TIDMKRM
RNS Number : 3137L
KRM22 PLC
12 January 2021
KRM22 plc
("KRM22", the "Group" or the "Company")
Trading update
KRM22 plc (AIM: KRM.L) announces a trading update for the 12
month period to 31 December 2020 ("FY2020").
The Company continued to make good progress during the year,
winning top tier institutions as customers. Increases in new
contracted ARR have been offset by churn in its existing customer
base as firms inevitably adjusted to the new trading environment as
a result of COVID-19.
For FY2020 the Group expects to report:
-- A significantly improved adjusted EBITDA loss of
approximately GBP0.1m (FY2019: loss of GBP3.1m)
-- Revenue of approximately GBP4.6m (FY2019: GBP4.1m)
-- Gross cash as at 31 December 2020 was GBP2.0m (FY2019: GBP1.1m)
-- ARR at 31 December 2020 of GBP4.3m (FY2019: GBP4.3m) at the
2020 constant exchange rate (GBP4.1m at current rates)
o New contracted ARR in FY2020 of GBP0.8m, reflecting a gross
organic growth rate of 19%
The Company has a near term pipeline of a further GBP0.5m ARR of
deals which are in final contract negotiations and which are
expected to be signed in Q1 2021. In addition to this the Company
has a strong pipeline of opportunities for 2021. Whilst the net
contracted ARR has remained static at GBP4.3m, the new contracted
ARR in FY2020 is made up of higher quality customers. Sterling's
continued strengthening against the US dollar has had a negative
impact on contracted ARR as described above.
The Board is pleased to note that the Company signed contracts
with two, tier one banks in the second half of the year. One of the
contracts covered a pre implementation phase for the At Trade
Market Risk product, which will lead to significant contracted ARR
in 2021. The second contract for GBP0.2m ARR was signed in December
for the Pre Trade Market Risk product.
The total new contracted ARR in FY2020 of GBP0.8m is spread
across different risk domains including GBP0.5m on Market Risk
products, GBP0.2m on Compliance Risk products and GBP0.1m on
Enterprise Risk products. The new contracted ARR is derived from
six new customers, including top tier institutions, and two
existing customers. The sale of new risk products to existing
customers and the signing of a contract for a suite of products to
a UK Brokerage firm, as referred to in the announcement of August
2020, demonstrates KRM22's ability to simplify the cost and
complexity of risk management through technology delivered on one
platform as a one-stop service.
The total churn in FY2020 for institutional customers was
GBP0.8m which included some legacy customers acquired through
previous acquisitions. In addition, a number of our trader
customers were lost as they were unable to trade due to the CME
floor being closed as a result of the COVID-19 lockdown. The
overall level of churn in FY2020 has been significantly higher than
we have experienced historically or was expected but management
expects this to stabilise in 2021. We settled the disputed contract
referred to in previous announcements in December. While in our
view our case was strong, we decided that the agreed settlement was
pragmatically the right action to avoid the uncertainty,
distraction and cost of litigation. The balance has been written
off in FY2020.
Costs continue to be under tight control however we have started
to phase back the voluntary salary sacrifices in Q4 2020, with
phased full reinstatement starting in January 2021 and expected to
complete in January 2022.
The Group's net debt as at 31 December 2020 was GBP1.0m (31
December 2019: GBP0.9m) and included cash of GBP2.0m and gross
debt, relating to the three-year convertible loan that was signed
with Kestrel Partners LLP in September 2020, of GBP3.0m (31
December 2019: cash of GBP1.1m and gross debt of GBP2.0m).
The Company expects to report full year results for the year to
31 December 2020 on 16 March 2021.
Keith Todd, Executive Chairman and CEO at KRM22, commented: 'The
year has been challenging but we have made good progress in
improving the quality of our customer revenue base with increased
cross sale opportunities and a significant reduction in our
adjusted EBITDA loss. The strengthened balance sheet provides a
sound financial base for 2021.
Our Global Risk Platform has matured well and has an increasing
positive impact in creating new sales opportunities.
The KRM22 business is in a much stronger position than a year
ago and is well placed for growth in 2021.'
For further information please contact:
KRM22 plc InvestorRelations@krm22.com
Keith Todd CBE, Executive Chairman and CEO
Kim Suter, CFO
finnCap Ltd (Nominated Adviser and Sole Broker) +44 (0)20 7220 0500
Carl Holmes / Kate Bannatyne / Matthew Radley
Alice Lane / 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' regulatory, market, technology and operations
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 KRM22.com .
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
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