shares held
by Employee Share
Ownership Trust - - 311 - - 152 463
Dividend - - - - - (622) (622)
At 30 June 2022 4,168 23,876 (298) 536 (1,285) 19,798 46,795
----------------------- ------------- --------- -------- ---------- ------------- ---------- --------
Consolidated statement of cashflows
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------- ----------- ----------- -------------
Cashflows from operating activities
Profit/(loss) after taxation 1,544 (581) (1,012)
Depreciation of property, plant and equipment 71 84 175
Amortisation of intangible assets 2,348 1,633 4,042
Amortisation of right-to-use assets 313 261 581
Share-based payments 436 174 369
Increase/(decrease) in trade and other
receivables 68 (756) (776)
Increase in contract assets (139) (1,172) (220)
(Decrease)/increase in trade and other
payables (1,271) 525 1,996
(Decrease)/increase in contract liabilities (1,874) (340) 256
Taxation (480) 256 1,443
Exchange gain on financial instrument - - (330)
Net finance costs 96 25 117
----------------------------------------------- ----------- ----------- -------------
Cash inflow from operations 1,112 109 6,641
Income taxes received 1,103 - -
Income taxes paid (1,199) (663) (1,114)
----------------------------------------------- ----------- ----------- -------------
Net cash inflow/(outflow) from operating
activities 1,016 (554) 5,527
Cash flows from investing activities
Exchange gain on financial instrument - - 330
Interest received 3 3 4
Purchase of property, plant and equipment (295) (22) (145)
Payments to acquire subsidiary undertakings
(net of cash) - (17,676) (19,639)
Payments of contingent consideration (369) - (923)
Payments to acquire intangible fixed assets (2,392) (1,745) (4,150)
----------------------------------------------- ----------- ----------- -------------
Net cash used in investing activities (3,053) (19,440) (24,523)
Cash flows from financing activities
Interest paid (48) - (39)
Principal paid on lease liabilities (329) (270) (590)
Dividends paid (622) (522) (522)
Share issue proceeds (net of costs) - 20,173 20,195
Net cash (used in)/from financing activities (999) 19,381 19,044
Net decrease in cash and cash equivalents (3,036) (613) 48
Cash and cash equivalents at beginning
of period 9,139 8,876 8,876
Exchange adjustments 401 (179) 215
Cash and cash equivalents at end of period 6,504 8,084 9,139
----------------------------------------------- ----------- ----------- -------------
Notes to the interim report
1. Basis of preparation
Gresham Technologies plc (LSE: "GHT", "Gresham" or the "Company"
or the "Group" or the "Parent") is a Public limited company and is
listed on the London Stock Exchange. The Company's registered
address is Aldermary House, 10 - 15 Queen Street, London, EC4N 1TX
and the Company's registration number is 1072032.
These condensed interim financial statements are unaudited, have
not been reviewed by the Group's auditors, and do not constitute
statutory accounts within the meaning of the Companies Act
2006.
These condensed interim financial statements have been prepared
on a going concern basis and in accordance with IAS 34 'Interim
Financial Reporting', the Disclosure and Transparency Rules and the
Listing Rules of the Financial Conduct Authority, and were approved
on behalf of the Board by the Chief Executive Officer Ian Manocha
and Chief Financial Officer Tom Mullan on 25 July 2022.
The accounting policies and methods of computation applied in
these condensed interim financial statements are consistent with
those applied in the Group's most recent annual financial
statements for the year ended 31 December 2021.
The financial statements for the year ended 31 December 2021,
which were prepared in accordance with UK adopted International
Financial Reporting Standards ("IFRSs"). The auditors' opinion on
those financial statements was unqualified and did not contain a
statement made under s498(2) or (3) of the Companies Act 2006.
Copies of these condensed interim financial statements and the
Group's most recent annual financial statements are available from
the Group's website www.greshamtech.com or by writing to the
Company Secretary at the Company's registered office.
2. Segmental information
The segmental disclosures reflect the analysis presented on a
monthly basis to the chief operating decision maker of the
business, the Chief Executive and the Board of Directors.
For management purposes, the Group is organised into the
following reportable segments:
-- Clareti Solutions - supply of solutions predominantly to the
finance and banking markets across Asia Pacific, EMEA and North
America. Includes both software and services that can be accessed
in the cloud, on-premise or deployed into hybrid environments.
These primary offerings within this segment include:
o Clareti Control products (including the acquired Electra
'Reconciliation' products)
o Clareti Connect products (including the acquired Electra
products except for 'Reconciliation')
-- Other Solutions - supply of a range of well-established
solutions to enterprise-level customers in a variety of end
markets
-- Contracting Services - supply of IT contracting services to one banking customer.
Transfer prices between segments are set on an arm's length
basis in a manner similar to transactions with third parties.
Segment revenue, segment expense and segment result include
transfers between business segments. Those transfers are eliminated
on consolidation
6 months ended 30 June 2022 (unaudited) - Segmental
Information
Other Solutions
-----------------------
Clareti Contracting
Solutions Software Services Consolidated
Revenue 16,381 2,430 4,168 22,979
Cost of sales (2,381) (1,218) (3,645) (7,244)
Gross profit 14,000 1,212 523 15,735
-------------------------------- ----------- --------- ------------ -------------
Gross profit % 85% 50% 13% 68%
-------------------------------- ----------- --------- ------------ -------------
Adjusted administrative
expenses (12,782) (55) - (12,837)
-------------------------------- ----------- --------- ------------ -------------
Adjusted operating profit 1,218 1,157 523 2,898
Adjusted operating margin
% 7% 48% 13% 13%
Adjusting items:
Exceptional costs (145)
Amortisation of acquired
intangibles (1,157)
Share-based payments (436)
-------------------------------- ----------- --------- ------------ -------------
Adjusting administrative
expenses (1,738)
Operating profit 1,160
Finance revenue 3
Finance costs (99)
-------------------------------- -----------
Profit before taxation 1,064
Taxation 480
-------------------------------- ----------- --------- ------------ -------------
Profit after taxation 1,544
-------------------------------- ----------- --------- ------------ -------------
Adjusted operating profit 2,898
Amortisation of intangibles 1,191
Depreciation of property,
plant and equipment 71
Amortisation of right-of-use
assets 313
Adjusted EBITDA 4,473
Development costs capitalised (2,392)
Principal paid on lease
liabilities (329)
-------------------------------- ----------- --------- ------------ -------------
Cash adjusted EBITDA 1,752
-------------------------------- ----------- --------- ------------ -------------
Segment assets 79,885
Segment liabilities (33,090)
-------------------------------- ----------- --------- ------------ -------------
6 months ended 30 June 2021 (unaudited) - Segmental
Information
Other Solutions
-----------------------
Clareti Contracting
Solutions Software Services Consolidated
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----------- --------- ------------ -------------
Revenue 9,856 2,468 2,467 14,791
Cost of sales (1,414) (1,181) (2,151) (4,746)
Gross profit 8,442 1,287 316 10,045
----------------------------------- ----------- --------- ------------ -------------
Gross profit % 86% 52% 13% 68%
Adjusted administrative
expenses (8,614) (71) - (8,685)
----------------------------------- ----------- --------- ------------ -------------
Adjusted operating (loss)/profit (172) 1,216 316 1,360
Adjusted operating margin
% (2%) 49% 13% 9%
Adjusting items:
Exceptional costs (1,482)
Amortisation of acquired
intangibles (516)
Share-based payments (174)
----------------------------------- ----------- --------- ------------ -------------
Adjusting administrative
expenses (2,172)
Operating loss (812)
Finance revenue 3
Finance costs (28)
----------------------------------- ----------- --------- ------------
Loss before taxation (837)
Taxation 256
----------------------------------- ----------- --------- ------------ -------------
Loss after taxation (581)
----------------------------------- ----------- --------- ------------ -------------
Adjusted operating profit 1,360
Amortisation of intangibles 1,117
Depreciation of property,
plant and equipment 84
Amortisation of right-of-use
assets 261
Bank charges (9)
----------------------------------- ----------- --------- ------------ -------------
Adjusted EBITDA 2,813
Development costs capitalised (1,745)
Principal paid on lease
liabilities (270)
----------------------------------- ----------- --------- ------------ -------------
Cash adjusted EBITDA 798
-------------
Segment assets 80,491
Segment liabilities (34,102)
----------------------------------- ----------- --------- ------------ -------------
Gross margin and reporting reclassification
The interim statement for the period ended 30 June 2021 included
the Group's fixed margin contracting services business with third
party contractor costs included within cost of sales and fixed term
contractors paid through the Groups' payrolls being disclosed as
administrative expenses. To provide more relevant and reliable
information for the year ended 31 December 2021 all contractor
costs incurred under the Group's contracting business were
disclosed as cost of sales regardless of how the contractor was
paid. This adjustment was disclosed as a prior year restatement in
the Group's financial statement for the year ended 31 December
2021.
As a result, the comparative information for the period to 30
June 2021 included within this statement have been restated for
this change in accounting treatment. The effect of this change is
that cost of sales increased by GBP1,054,000 to GBP4,746,000 with
administrative expenses decreasing by GBP1,054,000 to GBP8,685,000.
There was no impact to retained earnings.
Adjusted EBITDA
Adjusted EBITDA is calculated as EBITDA excluding exceptional
items and share-based payments, reconciled as follows:
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------- ----------- -------------
Profit/(loss) before taxation 1,064 (837) 431
---------------------------------------- ------------- ----------- -------------
Adjusting items:
Amortisation of intangibles 2,348 1,633 4,042
Depreciation of property, plant and
equipment 71 84 175
Amortisation of right-to-use assets 313 261 581
Notional interest on lease liabilities 20 19 43
Finance revenue (3) (3) (4)
Interest payable 79 - 78
---------------------------------------- ------------- ----------- -------------
EBITDA 3,892 1,157 5,346
---------------------------------------- ------------- ----------- -------------
Exceptional items 145 1,482 1,491
Share-based payments 436 174 369
---------------------------------------- ------------- ----------- -------------
Adjusted EBITDA 4,473 2,813 7,206
---------------------------------------- ------------- ----------- -------------
Exceptional items
An analysis of exceptional items included within the Income
statement is disclosed below:
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ----------- -------------
Acquisition and associated integration
costs 145 1,805 1,814
Implementation of new ten-year share option
scheme - 7 7
--------------------------------------------- ----------- ----------- -------------
145 1,812 1,821
Gain on forward foreign exchange contract - (330) (330)
145 1,482 1,491
--------------------------------------------- ----------- ----------- -------------
3. Taxation
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------- ----------- ----------- -------------
Current income tax
Overseas tax credit - adjustment to previous
periods - (99) (93)
Overseas tax charge - current period 719 433 1,118
UK corporation tax credit - adjustment
to previous periods - - (1,045)
Total current income tax 719 334 (20)
Deferred income tax
Movement in net deferred tax asset (1,199) (467) 1,231
Tax rate change adjustments - (123) 232
Total deferred income tax (1,199) (590) 1,483
Total (credit)/charge in the income statement (480) (256) 1,443
----------------------------------------------- ----------- ----------- -------------
The prior period UK corporation tax prior period adjustment to
prior periods relates to the cash credit received upon the
surrender of losses.
4. Earnings per ordinary share
Basic earnings per share amounts are calculated by dividing net
profit for the period attributable to ordinary equity holders of
the Parent by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to ordinary equity holders of the
Parent by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of
ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.
The following reflects the earnings and share data used in the
basic and diluted earnings per share computations:
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
Basic weighted average number of
shares 83,364,458 70,763,791 77,132,796
Dilutive potential ordinary shares
Employee share options - weighted 1,799,004 1,361,641 890,100
Diluted weighted average number
of shares 85,163,462 72,125,432 78,022,896
---------------------------------------------- ----------- ----------- --------------
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------- ----------- ----------- -------------
Adjusted earnings attributable to owners
of the Parent 3,282 1,591 3,919
Adjusting items:
Exceptional items (145) (1,482) (1,491)
Amortisation of acquired intangibles (1,157) (516) (1,673)
Deferred tax charge on inter-group sale
of intellectual property - - (1,398)
Share-based payments (436) (174) (369)
Statutory earnings attributable to owners
of the Parent 1,544 (581) (1,012)
-------------------------------------------- ----------- ----------- -------------
Earnings per share:
Statutory
Basic earnings per share - pence 1.85 (0.82) (1.31)
Diluted earnings per share - pence 1.81 (0.82) (1.31)
-------------------------------------------- ----------- ----------- -------------
Adjusted
Basic earnings per share - pence 3.94 2.25 5.08
Diluted earnings per share - pence 3.85 2.21 5.02
-------------------------------------------- ----------- ----------- -------------
There have been no transactions involving ordinary shares or
potential ordinary shares between the reporting date and the date
of completion of this interim statement.
5. Dividends paid and proposed
Amounts recognised as distributions to equity holders during the
period:
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------- ----------- ----------- --------------
Final dividend
Final dividend for the year ended 622 - -
31 December 2021 of 0.75 pence per
share
Final dividend for the year ended
31 December 2020 of 0.75 pence per
share - 522 522
622 522 522
------------------------------------- ----------- ----------- --------------
6. Statement of directors' responsibilities
The Directors are responsible for preparing the half-yearly
financial report, in accordance with applicable law and
regulations.
The Directors confirm, to the best of their knowledge, that this
condensed set of financial statements:
-- has been prepared in accordance with IAS 34; and
-- includes a fair review of the information required by Rules
4.2.7 and 4.2.8 of the Disclosure and Transparency Rules of the
United Kingdom Financial Conduct Authority (as detailed in the
Chief Executive review).
The principal risks and uncertainties facing the Group for the
period ending 30 June 2022 and anticipated for the remainder of the
year ended 31 December 2022 ; remain consistent with those
disclosed in the Group's financial statements for the year ended 31
December 2021, which are available from www.greshamtech.com .
7. Related party transactions
No related party transactions have taken place during the first
six months of the year that have materially affected the financial
position or performance of the Company.
Key management compensation
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------- ----------- ----------- --------------
Directors' emoluments
Remuneration 326 323 648
Bonuses 129 109 401
Pension 11 11 22
Share-based payment charges 151 43 116
617 486 1,187
----------------------------- ----------- ----------- --------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR EAFXSAELAEAA
(END) Dow Jones Newswires
July 26, 2022 02:00 ET (06:00 GMT)
Gresham Technologies (LSE:GHT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gresham Technologies (LSE:GHT)
Historical Stock Chart
From Apr 2023 to Apr 2024
