Highlights for continuing operations in the 6 months ended 30 June 2014 are set out below:

· Four new CTC wins since our May 2014 update, including two new key accounts;

· CTC revenues up 67% to £2.0m (H1 13: £1.2m);

· Total revenues £6.4m (H1 13: £6.4m), up 10% at constant currencies;

· Profit before tax £0.6m (H1 13: £0.7m), Profit after tax £0.8m (H1 13: £0.7m), EBITDA profit of £0.9m (H1 13: £0.9m) after additional investment of £0.4m to drive CTC revenue growth;

· Cash £4.8m and no debt (31 Dec 13: £4.4m and no debt);

· Management continue to be confident about outlook.

Chris Errington, CEO of Gresham, commented:

"Having made additional investments in CTC during the period in order to accelerate the commercialisation of our market-leading product, I am pleased to report growth in CTC customers, revenues and the pipeline of prospects. I am confident of reporting further progress for the remainder of 2014 and beyond, driven by CTC."


CEO Operational Review

Gresham is a leading software and services company that specialises in providing real-time financial transaction control software to the global matching and reconciliation market.

Our long term objective is to be recognised as a market leader in real-time financial transaction control in order to drive profitable growth and build shareholder value. We are executing a strategic plan to achieve this objective built around developing, selling and supporting a leading matching and reconciliation software developed by Gresham and called CTC. Further information concerning the Company's objectives, strategy and business model can be found in the Strategic Report section of the Annual Financial Report for 2013.

As planned, during the period, and with the benefit of a December 2013 firm placing to raise £2.9m net of expenses, we accelerated the commercialisation of CTC through additional investment in: CTC development, global sales operations (including new sales offices operations (including new sales offices and staff in North America and Singapore) and global CTC support infrastructure.

I am pleased to report CTC revenues up 67% in the period. Our progress with selling and commercialising CTC in the period is summarised below:

· Since our May 2014 IMS, four new customers have signed for CTC, including two new key CTC customer accounts:

o One of the world's largest banking and financial services organisations purchased CTC to assist with the matching and reconciliation of complex and non-standardised transactions in their Investment Bank;

o A global provider of banking and funds management services purchased CTC to offer as a service to its broker dealer customers in North America for the matching and reconciliation of derivative transactions;

o One of the largest retail businesses in the UK purchased CTC to manage matching and reconciliation of complex and non-standardised transactions in its central shared services operation;

o A major financial derivatives dealer in the UK purchased CTC for real-time matching and reconciliation; and

o We commenced further CTC proof-of-concept engagements with major banks, financial institutions and corporates.

· As previously announced in our May 2014 IMS, earlier in the year:

o A major bank purchased CTC for real-time intersystems matching and reconciliation, expanding the use of CTC in this key customer account from the corporate to the investment bank side of operations; and

o A back office processing company serving clients across Asia Pacific purchased CTC to provide real-time matching and reconciliation.

This progress with CTC takes us from 3 key CTC customer accounts entering the year to 5 key CTC customer accounts at the date of this report. Key customer accounts are those that have the potential to generate CTC revenues in excess of £3m over a 5 year period.

The majority of these new CTC engagements were again won in competition with well-established market vendors and often against the customer's incumbent vendor for this type of solution. We were in most cases selected because of CTC's ability to rapidly accept, match and reconcile complex and non-standard data.

We also continued to deliver a strong contribution from our other RTFS and Software businesses.

During the period, we increased CTC revenues by 67% to £2.0m (H1 13: £1.2m), with CTC revenues now representing 31% of total revenues (H1 13: 18%).

This growth was achieved through a combination of new CTC customer wins (CTC customer numbers are up over 200% from H1 13) and a growing established CTC customer base, which now includes five key CTC customer accounts (two at H1 13).

Total revenues for the period were £6.4m (H1 13: £6.4m continuing), with total recurring revenues increasing by 11% to £3.1m (H1 13: £2.8m continuing). On a constant currency basis, total revenues grew nearly 10% during the period compared with the level revenues reported at actual currencies. The change in Other RTFS revenues arises partly because of a refocus of services work from lower margin Other RTFS to CTC deployments and partly from currency fluctuations - the refocus on higher margin CTC related work has increased our gross margin a few percentage points in the period. We grew revenues in our Software business, experiencing a little more resilience in the legacy customer base than expected.

As planned, we increased our sales and marketing and support resources during the period, which added approximately £0.4m of additional cost in H1 14 compared to H1 13. This additional investment is being rewarded by CTC revenue growth and a growing pipeline of new opportunities. We also invested further in CTC development to satisfy customer demand and retain our innovation lead on the competition. We have maintained our earnings levels during this period of investment for growth.

The business retains a strong financial position as we continue to carefully control working capital whilst investing in the development of our strategic product CTC. Cash generation during the period was strong, with a £1.5m net cash inflow. In the second half we are due £0.4m of income taxes in respect of research and development tax credits for the prior year.

The £2.9m net proceeds of a firm placing in late 2013 strengthened our balance sheet and allowed us to advance our investment in the development of CTC growth. An exercise of share options in the period added a further £0.75m to our cash reserves. As planned, development activity in the period was high as we continued to add new functionality in line with existing and prospective customer demand.

Taxation

At 30 June 2014, the Group had total tax losses carried forward for offset against future trading profits of approximately £14.6 million. As a result, the Group has no material tax charge or liability. For the period to 30 June 2014, the Group has recorded a tax credit of £0.2 million in connection with a research and development tax credit related to new product development.


Outlook

I am pleased with the progress we are making with the commercialising of CTC during 2014. We are building a sound base of high quality CTC customers around the world and across a number of different markets. We expect to continue adding new CTC customers and to further grow the number of key CTC customer accounts we hold.

The proportion of revenues in the business attributable to CTC is growing as we continue to deliver our strategy of CTC led growth and we expect this trend to continue from a combination of existing and new CTC customer growth.

We have a growing pipeline of prospective customers to continue delivering growth in CTC customer numbers and revenues for future periods. We continue to balance the growth in CTC customers and revenues with our short term financial objectives.

We have achieved strong growth in CTC revenues during the period and we are confident of making further progress for the remainder of 2014 and beyond, again driven by CTC.

Chris Errington

Chief Executive Officer