Gresham Regulatory News (GHT)

RNS

4 January 2019

Gresham Technologies plc

Clareti contract signed and trading update

Gresham Technologies plc (LSE: "GHT", "Gresham" or the "Group"), the leading software and services company that specialises in providing real-time transaction control and enterprise data integrity solutions, provides the following trading update for the year ended 31 December 2018 ("FY 2018").

As noted at the time of the interim results and the trading updates in October and December 2018, the Group's ability to win and recognise revenue from a small number of competitive Clareti opportunities, each carrying significant, immediately recognisable license fees, before the end of the 2018 year-end was key to achieving full year forecasts.

Of the significant deals within its pipeline, the Group is pleased to confirm it has been selected for two strategic high-value projects for its Clareti platform, further illustrating the Board's view that there is a significant market opportunity for the Clareti platform to replace legacy vendor solutions and become the new industry standard for enterprise reconciliations in capital markets.

In late 2018, following a competitive process, a leading global investment bank selected the Clareti platform, together with one of Gresham's strategic alliance partners, to deliver a reconciliations managed service to replace legacy vendor technology and also address new data integrity and control requirements across the bank. The licence contract, the single largest in Gresham's history, was signed on 31 December 2018 and becomes unconditional on the signing of the partner's related services agreement now expected to be executed in early 2019.

Also in December 2018, contract terms were finalised with another global investment bank to migrate a legacy vendor implementation to the Clareti platform, with the agreement now expected to be executed in early 2019.

In light of these developments, the Company now expects to start recognising revenue from both projects in early 2019 and consequently has taken the opportunity to re-profile both agreements on an annuity subscription basis in order to provide higher levels of revenue visibility and earnings quality for future years. The total software value of both agreements over a five-year period is expected to be in excess of £7 million, of which £1.8 million is expected to be recognised in early 2019. Further details on these projects will be provided in due course.

The delay in recognising revenue from these projects, and specifically the lower than expected initial license fees secured in the year, has negatively impacted FY 2018 results. The Group now expects to report:

· Group revenues for the year down 8% to £20.0 million*

· Total Clareti revenues up 8% to £11.9 million*

· Clareti Annualised Recurring Revenue** up 30% to £7.4 million

· Other (non-Clareti) revenues down 24% to £8.1 million

· Group adjusted EBITDA* down 83% to £0.8 million

· The Group closed the year with cash at £5.3 million and remains debt free

*Includes a contribution of £0.7 million from the B2 Group acquired on 4 July 2018.

*\* The Group's closing contracted annualised run-rate of recurring Clareti revenues at 31 December 2018 is £7.4 million up 30% from £5.7 million at the end of the previous period. This includes £1.1 million from B2 Group.

***Earnings Before Interest, Taxation, Depreciation and Amortisation adjusted to add back share-based payment charges and exceptional items.

The Group's financial position is expected to remain strong throughout 2019 and beyond. The Board retains its confidence in the market opportunity for its Clareti platform and once revenue from the two deals expected imminently becomes recognisable, the Group's annual recurring revenue run-rate ("ARR") is anticipated to improve significantly to £8.8 million, from a 2018 closing ARR positon of £7.4 million. Gresham's sub-contracting business exited 2018 with a strong order book and is expected to grow positively in 2019, whilst the Group's residual legacy software business continues to steadily decline, as expected.

The Group anticipates that the results for FY 2018 will be announced on 12 March 2019.

Ian Manocha, CEO, commented:

"We are delighted to have won major competitive bids with two of the world's largest banks right at the end of the year, one of which will become the Group's largest Clareti win in its history, although we are naturally disappointed that timing issues have negatively impacted our full year results.

We enter 2019 with a stronger Clareti recurring revenue base and a focussed plan to build more predictable subscription-based business. The investments that we made during 2018 have positioned us well to capitalise on the opportunity in the market and we remain confident in the profitable growth prospects of the Group."

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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.

Note to editors

Gresham Technologies plc is a leading software and services company that specialises in providing real-time data integrity and control solutions. 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, all of whom are served locally from offices located in Europe, North America and Asia Pacific.

Gresham's award-winning Clareti software platform has been designed to provide financial institutions with complete certainty in their data processing. Clareti is a highly flexible and fully scalable platform for ensuring the integrity of data across an enterprise. It is designed to address today's most challenging financial control, risk management, data governance and regulatory compliance problems.