RNS Number : 3720M
Gresham Technologies PLC
29 April 2024
29 April 2024
Gresham Technologies plc
Annual Financial Report Announcement
Gresham Technologies plc (LSE: "GHT", "Gresham", "Group", "Company"), the leading software
and services company that specialises in providing solutions for data integrity and control,
banking integration, payments and cash management, is pleased to announce its audited results
for the financial year ended 31 December 2023 ("FY23").
Financial Highlights(1)
· Forward-looking Clareti 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 £1.6m to £3.1m (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 Highlights
· 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.
(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 IFRS16 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.
Page 1 of 19
(5) Excludes any IFRS16 lease-related payables.
(6) Percentage increases stated above are based on rounding to the nearest £'000 as disclosed at detailed level within this report.
Ian Manocha, CEO, commented:
"We are pleased to report another year of profitable growth and progress towards our goal of creating a
leading global financial technology company. In a challenging market, most especially in the first half of
2023, our talented team delivered strategic new wins, improved on customer ARR net retention, and
further lifted margins in the Clareti business and across the Group as a whole. The improved resilience
enabled the Group to further reduce its dependency on legacy revenues, stepping away from its low
margin sub-contracting business at the end of the year.
The Group has now completed its transformation into a modern subscription software and cloud services
business. Whilst markets remain difficult, with elongated sales cycles, we have made a positive start to
2024."
Documents
A copy of this announcement has been submitted to the National Storage Mechanism and will shortly be
at
available
https://www.greshamtech.com/invest-in-us.
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
inspection
and
for
at
The Annual Financial Report 2023 will be made available on
https://www.greshamtech.com/invest-in-us and sent to shareholders in due course.
the Company's website at
Enquiries
Gresham Technologies plc
Ian Manocha / Tom Mullan
+44 (0) 207 653 0200
Singer Capital Markets (Financial Adviser and Broker)
Shaun Dobson / Tom Salvesen / Jen Boorer
+44 (0) 207 496 3000
Alma Strategic Communications
Josh Royston / Hilary Buchanan / Will Ellis Hancock
+44 (0) 203 405 0205
Inside information
The information contained within this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is
now considered to be in the public domain.
Rule 26.1 Disclosure
In accordance with Rule 26.1 of the City Code on Takeovers and Mergers, a copy of this announcement will
be available on the investor section of the Company's website at https://www.greshamtech.com/invest-in-
us by no later than 12 noon (London time) on the business day immediately following the date of this
announcement. The content of the website referred to in this announcement is not incorporated into and
does not form part of this announcement.
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.
ANNUAL FINANCIAL REPORT ANNOUNCEMENT
In accordance with the Disclosure and Transparency Rules, the extracts below are from the Annual
Financial Report 2023 in un-edited full text. In order to comply with the regulatory requirement to include
un-edited text in this Annual Financial Report Announcement, page and note references refer to page and
note numbers in the Annual Financial Report 2023.
The financial information contained herein for the year ended 31 December 2023 and the year ended 31
December 2022 does not constitute the Company's statutory accounts for those years. The statutory
accounts for the year ended 31 December 2023 will be delivered to the Registrar of Companies following
the Company's Annual General Meeting in due course.
The auditor's reports on the accounts for the years ending 31 December 2023 and 31 December 2022
were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
CHAIR'S STATEMENT
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-IP pure-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
Page 2 of 19
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 2025
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.
[1]
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.
Finally, the evolution of the Group's financial profile and business model, following prior years of
investment and M&A, mean we have the potential to realise the benefits of operational leverage.
Operating the business in a sustainable way
The Board remains focused on advancing the Group's Environmental, Social and Governance ("ESG")
agenda. This includes managing our impact on the environment; our social responsibilities to our people
and our communities; improving outcomes for our customers; having consideration for our suppliers; and
operating as an ethical business.
To further our support of the Task Force on Climate-related Financial Disclosures ("TCFD"), we created a
Sustainability Committee, and conducted our first climate-related scenario analysis.
Dividend
Having considered the Group's financial performance for the year, together with the cash within the
business and capital allocation priorities, and in light of the current offer for Gresham mentioned below,
the Board is declaring an interim dividend of 0.75 pence per share (FY22: £nil) instead of a final dividend
(FY22: 0.75 pence). It is intended to pay the interim dividend on 10 June 2024 to all shareholders on the
register at close of business on 10 May 2024. The ex-dividend date will be 9 May 2024.
Outlook
We closed the financial year with good momentum, new customer wins adding to the Group's base of
recurring revenues, and an improved pipeline. Despite a challenging macro environment, trading is in line
with the Board's expectations.
We have a substantial opportunity to expand within our 270 clients, the market drivers for new companies
to engage with us have never been more acute and the recent launch of Floe, the Group's smart bank
account platform, highlights the new ideas and IP that sits within Gresham today.
O n 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.
Richard Last
Non-Executive Chair
29 April 2024
CEO'S STATEMENT
Dear shareholder
Overview: significant milestone in our strategic journey
In 2023, Gresham achieved key milestones in its journey towards becoming a global leader in mission-
critical data control and automation solutions for financial services. As a result of our strategic acquisition
of Electra in the US in 2021 and subsequent efforts in defining our integrated technology roadmap, and
executing on our sales plan and global marketing strategies, we have extended our position in the market.
This year marked an acceleration in this journey, with nearly 300 organisations globally trusting our
solutions to drive their operations forward and our commitment to innovation evidenced by the successful
launch of Floe, our new innovative banking platform. With our extended international reach and a firm
foothold across banking, capital markets, insurance, and energy trading sectors, we are well positioned for
continued growth and success.
As we reflect on our achievements, a number of contract wins helped validate our market standing. This
included a Clareti contract win with a major US investment manager where our cloud solution is helping to
automate and reduce costs in its operations. We also welcomed two new Tier 1 banking customers later in
the year who are using our Control solutions across their business operations.
Our robust financial performance during a year of dramatic events in capital markets underscores our
resilience, with Clareti Annualised Recurring Revenue reaching £29.5 million (up 5% on FY22) or £30.4
million on a constant currency basis (up 8% on FY22) by year-end. With EBITDA reaching £10.7 million and
healthy cash reserves exceeding our expectations at £4.8 million, we started the new year with confidence
and determination to drive further innovation and value for our clients and stakeholders.
Market: trends of digital transformation, regulation and AI are accelerating
2023 has been another challenging year for financial markets and the wider finance sector. With continued
concerns over banking liquidity at the start of the year, the broader economic and geo-political challenges
as well as the mixed benefits throughout the year of higher interest rates on Banks and Asset Managers, it
has been a difficult market for organisations to navigate. More broadly, however, several asset classes
performed much better than expected in the year which together with an expectation that monetary policy
will normalise through 2024 should support increasing confidence for consumers, corporates and therefore
our target clients. Importantly, all the drivers that create a need for banks, fund managers and other
financial institutions to engage with us are key boardroom agenda items in both better and tougher years.
Continuing pace of regulatory changes
The regulatory landscape does not stand still, and the last year has only reinforced the need for intra-day
monitoring and rule-based reporting. Governments have the challenge of regulating traditional banks and
engaging with emerging technologies, particularly
like fintech, digital payments, and
cryptocurrencies. In Europe the new EMIR Refit reporting rules which go live during 2024 have focused
attention on more accurate data for regulatory reporting. In the US, there is an ambitious agenda of
change planned in the coming year, including significant proposed changes to capital, resolution planning,
consumer compliance, and supervision, among many others. The move to T+1 settlement comes into
effect in 2024 in the US, representing a substantial shift in the industry, with Europe and the UK currently
debating the switch to a T+1 environment. For banks, these changes will further necessitate building and
maintaining effective governance, risk management, and control frameworks, intra-day processing and
particularly how they interact with consumers.
in areas
Innovation in financial services
Page 3 of 19
Innovation in financial services
Technology-led product and service innovation continues to have a transformative impact on financial
services with generative AI, open data, APIs and embedded finance, the digitisation of money, digital
identity and concerns over cyber-security all likely to grow further in 2024.
The interest and adoption of blockchain technology, cryptocurrencies and other digital assets have been
growing. Several US asset managers are planning to launch exchange traded funds ("ETFs") with
leveraged bitcoin exposure and expand into bitcoin-based options and other cryptocurrencies after SEC
approval. More broadly, financial institutions continue to explore how to integrate blockchain for secure
and transparent transactions within their systems and specifically how they can reconcile and report
transactions for digital asset classes. This is a good example of where it becomes harder for banks to
stretch existing legacy IT systems and we are seeing some banking clients that have implemented our
systems over the last five years are returning in a second wave of investment to remain competitive and
compliant.
Controlling Artificial Intelligence and Machine Learning in the financial services sector
The use of artificial intelligence (AI) and machine learning (ML) in the financial sector is increasing. These
technologies have been deployed for a while for fraud detection, marketing and customer service and are
becoming increasingly prevalent as applications are found across the entirety of a bank's internal and
external operations. The priority for boards is to ensure automation tools, especially those which are AI
driven, are used appropriately and the outputs and decisions taken are compliant, transparent, optimal
and explainable. AI has always been a key component of our technology and roadmap but the rapid
advances in the potential of the technology are providing us with a range of options to both improve our
products, streamline our development cycles, and operate more efficiently as a business.
Digital transformation
Fintech companies continue to challenge traditional banking models, and established financial institutions
continually need to adapt, compete and adopt digital technologies to improve efficiency and enhance
customer experiences. This includes investing in cloud computing, APIs, mobile applications, and other
digital technologies that enable banks to deliver products and services to their customers in a fast, efficient,
and seamless manner. This remains the over-arching main driver of our new business discussions.
Clareti a leading solution in the sector
Our conversations with banks, asset managers and a range of institutions encompass all these challenges.
Our Data and Connect solutions provide a comprehensive suite for seamless integration into global
financial systems, supporting third party data access and lowering integration risks, costs, and saving
time. The Data service offers a cloud-based aggregation platform collecting data from 2,500 sources,
processing 14.5 billion records annually, and serving close to 300 clients. The goal is to become a leading
independent provider of bank and custodian account data. Meanwhile, Connect solutions enable
interaction with bank partners for payments and statements, streamline trading processes, ensuring
regulatory compliance, and enhancing real-time data flows through a cloud platform.
Clareti is therefore a clear choice in supporting many companies in delivering optimised business
processes, enhanced data accuracy, all while ensuring compliance with regulatory frameworks. Most
importantly, our software and managed services enables customers to prioritise and focus on improving
their own client service levels and propositions. This is why we grow our client numbers year-on-year and
why many of our existing clients return each year to expand and upgrade their systems.
Client wins with major banks and buy-side firms
A good example of Clareti in action was our major win during the year with a major player in the US
investment management industry. This contract was particularly pleasing because of the size and
importance of the client but it also highlighted the end-to-end service and transformation we can deliver.
The firm, which offers active equity and fixed-income solutions to institutional and private clients, selected
us to help automate and reduce costs in its investment operations with a cloud solution covering data
collection from custodians and brokers, data aggregation, reconciliation against internal books and
records, and exception management processes. Following an extensive evaluation of market options, the
firm selected Control for Investment Management delivered as a service in the Clareti Cloud.
The contract includes minimum subscription fees of $240k per annum over an initial five-year committed
term, with potential for incremental subscription fees through optimal managed services and usage
expansion and additional service income.
The Group also secured a number of wins to close the year. In December, contracts for initial deployments
with two new Control customers were signed including a Tier 1 global investment bank and one of the
world's largest sovereign wealth funds. In addition, an agreement was reached with two recently merged
tier one bank customers for the adoption of Control as standard across the combined business operations,
providing a high level of certainty over existing recurring revenues.
Innovation: Floe - our next generation bank account platform
It is that focus on the end banking customer that has driven one of our most exciting innovation
programmes over the last few years. In Q3 2023 after nearly four years of development funded by our
partner, ANZ Bank, we launched our next generation banking platform, Floe.
The partnership, first announced in September 2019, has focused on developing next generation solutions
for digital corporate banking and particularly targeting corporate cash management workflows and
embedded bank account solutions. We have made remarkable progress over the past three and a half
years and our collaboration with ANZ has been transformative in terms of the product and go-to-market
plans we have today. From 2020 to 2021 we engaged in intensive design, development and deployment
phases, culminating in early releases of our product. Through 2022 rigorous testing procedures led to the
realisation of a product-grade solution, now actively deployed with ANZ Bank. As we enter the next phase,
our focus now shifts towards monetisation.
At the core of Floe's mission lies our commitment to facilitating faster, more flexible, and frictionless
corporate banking experiences. Floe is a cloud native, modular and configurable application that can build
on existing legacy systems to provide a modern, real-time, digital banking platform. Future solutions
included embedded bank accounts, in-house banking, and banking-as-a-service offerings, all enabled with
a modern API centric and cloud-native architecture.
The cloud design makes it flexible for different banking environments, it is highly scalable and secure and
is based on industry standards for communication, making it easy to connect to other systems, and
therefore offer new services quickly.
We believe our target market encompasses approximately 250 to 300 middle-sized transaction banks
globally, with a focus on those seeking innovative solutions without the need for extensive in-house
development or core system replacements.
Financially, we expect scaling Floe to be broadly self-funding in the near term. Beyond that we believe Floe
has the potential to extend our strategic importance in our target markets and become a material
contributor to ARR.
ANZ services relationship
As the Floe programme has progressed, we have taken the opportunity to review our ongoing relationship.
In consultation with ANZ, the Company agreed to exit the lower margin legacy sub-contracting business
under which locally based freelance IT contractors are provided to the Bank on short-term agreements. We
recognised £8.1m in revenue from these arrangement in FY23 with fixed margins of 13%, and the business
was being abandoned from December 2023. In line with the Group's strategy, these changes will continue
the Group's transformation to a pure-play SaaS company and lead to an immediate improvement in gross
and adjusted EBITDA margins.
People
In 2023, as we largely completed our transition to a pure fintech-focused software business, we have taken
the opportunity to re-evaluate our marketing strategy. A key part of this new approach is the investment in
our brand and our commitment to maintaining a challenger culture in product development and client
interaction. In July we were therefore pleased to welcome Geneva Loader to our team, to lead the Group-
Page 4 of 19
interaction. In July we were therefore pleased to welcome Geneva Loader to our team, to lead the Group-
wide marketing strategy.
Looking forward as we think about our technology roadmap over the next five years, post year-end we
announced the appointment of Andrew Elmore as Chief Technology Officer. With his industry experience,
he will not only add valued insight and knowledge into our R&D roadmap but also provides a fresh
opportunity to look at our processes and how we best allocate product development capital.
Importantly, Neil Vernon, CTO from the start of our Clareti journey, has transitioned to the newly created
role of Chief Product and Innovation Officer, with a focus on identifying and driving next generational
product strategy; including artificial intelligence and machine learning to serve the evolving needs of the
financial services data landscape.
Current trading and outlook: encouraging client interactions in Q1
We have had a positive start to 2024 and while sales cycles remain elongated and end markets are
consolidating, there are some signs of improving trends across our clients which gives us confidence for
the year ahead. The successful transformation of the Group presents us with opportunities to enhance
efficiencies across the organisation while remaining steadfast in our roadmap and go-to-market strategy.
This dual emphasis on growth and operational refinement positions us for sustained success and
innovation in the marketplace, driven by our commitment to client success and our own operational
excellence.
Ian Manocha
Chief Executive
29 April 2024
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.
2023
2022 Variance
%
Clareti ARR
Other ARR
Group ARR
Clareti ARR at start of
year
Organic increase in ARR
Foreign exchange
movement
Clareti ARR at end of
year
Other ARR
Group ARR
£m
£m
£m
£m
£m
£m
28.1
24.0
N/a
2.2
(0.8)
2.3
1.8
(0.1)
(4%)
(2.6)
(144%)
29.5
28.1
3.2
32.7
3.5
31.6
1.4
(0.3)
1.1
5%
(9%)
4%
KPI
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. The organic Clareti ARR growth in 2023 was £2.2m, an
increase of 8% on the opening Clareti ARR position, and broadly aligned with the £2.3m organic growth
achieved in the previous year, we were disappointed with the Clareti ARR growth performance in 2023 and
confident in improving this in 2024. Foreign exchange movements in the opening ARR position, largely the
strengthening of the GBP against the USD and AUD, were negative £0.8m, compared to the positive £1.8m
experienced in 2022. Our retention and upsell measures improved on the previous year, with the trailing
twelve-month net Clareti ARR retention rate being 105%, increasing from the 102% rate achieved in the
prior year (both on a constant currency basis). We calculate our net ARR retention rate as ARR from the
end of the 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 are strategically investing in capturing. Going forward, we expect
to our net ARR retention rate to further improve in 2024.
ARR from our Other businesses have fallen by £0.3m to £3.2m in 2023. The significant majority of this ARR
is denominated in AUD. Therefore the movement is largely due to the strengthening of the GBP against the
AUD since the prior year. It remains encouraging to see the ongoing longevity of the remaining non-Clareti
business line continuing to provide predictability and further ability to invest with confidence in the Clareti
business.
In addition to Group ARR of £32.7m, expected revenues from non-recurring contracts in place as at 31
December 2023 provide visibility for over £38.0m of revenue for 2024 before any new or incremental
contracts are won.
Prior year restatement
The Group identified two items requiring restatement in relation to a change in revenue recognition policy
and an error in the accounting for foreign exchange differences on the retranslation of intercompany
trading and loan balances. Full details of these restatements are disclosed in full within note 3 to the
financial statements. The financial statements and all commentary and references to the year's
performance or year-end position of the Group for 2022 and 2023 are presented post the application of
these changes, as has the opening balance sheet position at 1 January 2022. Where commentary and
references are made to performance and positions prior to 1 January 2022, these are based upon the
previously published results. A summary of these restatements for the year ended 31 December 2022 is as
follows:
2022 - as
previously
reported
48.7
33.9
10.3
4.4
2.9
£m
£m
£m
£m
£m
Restatements
2022 - as
restated
(0.5)
(0.5)
(0.5)
(0.5)
(1.3)
48.2
33.5
9.8
3.9
1.6
Group revenues
Group gross profit
Group adjusted EBITDA
Group cash adjusted EBITDA
Statutory profit after tax
Income Statement
Abandoned operations
During November we announced that in line with the Group's strategy to continue our transformation to a
pure-play SaaS company, we were abandoning our Contracting Services business with ANZ bank; with all
material operations ceasing before 31 December 2024. This business was the lower-margin legacy sub-
contracting business under which locally based IT contractors were provided to the Bank on short-term
agreements.
The majority of the sub-contracting business has been reported as its own contracting services business
segment, with a smaller proportion being reported within Clareti non-recurring revenue where a small
number of contractors have been provided specifically as part of the Floe project (now presented
separately in note 5 to the financial statements). Revenues and profits from this operation have been
disclosed below and are described separately to the ongoing operations of the Group. Revenues from this
contract were £8.1m for the year, 22% lower than 2022, with the reduction being due to lower demand
Page 5 of 19
contract were £8.1m for the year, 22% lower than 2022, with the reduction being due to lower demand
from ANZ for these non-strategic services. In addition to the transition away from these services, these
revenues have also been impacted by foreign exchange differences due to the AUD weakness experienced
throughout the year against the GBP.
Non-recurring
Non-recurring
Abandoned
operations
Clareti revenues (1)
Other services revenues
(1)
Group revenues
Group gross margin
Group adjusted EBITDA
Group cash adjusted EBITDA
2023
2022 Variance
%
1.5
6.6
8.1
1.1
13%
1.1
13%
1.1
13%
2.2
8.2
10.4
1.4
13%
1.4
13%
1.4
13%
(0.7)
(32%)
(1.6)
(20%)
(2.3)
(0.3)
(22%)
(22%)
-
N/a
(0.3)
(22%)
-
N/a
(0.3)
(22%)
-
N/a
£m
£m
£m
£m
%
£m
%
£m
%
(1) Abandoned operations under both the Clareti and Non-Clareti business segments were performed under the same master contract
and carried the same fixed margin
Constant currency Income Statement headlines
Due to the levels of transactions occurring in currencies other than the Company's functional reporting
currency of GBP, largely USD and AUD, the Group suffered to a material degree from the strengthening of
the GBP throughout the year. The table below shows 2023 performance if transactions had been reported
on the same average exchange rates for the year as 2022.
2023
Actual
basis
Constant
currency
basis
2022 Variance
on
constant
currency
basis
49.0
36.2
74%
10.7
22%
4.7
10%
50.2
36.9
74%
11.0
22%
5.0
10%
48.2
33.5
70%
9.8
21%
3.9
8%
2.0
3.4
4%
1.2
1%
1.1
1%
%
4%
10%
12%
28%
Group revenue
Group gross margin
Group gross margin %
Group adjusted EBITDA
Group adjusted EBITDA %
Cash adjusted EBITDA
Cash adjusted EBITDA %
£m
£m
%
£m
%
£m
%
Revenues
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 - which are 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 - include professional services, contracting, training and other
services that are expected to be one-off or periodic in nature.
2023
2022 Variance
%
Clareti solutions
Recurring
KPI
£m
Non-recurring
Total Clareti revenues
KPI
Other solutions &
services
Abandoned
operations
Group
Clareti Solutions
Recurring
Non-recurring
Total
Non-recurring
Total
£m
£m
£m
£m
£m
29.6
6.6
36.2
4.2
0.5
4.7
8.1
26.9
6.0
32.9
4.6
0.3
4.9
10.4
48.2
2.7
0.6
3.3
(0.4)
0.2
(0.2)
(2.3)
0.8
10%
10%
9%
(9%)
67%
(4%)
(22%)
2%
KPI
£m
49.0
Clareti recurring revenues increased by 10%, up £2.7m on 2022 or 12% and £3.2m on a constant
currency basis. These increases were as a result of both new recurring revenue sales and
increased consumption of Clareti solutions from our existing customers.
Clareti non-recurring revenues increased by 10%, up £0.6m on the prior year. The increase driven
by new implementations associated with the increase in Clareti recurring revenues and improved
discipline in ensuring services work from the Electra business, acquired in 2021, is fully
chargeable.
Other Solutions & Services
The vast majority of the remaining and ongoing 'Other Solutions & Services' relate to a legacy
partner relationship where we act as a reseller of third party software to a single customer. We
continue to benefit from very good visibility of customer intentions in relation to this remaining
product line.
Recurring revenues within the 'Other Solutions & Services' portfolio decreased by 9% to £4.2m as
a result of the discontinuation of our own-IP software product (EDT) from 31 December 2022, and
the weakening of the AUD, which the vast majority of the remaining recurring business is
contracted in. Non-recurring Other revenues increased from £0.3m to £0.5m due to a one-off
purchase of extended rights for unsupported source code usage of one of our legacy products.
Earnings
Clareti Solutions
Gross margin
Other solutions &
services
Gross margin
Gross margin
2023
2022 Variance
£m
%
£m
32.9
91%
2.3
29.7
90%
2.5
Page 6 of 19
%
11%
N/a
3.2
1%
(0.2)
(8%)
services
Abandoned
operations
Group
Gross margin
Gross margin
Gross margin
Gross margin
Gross margin
Adjusted EBITDA
Adjusted EBITDA
Cash Adjusted EBITDA
Cash Adjusted EBITDA
Statutory profit after tax
KPI
KPI
KPI
KPI
%
£m
%
£m
%
£m
%
£m
%
£m
Adjusted diluted EPS
KPI
Pence
50%
49%
1%
N/a
1.0
1.3
(0.3)
(20%)
13%
36.2
74%
10.7
22%
4.7
10%
3.1
6.32
13%
33.5
69%
9.8
20%
3.9
8%
1.6
-
2.7
5%
0.9
2%
0.8
2%
1.5
N/a
8%
N/a
9%
N/a
21%
N/a
94%
7.03
(0.71)
(10%)
Gross margin
The majority of our cost of sales within the Clareti business is made up of: (i) customer-specific
third party costs incurred in providing our hosted cloud solutions; and (ii) third party contractor
costs providing non-recurring services to customers. Gross margins achieved within the Clareti
business segment have increased from 90% in 2022 to 91% in 2023 as high margin recurring
revenues have increased as a proportion of total Clareti revenues.
Within the 'Other Solutions & Services' business segment, cost of sales are incurred in relation to
the fees paid to the software IP owner at fixed margins under reselling contracts. Gross margins
generated in this business segment for the year are 50%, relatively consistent with those in 2022
of 49%.
Group gross margins have improved from 69% to 74% as the mix of the Group's business has
continued to move, in line with Group strategy, to the high-margin Clareti business.
Adjusted EBITDA
Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) is analysed
excluding exceptional items, share-based payment charges and foreign exchange differences on
intercompany balances; which is consistent with the way in which the Board reviews the financial
results of the Group. We also consider this to be consistent with the manner in which similar
small-cap LSE (or AIM) listed companies present their results, and how we understand the global
investment community assesses performance, with this particularly being the case for growth
shares in which recurring cash performance is considered important. However, whilst we consider
them consistent and appropriate, this EBITDA measure and cash adjusted EBITDA measure below
are not necessarily directly comparable to other companies as they are not strictly governed IFRS
accounting measures, nor should they be considered as a substitute for, or superior to, any IFRS
measures.
Group adjusted EBITDA has improved by £0.9m, or 9%, since the prior year with margins
improving by 2% to 22% in 2023. 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. 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 IFRS 16 lease-related cash expenses classified as depreciation and
interest. We consider this a good measure of cash profitability for a modern SaaS business who
continue to invest in product development to ensure they remain market leading.
Cash adjusted EBITDA has also improved on the prior year, with £0.8m of the £0.9m
improvement in adjusted EBITDA (mentioned above) dropping through to improvement cash
EBITDA. This has resulted in a cash adjusted EBITDA margin of 10%, an improvement of 2% on
the prior year. Like adjusted EBITDA, we expect to see continued improvements in these margins
in future years.
The Clareti standalone business reached an important milestone in 2022, becoming cash
adjusted EBITDA positive for the first time, generating a margin of 2%. As was anticipated, this
margin further improved to 4% in 2023. As the Clareti business continues to scale this will
continue to drive Group cash adjusted EBITDA improvements.
Statutory profit after tax and Adjusted diluted EPS
There has been an increase in statutory profit after tax of £1.5m to £3.1m due to the
combination of improved adjusted operating profit of £0.4m as a result of the growth and
improved profitability of the Group; offset by an increase in tax charge of £0.7m (see below).
Adjusted diluted EPS has reduced by 10% to 6.3 pence per share, the reduction is largely due to
the increased taxation charge for the year (refer to taxation section below). Adjusted earnings
used in this calculation adjust the statutory result after tax for exceptional items; amortisation of
acquired intangibles, share-based payments and foreign exchange differences on intercompany
balances.
Exceptional items
During the year, the Group recognised exceptional costs of £0.1m in relation to the termination
of supplier contracts following the closure of the EDT business in December 2022. In the prior
year, £0.2m of exceptional costs were incurred in relation to the Electra acquisition and
associated integration. The Group also received £0.1m of exceptional income in the year from a
one-off tax credit in relation to the Covid-19 pandemic relief scheme; there was no such
exceptional income in 2022.
Taxation
For the year ended 31 December 2023, the Group has recorded a net tax charge of £1.0m (2022:
£0.3m). This is made up of a current tax charge of £0.6m (2022: £0.3m) and deferred tax charge
of £0.4m (2022: £nil).
The current tax charge increased by £0.3m, largely due to the credit generated upon the
surrender of tax losses for a cash rebate related to the enhanced relief available from qualifying
R&D activity being lower than the prior year as a result of their being fewer losses available.
The deferred tax charge increased by £0.4m as a result of: the recognition of tax asset due to
losses generated being £0.4m lower than the prior year upon the reduction in rate of enhanced
tax relief on qualifying R&D activity from 130% to 86%; and a £0.3m reduction in deferred tax
asset due unexercised employee share awards, which are valued at the current share price for
Page 7 of 19
asset due unexercised employee share awards, which are valued at the current share price for
tax purposes which has reduced since the prior year.
Cashflow
The Group's financial position remained very strong throughout 2023. At a headline level, the
cash balance at the year-end of £4.8m was behind that of the prior year-end of £6.3m. Whilst the
final deferred consideration payments from 2021's Electra acquisition during the year of £4.0m
explains much of this, there are also a number of other movements beneath the headline
balances which are described below.
Operating cashflow, excluding working capital, abandoned and exceptional items, has increased
by £0.8m to £9.7m in the year as a result of the improved cash EBITDA of the Group, particularly
the strategic Clareti business.
Operating cash outflow from exceptional items has reduced from £0.2m to £nil, and operating
cashflows from abandoned operations have reduced by £0.4m to £1.0m.
The movement in working capital, excluding the impact of the abandoned operations, has
improved from negative £0.8m to a positive £1.3m; a trend which is expected to continue due to
the 'paid annually in advance' commercial model in the Clareti business (this was after a number
of one-off items caused the negative movement in the prior year). The movement in working
capital from abandoned operations was a negative £1.9m, reflecting the quarterly advance
payments model of the Contracting Services business.
The Group paid net tax of £0.6m in 2023, whereas £0.6m was received in 2022. Gross tax
payments were made in the year of £1.9m (2022: £1.9m). During 2023 the Group received gross
tax receipts of £1.3m as a result of research and development activities performed. During 2022,
two years' worth of equivalent receipts were received relating to 2020 and 2021, totalling £2.5m.
The capitalised development expenditure of £5.2m is £0.2m higher than with 2022 largely due to
inflationary related salary increases.
During 2023 the Group spent £0.2m on other capital spend, a return to normal levels, after 2022
saw a one-off increase in relation to the complete refurbishment of our New York office.
During the prior year the Group paid the final contingent consideration payment of £0.4m in
relation to the July 2020 Inforalgo acquisition. As such, there was no equivalent payment in the
current year.
Upon meeting the success criteria measured on the second anniversary of the 2021 Electra
acquisition, the second and final contingent consideration payment was made in full of £4.0m
(2022: £4.0m).
The Group received £0.2m upon the exercise of share options during the year (2022: £0.1m).
Included within 'Other' is the recording of negative effect of foreign exchange rate changes of
£0.1m, arising upon the revaluation of the Group's non-GBP entity opening balance sheets upon
consolidation; the equivalent in the prior year was £1.1m.
As has been the strategy of the Group for a number of years, with increasing Clareti sales from
the growing annuity base and new customer wins, coupled with carefully selected and controlled
investments, we expect the cash-generation capacity of the business to continue and are looking
at opportunities to best utilise excess cash generated. In order to maximise our returns, we plan
to increase levels of investment in distribution and customer success, whilst continuing to invest
excess cash efficiently in bank deposits and giving appropriate consideration to M&A
opportunities.
Opening cash and cash equivalents at 1
January
Operating cashflow excluding abandoned and
exceptional items
Operating cashflow from abandoned
operations
Operating cashflow from exceptional items
Total operating cashflow excluding working
capital
Movement in working capital
Movement in working capital - abandoned operations
Cash inflow from operations
Net tax (payments)/receipts
Capital expenditure - development costs
Capital expenditure - other
Principal paid on lease liabilities
Inforalgo acquisition (net of cash acquired)
Electra acquisition
Shares issued - upon option exercises
Dividend
Other
Net increase/(decrease) in cash and cash equivalents
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
2023
2022 Variance
%
6.3
9.1
(2.8)
(31%)
9.7
1.0
-
8.9
1.4
0.8
9%
(0.4)
(29%)
(0.2)
0.2
(100%)
10.7
10.1
0.6
6%
(0.8)
1.8
(225%)
1.0
(1.6)
10.1
(0.6)
(5.4)
(0.2)
(0.7)
-
(4.0)
0.2
(0.6)
(0.3)
-
9.3
0.6
(5.2)
(0.8)
(0.6)
(0.4)
(4.0)
0.1
(0.6)
(1.2)
(1.6)
0.8
(1.2)
(0.2)
0.6
(0.1)
0.4
-
0.1
-
0.9
1.3
N/a
9%
(200%)
4%
(75%)
17%
100%
-
100%
-
(75%)
(46%)
(1.5)
(2.8)
Closing cash and cash equivalents at 31
December
KPI
£m
4.8
6.3
(1.5)
(24%)
Consolidated statement of financial position
Intangible fixed assets remain the largest item on the balance sheet at £62.9m (2022: £62.8m),
consisting of software development assets of £25.9m (2022: £23.6m), separately identified
assets acquired with previous acquisitions of £17.2m (2022: £19.5m), and goodwill of £19.6m
(2022: £19.7m).
Trade receivables increased from £4.8m to £5.7m and accrued income (a contract asset) has
reduced from £1.8m to £1.0m. The combined balance of trade receivables and accrued income
remains fairly consistent year on year, however the balance between the two has shifted due to
the timing of a single large customer invoice being raised.
Contract liabilities are split between non-current, £0.8m (2022: £0.4m) and current liabilities,
£13.0m (2022: £13.5m). Non-current contract liabilities have increased by £0.4m due to two
customers negotiating non-standard renewal terms under which they paid the full three-year
Page 8 of 19
customers negotiating non-standard renewal terms under which they paid the full three-year
renewal term upfront. Current contract liabilities have reduced by £0.5m due to the abandoning
of the non-Clareti Contracting Services business, which is partially offset by the increase in
Clareti ARR which is typically paid annually in advance.
Deferred tax liabilities, which are presented net of deferred tax assets, have increased from
£5.7m to £6.5m as a result of research and development spend qualifying for enhanced tax relief
being £0.4m lower than the prior year as a result of the rate reducing from 130% to 86% ; offset
by a reduction of £0.6m from the unwinding of timing difference arising on acquired intangibles,
a £1.0m decrease in tax losses available and a £0.3m decrease in deferred tax on employee
share awards.
Contingent consideration has reduced from £4.0m to £nil as a result of the final amount of $4.8m
due on the Electra acquisition being paid during the third quarter of 2023.
Trade payables decreased from £1.5m to £1.0m, largely due to the Contracting Services
business being abandoned. Accruals decreased to £3.6m (2022: £4.3m), largely in relation to a
reduced bonus provision as 2023 performance was not as strong against set targets as it was in
2022.
Financial outlook
Management were pleased to deliver continued growth in 2023 in Clareti revenues, Group
adjusted EBITDA and Group cash adjusted EBITDA against the continued turbulent economic
environment in which our customers operate, and the foreign exchange headwinds experienced.
Management are confident of the building blocks in place to drive expected improvements in
Clareti growth rates; which will be achieved through new customer wins, expanding the existing
ARR base from existing customers, and reducing losses and down-sells.
The decision with ANZ to abandon the non-core low-margin Contracting Services business
simplifies the Group towards a pure-play SaaS company, generating Group margins expected of
such a business.
We are also focussed on improving our profit margins through targeted cost optimisations across
the Group whilst prioritising investments that maximise growth generation.
Tom Mullan
Chief Financial Officer
29 April 2024
CONSOLIDATED INCOME STATEMENT
Revenue
Cost of sales
Gross profit
Adjusted administrative expenses
Adjusted operating profit
Adjusting administrative items:
Exceptional costs
Exceptional income
Foreign exchange differences on retranslation of intercompany
balances
Amortisation of acquired intangibles
Share-based payments
Total administrative expenses
Operating profit
Finance revenue
Finance costs
Profit before taxation
Taxation
Profit after taxation attributable to the equity holders of the
Parent
Earnings per share
Statutory
Basic earnings per share
Diluted earnings per share
Notes
Year ended
31
December
2023
£'000
As restated
Year ended
31 December
2022
£'000
4,5
49,012
48,238
(12,790)
(14,774)
36,222
33,464
(29,431)
(27,027)
6,791
6,437
(79)
119
636
(2,315)
(757)
(2,396)
(153)
-
(860)
(2,315)
(1,027)
(4,355)
(31,827)
(31,382)
4,395
2,082
1
(307)
4,089
(1,013)
3,076
6
(219)
1,869
(279)
1,590
pence
pence
3.68
3.55
1.91
1.88
5
5
5
14
23
5,6
9
9
10
11
11
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit after taxation attributable to the equity holders of the Parent
Notes
Year ended
31
December
2023
£'000
3,076
As restated
Year ended
31
December
2022
£'000
1,590
Page 9 of 19
Profit after taxation attributable to the equity holders of the Parent
3,076
1,590
Other comprehensive expenses
Items that will or may be re-classified into profit or loss:
Exchange differences on translating foreign operations
Total other comprehensive expenses
24
(421)
(421)
(77)
(77)
Total comprehensive income for the year
2,655
1,513
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Current assets
Trade and other receivables
Contract assets
Income tax receivable
Cash and cash equivalents
Total assets
Equity and liabilities
Equity attributable to owners of the Parent
Called up equity share capital
Share premium account
Own share reserve
Other reserves
Retained earnings
Total equity attributable to owners of the
Parent
Non-current liabilities
Contract liabilities
Lease liabilities
Deferred tax liability
Provisions
Contingent consideration
Current liabilities
Trade and other payables
Lease liabilities
Income tax payable
Contingent consideration
Total liabilities
Total equity and liabilities
Notes
At 31
December
2023
As restated
At 31
December
2022
As restated
At 1 January
2022
£'000
£'000
£'000
13
16
14
10
18
18
19
22
24
22
24
24
20
16
10
20
20
20
16
20
20
731
1,574
62,861
137
65,303
7,175
1,871
-
4,774
13,820
79,123
4,194
24,232
(44)
536
21,550
50,468
796
867
6,489
183
-
8,335
19,659
661
-
-
20,320
28,655
79,123
899
1,592
62,788
-
65,279
6,515
2,605
-
6,280
15,400
80,679
4,172
23,941
(296)
536
18,770
47,123
354
953
5,712
146
-
7,165
21,633
709
62
3,987
26,391
33,556
80,679
218
1,466
62,267
232
64,183
5,403
1,740
1,268
9,139
17,550
81,733
4,168
23,876
(609)
536
16,459
44,430
60
770
6,566
144
3,575
11,115
21,602
642
-
3,944
26,188
37,303
81,733
The financial statements were approved by the Board of Directors and authorised for issue on 29
April 2024.
On behalf of the Board
Ian Manocha Tom Mullan
Chief Executive Chief Financial Officer
29 April 2024 29 April 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 1 January 2022 - as previously
reported
Notes
Share
capital
Share
premium
account
Own
share
reserve
Other
reserves
Retained
earnings
Total
£'000
£'000
£'000
£'000
£'000
£'000
4,168
23,876
(609)
536
17,910
45,881
Prior year adjustment
3
-
-
-
-
(1,451)
(1,451)
At 1 January 2022 - As restated
4,168
23,876
(609)
536
16,459
44,430
Attributable profit for the period -
As restated
Other comprehensive expenses -
As restated
Total comprehensive income - As
restated
Exercise of share options
Transfer of own shares held by
Employee Share Ownership Trust
to employees
Deferred tax movement in respect
of share options
Share-based payments
Dividend paid
22
22
10
23
12
-
-
-
4
-
-
-
-
-
-
-
65
-
-
-
-
-
-
-
-
313
-
-
-
-
-
-
-
-
-
-
-
1,590
1,590
(77)
(77)
1,513
1,513
-
69
92
405
301
301
1,027
1,027
(622)
(622)
Page 10 of 19
Dividend paid
12
-
-
-
-
(622)
(622)
At 31 December 2022 - As
restated
Attributable profit for the period
Other comprehensive expenses
Total comprehensive income
Exercise of share options
Issue of shares to Employee Share
Ownership Trust
Transfer of own shares held by
Employee Share Ownership Trust
to employees
Deferred tax movement in respect
of share options
Share-based payments
Dividend paid
22
22
22
10
23
12
4,172
23,941
(296)
536
18,770
47,123
-
-
-
15
7
-
-
-
-
-
-
-
291
-
-
-
-
-
-
-
-
-
(7)
259
-
-
-
-
-
-
-
-
-
-
-
-
3,076
3,076
(421)
(421)
2,655
2,655
-
-
306
-
223
482
(229)
(229)
757
757
(626)
(626)
At 31 December 2023
4,194
24,232
(44)
536
21,550 50,468
CONSOLIDATED STATEMENT OF CASHFLOW
Cashflows from operating activities
Profit after taxation
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of right-of-use assets
Profit on disposal of fixed assets
Share-based payments
Increase in trade and other receivables
Decrease/(increase) in contract assets
(Decrease)/increase in trade and other payables
Increase in contract liabilities
Decrease in sales tax provision arising on acquisition
Taxation
Net finance costs
Cash inflow from operations
Income taxes received
Income taxes paid
Net cash inflow from operating activities
Cashflows from investing activities
Interest received
Purchase of property, plant and equipment
Payment of contingent consideration on acquisition of Inforalgo
Payment of contingent consideration on acquisition of Electra
Payments to acquire intangible fixed assets
Net cash used in investing activities
Cashflows from financing activities
Interest paid
Principal paid on lease liabilities
Dividends paid
Drawdown on RCF loan facility
Repayment of RCF loan facility
Share issue proceeds (net of costs)
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
Notes
Year ended
31 December
2023
As restated
Year ended 31
December
2022
£'000
£'000
13
14
16
23
10
9
10
9
13
20
20
14
9
16
12
21
21
22
19
3,076
333
5,294
556
(11)
757
(790)
664
(680)
215
-
1,013
306
10,733
1,179
(1,833)
10,079
1
(191)
-
(3,987)
(5,398)
(9,575)
(209)
(676)
(626)
3,278
(3,278)
242
1,590
191
4,723
714
-
1,027
(886)
(743)
1,560
278
(496)
279
213
8,450
2,473
(1,893)
9,030
6
(806)
(369)
(3,987)
(5,195)
(10,351)
(138)
(645)
(622)
-
-
69
(1,269)
(1,336)
(765)
6,280
(741)
4,774
(2,657)
9,139
(202)
6,280
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. Basis of preparation
The Group's financial statements have been prepared in accordance with UK adopted international
accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance
with international financial reporting standards and international accounting standards as issued by the
International Accounting Standards Board ("IASB") and
Interpretations (collectively "IFRSs"). The
accounting policies which follow set out those policies which apply in preparing the financial statements for
the year ended 31 December 2023.
The Group's financial statements have been prepared on a historical cost basis except contingent
consideration.
The Group financial statements are presented in Sterling, which is also the Company's functional currency.
All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
2. Responsibility statements under the disclosure and transparency rules
The Annual Financial Report for the year ended 31 December 2023 contains the following statements:
The directors confirm that to the best of their knowledge:
Page 11 of 19
The directors confirm that to the best of their knowledge:
·
the Group financial statements have been prepared in accordance with UK adopted
international accounting standards and Article 4 of the IAS Regulation, and give a true and
fair view of the assets, liabilities, financial position and profit and loss of the Group; and
·
the Annual Financial Report 2023 includes a fair review of the development and
performance of the business and the financial position of the Group and the Parent
Company, together with a description of the principal risks and uncertainties that they
face.
The name and function of each of the directors for the year ended 31 December 2023 are set out in the
Annual Financial Report 2023.
3. Prior Year restatement
Revenue recognition policy
Management changed their assessment as to whether software licensing, support and
maintenance for non-Gresham-hosted deployments were distinct performance obligations and
could therefore be unbundled. Management now consider that unbundling is not possible, largely
due to changes in customer expectations, the maturity of subscription software selling, the pace
of innovation in the fin-tech industry and precedents set over the decade plus life of the Clareti
business to date. This change in assessment has resulted in a change in the accounting
treatment for the recognition of revenue for on-premise license fees during the year. Previously
this revenue was recognised at the point in time the license was delivered to the customer,
following a review of customer contracts the revenue previously recognised was corrected to
reflect the fact that performance obligations for the license fee were on-going through the
contracted period and therefore these licenses should be treated as a right to access licence
under IFRS 15 and not a right of use licence. Therefore, revenue should be recognised rateably
over the contracted period. Administrative expenses have been adjusted for the amortisation of
contracted sales commissions which has been recognised in line with revenue recognition in
accordance with IFRS 15.
As result of this change revenue for the year ended 31 December 2022 has been restated,
reducing revenue by £481,000 and increasing administrative expenses by £28,000. This
adjustment has resulted in the restatement of the Group's opening reserves at 1 January 2022,
its financial position as at 31 December 2022 and the results of the cashflows of the Group then
ended. The impact of this change as at 1 January 2022 was to reduce the net assets by
£1,911,000, increasing contract liabilities (current liabilities) by £1,986,000 and reducing contract
assets by £75,000.
The impact of this adjustment has also reduced the taxation charge for the year ended 31
December 2022 by £77,000, with the deferred tax liability reducing by £90,000 and a £13,000
increase in corporation tax creditor. The impact of this change as at 1 January 2022 is to reduce
the deferred tax liability by £265,000, the corporation creditor by £131,000 and increases income
tax receivable by £64,000, with a corresponding increase of £460,000 to retained earnings.
Foreign exchange differences on retranslation of intercompany balances
Foreign exchange differences arising on intercompany trading balances have historically been
recognised within Other Comprehensive Income within the consolidated financial statements and
cumulatively recognised in the foreign currency translation reserve. In accordance with IAS21,
exchange differences on intragroup balances should be recognised in the Income statement as
they do not form part of Company's net investment in foreign operations.
As a result of the identification of this error, the Income statement has been restated to reflect
the foreign exchange differences, with the impact increasing administrative expenses by
£860,000 in the year ended 31 December 2022, with the corresponding correction recognised as
a reduction within other comprehensive income. In addition, the previously separately
recognised foreign currency translation reserve has been merged with the retained earnings
reserve. This change has been applied retrospectively, restating the Group's opening reserves at
1 January 2022 and its financial position as at 31 December 2022. The impact of this change as
at 1 January 2022 was to reduce retained earnings by £378,000 and to increase Foreign currency
translation reserve by £378,000.
The combined impact of these changes are detailed below:
Consolidated Income Statement
Year ended 31 December 2022
Revenue
Gross profit
Administrative expenses
Profit before taxation
Taxation
Profit after taxation
As previously
reported
£'000
48,719
33,945
(30,494)
3,238
(356)
2,882
Change in
revenue
recognition
£'000
Foreign
exchange
differences
£'000
(481)
(481)
(28)
(509)
77
(432)
-
-
(860)
(860)
-
(860)
As restated
£'000
48,238
33,464
(31,382)
1,869
(279)
1,590
Consolidated Statement of Financial Position
At 1 January 2022
Current assets
Contract assets
Income tax receivable
Total current assets
Current liabilities
Contract liabilities
Income tax payable
Total current liabilities
Non-current liabilities
Deferred tax liability
Change in
revenue
recognition
£'000
Foreign
exchange
differences
£'000
As previously
reported
£'000
1,665
1,204
17,411
75
64
139
(12,048)
(1,986)
(131)
131
(24,333)
(1,855)
(6,831)
265
As restated
£'000
1,740
1,268
17,550
(14,034)
-
(26,188)
(6,566)
-
-
-
-
-
-
-
Page 12 of 19
Deferred tax liability
Total liabilities
Equity
Retained earnings
Foreign currency translation reserve
Total equity
At 31 December 2022
Current assets
Contract assets
Current liabilities
Contract liabilities
Income tax payable
Total current liabilities
Non-current liabilities
Deferred tax liability
Total liabilities
Equity
Retained earnings
Foreign currency translation reserve
Total equity
Earnings per share
(6,831)
265
(35,713)
(1,590)
-
-
(6,566)
(37,303)
18,288
(378)
45,881
(1,451)
-
(1,451)
(378)
378
16,459
-
-
44,430
As previously
reported
£'000
Change in
revenue
recognition
£'000
Foreign
exchange
differences
£'000
2,558
47
(11,070)
(2,467)
(244)
182
(24,106)
(2,285)
(6,067)
355
(31,626)
(1,930)
-
-
-
-
-
-
As restated
£'000
2,605
(13,537)
(62)
(26,391)
(5,712)
(33,556)
21,968
(1,315)
49,006
(1,883)
-
(1,883)
(1,315)
1,315
18,770
-
-
47,123
For the year ended 31 December 2022 the impact has reduced basic and diluted earnings per
share from 3.46 pence per share to 1.91 pence per share and from 3.41 pence per share to 1.88
pence respectively.
4. Segment information
The segmental disclosures reflect the analysis presented on a monthly basis to the chief
operating decision maker of the business, the Chief Executive Officer and the Board of Directors.
In addition, the split of revenues and non-current assets by the UK and overseas have been
included as they are specifically required by IFRS 8 "Operating Segments".
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
o Clareti Connect products
·
·
·
Other Solutions - supply of a range of well-established solutions to enterprise-level
customers in a variety of end markets
Clareti Contracting Services - supply of IT contracting services to one banking
customer. Services provided relate to Clareti products
Contracting Services - supply of IT contracting services to one banking customer,
excluding Clareti Contracting Services.
The Clareti Solutions reportable segment has been analysed separated between Solutions and
Contracting Services in the tables below. The separate analysis is provided following the
announcement in November 2023 that the agreement for contracting services business was
being terminated in 2024. This reflects how the business is reported to Management and the
Board of Directors and how the business will be monitored going forward.
The prior year segmental analysis has been updated to reflect this change.
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.
Notes
Clareti
Solutions
Clareti
Contracting
Services
Other
Solutions
Contracting
Services
£'000
36,281
(3,415)
32,866
91%
£'000
1,501
£'000
4,653
£'000
6,577
(1,301)
(2,320)
(5,754)
200
13%
2,333
50%
(29,363)
-
(68)
823
13%
-
3,503
200
2,265
823
2023
Revenue
Cost of sales
Gross profit
Gross profit %
Adjusted
administrative
expenses
Adjusted operating
profit
Adjusting
administrative items:
Exceptional items
Foreign exchange
differences on
retranslation of
intercompany
balances
Amortisation of
acquired intangibles
Share-based
payments
4
5
6
14
23
Adjustments,
central
overheads
and
elimination
£'000
Consolidated
£'000
49,012
(12,790)
36,222
74%
(29,431)
6,791
40
40
636
636
(2,315)
(2,315)
(757)
(757)
Page 13 of 19
payments
Adjusting
administrative
expenses
Operating profit
Finance revenue
Finance costs
Profit before taxation
Taxation
Profit after taxation
Adjusted operating
profit
Amortisation of
intangibles
Depreciation of
property, plant and
equipment
Amortisation of right-
of-use assets
Adjusted EBITDA
Development costs
capitalised
Principal paid on
lease liabilities
Cash adjusted
EBITDA
Segment assets
Segment liabilities
2022 (as restated)
Revenue
Cost of sales
Gross profit
Gross profit %
Adjusted
administrative
expenses
Adjusted operating
profit
Adjusting
administrative items:
Exceptional costs
Foreign exchange
differences on
retranslation of
intercompany
balances
Amortisation of
acquired intangibles
Share-based
payments
Adjusting
administrative
expenses
Operating profit
Finance revenue
Finance costs
Profit before taxation
Taxation
Profit after taxation
Adjusted operating
profit
Amortisation of
intangibles
Depreciation of
property, plant and
equipment
Amortisation of right-
of-use assets
Adjusted EBITDA
Development costs
capitalised
Principal paid on
lease liabilities
Cash adjusted
EBITDA
Segment assets
Segment liabilities
9
9
10
14
13
16
14
16
Notes
Clareti
Solutions
Clareti
Contracting
Services
Other
Solutions
Contracting
Services
£'000
32,888
(3,164)
29,724
90%
£'000
2,150
£'000
4,976
£'000
8,224
(1,868)
(2,546)
(7,196)
282
13%
2,430
49%
1,028
13%
(26,926)
-
(101)
-
2,798
282
2,329
1,028
4
5
6
14
23
9
9
10
14
13
16
14
16
(757)
(757)
(2,396)
(2,396)
4,395
1
(307)
4,089
(1,013)
3,076
6,791
2,979
333
556
10,659
(5,297)
(676)
4,686
79,123
(28,655)
Adjustments,
central
overheads and
elimination
£'000
Consolidated
£'000
48,238
(14,774)
33,464
69%
(27,027)
6,437
(153)
(153)
(860)
(860)
(2,315)
(2,315)
(1,027)
(1,027)
(4,355)
(4,355)
2,082
6
(219)
1,869
(279)
1,590
6,437
2,408
191
714
9,750
(5,195)
(645)
3,910
80,679
(33,556)
The Group has a customer relationship with one banking customer which is considered by the
Directors to be individually significant; revenue from this relationship exceeded 10% of the
Group's revenue, totalling £17,589,000 (2022: £20,604,000) which includes contracting revenue
of £8,078,000 (2022: £10,374,000).
Page 14 of 19
Adjusting administrative items
Operating performance is analysed excluding exceptional items, share-based payment charges
and amortisation from acquired intangibles which is consistent in with the way in which the
Board and most stakeholders review the financial performance of the Group. These adjusting
items are all either non-cash or non-recurring IFRS expenses (or income) that do not reflect the
underlying performance of the business. In the case of share-based payment charges,
management acknowledge that these awards are potentially paid in "lieu" of cash salary or
bonuses, however the actual charge represents a non-cash expense. Adjusting for these items is
also consistent with the manner in which a number of similar small and mid-cap LSE (or AIM)
listed present their results and how we understand the investment community to assess
performance, where, for growth shares the recurring cash performance of the business is
considered most important. In addition, these adjustments are also aligned with the performance
methodology used by the panel of debt providers that tendered for the revolving credit facility
established during the year in order to assess and continually monitor credit worthiness, risk and
upon which covenants are set.
The adjusting administrative items are:
Acquisition and associated integration costs
Professional fees
Exceptional costs
Exceptional income
Total exceptional items
Foreign exchange differences on retranslation of intercompany balances
Amortisation on acquired intangibles
Share-based payments
Total adjusting administrative items
2023
£'000
-
79
79
(119)
(40)
(636)
2,315
757
2,396
As
restated
2022
£'000
153
-
153
-
153
860
2,315
1,027
4,355
During the year the Group incurred £79,000 exceptional costs relating to termination costs of
supplier contracts following the closure of the EDT business and one-off corporate costs including
legal and professional fees.
The exceptional income related to payroll tax relief received from the Australian tax authorities
as a result of a post-Covid pandemic scheme.
In 2022 exceptional costs related to legal and professional fees for the integration of prior year
acquisitions.
Due to the amount and nature of amortisation of acquired intangibles and share-based payments
both costs were treated as an adjusting administrative item.
Adjusted EBITDA
Adjusted EBITDA is disclosed within the financial statements to show the underlying performance
of the Group on a consistent basis and to aid understanding of the financial performance during
the year.
Profit before taxation
Adjusting items:
Amortisation of intangibles
Depreciation of property, plant and equipment
Amortisation of right-to-use assets
Notional interest on lease liabilities
Finance revenue
Interest payable
EBITDA
Net exceptional items
Foreign exchange differences on retranslation of
intercompany balances
Share-based payments
Adjusted EBITDA
Notes
2023
£'000
4,089
As restated
2022
£'000
1,869
14
13
16
9
9
9
5
5
23
5,294
333
556
58
(1)
249
10,578
(40)
(636)
757
10,659
4,723
191
714
45
(6)
174
7,710
153
860
1,027
9,750
Adjusted EBITDA is not an IFRS measure or not considered to be a substitute for or superior to any IFRS
measures. It is not directly comparable to other companies.
Geographic information
Revenues from external customers (by destination)
UK
EMEA
United States
Americas
Australia
Asia Pacific
2023
£'000
8,114
4,635
16,686
1,146
17,726
705
49,012
As restated
2022
£'000
6,832
4,128
14,568
1,307
20,851
552
48,238
EMEA includes revenue from external customers located primarily in the Netherlands, Luxembourg,
Switzerland, Sweden, and South Africa. Americas includes revenue primarily from Canada. Asia
Pacific includes revenue from external customers located primarily in Malaysia and Singapore.
Page 15 of 19
Non-current assets
UK
EMEA
North America
Asia Pacific
2023
£'000
62,854
454
1,269
726
65,303
2022
£'000
63,077
425
740
1,037
65,279
Non-current assets consist of property, plant and equipment, right-of-use assets, intangible assets and
deferred tax assets.
5. Taxation
Tax on profit on ordinary activities
Tax charge in the Income Statement
Current income tax
Overseas tax charge - adjustment to prior years
Overseas tax charge - current year
UK corporation tax credit - adjustment to prior years
Total current income tax
Deferred income tax
Movement in net deferred tax liability
Total deferred income tax
Total charge in the Income Statement
2023
£'000
As restated
2022
£'000
41
1,503
(949)
595
418
418
1,013
45
1,583
(1,293)
335
(56)
(56)
279
The UK corporation tax credit included £1,162,000 (2022: £1,273,000) relating to the surrender of prior
year tax losses under the HMRC R&D tax credit scheme.
Reconciliation of the total tax charge
The tax charge in the Income Statement for the year is higher (2022: lower) than the standard rate of UK
corporation tax for the period of 23.5% (2022: 19.0%). The differences are reconciled below:
Profit before taxation
Profit before taxation multiplied by the UK standard rate of corporation tax for the
period of 23.5% (2022: 19.0%)
Effects of:
Expenses not deductible for tax purposes
Impact of tax rate change on timing differences
Difference in overseas tax rates
Movement in unprovided deferred tax losses
Adjustments to prior years in respect of current tax
Adjustments to prior years in respect of deferred tax
Research and development enhanced relief claim
Total tax charge reported in the Income Statement
Tax credit recognised in equity:
Deferred tax (charge)/credit recognised directly in equity
Total tax (charge)/credit recognised directly in equity
Deferred tax
Deferred tax liabilities
The movement on the net deferred tax liability is shown below:
At 1 January
Recognised in income
Recognised in equity
Foreign exchange
At 31 December
Deferred tax recognised relates to the following:
Tax losses available for offset against future taxable income
Employee share award schemes
Capitalised development costs
Accelerated depreciation for tax purposes on fixed assets
Other timing differences
Inter-group sale of intellectual property
Acquired intangibles - software and customer relationships
31 December
2023
£'000
4,089
961
460
-
194
545
As
restated
2022
£'000
1,869
355
573
139
375
97
(908)
2,150
(1,248)
2,165
(2,389)
(2,177)
1,013
279
2023
£'000
(229)
(229)
2022
£'000
301
301
2023
£'000
As
restated
2022
£'000
(5,712)
(6,334)
(418)
(229)
7
56
301
265
(6,352)
(5,712)
2023
£'000
3,550
503
(5,843)
333
403
(988)
(4,310)
(6,352)
As restated
2022
£'000
4,334
766
(5,577)
540
379
(1,300)
(4,854)
(5,712)
Page 16 of 19
Comprising:
Asset
Liability
31 December
2023
£'000
137
(6,489)
(6,352)
As restated
2022
£'000
-
(5,712)
(5,712)
Unrecognised tax losses
The Group has tax losses that are available indefinitely for offset against future taxable profits of the
companies in which the losses arose as analysed below. Deferred tax assets have not been recognised in
respect of these losses as they may not be used to offset taxable profits elsewhere in the Group and they
have arisen in subsidiaries that have been loss making for some time.
The tax effect of exchange differences recorded within the Consolidated Statement of Comprehensive
Income is a credit of £99,000 (2022: credit £15,000).
Temporary differences associated with Group investments
At 31 December 2023, there was no recognised deferred tax liability (2022: £nil) for taxes that would be
payable on the unremitted earnings of certain of the Group's subsidiaries as the Group has determined
that undistributed profits of its subsidiaries will not be distributed in the foreseeable future.
Unrecognised potential deferred tax assets
The deferred tax not recognised in the Consolidated Statement of Financial Position is as follows:
Gresham Technologies (Luxembourg) S.A.
Gresham Technologies (Holdings) SARL
Gresham Technologies (Singapore) Limited
Gresham Technologies (TDI) Limited
Tax losses
Gross tax losses unrecognised
Future tax rates
2023
£'000
665
128
235
73
2022
£'000
793
109
137
119
1,101
1,158
4,859
5,155
The main UK corporation tax rate increased from 19% to 25% from 1 April 2023 as substantively enacted
by the Finance Act 2021. Therefore, the rate used to calculate deferred tax balances at 31 December 2023
is 25%.
The Group's recognised and unrecognised deferred tax assets in the UK, Luxembourg, Australian,
Singapore and US subsidiaries have been shown at the rates in the following table, being the substantively
enacted rates in these countries.
UK
Luxembourg
Australia
Singapore
US
6. Earnings
Earnings per share
2023
2022
%
25
25
30
17
27
%
25
25
30
17
27
Basic earnings per share amounts are calculated by dividing profit or loss for the year attributable to
owners of the Parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing profit or loss attributable to owners of the
Parent by the weighted average number of ordinary shares outstanding during the year 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 except when such dilutive instruments would reduce the loss per
share.
The following reflects the earnings and share data used in the basic and diluted earnings per share
computations:
Basic weighted average number of shares
Employee share options - weighted (note 23)
Diluted weighted average number of shares
Adjusted earnings attributable to owners of the Parent
Adjusting items:
Exceptional items
Foreign exchange differences on retranslation of intercompany
balances
Amortisation of acquired intangibles
Share-based payments
Statutory earnings attributable to owners of the Parent
Notes
5
5
14
23
Earnings per share
Statutory
Basic earnings per share
Diluted earnings per share
Adjusted
Basic earnings per share
Diluted earnings per share
2023
83,669,390
2,917,224
86,586,614
As restated
2022
83,393,061
1,133,957
84,527,018
2023
£'000
5,472
40
636
(2,315)
(757)
3,076
pence
3.68
3.55
6.54
6.32
2022
£'000
5,945
(153)
(860)
(2,315)
(1,027)
1,590
pence
1.91
1.88
7.13
7.03
Page 17 of 19
During the year ended 31 December 2023, share options granted under share option schemes were
exercised and the Group issued 285,000 (2022: 85,000) ordinary shares accordingly (ranking pari passu
with existing shares in issue). Shares totalling 140,000 were issued and transferred to the Employee Share
Ownership Trust during the year. See note 22 for further details.
There have been no other transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of completion of this Annual Financial Report 2023.
7. Dividends paid and proposed
The final dividend for the year ended 31 December 2022 was approved at the Company Annual General
Meeting on 23 May 2023 and paid on 26 May 2023 of 0.75 pence per share, equating to a total of
£626,000. The Board has declared an interim dividend of 0.75 pence per share (2022: £nil) instead of a
final dividend (2022: 0.75p).
8. Intangible assets
Separately identified
intangibles on
acquisition
Development
costs
£'000
36,301
5,297
-
(41)
Patents
and
licences
£'000
777
101
(85)
(4)
Software
Customer
relationships
Goodwill
Total
£'000
£'000
£'000
£'000
12,120
14,210
19,903
83,311
-
-
-
-
-
-
-
-
(60)
5,398
(85)
(105)
2023
Cost
At 1 January
Additions
Disposals
Exchange
adjustment
At 31 December
41,557
789
12,120
14,210
19,843
88,519
At 1 January
Charge for year
Eliminated on
disposal
Exchange
adjustment
(12,745)
(730)
(4,317)
(2,934)
(45)
(1,212)
(2,481)
(1,103)
-
34
85
4
-
-
-
-
(250)
(20,523)
-
-
36
(5,294)
85
74
At 31 December
(15,645)
(686)
(5,529)
(3,584)
(214)
(25,658)
Net carrying amount
At 31 December
At 1 January
25,912
23,556
103
47
6,591
7,803
10,626
11,729
19,629
19,653
62,861
62,788
Separately identified
intangibles on
acquisition
Development
costs
£'000
31,072
5,195
-
34
2022
Cost
At 1 January
Additions
Disposals
Exchange
adjustment
At 31 December
36,301
At 1 January
Charge for year
Eliminated on
disposal
Exchange
adjustment
(10,378)
(2,360)
-
(7)
Patents
and
licences
£'000
858
-
(91)
10
777
(763)
(48)
91
(10)
Software
Customer
relationships
Goodwill
Total
£'000
£'000
£'000
£'000
12,120
14,210
19,848
-
-
-
-
-
-
-
-
55
78,108
5,195
(91)
99
12,120
14,210
19,903
83,311
(3,105)
(1,212)
(1,378)
(1,103)
-
-
-
-
(217)
-
-
(33)
(15,841)
(4,723)
91
(50)
At 31 December
(12,745)
(730)
(4,317)
(2,481)
(250)
(20,523)
Net carrying amount
At 31 December
At 1 January
Development costs
23,556
20,694
47
95
7,803
9,015
11,729
12,832
19,653
19,631
62,788
62,267
Development costs are internally generated and are capitalised at cost. These intangible assets have been
assessed as having a finite life and are amortised on a straight-line basis over their useful lives of two to
ten years. These assets are tested for impairment where an indicator of impairment arises and on an
annual basis.
For the years ended 31 December 2023 and 31 December 2022 the Group has capitalised development
costs in respect of individual Clareti applications which have been individually assessed against the
required capitalisation criteria and been individually assigned useful economic lives reflecting the maturity
and availability of comparable applications in our markets. These useful economic lives are assessed to be
between two and ten years.
No changes have been made to development costs capitalised in prior years in respect of the Clareti
platform, which continue to be amortised on a systematic basis over the existing useful economic life of
ten years.
Patents and licences
Patents and licences are the third party costs incurred in seeking and obtaining protection for certain of
the Group's products and services. These intangible assets have been assessed as having a finite life and
are being amortised evenly over their useful economic life, to a maximum of ten years. Patents have a
remaining life of three years and licences have a remaining life of one to ten years.
Separately identified acquired intangibles
Separately identified intangibles acquired through business combinations represent software and customer
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Separately identified intangibles acquired through business combinations represent software and customer
relationships which arose through the acquisitions of C24 Technologies, B2 Group, Inforalgo and Electra
Information Systems.
Software is amortised over its useful economic life, which is deemed to be ten years.
Customer relationships are amortised over their useful economic life, which is deemed to be twelve years
for the Electra acquisition, eight years for the Inforalgo and C24 Technologies acquisitions and six years for
B2 Group.
Goodwill
Goodwill arose on the acquisition of our Asia Pacific real-time financial solutions business, C24
Technologies, B2 Group, Inforalgo and Electra Information Systems. It is assessed as having an indefinite
life and is assessed for impairment at least annually.
9. Related party transactions
Key management compensation (including Directors)
Directors' emoluments
Remuneration
Social security costs
Bonuses
Pension
Share-based payments
2023
£'000
2022
£'000
662
102
136
23
175
652
137
298
22
406
1,098
1,515
Details of Directors' compensation are included in the Directors' Remuneration Report.
There is no single party known that the Directors consider to be a controlling shareholder or ultimate
parent undertaking. Refer to page 78 for details of all significant shareholders that the Company has been
notified of.
10. Events after the reporting date
An interim dividend of 0.75 pence per share has been declared by the Board (2022: £nil) instead of a final
dividend (2022: 0.75p).
On 9 April 2024, the Boards of Gresham and 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 and other documentation in relation to
the acquisition were published on 18 April 2024 and are available on the Investor Hub on the Gresham
website.
11. Additional information
Principal risks and uncertainties
The principal risks and uncertainties facing the Group together with actions being taken to mitigate them
and future potential items for consideration are set out in the Strategic Report section of the Annual
Financial Report 2023.
[1] BFSI Security Market Size & Share Report, 2025
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