KRM22 plc
("KRM22", the "Group" or the "Company")
UNAUDITED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 30 JUNE 2024
KRM22 plc (AIM: KRM.L), the technology and
software investment company, with a particular focus on risk
management in capital markets, is pleased to announce its unaudited
interim results for the six months ended 30 June 2024 ("H1 2024" or
the "Period").
Highlights
Financial
·
Annualised Recurring Revenue* ("ARR") of £6.0m at 30 June
2024 (H1 2023: £4.9m) - growth of 22.4%
o New contracted
ARR in the period of £1.1m (H1 2023: £0.4m)
o Total ARR
attributable to the relationship with Trading Technologies
International, Inc. ("TT") of £0.8m (H1 2023: £0.2m)
·
Total revenue recognised of £3.3m (H1 2023: £2.4m) - growth
of 37.5%
·
Adjusted EBITDA profit** of £0.3m (H1 2023: loss of
£1.0m)
·
Loss before tax of £1.3m (H1 2023: loss before tax of
£2.3m)
·
Gross cash and cash equivalents at 30 June 2024 of £0.6m (FY
2023: £0.9m), together with the availability of £0.5m, which
remains undrawn, under the TT convertible loan the Company has
available funding of £1.1m
Operational
·
Launch of Risk Manager application with first sales of the
application in H1 2024
·
Group restructure and rationalisation during the Period to
implement a focused cost savings programme, with annual cost
savings of £1.2m
·
Board changes announced with the appointment of Dan Carter as
CEO and Garry Jones as Non-Executive Chairman, replacing Stephen
Casner and Keith Todd respectively, with Keith Todd remaining on
the Board as Executive Director
Post-Period
Events
·
Growth in ARR to £6.3m from a further two new contracts, for
the Limits Manager and Risk Manager applications, and a three year
renewal of an existing customer for the Market Surveillance
application
*
Annualised Recurring Revenue (ARR) is the value of contracted
Software-as-a-Service (SaaS) revenue normalised to a one year
period and excludes one time fees.
**
Adjusted EBITDA is the reported loss for the period, adjusted for
recurring non-monetary costs including depreciation, amortisation,
unrealised foreign exchange loss and share-based payment
(credit)/charges and non-recurring costs, both monetary and
non-monetary, including Company reorganisation costs, former
director separation costs, loss on disposal of tangible assets,
gain on extinguishment of debt and acquisition, funding and debt
related costs.
Commenting on
the results, CEO of KRM22, Dan Carter, said:
"These
results, with £1.1m of new ARR and an adjusted EBITDA profit of
£0.3m, demonstrate that KRM22 is firmly on track to achieving our
full year expectations and our journey of creating a cash
generative and profitable business. The growth in ARR, driven
primarily by the Risk Manager and Limits Manager applications, is
demonstration that there is demand for our applications as we look
to cement our position as the industry standard. The pipeline
of sales opportunities remains encouraging giving us real
excitement as we look to close out 2024 and move into next
year."
This
announcement contains inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms
part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of
MAR.
For further
information please contact:
KRM22
plc
InvestorRelations@krm22.com
Garry Jones, Non-Executive Chairman
Dan Carter, CEO
Kim Suter, CFO
Cavendish
Capital Markets Limited (Nominated Adviser and
Broker)
+44 (0)20 7220 0500
Carl Holmes / Rory Sale
Sunila de Silva (ECM)
About KRM22
plc
KRM22 is a closed-ended investment company
which listed on AIM on 30 April 2018. The Company has been
established with the objective of creating value for its investors
through the investment in, and subsequent growth and development
of, target companies in the technology and software sector, with a
focus on risk management in capital markets.
Through its investments and the Global Risk
Platform, KRM22 helps capital market companies reduce the cost and
complexity of risk management. The Global Risk Platform
provides applications to help address firms' trading and corporate
risk challenges and to manage their entire enterprise risk
profile.
Capital markets companies' partner with KRM22
to optimise risk management systems and processes, improving
profitability and expanding opportunities to increase portfolio
returns by leveraging risk as alpha.
KRM22 plc is listed on AIM and the Group is
headquartered in London, with offices in several of the world's
major financial centres.
See more about KRM22 at www.krm22.com
CEO'S
REPORT
The Company made significant progress in the
first half of 2024 with Annual Recurring Revenue ("ARR") increasing
to £6.0m at 30 June 2024, with this further increasing to £6.3m at
the time of writing. The growth in ARR was driven in the main
by £1.1m, and £1.4m as at time of writing, in new contracted sales,
a number that surpasses all of our previous annual new sales
records, a fantastic achievement. Continued investment and
development in our software offering has allowed us to make
significant progress with our overall product strategy. We
continue to manage levels of customer churn and the underlying cost
base of the business, all driving towards becoming a cash flow
positive and profitable business and our target of £10.0m ARR being
firmly in our sights.
Revenue
growth
KRM22 added £1.1m in new ARR in the Period, with
£0.9m from new contracts and £0.2m from extensions to existing
contracts, from both direct sales and the relationship with Trading
Technologies International, Inc. ("TT").
The growth in ARR was primarily driven by sales
of the Risk Manager (53%) and Limits Manager (43%) applications.
This growth validates the decision to rebuild the Pre-Trade,
At-Trade and Post-Trade legacy applications, together with
additional Value at Risk ("VaR") functionality, into the new
technology stack offered by the Global Risk Platform. The
integration of the Risk Manager and Limits Manager applications
allows firms to gain complete control of their risk management
processes technologically, syncing live risk data with limits set
on the trading applications and exchanges, something that has never
been done before and that we expect will drive further growth in
ARR with existing customers as they adopt both applications from us
in the future.
As at the date of this report, we now have three
customers using the Risk Manager application, two using the KRM22
GUI and one using the API service which delivers risk metrics out
for consumption on the client side. In addition, we have
active engagements with our existing At-Trade and Post-Trade
customers to migrate them to the new Risk Manager application.
Limits Manager continues to be the market leader, and we now
have nine Futures Commissions Merchants ("FCMs") using the
application.
Our partnership with TT continues to deepen to
allow for KRM22's Market Surveillance human calibrated alert tools
to be integrated into TT's own surveillance product, the integrated
offering is now available for TT customers. The Risk Manager
application is expected to be added before the end of 2024 allowing
TT customers to deploy the Risk Manager application direct on the
TT platform. Both the TT Surveillance and Risk Manager
applications are expected to generate new ARR opportunities in
2025. At the date of this report, the total amount of ARR
attributable to the relationship with TT, is £0.9m.
The delivery of the highest standards of service
are critical and the Customer Services team continues to deliver
these high standards to maintain customer churn at manageable
levels. At the start of the 2024, there was £2.9m of
contracted ARR that was subject to renewal over the next 12 months
and it was therefore always going to be a challenge to retain all
ARR with no churn. Whilst it is unfortunate that there have
been some unexpected losses in the Period, with total churn in the
Period of £0.4m, and a further £0.1m of churn that has already been
communicated in the second half of 2024, there remains £0.7m of
ARR, of which £0.3m relates to legacy customers on rolling monthly
contracts, that is subject to renewal as we approach the end of
2024. The value of ARR contracts that are subject to renewal
in 2025 is substantially lower than 2024 so we remain positive that
churn will be kept under control moving forwards.
Company
reorganisation
In January 2024 we implemented a focused cost
saving program with annual cost savings of approximately £1.2m to
accelerate the Company's path to profitability. The cost
savings were from staff redundancies, spread across different
functions and geographical locations in which KRM22 operates, which
has had minimal impact on operations as the savings were derived
from operational synergies and a reduction in contracted
development resource as specific projects neared their
completion.
Products
Having simplified KRM22's product offering in
2023 into two key distinct areas of risk, Trading Risk and
Compliance Risk, we set about investing in the core functionality
within the applications in 2024.
Limits Manager
As Limits Manager moves through its product
lifecycle, and its initial growth phase, the focus has been on
delivering key functionality to benefit end users to provide more
efficiencies for firms and their execution services and risk teams.
Enhancements to the client portal, which allow firms to
provide access of the front-end of the application to their end
client, were delivered whilst the ability to enrich the dataset
available via the API with external data has enhanced the power of
the audit trail. Automation features that were added in 2023
have been enhanced in the Period with additional ISV and exchange
integrations, via API and file-based transfers, added to the
application.
Risk
Manager
The creation of Risk Manager, bringing real-time
P&L, Margin, Stress scenario analysis and VaR together in one
application was completed in 2023 and 2024 has allowed us to focus
on core functionality and data processing within the application,
ensuring effective delivery of three customer deployments. We
have also added numerous front-end GUI enhancements, aimed at
ensuring the functional aspects of the legacy At-Trade and
Post-Trade applications are available in the new application.
We will continue to develop the application with a
customer-led product roadmap, ensuring that functions needed by
firms risk managers are delivered within the
application.
Integration of Limits Manager and Risk
Manager
As firms begin to see the power of integrated
Limits Manager and Risk Manager applications, we have continued to
enhance and test this feature set throughout the Period. The
integration of both applications allows risk managers to review key
risk metrics from Risk Manager and display it alongside the limit
changes raised by a client within Limits Manager. When the
risk team approves the change, these values will be stored in the
audit trail - a crucial view of what standing the account was in
and why the decision was made at that time which will ultimately
provide risk teams with more visibility and information in
real-time when making these key decisions.
Market Surveillance
We continue to enhance the Market Surveillance
application with new alerts, including Spoofing by Order Depth,
Cross Trades and Gilt Closing alongside key functional
changes. We now have over 80 alert types available to
customers in the application.
Developing an API, where results from the
application can be consumed outside the KRM22 GUI, was a key area
of development that supports our integration with TT Surveillance,
TT's own surveillance application, which is a AI/ML based
model, with KRM22's human calibrated alerting tool, allows
compliance officers to ensure their calibrations are valid.
This integrated offering has been released by TT in the second half
of 2024 to market and sell directly. The project has already
generated ARR and non-recurring revenue for KRM22 and the
integrated product will generate further revenue for KRM22, through
a revenue share model, once product sales crystalise for
TT.
Outlook
We have continued to make good progress in the
year towards our 2024 full year expectations with ARR now at £6.3m
from £5.4m at the start of the year. The continued adoption
of Limits Manager and Risk Manager demonstrates that there is clear
demand and appetite for these applications, both individually and
as integrated applications. We are seeing an increased level
of demand with firms that previously had no desire to change
systems, namely during and immediately after the coronavirus
pandemic, starting to look at newer technologies and where they can
help. This is encouraging for us as we progress through the
remainder of 2024 and move into 2025.
Our progress keeps us firmly on track towards
becoming a £10.0m ARR business generating positive EBITDA and
cashflows. The pipeline of sales opportunities remains strong
and the reorganisation of our workforce in early 2024 has been
successfully implemented, without any adverse impact to service
levels, as we manage the cost base of the business and move towards
positive cashflows.
Dan Carter
CEO
24 September
2024
FINANCIAL REVIEW
Income statement
Total revenue
Total revenue reported in the period was £3.3m
(H1 2023: £2.4m), an increase of 37.5% compared with the prior
period, with 89.1% (H1 2023: 93.7%) generated from recurring
customer contracts. Non-recurring revenue for the period was
£0.4m (H1 2023: £0.2m) and related principally to customer
implementations, proof of concept work and development
services.
Recurring revenue
As at 30 June 2024, the Group had contracted
Annualised Recurring Revenue ("ARR") of £6.0m (H1 2023: £4.9m),
with new contracted ARR in the period of £1.1m (H1 2023: £0.4m) and
churn of £0.4m (H1 2023: £0.1m). As at the date of this
report, contracted ARR has further increased to £6.3m.
Gross profit
Gross profit for the period was £2.7m (H1 2023:
£1.8m) with gross profit margin for the period of 81.8% (H1 2023:
75.5%). The increase in gross profit margin was driven by the
increased amount of non-recurring revenue recognised in the
Period.
Adjusted EBITDA
Adjusted EBITDA is a key metric to consider in
order to understand the cash-profitability of the business due in
particular to the non-cash items that impact the Income Statement
under IFRS accounting, such as non-cash share-based
costs.
Adjusted EBITDA for the period was a profit of
£0.3m (H1 2023: loss of £1.0m) and a reconciliation of adjusted
EBITDA profit to operating loss is detailed below.
|
|
|
|
H1 2024
|
|
H1 2023
|
|
|
|
|
£'m
|
|
£'m
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
profit/(loss)
|
|
|
0.3
|
|
(1.0)
|
|
Depreciation and
amortisation
|
|
|
(0.8)
|
|
(0.8)
|
|
Unrealised foreign
exchange loss
|
|
|
-
|
|
(0.5)
|
|
Gain on extinguishment
of debt
|
|
|
-
|
|
0.1
|
|
Share-based payment
credit/(expense)
|
|
|
0.1
|
|
-
|
|
Reorganisation
costs
|
|
|
(0.6)
|
|
-
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(1.0)
|
|
(2.2)
|
Loss
for the period
Reported operating loss for the period was £1.0m
(H1 2023: loss of £2.2m) and included one off costs of £0.6m
relating to reorganisation costs covering redundancy and separation
costs associated with the cost savings programme implemented in
January 2024 and separation costs associated with Executive changes
announced in March 2024.
Finance charges
The net finance expense for the period was £0.3m
(H1 2023: £0.2m) principally related to loan interest (H1 2023:
loan interest of £0.1m and IFRS16 lease liability interest of £
0.1m)
Financial position
Assets
The cash balance at 30 June 2024 was £0.6m (31
December 2023: £0.9m).
The Company's cash balance of £0.6m,
together with the availability of £0.5m, which remains
undrawn, under the TT convertible loan provides Company with
available funds of £1.1m.
Current assets at 30 June 2024 include trade and
other receivables of £1.2m (31 December 2023: £1.1m).
Liabilities
As at 30 June 2024, our principal
liabilities were:
·
£4.5m convertible loan (the "TT Convertible Loan")
owed to TT plus accrued interest of £0.5m. £0.5m of the TT
Convertible Loan remains undrawn but available.
·
£0.6m (US$0.8m) deferred consideration for earn
out payments for the acquisition of Object+. The liability
can be satisfied in either cash or Company ordinary shares at the
Company's discretion.
·
£0.3m for the right of use assets relating to all
future payments of leased-office rentals under IFRS16 'Leases'
whereby such lease payments are provided for at today's
value. At 30 June 2024, KRM22 had one remaining lease in
London which expired in August 2024 and the liability of £0.3m is
associated with a lease that expired in 2022.
·
£2.8m of deferred revenue; contracted and paid
services that will be released within one year.
Principal risks and
uncertainties
The principal risks and uncertainties
facing the Group remain broadly consistent with the Principal Risks
and Uncertainties reported in the Group's 31 December 2023 Annual
Report and continue to be carefully monitored by the
Board.
Kim Suter
CFO
24 September 2024
Consolidated income statement and
statement of comprehensive income
for the six months ended 30 June
2024
|
|
|
|
|
|
|
|
|
Note
|
|
6 months to
30 June 2024
(unaudited)
|
|
6 months to
30 June 2023
(unaudited)
|
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Revenue
|
4
|
|
3,293
|
|
2,402
|
|
Cost of
sales
|
|
|
(574)
|
|
(588)
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
2,719
|
|
1,814
|
|
Other
income
|
|
|
73
|
|
69
|
|
Administrative
expenses
|
|
|
(3,794)
|
|
(4,047)
|
|
Operating
profit/(loss) before interest, taxation, depreciation,
amortisation, share based payment and exceptional items ("Adjusted
EBITDA")
|
|
|
333
|
|
(983)
|
|
Depreciation and
amortisation
|
|
|
(836)
|
|
(790)
|
|
Debt related
expenses
|
|
|
-
|
|
(2)
|
|
Loss on disposal of
tangible assets
|
|
|
-
|
|
(1)
|
|
Unrealised foreign
exchange loss
|
|
|
(8)
|
|
(477)
|
|
Gain on extinguishment
of debt
|
|
|
-
|
|
127
|
|
Share-based payment
credit/(expense)
|
|
|
92
|
|
(38)
|
|
Reorganisation
costs
|
|
|
(583)
|
|
-
|
|
Operating
loss
|
|
|
(1,002)
|
|
(2,164)
|
|
|
|
|
|
|
|
|
Net finance
charge
|
|
|
(262)
|
|
(155)
|
|
|
|
|
|
|
|
|
Loss before taxation
|
|
|
(1,264)
|
|
(2,319)
|
|
Taxation
credit
|
|
|
40
|
|
68
|
|
Loss for the period
|
|
|
(1,224)
|
|
(2,251)
|
|
Loss for the period
attributable to:
Equity shareholders of
the parent
|
|
|
(1,224)
|
|
(2,251)
|
|
|
|
|
(1,224)
|
|
(2,251)
|
|
Other comprehensive
income
|
|
|
|
|
|
|
Item that may be
reclassified subsequently to profit and loss
Exchange gain on
translating foreign operations
|
|
|
12
|
|
329
|
|
Total comprehensive loss for the
period
|
|
|
(1,212)
|
|
(1,922)
|
|
Total comprehensive
loss for the period attributable to:
Equity shareholders of
the parent
|
|
|
(1,212)
|
|
(1,922)
|
|
|
|
|
(1,212)
|
|
(1,922)
|
|
|
|
|
|
|
|
|
Loss per ordinary
share
|
|
|
|
|
|
|
Basic and diluted earnings per
share
|
5
|
|
(3.4p)
|
|
(6.3p)
|
|
|
|
|
|
|
|
All amounts relate to continuing
activities.
Interim consolidated statement of
financial position
at 30 June 2024
|
|
|
|
30 June
2024
(unaudited)
|
|
31 December
2023
(audited)
|
|
|
|
|
£'000
|
|
£'000
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Goodwill
|
|
|
3,497
|
|
3,516
|
|
Other intangible assets
|
|
|
2,156
|
|
2,105
|
|
Property, plant and equipment
|
|
|
13
|
|
21
|
|
Right of use assets
|
|
|
19
|
|
136
|
|
|
|
|
5,685
|
|
5,778
|
|
Current
assets
|
|
|
|
|
|
|
Trade and other
receivables
|
|
|
1,232
|
|
1,142
|
|
Cash and cash
equivalents
|
|
|
629
|
|
886
|
|
|
|
|
1,861
|
|
2,028
|
|
Total assets
|
|
|
7,546
|
|
7,806
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
4,781
|
|
3,900
|
|
Lease
liabilities
|
|
|
285
|
|
369
|
|
Loans and
borrowings
|
|
|
552
|
|
391
|
|
Derivative financial
liability
|
|
|
196
|
|
196
|
|
|
|
|
5,814
|
|
4.856
|
|
Net current
liabilities
|
|
|
(3,953)
|
|
(2,828)
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Loans and
borrowings
|
|
|
3,988
|
|
3,887
|
|
Deferred tax
liability
|
|
|
30
|
|
164
|
|
|
|
|
4,018
|
|
4,051
|
|
Total liabilities
|
|
|
9,832
|
|
8,907
|
|
|
|
|
|
|
|
|
Net Assets
|
|
|
(2,286)
|
|
(1,101)
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share
capital
|
|
3,581
|
|
3,567
|
|
|
Share premium
reserve
|
|
20,622
|
|
20,517
|
|
|
Merger
reserve
|
|
(190)
|
|
(190)
|
|
|
Convertible debt
reserve
|
|
327
|
|
327
|
|
|
Foreign exchange
reserve
|
|
(102)
|
|
(114)
|
|
|
Share-based payment
reserve
|
|
2,853
|
|
2,945
|
|
|
Retained
losses
|
|
(29,377)
|
|
(28,153)
|
|
|
Total equity
|
|
(2,286)
|
|
(1,101)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Interim consolidated statement of cash
flows
for the six months ended 30 June
2024
|
|
|
|
6 months to
30 June 2024
(unaudited)
|
|
6 months to
30 June 2023
(unaudited)
|
|
|
|
|
£'000
|
|
£'000
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
Loss for the period
|
|
|
(1,224)
|
|
(2,251)
|
|
Adjustments
for:
|
|
|
|
|
|
|
Tax credit
|
|
|
(40)
|
|
(68)
|
|
Net finance expense
|
|
|
262
|
|
155
|
|
Depreciation and amortisation
|
|
|
836
|
|
790
|
|
Loss on disposal of tangible assets
|
|
|
-
|
|
1
|
|
Gain on extinguishment of debt
|
|
|
-
|
|
(127)
|
|
Debt related expenses
|
|
|
-
|
|
(149)
|
|
Unrealised foreign exchange loss
|
|
|
8
|
|
477
|
|
Equity-settled share-based payment
(credit)/expense
|
|
|
(92)
|
|
38
|
|
|
|
|
(250)
|
|
(1,134)
|
|
|
|
|
|
|
|
|
(Increase)/decrease in
trade and other receivables
|
|
|
(90)
|
|
654
|
|
Increase/(decrease) in
trade and other payables
|
|
|
834
|
|
(242)
|
|
|
|
|
744
|
|
412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflows/(outflows) used in
operating activities
|
|
|
494
|
|
(722)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
Purchases of
intangible assets
|
|
|
(624)
|
|
(490)
|
|
Purchases of property,
plant and equipment
|
|
|
(9)
|
|
(4)
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
(633)
|
|
(494)
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
Lease payments
principal
|
|
|
(116)
|
|
(114)
|
|
Lease payments
interest
|
|
|
(3)
|
|
(11)
|
|
Receipts from
borrowings
|
|
|
-
|
|
4,000
|
|
Interest
paid
|
|
|
-
|
|
(208)
|
|
Repayment of
borrowings
|
|
|
-
|
|
(3,000)
|
|
|
|
|
|
|
|
|
Net cash (used in)/from financing
activities
|
|
|
(119)
|
|
667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents
|
|
|
(258)
|
|
(549)
|
|
|
|
|
|
|
|
|
Cash and cash equivalent at beginning of
the period
|
|
|
886
|
|
1,900
|
|
Effect of foreign
exchange rate changes
|
|
|
1
|
|
-
|
|
|
|
|
|
|
|
|
Cash and cash equivalent at end of the
period
|
|
|
629
|
|
1,351
|
Notes to the interim financial
information
1. General
information
KRM22 Plc (the "Company") is a public limited
company incorporated in England and Wales on 2 March 2018 under
registration number 11231735. The address of its registered
office is 8th Floor, Capital House, 84 - 86 King William
Street, London, EC4N 7BL. The Company listed on the London
Stock Exchange on 30 April 2018.
The principal activity the Company and together
with its subsidiaries (the "Group") is to develop and invest in
leading risk tools to support regulatory, market, technology and
operational risks.
The Board of Directors approved this interim
report on 24 September 2024.
2. Basis of
preparation and consolidation
These interim consolidated financial statements
have been prepared using accounting policies based on International
Financial Reporting Standards (IFRS and IFRIC Interpretations)
issued by the International Accounting Standards Board ("IASB") in
conformity with the requirements of the Companies Act 2006.
They do not include all disclosures that would otherwise be
required in a complete set of financial statements and should be
read in conjunction with the 31 December 2023 Annual Report.
The financial information for the half years ended 30 June 2024 and
30 June 2023 does not constitute statutory accounts within the
meaning of Section 434 (3) of the Companies Act 2006 and both
periods are unaudited.
The annual financial statements of KRM22 Plc
(the "Group") are prepared in accordance with IFRS. The
statutory Annual Report and Financial Statements for 2023 have been
filed with the Registrar of Companies. The Independent
Auditors' Report on the Annual Report and Financial Statements for
the year ended 31 December 2023, which was unqualified, did draw
attention to a material uncertainty, being going concern and did
not contain a statement under 498(2) or 498(3) of the Companies Act
2006.
The Group has applied the same accounting
policies and methods of computation in its interim consolidated
financial statements as in its 31 December 2023 annual financial
statements, except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2024 and will be adopted in the 2024
financial statements. There are deemed to be no new and
amended standards and/or interpretations that will apply for the
first time in the next annual financial statements that are
expected to have a material impact on the Group.
3. Going
concern
In carrying out the going concern assessment,
the Directors have undertaken a significant assessment of the
cashflow forecasts for the next twelve months. Cashflow
forecasts have been prepared based on a range of scenarios
including, but not limited to, existing customer churn at different
churn rates, no new contracted sales revenue, delayed sales and a
combination of these different scenarios.
Having assessed the sensitivity analysis on
cashflows, the key risks to KRM22 remaining a going concern and not
being in breach of the financial covenants associated with the TT
Convertible Loan is existing customers paying on payment terms and
within 45 days of invoice, customer churn of up to 10%, conversion
of some of the sales opportunities that are currently at contract
negotiation stage and maintaining control of the cost
base.
The time to close new customers and the value
of each customer, which are deemed individually as high value and
low volume in nature, is key to the forecast being achieved and
KRM22 continuing to operate within its existing facilities, this
being KRM22's current cash balance and the ability to drawdown on
the remaining funds available through the TT Convertible
Loan. However, even if the forecast is achieved, there
remains a material uncertainty around KRM22 operating within the
financial covenants associated with TT Convertible Loan. The
TT Convertible Loan includes financial covenants, reported at the
end of each quarter, based on the Group's financial performance and
there is a risk that KRM22 breaches the Cash Covenant, which
requires KRM22 to retain a minimum amount of cash, on the 31
December 2024, 31 March 2025 and 30 June 2025 measurement
dates. Failure to comply with a financial covenant will
result in an Event of Default which may result in TT withdrawing
the TT Convertible Loan with all accrued amounts becoming
immediately due and payable which would result in KRM22 becoming
insolvent.
In May 2024 the Board have received a letter of
support from TT that they would be willing to enter into
discussions with KRM22 around amending the terms of the TT
Convertible Loan to ensure that KRM22 does not breach the Cash
Covenant. Conversations between KRM22 and TT around amending
the terms are ongoing however amendments could include, but are not
limited to, reducing the value of the Cash Covenant at each
measurement date so that KRM22's cash exceeds the minimum cash
requirement on each measurement date, and deferring the accrued
interest payments that are due on 31 December 2024, 31 March 2025
and 30 June 2025 to a later date. If the terms of the TT
Convertible Loan are not amened, KRM22 would be obliged to seek
alternative resolution including implementing extensive cost
reduction measures.
The Directors have concluded that the
circumstances set forth above indicates the existence of a material
uncertainty that may cast significant doubt on KRM22's ability to
continue as a going concern. However, given KRM22's forecast,
visible sales pipeline, working capital needs and letter of support
from TT, the Directors have considered it appropriate to prepare
the interim financial statements on a going concern basis and the
interim financial statements do not include the adjustments that
would be required if KRM22 were unable to continue as a going
concern.
4. Revenue (and
segmental reporting)
The Board of Directors, as the chief operating
decision maker in accordance with IFRS 8 Operating Segments, has
determined that KRM22 have identified two areas of risk management
as operating segments, together with a third segment where the two
areas of risk management are not easily separable, however for
reporting purposes into a single global business unit and operates
as a single operating segment, as the nature of services delivered
are common.
The Directors consider that the business has
two areas of risk management: Trading Risk and Corporate Risk.
Within these segments, there are two revenue streams with different
characteristics, which are generated from the same assets and cost
base.
|
|
|
|
|
|
|
|
6 months to
30 June 2024
(unaudited)
|
6 months to
30 June 2023
(unaudited)
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Recurring
|
2,935
|
2,251
|
|
|
Non-recurring
revenue
|
358
|
151
|
|
|
Total
|
3,293
|
2,402
|
KRM22's revenue from external customers by
geography and risk domain is detailed below:
|
|
|
|
|
|
|
|
6 months to
30 June 2024
(unaudited)
|
6 months to
30 June 2023
(unaudited)
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
UK
|
1,127
|
897
|
|
|
Europe
|
346
|
398
|
|
|
USA
|
1,654
|
944
|
|
|
Rest of
world
|
166
|
163
|
|
|
Total
|
3,293
|
2,402
|
|
|
|
|
|
|
|
|
6 months to
30 June 2024
(unaudited)
|
6 months to
30 June 2023
(unaudited)
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Trading
Risk
|
1,666
|
1,197
|
|
|
Corporate
Risk
|
1,503
|
1,113
|
|
|
Multiple
Risk
TT Platform
|
31
93
|
80
12
|
|
|
Total
|
3,293
|
2,402
|
5. Loss per
share
Basic earnings per share is calculated by
dividing the loss attributable to the equity holders of KRM22 by
the weighted average number of shares in issue during the
period.
KRM22 has dilutive ordinary shares, this being
warrants and options granted to employees. As KRM22 has
incurred a loss in both periods, the diluted loss per share is the
same as the basic earnings per share as the loss has an
anti-dilutive effect.
|
|
|
6 months to
30 June 2024
(unaudited)
|
6 months to
30 June 2023
(unaudited)
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Loss for the period
attributable to equity shareholders of the parent
|
(1,224)
|
(2,251)
|
|
|
|
|
|
|
|
Basic weighted average
number of shares in issue
|
35,727,187
|
35,666,336
|
|
|
Diluted weighted
average number of shares in issue
|
46,263,507
|
46,958,070
|
|
|
|
|
|
|
|
Basic and diluted loss
per share
|
(3.4p)
|
(6.3p)
|
6.
Intangibles
The Group capitalised £0.6m of costs (H1 2023:
£0.5m, FY 2023: £1.1m) representing the development of KRM22's
applications during the period, resulting in a net book value of
£1.6m (H1 2023: £1.3m, FY 2023: £1.4m) after an amortisation and
impairment charge of £0.5m (H1 2023: £0.4m, FY 2023:
£0.9m).
7. Cautionary
statement
This document contains certain forward-looking
statements relating to KRM22 plc (the "Group"). The Group
considers any statements that are not historical facts as
"forward-looking statements". They relate to events and
trends that are subject to risk and uncertainty that may cause
actual results and the financial performance of the Group to differ
materially from those contained in any forward-looking
statement. These statements are made by the Directors in good
faith based on information available to them and such statements
should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any
such forward-looking information.
Copies of this report and all other
announcements made by KRM22 plc are available on the Company's
website at https://krm22.com/investors
