INTERNATIONAL
Annual Report 2022
KRM22 Plc
Company number: 11231735
CONTENTS
Highlights ............................................................................................................................................................ 1
Chairman’s statement ...................................................................................................................................... 2
Chief Executive Officer’s Report ..................................................................................................................... 3
Chief Financial Officer’s Report ....................................................................................................................... 6
Our products ..................................................................................................................................................... 11
Principal risks and uncertainties ................................................................................................................... 14
Section 172 statement ................................................................................................................................... 17
Board of Directors............................................................................................................................................ 20
Corporate Governance statement ................................................................................................................ 23
Audit Committee report .................................................................................................................................. 29
Remuneration Committee report .................................................................................................................. 31
Nomination Committee report ...................................................................................................................... 34
Directors’ report ............................................................................................................................................... 35
Financial Statements ...................................................................................................................................... 40
Independent auditor’s report to the members of KRM22 Plc ................................................................. 41
Consolidated income statement and statement of comprehensive income for the group .............. 49
Consolidated statement of financial position for the group .................................................................... 50
Company statement of financial position ................................................................................................... 51
Consolidated statement of changes in equity for the group ................................................................... 52
Company statement of changes in equity .................................................................................................. 53
Consolidated statement of cash flows for the group ............................................................................... 54
Notes to the consolidated financial statements ........................................................................................ 55
Company information ..................................................................................................................................... 83
1
KRM22 plc
ANNUAL REPORT 2022
HIGHLIGHTS
Financial
• Annualised Recurring Revenue (ARR)1 as at 31 December 2022 of £4.8m (2021: £3.8m) – growth of 26.3%
o New contracted ARR in 2022 of £1.3m (2021: £0.7m) – growth of 85.7%
• Total revenue recognised of £4.3m (2021: £4.1m) – growth of 4.9%
• Adjusted EBITDA loss2 of £1.7m (2021: £0.7m)
• An improved loss before tax of £3.0m (2021: loss of £3.4m)
• Gross cash as at 31 December 2022 of £1.9m (2021: £5.4m)
Operational
• More than 20 new ARR contracts signed in the year with 11 new customers
•
Launch of “Limits Manager” and “Risk Manager”, the first products with Trading Technologies International, Inc
(“TT”) following the distribution agreement signed in 2021
• Conversion of additional sales opportunities generated by the TT relationship
• Significant reduction in unplanned churn to £0.1m (2021: £0.7m)
• Ambition to target 20%+ annual growth of ARR
Post Year-End Events
• Replacement of existing Kestrel debt facility with a new £5.0m facility provided by TT
• Growth in ARR to £4.9m as at the date of this report
1 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.
2 Adjusted EBITDA is the reported loss for the year, adjusted for recurring non-monetary costs including depreciation, amortisation,
unrealised foreign exchange gain/(loss) and share-based payment charges and non-recurring costs including profit on disposal of
tangible/intangible assets and acquisition and funding costs. A reconciliation of Adjusted EBITDA loss to the reported operating loss
for the year is detailed on page 7.
2
KRM22 plc
ANNUAL REPORT 2022
CHAIRMAN’S STATEMENT
2022 was a year of transition for KRM22, placing it back on the growth path. Stephen
Casner took over as CEO of KRM22 as I transitioned to running Trading Technologies
International, Inc. (“TT”), the Company’s major shareholder. He and the KRM22 team
have refocused the business and driven Annualised Recurring Revenue (“ARR”)
growth to £4.8m at 31 December 2022, up from £3.8m at December 2021, and a
credible 26% growth year on year.
Since we launched KRM22 in April 2018, it has been five turbulent years with the UK
exiting the European Union, Covid disruption and significant political turmoil globally
as well as locally in the UK. Despite these challenges, KRM22 has been established
as a credible name in capital markets with many leading institutions as current
customers but many more in the immediate pipeline.
At the beginning of 2022, we announced the TT partnership, and we are pleased to say that we have made excellent
progress to date. This includes integrating the KRM22 software into the TT platform within the TT firewalls, signing new
customers as well as establishing a very strong 2023 sales pipeline including many tier one banks.
Outside of the TT partnership, the KRM22 team has refocused the product offering, as well as restructured and
strengthened the sales team providing a platform for growth, demonstrated by the growth in ARR through direct sales
channels.
We were pleased to have recently concluded a debt financing facility with TT for £5.0m after a competitive process,
providing the Company with access to capital to continue its growth. The terms include a higher convertibility threshold
compared to the previous debt facility and lower interest cost compared to alternative debt financing arrangements.
The Board and I wish to thank not just the customers and investors but the KRM22 team for the continued commitment
for delivering high quality products and services to the capital markets risk community. We look forward to seeing
continued growth in 2023 and beyond as well as crossing the cash generation line.
Keith Todd CBE
Executive Chairman
27 June 2023
3
KRM22 plc
ANNUAL REPORT 2022
CHIEF EXECUTIVE OFFICER’S REPORT
2022 saw KRM22 advance all of its key initiatives and solidly place the Company
on track to meet our goal of moving towards a £10.0m Annualised Recurring
Revenue (“ARR”) business by 2026 with positive EBITDA performance and cash
flow and an ambition to grow ARR by 20% year on year.
We are doing this through four key initiatives:
(1)
(2)
(3)
(4)
generating revenue from the relationship with Trading Technologies
International, Inc. (“TT”);
growing ARR, through direct sales and the TT partnership;
reducing the level of customer churn as experienced in previous years,
whilst improving the success and adoption rate of the Risk Cockpit;
and
reorganisation of the workforce to help grow the business and support
other initiatives.
I am pleased to report that KRM22 has found success in each of these endeavours.
In addition to these initiatives, the Company has secured a new £5.0m secured debt facility from TT, our largest
shareholder, to replace a £3.0m secured debt facility that was due to mature in September 2023.
As you review the progress made in the year, I would like to highlight how we stand on the key initiatives we embarked
on at the start of 2022 and will continue in 2023.
Creating revenue from TT’s customer base
Our relationship with TT was one of the keys to our success in 2022. We signed our first sales contract from the TT
sales channel in June 2022. This contract allows us to leverage our Pre-Trade Limit Manager product to be used as a
custom limit system for a major European commodity exchange. This three-year contract provides £0.1m of ARR to
KRM22 in addition to £0.2m of one-off non-recurring revenue.
We announced in 2022 the two key products that TT will distribute for KRM22, Limits Manager and Risk Manager. A
major component of the announcement was that these products would operate on TT’s technical platform. This allows
TT customers to contract for the KRM22 services under their existing TT license agreement conforming to technical
audits and without migrating data to a different environment. We jointly decided to make this investment to reduce the
amount of “friction” TT would experience in selling KRM22’s products.
This is a direct response to how our core market has changed the way they acquire software products, allowing them to
test and use the applications before making a financial commitment.
We are impressed with how KRM22 and TT worked collaboratively on our first product. By the end Q3 of 2022, the
KRM22 Limits Manager product had been successfully integrated into the TT platform.
This allowed us to commence TT’s sales campaign for KRM22’s Limits Manager in Q4 2022 which has resulted in
creating an impressive pipeline of sale opportunities for the Limits Manager product in 2023 which has already resulted
in a product sale to one of the world’s largest financial institutions.
The power of the TT sales channel became evident as the financial institution in question was able to go live on the
Limits Manager product in less than two weeks after signing a sales order with TT – a process that would ordinarily take
months of effort to accomplish if it were a direct sales opportunity.
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KRM22 plc
ANNUAL REPORT 2022
A second KRM22 product, Risk Manager, has been launched on the TT platform and another major global financial
institution has begun testing and evaluating this new product. We expect revenue from this product to come forward in
the second half of 2023 and be a significant contributor to achieving our revenue goals.
Revenue growth
While our relationship with TT is important, we must also demonstrate that we can directly sell our products to new
customers and expand the use of our products by our existing customers. I am pleased to report our 2022 selling
initiatives have been successful and our new sales team is being led by the Company’s Chief Revenue Officer, Billy
Murray.
As of the date of this report, our ARR is £4.9m up from £3.8m at 31 December 2021, an increase of approximately 29%
which we are pleased with. In 2022 the Company signed 22 new contracts totalling £1.3m – 11 with new customers,
including a Tier One bank, and 11 with existing customers for new products and extensions of existing products.
Whilst we have had strong performance generating new contractual ARR, we have been less successful in delivering
non-recurring revenue which would have improved the underlying financial position for 2022. We expect a renewed
focus on non-recurring revenue in 2023 resulting in a significant improvement to adjusted EBITDA performance in 2023.
Retention of customers and making the Risk Cockpit successful
The level of customer attrition the Company experienced in prior years, with total churn of £1.4m notified to us in 2021,
covering contract terminations in 2021 and the first two months of 2022, was unprecedented and not sustainable. The
churn was from legacy customers on old deployed software that did not want to migrate to SaaS delivered services.
Whilst some level of customer churn is expected, we needed to implement a plan to mitigate and reduce the level of
churn to a more acceptable level.
We embarked upon a defined customer retention plan led by our Customer Services team which resulted in the
prevention of “surprise” churn in the customer base in 2022. Throughout the whole of 2022 we only had one customer
contract that we did not anticipate terminating, with ARR of £0.1m, and this was a Belarusian customer with the
termination driven by the Russia/Ukraine geopolitical crisis.
A highlight of our retention plan included the roll out of a series of “KRM22 health dashboards” to our customers. This
initiative highlights how many transactions we process for our customers each day, gives our customers a direct and
instantaneous view of open and closed support tickets as well as the availability of future product updates and
associated new features and functions. These dashboards, in combination with our monthly newsletter program, has
significantly extended our daily customer touch points and improved the value we deliver to each of our customers every
day.
Another key part of our customer retention plan was to deliver the integrated benefit of KRM22’s Global Risk Platform
to our Showcase Global Risk Platform Customer, and we delivered excellent progress in the period. The Global Risk
Platform is now fully operational for Trading and Corporate risk at our Showcase Global Risk Platform Customer with
the Risk Cockpit product being utilised into production to support a key risk evaluation parameter for them. We expect
to “package” this success to begin accelerating revenue from the Risk Cockpit in 2023.
We have been disappointed in the historical rate of adoption of the Risk Cockpit product since the product was developed
and launched in 2019. We have created a new plan with new resources to help us make that change by further tailoring
the product for the Capital Markets industry and helping existing customers with their alignment to FCA requirements,
e.g. ICARA. The results of our efforts are now evident at our showcase customer.
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KRM22 plc
ANNUAL REPORT 2022
Reorganise the workforce
At the start of 2022, and following my appointment as CEO of KRM22, we restructured KRM22’s internal teams and their
responsibilities, as this is key to the Company’s future success. The senior leadership team was streamlined and
refocused into four distinct areas: Revenue, Customer Services, Technology and Finance/HR/Legal. We completed a
successful search for a new Chief Revenue Officer, Billy Murray, who joined in September 2022. Dan Carter was
promoted to run Customer Services, Viliam Dzupin’s Technology responsibilities were extended to cover Product, whilst
Kim Suter’s responsibilities were extended to cover legal contracts and administration.
This new leadership team has brought clarity and efficiency to the organisation and, together with the teams that they
manage, is a primary reason for the Company’s success in 2022.
Outlook
Overall, we are on the right path to achieve the objectives and internal KPI's set out at the start of 2022. These provide
a strong foundation on which to build in 2023.
We have defined a goal to get to £10.0m of ARR by 2026 through delivering 20% compounded ARR growth each year
while achieving positive EBITDA and cash flow and we have the right foundations in place to achieve this
goal. Notwithstanding a backdrop of challenging market conditions, which we do not expect to materially change in the
near term, we will continue to consistently drive the acceleration of revenue through each of our sales channels. We
also will continue to manage the underlying cost base of the business to ensure we have sufficient cash to give us
the runway to achieve our goal.
Whilst we have defined our goal of growing KRM22 to a £10.0m ARR business, the amount of variables we have in our
revenue plan still inhibit us from publishing market forecasts. We believe that by remaining diligently focused on growing
ARR, retaining customers and managing costs, the time frame for our success will begin to come into focus in our
subsequent reporting periods.
As always, we thank you for your support and look forward to continuing to build one of the capital markets best risk
management companies.
Stephen Casner
CEO
27 June 2023
6
KRM22 plc
ANNUAL REPORT 2022
CHIEF FINANCIAL OFFICER’S REPORT
Following a challenging couple of years with the COVID-19 pandemic, impacting
KRM22 through extended sales cycles and significant customer churn, 2022, against
a backdrop of increasing global economic uncertainty, saw an increase in total
revenue recognised, a significant increase in its ARR and a reduction in customer
churn compared with prior years. Whilst total revenue recognised in the year saw an
increase of 4.9% to £4.3m from £4.1m, the Company’s ARR at year end saw a net
increase of 26.3% to £4.8m from £3.8m at 31 December 2021.
Profit and Loss
Total revenue
Revenue recognised for the year to 31 December 2022 was £4.3m (2021: £4.1m), an increase of 4.9% compared with
the prior year, with 92% (2021: 96%) of total revenue generated from recurring customer contracts. Non-recurring
revenue for the year ended 31 December 2022 totalled £0.3m (2021: £0.2m) and related principally to customer
implementations and proof of concept work.
Recurring revenue
ARR (“Annualised Recurring Revenue”) is a key metric for KRM22 and as at 31 December 2022, ARR had increased by
26.3% to £4.8m (2021: £3.8m), a net increase of £1.0m (2021: net decrease of £0.3m). New contracted ARR in the year
totalled £1.3m (2021: £0.7m) of which £0.7m (2021: £0.3m) was from new customers and £0.6m (2021: £0.4m) was
generated from existing customers.
Total churn in the year was £0.6m (2021: £0.9m), of which £0.1m was from the termination of one customer in the year
and which was unexpected, however this was from a Belarusian customer with the termination driven by the
Russia/Ukraine geopolitical situation, and £0.5m which terminated in early 2022 and which KRM22 had been notified of
in 2021.
Gross profit
Gross profit for the year to 31 December 2022 was £3.3m (2021: £3.5m). The reduction in gross profit margin to 77%
this compared to the prior year margin of 84% was due to additional hosting capacity required to service the increase in
customer numbers and this was further compounded by the volatility and adverse movement in foreign currency rates,
with a significant proportion of the Company’s cost of sales being Amazon Web Services server costs which are invoiced
in US dollars. In addition, KRM22 generates revenue through partner products and services, primarily through data and
news feeds with minimal margin to KRM22, and this accounted for 6% of recurring revenue recognised in the year ended
31 December 2022 (2021: 4%) which contributed to the reduction in gross profit margin.
Capitalised development
A total of £0.8m (2021: £0.7m) of development was capitalised in the year to 31 December 2022. Capitalised
development is amortised over three years.
7
Adjusted EBITDA
KRM22 plc
ANNUAL REPORT 2022
Adjusted EBITDA is the key metric that the Company considers in order to understand the cash-profitability of the
business. This is due in particular to the non-cash items that impact the Income Statement under IFRS accounting, such
as non-cash share-based payment charges.
Adjusted EBITDA for the year to 31 December 2022 was a £1.7m loss (2021: loss of £0.7m). Following the investment
from Trading Technologies International, Inc (“TT”) in December 2021 of £4.7m, the Company completed an internal
reorganisation of the business to help drive business growth, including investing in additional resource, and this
contributed to the increase in adjusted EBITDA loss however this investment, and ultimately the increase in the cost
base of the business in the year, is generating a return for the business, evident by the growth in ARR in the year.
The increase in the Company’s adjusted EBITDA loss was also on the back of two years of trying to grow the business
through cost-cutting during the COVID-19 pandemic, together with the added benefit in 2021 of a £0.2m (US$0.3m)
Payback Protection Program (“PPP”) loan, converted to a grant under the rules of the PPP scheme, and recognised as
Other operating income.
A reconciliation of Adjusted EBITDA loss to the reported operating loss is provided as follows:
Adjusted EBITDA loss
Depreciation and amortisation
Unrealised FX gain/(losses)
Contingent consideration charge
Share-based payment expense
Operating loss
Operating loss
2022
£’m
(1.7)
(1.6)
0.8
–
(0.1)
(2.6)
2021
£’m
(0.7)
(1.7)
(0.1)
(0.1)
(0.4)
(3.0)
Reported operating loss for the year to 31 December 2022 was £2.6m (2021: loss of £3.0m).
Finance charges
Net finance expense in the year was £0.6m (2021: £0.4m) and includes:
Loan interest of £0.3m (2021: £0.3m);
IFRS16 lease liability interest of £0.1m (2021: £0.1m); and
•
•
• Derivative financial instrument fair value adjustment of £0.2m (2021: £0.0).
Taxation
The tax credit in the year was £0.2m (2021: credit of £0.1m) which includes £0.1m (2021: £nil) R&D tax credit received.
Financial position
Assets
The cash balance as at 31 December 2022 was £1.9m (2021: £5.4m).
Current assets at 31 December 2022 include trade and other receivables of £1.5m (2021: £0.7m).
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KRM22 plc
ANNUAL REPORT 2022
Non-current assets were £7.8m (2021: £8.1m) relating principally to: £6.1m for goodwill and assets acquired (2021:
£6.1m), £0.4m for right of use assets recognised under IFRS16 (2021: £0.6m) and £1.3m (2021: £1.3m) for capitalised
development costs.
Liabilities
As at 31 December 2022, our principal liabilities were:
• £3.0m Convertible Loan owed to Kestrel Partners LLP. The interest rate payable on the loan is 9.5% payable in
cash quarterly in arears. The loan can be converted into new Ordinary Shares in the Company at a conversion
price of 38p and the conversion can be requested by Kestrel Partners at any time. The Company has the right
to request conversion at any time after eighteen months following the date of the agreement, 15 September
2020, subject to certain conditions regarding the Company's share price at that time.
• £1.0m (US$1.1m) deferred consideration for earn out payments for the acquisition of Object+. The deferred
consideration can be satisfied in either cash or Company ordinary shares at the Company’s discretion.
• £0.6m 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. In practice, these rental payments will be spread
over the next few years. As a result, £0.5m of the related liability is shown in current liabilities as it relates to
lease payments that will be paid in 2023, with the balance for periods greater than one year.
• £1.8m of deferred revenue; contracted and paid services that will be released in a future period.
Investors
As an AIM quoted business, a large proportion of KRM22’s shareholders are professional investment funds. In addition,
the Directors together owned 3,764,958 shares at the year end, representing 10.6% of the Company’s issued share
capital.
Funding
The Company has a £3.0m convertible loan (the “Kestrel Convertible Loan”) with Kestrel Partners LLP (“Kestrel”). The
interest rate payable on the Kestrel Convertible Loan is 9.5% per annum and is paid quarterly in arrears. Kestrel can
convert the Kestrel Convertible Loan into new ordinary shares in the Company at any time at a conversion price of 38p.
The Company has the right to request conversion at any time after the 18 months following the date of the agreement,
15 September 2020, subject to certain conditions regarding the Company's share price at that time. Kestrel has the right
to prevent any conversion which would trigger a Rule 9 event under the Takeover Code.
The Kestrel Convertible Loan is secured on certain KRM22 assets and includes covenants based on the Group’s financial
performance.
Since the year end the Company has secured a new £5.0m convertible loan facility with TT (the “TT Convertible Loan”)
to replace the existing Kestrel Convertible Loan. Further detail on the TT Convertible Loan is detailed in the Directors
report on page 37.
Use of cash in the year
Our net cash outflow in the year was £3.5m, of which £0.7m was used for capitalised development, £0.3m was used to
pay interest on the Kestrel Convertible Loan and the balance was used to provide working capital for KRM22.
Going concern
Analysis of KRM22’s going concern position is detailed in the Directors report on pages 36 – 37.
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KRM22 plc
ANNUAL REPORT 2022
Shareholdings and Earnings per share
As at 31 December 2022, KRM22 had 35,666,336 shares in issue and this was also the undiluted weighted average
number of shares for the period. The resulting Earning per Share (“EPS”) is a 8.7p loss per share (2021: loss of 12.4p).
Due to the loss made by the Company in the year, the diluted EPS is the same as EPS.
Dividend
We aim to deliver capital growth for shareholders to generate an attractive total return. However, we do not recommend
a dividend for the year, but may choose to do so in future years.
Conclusion
In 2022, KRM22 has utilised the funds received from the TT investment in December 2021 to grow the business through
new customer sales and reducing the level of customer churn, with net growth in ARR of 26.3%. The Company now has
the foundations in place for this momentum to continue into 2023 and beyond, with significant sales pipeline
opportunities, both from direct selling opportunities and through the TT distribution agreement, to increase ARR and
improve the adjusted EBITDA position.
Approved by the Board and signed on its behalf by:
Kim Suter
CFO
27 June 2023
Strategic Report
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KRM22 plc
ANNUAL REPORT 2022
OUR PRODUCTS
Built on the Global Risk Platform, KRM22 offer products addressing risk management challenges across Corporate and
Trading risk. By layering on data from throughout a customer’s environment, customers are now able to better assess,
monitor and manage the increasing correlation between these risk areas.
The Global Risk Platform
The KRM22 Global Risk Platform is a cloud-based SaaS service for Corporate and Trading risk that securely connects and
integrates into existing and new client portals from one integrated system.
Corporate Risk
Risk Cockpit
The Risk Cockpit is a digital risk register that brings risk policies and operational controls to life through a proven risk
assessment workflow
• Enforce risk controls
• Capture, assess and
remediate events
• Track and understand
metrics
• Generate regulatory and
historic reporting
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KRM22 plc
ANNUAL REPORT 2022
Market Surveillance
Market Surveillance provides insightful analytics and contextual market surveillance to help capital market firms identify
and manage the potential risks of market abuse
• 30+ alerts including
Layering and Spoofing,
Wash Trading and Insider
Trading, Abnormal Trade,
Volatility Spike and
Unusual Price Movement
Identify the appropriate
actions to manage alerts
•
• Configure and analyse
alert scenarios in real-time
• Sophisticated case
management workflows
Trading Risk
Pre-Trade Centralised Risk Management
Pre-Trade combats time consuming and error prone processes by maintaining, auditing and approving trading limits
across multiple platforms in one centralised application
• Submit, review and
approve limit change
requests for software
trading platforms
• Automate pre-approved
limit changes
• View the completed
status of limit requests
• Capture all limit activity
and simplify reporting
• Maintain a database of
account limits by date or
date range, detailing
adjustments since
inception
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KRM22 plc
ANNUAL REPORT 2022
At-Trade P&L and Margin
At-Trade meets your risk management goals for P&L, Margin and position management in real-time
• Understand exposure at all
times
• Receive automatic alerts
of limit violations
• Obtain real-time data
directly from exchanges
and clearing houses
• Calculate SPAN, SPAN2,
PRISMA and custom
margin requirements in
real time
• Build “what if” portfolios to
test trading strategies
Post-Trade Stress
Post-Trade supports the creation of custom risk views to scale both the amount and type of risk calculations performed,
delivering a “Maximum Risk” value
•
•
•
•
•
React to extreme
volatility through
intraday stress, P&L
and position
monitoring
Analyse multiple
market stress
scenarios
simultaneously
Understand your
exposure with multi-
level stress risk
scenarios
Define single and
multi-dimensional limit
alerts
Provide parametric,
historic and Monte
Carlo analysis criteria
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KRM22 plc
ANNUAL REPORT 2022
PRINCIPAL RISKS AND UNCERTAINTIES
The Board considers the risks set out below to be the principal risks to KRM22. The Board continually reviews the risks
facing KRM22 to help monitor and manage these risks, and ensures appropriate steps are taken to mitigate them. If more
than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects
on KRM22. The Board recognises that the nature and scope of risks can change and there may be other risks to which
KRM22 is exposed so the list is not intended to be exhaustive.
Risk and uncertainty
Potential impact
Mitigating actions
Global
economic
uncertainty and rising
inflation
Customer retention
Global economic uncertainty, and the risk of an
impending recession, together with significant
increases in inflation will impact all of KRM22’s
stakeholders.
Economic uncertainty could
impact liquidity of existing customers and the
to convert new sales
ability by KRM22
opportunities. Rising inflation of more than 10%,
or as high as 18% in Czech Republic where
KRM22 has an office, will increase the cost of
goods and services purchased from third
parties. High inflation creates liquidity issues
and uncertainty for KRM22 staff which in turn
leads to an increase in salary and compensation
expectations. All of these stakeholders have the
ability to impact the profitability of KRM22. The
potential impacts are detailed further under the
separate risk and uncertainty components.
Given KRM22’s strategic focus on Annualised
Recurring Revenue,
retention of key
the
customers is critical to the maintenance of
revenue streams. The loss of key customers
could adversely impact business results.
New contract signings Delays in new customer contract signings will
impact business results and the cash position of
KRM22. Investors are expecting KRM22 to sign
new customer contracts and increase ARR and
any delays in this will impact shareholder
confidence.
Foreign exchange
KRM22 operates internationally and is therefore
exposed to fluctuations in foreign exchange
rates.
The mitigating actions associated with global economic
inflation related risks and
uncertainty and rising
uncertainties are included in further detail under each
risk and uncertainty component listed below.
Every customer has an account manager who regularly
speaks with
the customer and who ensures
requirements are met.
KRM22 also has a centralised customer support team
with defined service levels to ensure quality product
service to the customer.
All sales opportunities are assigned a key internal
contact at KRM22 who updates the executive team on a
regular basis.
The CFO maintains detailed cash forecasts that include
sensitivity analysis applied to new sales opportunities
including delayed sales, reduced recurring and non-
recurring revenue values and no future sales growth.
These are reviewed and discussed on a regular basis
between the CFO and CEO so that they can manage the
cost base and cashflow accordingly. The forecasts are
also discussed at the monthly Board meetings.
KRM22 relies on a partial natural hedge of GBP, EUR and
USD costs and revenue being in the same currencies.
KRM22 also continuously monitors its foreign exchange
exposure
forward currency
transactions are necessary.
to assess whether
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KRM22 plc
ANNUAL REPORT 2022
Risk and uncertainty
Potential impact
Mitigating actions
Liquidity of customers KRM22 has a global customer base with these
customers being stakeholders in their own
supply chain. Customer’s liquidity will be
dependent on a number of factors including the
ability of their own customers to pay sales
invoices, their suppliers providing services that
support their own revenue and the availability of
staff to perform the work that drives their
revenue and liquidity of the business. The
actions of these stakeholders will impact the
customers liquidity and their ability to pay
KRM22 sales invoices.
Compliance with laws
and regulations
KRM22’s business is the sale of software that
will facilitate compliance with financial services
laws and regulations. A failure by KRM22 to
comply with laws and regulations in its own
business could lead to fines and revocation of
business
licences, as well as significant
reputational loss.
Staff recruitment and
retention
KRM22 is reliant on the skills and knowledge
of its people in a wide range of areas but
especially
in executive management and
software development.
in critical areas could
Failure to recruit, retain and motivate an
appropriate number of suitably qualified
lead to a
people
deterioration in the quality of our products and
services. This could lead to KRM22 failing to
meet its customers’ needs resulting in the loss
of business and a failure to deliver expected
financial returns.
Investor attitude and
confidence
Investors lose faith in KRM22 and the ability to
grow the business at a rate that provides them
with a suitable return on investment.
KRM22 has a centralised finance function with accounts
receivable (“AR”) balances reviewed on a regular basis
with account managers and executives of the Company.
The use of automated centralised systems allows AR
balances to be updated daily and, should an AR balance
become overdue, appropriate action can be taken to
resolve payment of any outstanding amounts.
Sensitivity analysis is included on AR receipts when
preparing cash forecasts with any bad or doubtful AR
balances excluded from base case cash forecasts.
KRM22 employs fully qualified finance professionals
and external professional advisors, including legal and
tax, to ensure all relevant legal and regulatory codes are
fully complied with.
reviews KRM22’s
The Remuneration Committee
compensation policies to ensure KRM22 continues to
attract, motivate and retain qualified personnel. All
employees are offered equity awards, including share
options and restricted stock units (“RSUs”) in KRM22 so
that they have a vested interest in the long-term success
of KRM22.
KRM22 is committed to the retention of staff by adopting
a friendly and flexible working environment and offering a
broad range of staff benefits.
There is regular staff engagement and communication
including formal monthly internal company meetings
where the Executive team update all staff on business
wide issues and encourage team participation. In
addition, formal staff appraisals are completed two times
a year for employees and their managers to give direct
feedback and to understand staff morale, flight risks and
any gap in skills or qualifications. The output of each
appraisal is discussed by the Executive Directors with any
remedial action plans implemented accordingly.
KRM22 completes salary reviews on an annual basis and,
as part of this review, undertakes a salary benchmarking
exercise to ensure that salaries are in line with current
market trends across the different geographical locations
in which it operates.
The CEO and CFO meet institutional shareholders, fund
managers and analysts at
least twice a year to
understand how the strategy and the Board’s decisions
impact on and are received by investors. In addition, the
CEO and CFO maintain regular contact with finnCap, as
Broker and Nominated Advisor, who keep in regular
contact with KRM22’s investor base.
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KRM22 plc
ANNUAL REPORT 2022
Risk and uncertainty
Potential impact
Mitigating actions
Debt facility
Technology
Information security
The convertible loan with Kestrel Partners (the
“Kestrel Convertible Loan”) requires KRM22 to
adhere with various obligations
including
compliance with financial covenants and the
provision of
forward-looking compliance
information, payment of interest by due dates
and the reporting of management information
within agreed timeframes. Failure to comply
with a financial covenant will result in an Event
of Default which may result in Kestrel Partners
withdrawing the Kestrel Convertible Loan with
all amounts accrued becoming immediately
due and payable which would impact KRM22’s
cashflow.
On 17 June 2023, Trading Technologies
International Inc. (“TT”) provided a new debt
facility (the “TT Convertible Loan”) to KRM22
with some of the proceeds used to repay the
Kestrel Convertible Loan. The principal risks
and uncertainties associated with the Kestrel
Convertible Loan are also applicable to the TT
Convertible Loan.
To remain successful, KRM22 must ensure
that
its products continue to meet the
requirements of customers. If products do not
meet the requirements of customers, they
could seek alternative solutions, resulting in
loss of revenue.
To be a credible and competitive Software-as-
a-Service (SaaS) organisation who stores,
processes or transmits critical information,
well defined controls and procedures are
required to be defined and adhered to. Without
these controls and procedures, unauthorised
access and theft of customer and Company
data could materialise and be extremely
damaging to the Company, both financially
and reputationally.
The risk of failing to adhere with financial covenants is
mitigated by growth in ARR generated through new
customer
cash,
agreements, management
management of the cost base and ensuring that regular
forecasts are maintained that include sensitivity analysis
applied to new sales opportunities. Forecasts, with
specific reference to the financial covenants are also
reviewed and discussed at each Board meeting.
of
There are defined reporting obligations that KRM22 has to
Kestrel Partners and this includes a process to engage
together in advance of any forecasted issues and risks.
The mitigations associated with the Kestrel Convertible
Loan also apply to the TT Convertible Loan.
KRM22’s Product Managers are subject matter experts in
their fields and understand the trends of the market and
customer needs.
In addition, customer account
managers gather requirements of the existing customer
base and
to product
development. KRM22’s CTO, together with the Product
Managers, use this information and feedback and invest
in the products and underlying technology to enhance the
existing products and develop new features.
information
feedback
that
and
policies
security
SOC 2 requires organisations to establish and follow strict
information
procedures,
encompassing
the security, availability, processing,
integrity and confidentiality of customer data. The
Company is SOC 2 accredited with an audit being
undertaken on an annual basis each year for accreditation
to continue. In addition to mitigating information security
risks, SOC 2 accreditation provides KRM22 with an edge
over competitors who cannot show compliance.
In addition to the risk of customer and
Company data theft, KRM22 is susceptible to
more general fraud and security risks including
spam and phishing emails sent to KRM22
staff. If such emails, and any attachments are
opened by staff, the email and/or attachment
could instal fraud spyware and/or impact
services. If any phishing emails requesting a
payment to be made are received and
actioned, KRM22 could make fraudulent
payments resulting in financial loss.
In addition to SOC2, all staff are provided with regular
training on information security and fraud and are
expected to review and formally acknowledge the
Company’s Information Security Code of Practice on an
annual basis. KRM22 has anti-virus software installed on
all machines which is managed by central IT services and
audited on a regular basis. KRM22 has Cyber Essentials
accreditation which provides reassurance that it has
sufficient defences against the vast majority of common
cyber attacks. All bank payments require dual approval to
mitigate the risk of an unapproved payment being made
to a fraudulent third party.
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KRM22 plc
ANNUAL REPORT 2022
SECTION 172 STATEMENT
Under section 172(1) of the Companies Act 2006, the Directors of a company have a duty to promote the success of the
company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
a)
b)
c)
d)
e)
f)
the likely consequences of any decision in the long-term;
the interests of the company’s employees;
the need to foster the company’s business relationships with suppliers, customers and others;
the impact of the company’s operations on the community and environment;
the desirability of the company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between members of the company.
Set out below is a summary of how the Directors have performed their duty under section 172(1) of the Companies Act,
including how the Board has engaged with key stakeholders during the year.
Why engagement is important
How Directors and/or management
engage
Strategic decisions in the year
Customers
Regular customer engagement ensures
that KRM22 understands customer
expectations so that it can meet or exceed
these requirements. In addition, it allows
management to understand the risk of
churn and take corrective action to
mitigate this risk.
Investors
Allows communication of KRM22’s long-
term strategic objectives to secure the
investors ongoing support for strategic
objectives and provides an opportunity for
investors to raise any questions.
Team
Continuous engagement and two-way
communication with staff allows staff to
understand and deliver KRM22’s long-
term strategic objectives. Transparency
and openness improve motivation and
productivity rates and helps to maintain
low staff turnover.
The easing of COVID
travel
restrictions allowed the reintroduction of
face-to-face meetings with key customers
and sales prospects on a regular basis.
related
Open dialogue with customers and
understanding their needs influenced the
product roadmap of ongoing development
work and release on new features in the
KRM22 product suite.
Following the release of the Company’s
FY21 full year results and FY22 interim
results in March and September 2022
respectively, the CEO and CFO met with
individual investors to discuss the results.
No strategic decisions were made in the
year affecting investors.
Monthly “All Hands” meetings in which
management update staff on company
progress with
two-way participation
encouraged.
Strategic decision made early in the year
to complete a reorganisation of the
internal KRM22 team into four distinct
pillars:
Staff appraisals completed twice a year
with a review of accountabilities and the
setting of objectives.
“pulse” survey
Anonymous monthly
completed with results discussed by
management and action taken where
appropriate.
Following the easing of COVID related
travel restrictions, management regularly
visit overseas offices.
• Revenue: help focus on growing
ARR;
• Customer
improve
Services:
account management and reduce
customer churn;
• Technology:
enhance
product
development,
with
software development and internal
IT; and
together
• Finance/HR/Legal:
enhancing
internal administration to support
business growth.
Implementation of LTIP equity bonus
plans for all staff based on corporate,
team and individual performance.
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KRM22 plc
ANNUAL REPORT 2022
Why engagement is important
How Directors and/or management
engage
Strategic decisions in the year
Suppliers
Engagement with key suppliers ensures
its business
that KRM22 operates
effectively and without disruption.
Inc.
Trading Technologies International, Inc.
In December 2021, and as part of Trading
Technologies
(“TT”)
International
investment in KRM22, both parties entered
into a distribution agreement for the
distribution of KRM22 products into the TT
customer
significant
opportunities for growth and cross selling.
Collaborative engagement was important
as it would enable products to be launched
in a timely manner to help drive the growth
of KRM22.
base
with
KRM22 nominates internal resource to
manage key supplier relationships with
regular meetings between these parties
which is reported back to management.
team, represented by key
A project
individuals
from both parties, was
established to agree on the order of
priority
for making KRM22 products
available to TT customers. The team meet
on a weekly basis to collaborate on ideas
and resolve any operational and technical
issues prior to the launch of the products.
No strategic decisions were made in the
year affecting suppliers.
A strategic decision was made to prioritise
the launch of Limits Manager on the TT
platform in March 2022 and Risk Manager
in November 2022.
Kestrel Partners, as debt provider
forward-looking
of
Communication
compliance information under terms of
the Kestrel Convertible Loan allows the
Directors and Kestrel Partners to evaluate
any risks and agree remedial action if
required.
reports on compliance with
KRM22
financial covenants and provides forward-
looking compliance information at the end
of each quarter. In addition to the CEO and
CFO meeting with Kestrel to discuss the
underlying data and projections.
increasing
focus as
Given that the original Kestrel Convertible
Loan had a maturity date of 15 September
2023, refinancing the debt facility became
an
the year
progressed. The CEO and CFO explored,
and were offered, alternative sources of
funding to replace the existing facility and
on 17 June 2023 KRM22 signed a new
debt facility (the “TT Convertible Loan”)
with Trading Technologies International,
Inc.
the Kestrel
to
(“TT”)
Convertible Loan.
replace
Corporate Governance
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KRM22 plc
ANNUAL REPORT 2022
BOARD OF DIRECTORS
Keith Todd CBE
Executive Chairman
Keith has over 40 years of global technology business experience from publicly listed and large
multi-nationals to start-up businesses.
Keith is Executive Chairman of KRM22, having previously held the joint roll of Executive Chairman and CEO of KRM22. As
well as being Executive Chairman of KRM22, he is currently CEO of Trading Technologies International, Inc.
From 2002 to 2017 he served as Executive Chairman of AIM listed FFastFill plc, provider of SaaS to the global derivatives
community. Keith retained this position even after FFastFill was acquired by Ion Group in 2013.
He was Non-Executive chairman of AIM listed Aferian plc, a provider of digital TV entertainment and cloud solutions to
network operators from 2005 to 2019. He also served as Non-Executive Chairman of UK Broadband Stakeholder Group
(a UK Government advisory board), Easynet plc and Chief Executive of ICL plc.
Stephen Casner
CEO
Stephen became CEO of KRM22 in December 2021, having previously served as President and, previous to that, CEO of
the North American business since KRM22’s inception. Along with responsibility for the Company’s North Americas
operations, he has helped form and create KRM22’s market risk products as well as lead the Company’s acquisition of
Prime Analytics in Chicago and Object+ in Amsterdam.
Stephen has accumulated over 35 years of experience in the “Fin-Tech” industry. He served as CEO and Co-Founder of
HazelTree, the world’s leading treasury technology solution for hedge funds and global asset managers, from 2010 until
2017. He led AIM-TO as CEO from 2004 to 2010 and Picasso Software as CEO when Picasso was named one of the 50
fastest growing technology companies in 2002. He also ran Chicago based Quantra group and drove their growth to a
successful sale to SS&C Technologies in 1997.
Kim Suter
CFO
Kim has significant experience in building and leading finance functions to support business growth.
He started his career in practice, covering all aspects of audit, financial reporting and tax for a range of clients, providi ng
him with a broad knowledge of how finance functions operate across different business sizes and industries. Kim has
since applied this knowledge to support structured growth at a number of start-up organisations prior to joining KRM22.
Kim joined KRM22 in July 2018 as Head of Finance to set up the finance function for the KRM22 group. He has served
as CFO since July 2019 and joined the KRM22 Board in April 2020. Kim is a qualified Chartered Certified Accountant.
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ANNUAL REPORT 2022
Sandy Broderick
Non-Executive Director
Sandy was previously Non-Executive Director of AIM listed regulatory reporting and collateral risk management solutions
company, Lombard Risk Management plc, which was acquired by Vermeg Group.
Prior to Lombard Risk Management he was CEO of DTCC DerivSERV, where he led the roll out of its Global Trade
Repository in Europe and Asia, as well as holding the CEO position of New York Portfolio Clearing, where he oversaw its
development and successful sale to ICE.
During Sandy’s 23 year derivative trading career at Société Générale and Bank of America, he was at the centre of several
industry initiatives in clearing and market infrastructure, including development of the LCH Clearnet SwapClear system.
Sandy was Chairman of the OTC Derivnet Board from 2011 to 2012. Currently Sandy works with a number of companies
as an expert witness for Regulatory, Trading and Competition issues.
Garry Jones
Non-Executive Director
Garry Jones is currently CEO of NovaFori, a leading technology company operating in the marketplace and auction
technology space - overlaying platform technology with machine learning and artificial intelligence. As well as being a
Non-Executive Director of KRM22, he is a member of the Board of ICBCS, an emerging markets investment bank.
He has many years’ experience in financial services, and has been CEO of three of the largest derivatives and OTC
exchanges in Europe: BrokerTec, LIFFE and the LME, as well as taking leadership roles in the parent companies of NYSE
Euronext and HKEX.
He has contributed to the business change, growth, and globalisation in the exchange world as technology has
fundamentally changed the way that we trade, driving the momentum behind electronic trading and increased efficiency
in the post trade environment.
Steve Sparke
Non-Executive Director
Steve has over 35 years’ experience in Financial Services, trading Interest Rate products for the first
15 years, and subsequently in the Exchange Traded Derivatives (“ETD”) and Commodity industry with extensive board-
level experience for global ETD and Commodities organisations.
Prior to his role as Vice Chairman, leading the Conduct and Culture initiatives of Marex, Steve spent 10 years as Group
COO, responsible for the firm’s operating environment, including IT, Operations, Risk, Compliance and HR.
Prior to Marex, Steve spent 20 years with UBS where he was Managing Director and Global Head of Exchange-Traded
Derivatives.
Since retiring from Marex, Steve holds NED positions on the UK Regulated Entities of TP ICAP and was Non-Executive
Chairman of FIA’s European Advisory Board until the end of 2019, where he continues as a Board Advisor. Steve was
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KRM22 plc
ANNUAL REPORT 2022
previously a NED of NYSE Euronext LIFFE (now ICE Europe) for over 10 years and was a NED at PATS Systems, an AIM-
listed DMA system provider.
Steve has a Law degree from Nottingham University.
23
KRM22 plc
ANNUAL REPORT 2022
CORPORATE GOVERNANCE STATEMENT
In applying a recognised corporate governance code, the Directors have adopted the Quoted Companies Alliance’s (“QCA”)
Corporate Governance Code for small and mid-sized quoted companies (“QCA Code”). The principal means of
communicating our application of
this Annual Report and on our website
(www.krm22.com/investor-relations/governance).
the Code are detailed
in
The Directors believe that, in addition to being responsible for setting the strategic direction and managing risk across the
business, they are responsible for good corporate governance, clear shareholder and stakeholder communications and
monitoring the effectiveness of the Executive Directors. The Directors believe that effective corporate governance,
appropriate to KRM22, considering its size and stage of development, will assist in the delivery of corporate strategy, the
generation of shareholder value and the safeguarding of shareholders’ long-term interests.
This report follows the structure of the QCA Code guidelines and explains how the Board have applied the guidance as
well as the reasons for any departures from the guidance.
At the centre of KRM22’s philosophy are four groups of stakeholders:
• Customers: Customers should enjoy doing business with KRM22, receive value for money and understand that
KRM22 is aligned with their values.
Investors: Investors should receive superior returns from KRM22, governed along established lines.
•
• Team: The team should be highly motivated, well rewarded and believe in the Company vision.
• Community: The local and global community should see KRM22 as an asset.
In adopting QCA principles, the Directors have ensured alignment with the goals of the Company’s stakeholders.
QCA PRINCIPLES
Principle 1: Establish a strategy and business model which promotes long-term value for shareholders
KRM22 listed on AIM, via an IPO, on 30 April 2018. As part of this process, the Board determined the long-term vision of
KRM22 and detailed the steps to achieve that strategy.
At the start of 2022, and following the appointment of Stephen Casner as CEO, the Board refined the strategy, based on
customer feedback, additional input from risk management experts at KRM22, shareholder feedback, debt provider
feedback and employee participation which has led to a clearer definition of KRM22’s strategy. The strategy previously
focused on five domains of risk: Enterprise, Market, Compliance, Operations and Technology, and this has been simplified
into two segments as Trading Risk and Corporate Risk.
Corporate status: KRM22 (KRM:L) is a closed-ended investment company (CEIC) listed on the AIM of the London Stock
Exchange. This means that the number of shares in the Company are known and the shares are traded on AIM. KRM22
expects to convert to an operating company when its business develops to fit the necessary criteria.
In adopting Principle 1, KRM22 is assisting investors to obtain longer-term superior returns.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Company’s CEO and CFO meet institutional shareholders, fund managers and analysts at least twice a year to
understand how the strategy and the Board’s decisions impact on and are received by investors.
The Annual General Meeting provides an opportunity for all shareholders to meet the Directors and raise any questions.
finnCap act as the Company’s NOMAD and broker.
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KRM22 plc
ANNUAL REPORT 2022
Nominated Advisor (NOMAD): NOMADs are approved by the London Stock Exchange and must meet eligibility
criteria set out in the AIM Rules for NOMADs. In their role, finnCap advises and guides the KRM22 Board on its
responsibilities as an AIM listed business and undertakes due diligence and works as the primary advisor of the
business.
Broker: finnCap is also the appointed broker of KRM22. In this role finnCap facilitate communications with
existing and potential new investors. The CEO and CFO regularly meet investors together with representatives of
the broker. finnCap also advise KRM22 on shareholder communications on its website, all RNS releases
(Regulatory News Service – AIM) and will guide communications within the Annual Report.
Investor queries can be directed to KRM22 by email to InvestorRelations@krm22.com. All advisor details, including those
of KRM22’s NOMAD and Auditors can be found on the last page of this report.
In adopting Principle 2, KRM22 assures investors that the Company is aligned to their needs, expectations and values.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term
success
The Board believes that KRM22 should be seen as an asset to its stakeholders, aligned with their values. This is why the
Board is working to establish an Environment, Social and Governance (“ESG”) programme.
The ESG programme will be centred around meeting the United Nations 17 Sustainable Development Goals (“SDGs”)
(https://sdgs.un.org/goals). In order to work towards these SDGs, KRM22 will promote a culture of transparency and
discussion amongst all four stakeholder groups.
The first phase of the ESG programme, which KRM22 is in the process of undertaking, is an exercise to benchmark the
Company against the SDGs with the aim of establishing the areas of focus for the remainder of the programme. During
this benchmarking phase, each stakeholder group will be considered and if necessary, consulted to establish alignment
with their views and values.
In addition to the ESG programme, KRM22 continually gathers feedback from all stakeholder groups.
Methods of two-way communication include:
Investors: See Principle 10 below.
Customers: Regular meetings with existing and potential customers by the Revenue and Customer Service teams.
Team: KRM22 communicates regularly with the cross-country, multi-national and diverse team in multiple ways. Monthly
internal company meetings are held where the Executive team update all staff on business-wide issues and encourage
including team-wide easy-to-use
team participation.
communication tools, formal performance appraisals are completed two times a year, with informal appraisals completed
throughout the year, a monthly “pulse” where staff participate on an anonymous basis to help the Executive team
understand the mood of business and “all-employee” announcements (for example, on acquisitions/investments, new
customer contract wins, customer projects and other business-wide news).
In addition, KRM22 uses centralised
internal systems
Principle 3 provides the main methodology of meeting KRM22’s ESG goals across all stakeholder groups.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
Good effective risk management is part of KRM22’s DNA and the Company has built the Risk Cockpit as a product to
market and sell and also use internally to effectively manage risk throughout the Company. Therefore, risk management
is embedded in the culture of not only the KRM22 Board, but also the whole team.
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KRM22 plc
ANNUAL REPORT 2022
Director experience in risk management: All the Directors have experience of building growing multi-national
businesses and understand the risks and challenges that come with the journey. Their sector and professional
mix of skills is particularly relevant – see Principle 6.
Team experience in risk management: The subject matter expertise within the multi-national team is very strong
and includes experts in in Trading and Corporate risk. As a company dedicated to risk management technology,
the KRM22 team has a high understanding and experience in managing risk.
Risk Cockpit: The Risk Cockpit is an application that KRM22 has developed to allow CEOs and their teams to see
real-time risk statuses and enable them to take action, in addition to managing specific projects. KRM22 has
implemented the Risk Cockpit internally to monitor and manage risks including the development of customer
dashboards built on the Risk Cockpit framework.
Controls and processes: The Directors are continually reviewing controls and processes in all key areas on an
ongoing basis.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair
The Board comprises three executives, including the Executive Chairman, and three non-executives which encourages
healthy challenge and debate with the non-executives providing additional independence.
The principal role of the Executive Chairman, Keith Todd, is to manage and to provide leadership to the Board of Directors
of the Company. The Executive Chairman is accountable to the Board. The principal role of the CEO, Stephen Casner, is
to make major corporate decisions, manage the overall operations and resources and act as the ultimate point of
communication with stakeholders. In keeping these two roles separate, KRM22 is adhering to the QCA guidelines for the
role of Chairman and CEO to be held by two different people.
The Board believes strongly that a mix of professional skills, risk management experience and capital market
understanding make a difference, as does diversity, and one of the responsibilities of the Nomination Committee is to
undertake an annual assessment of Board Effectiveness which includes a review of skills, experience and composition.
The KRM22 leadership is described on pages 20 – 22.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Directors consider that the mix of professional skills, risk management experience and capital market understanding
is key to the effectiveness of the Board and its Committees. As such, the Board is very satisfied that the resulting mix of
skills is suited to the sector, to the maturity and growth stage and for an AIM listed business.
Skills: Of the six Directors, five have worked within capital markets, two are qualified accountants and one is a qualified
lawyer. All six Directors have experience of growing businesses and how risks need to be managed within a fast-growth
environment.
The Directors maintain their professional experience and skill set through Continued Professional Development (legal and
financial), and constant contact with customers, sector experts and industry influencers, and by listening to feedback
from all stakeholders.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The KRM22 Board has three Board Committees, each consisting of the three independent Non-Executive Directors. See
more details in Principle 9.
The responsibilities of the Nomination Committee include an annual assessment of Board Effectiveness. The last
assessment was completed in April 2022. The Non-Executive Directors assessed the Board on:
•
risk management (including Going Concern);
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KRM22 plc
ANNUAL REPORT 2022
the effectiveness of decision processes and decision making;
• adequacy of management information to make decisions and manage risk;
•
• Board composition (mix of skills, experience, diversity, and adequate succession planning);
•
the effectiveness of each Director on the Board, whether Executive or Non-Executive;
• Board communication and organisation; and
• director induction and training.
The Nomination Committee regarded the Board’s performance, effectiveness and composition as appropriate
considering the size of the Company however they continue to monitor the Board’s construction and remit.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
KRM22 has brought together different business and nationality cultures, through acquisitions and its own organic growth,
and therefore the Board is very people-focused, including all stakeholders whether internal or external.
Team
The aim of the Directors is to build and maintain a culture of transparency and performance and the Directors believe that
empowerment of employees is key to delivering the strategy.
KRM22’s three key company values are:
focus wins;
•
• business is a team game; and
•
clear accountabilities for all.
All employees have access to an internal HR system which provides the full organisation chart across KRM22. This helps
each employee understand where they fit within the organisation and how their work contributes to KRM22’s growth and
performance.
KRM22 has adopted corporate policies, staff handbooks and accounting policies which are aligned with the needs of the
Group, each country and team. Each member of the team is expected to sign and adhere to certain policies, including the
Business Code of Conduct which outlines key responsibilities in terms of ethics.
In addition, for full transparency, the Board has adopted whistleblowing policies for employees and external stakeholders,
including the choice of reporting to and excluding the CFO.
As discussed in Principle 3, KRM22’s ESG programme is focused on meeting the United Nations 17 SDGs which promotes
a strong ethical culture within all areas of the Company.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making
by the Board
The Board of Directors is responsible for setting the strategic direction of the business, managing risks and monitoring
performance and progress. To help fulfil these responsibilities, the Directors have implemented independent Board
Committees which together with the Matters Reserved for the Board, provide structure and formalisation of corporate
governance.
The Board is provided with monthly financial and non-financial information for monitoring performance and to make
strategic decisions. The Board has a formal schedule of Matters Reserved for the Board including acquisitions, share
subscriptions and approval of the annual budget, together with standing items such as health and safety, conflicts of
intertest and concerns reported through whistleblowing procedures. The Board aims to meet for scheduled Board
meetings ten times per year, plus ad hoc meetings as required.
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Risk Management
KRM22 plc
ANNUAL REPORT 2022
The Company uses its own Risk Cockpit software tool to assess and monitor risks. This has gradually replaced any list
of risks in Excel or Word (often the basis for a “Risk Register”) and deliver much more visibility to the Directors of the
performance KRM22 as a whole.
Independence
At 31 December 2022 the Board was comprised of the Executive Chairman, two Executive Directors and three Non-
Executive Directors. Three of the Non-Executive Directors are considered independent as they have not previously worked
with the executive team.
Under their letters of appointment, the Non-Executive Directors have a time commitment of two days per month and the
executives are full-time (with time allowed for agreed external professional activities). All Directors are able to allocate
sufficient time to KRM22 to fulfil their responsibilities.
Nine board meetings were held during the year.
20
Board meeting
attendance 2022
Executive Chairman
Keith Todd
Executive Directors
Stephen Casner
Kim Suter
Non-Executive Directors
Sandy Broderick
Garry Jones
Steve Sparke
Board committees
Maximum possible
meeting attendance
Number of meetings
attended
% of meetings
attended
9
9
9
9
9
9
9
9
9
7
9
8
100
100
100
78
100
89
The Directors have established an Audit Committee, a Nomination Committee and a Remuneration Committee with
formally delegated duties and responsibilities. None of the Executive Directors are members of these Committees and,
when invited to attend Committee meetings, it is to present information and not be part of the decision making.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
All financial reports and publicly-available information is published in the investor information section of the KRM22
website (www.krm22.com/investor-relations). This includes AIM rule 26, significant shareholder information and details
of the Directors’ roles and experience.
The CEO and CFO meet with institutional fund investors to communicate progress and plans at least twice a year and
have met them at other times where appropriate. In addition, the CEO and CFO meet with Kestrel Partners LLP (the
“Security Agent”) to report on financial covenants and forward-looking compliance information as part of the reporting
obligations of the Kestrel Convertible Loan.
The Directors believe that these meetings provide valuable two-way communication and allow investors and Security
Agent to provide feedback. Other investors are provided a channel for communication via the KRM22 investor information
on the website and via email contact at InvestorRelations@krm22.com.
The report of Board Committees is included in our Annual Report and Accounts each year. When General Meetings are
held, the Directors publish the results of votes on the KRM22 website in the Investor Information section.
Internally KRM22 uses multiple team-tools to communicate – see Principle 3.
28
KRM22 plc
ANNUAL REPORT 2022
Board Committees and Secretary
The Board delegates authority to three committees to assist in meeting its business objectives while ensuring a sound
system of internal control and risk management. The committees meet independently of Board meetings.
Audit Committee
The Audit Committee was established by a resolution of the Board on the recommendation of the Nomination Committee.
The Audit Committee, which meets at least two times a year, consisted of Steve Sparke, Garry Jones and Sandy Broderick,
all of whom were non-executive directors of the Company. During the year to 31 December 2022, and to date, the
Committee was chaired by Steve Sparke. The responsibilities of the Audit Committee are detailed in the Audit Committee
report on page 29.
Remuneration Committee
The Remuneration Committee, which meets at least once a year, consisted of Sandy Broderick, Garry Jones and Steve
Sparke, all of whom were non-executive directors of the Company. The Committee was established by a resolution of the
Board on the recommendation of the Nomination Committee. During the year to 31 December 2022, and to date, the
Committee was chaired by Sandy Broderick. The responsibilities of the Remuneration Committee are detailed in the
Remuneration Committee report on page 31.
Nomination Committee
The Nomination Committee, which meets at least once a year, consisted of Sandy Broderick, Garry Jones and Steve
Sparke, all of whom are non-executive directors of the Company. The Committee was established by a resolution of the
Board. During the year to 31 December 2022, and to date, the Committee was chaired by Sandy Broderick. The
responsibilities of the Nomination Committee are detailed in the Nomination Committee report on page 34.
For and on behalf of the Board
Keith Todd CBE
Executive Chairman
27 June 2023
29
KRM22 plc
ANNUAL REPORT 2022
AUDIT COMMITTEE REPORT
The Audit Committee is responsible for challenging the quality of internal and external controls and for ensuring that the
financial performance of KRM22 is properly reviewed and reported.
The Committee reviews reports on the interim and annual accounts, financial announcements, the Company’s accounting
and financial control systems, changes to accounting policies, the extent of non-audit services undertaken by the external
auditor and the appointment of the external auditor.
During the year the Audit Committee reviewed the 2021 annual report, 2022 interim report and the associated
announcements. The Audit Committee considered the accounting policies and principles adopted in these accounts as
well as significant accounting issues and areas of judgement and complexity.
Composition
The terms of reference for the Audit Committee require the committee to consist of preferably three members but not
less than two members and that a majority of the members shall be independent non-executives with at least one of
whom shall have recent relevant financial experience.
Throughout 2022 the Audit Committee was composed of myself, Steve Sparke, as Chairman, Sandy Broderick and Garry
Jones. I have extensive board-level experience and have previously been the Chairman of the Audit and Risk Committee
at NYSE Euronext LIFFE (now ICE Europe) and, whilst working at Marex, the Internal Audit group reported to me, and I was
a standing attendee of the Audit and Compliance committee. The Board is of the view that we have recent and relevant
financial experience. Kim Suter (CFO), Carol Tarpey (Financial Controller) and other Executive Directors may attend
Committee meetings by invitation. The Committee formally met on two occasions during the year. However, other
informal discussions were held by Committee members during the year and since year end. I report to the Board following
an Audit Committee meeting and minutes are available to the Board.
Role of the Committee
The main duties of the Committee are set out in its terms of reference, which are available on KRM22’s website and the
main items of business considered by the Committee in the year included:
•
•
consideration of risk management and internal control systems;
review and approval of the 2021 audit plan presented by KRM22’s auditor, BDO LLP, which set out the proposed
scope of work, audit approach, materiality and identified key audit risk areas;
review of the 2021 audited annual report and financial statements;
consideration of key audit matters and how they are addressed;
review of the unaudited 2022 interim report;
review the suitability of the external auditor; and
•
•
•
•
• meeting with the external auditor without management present.
Financial Reporting
The Committee reviews whether suitable accounting policies have been adopted and whether management has made
appropriate judgements and estimates. The Committee’s remit includes reviews of accounting papers prepared by
management providing details on the main financial reporting judgements as well as assessments of the impact of
potential new accounting standards.
There were no material changes in accounting policy for the Committee to consider during 2022. The Committee have
concluded that the annual report and financial statements are appropriately prepared and provide the information
necessary for shareholders to assess KRM22’s strategy and performance.
30
KRM22 plc
ANNUAL REPORT 2022
Risk management and interim controls
The risk and control management framework of KRM22 is designed to manage rather than eliminate the risk of failure to
meet KRM22’s objectives and the system can only provide reasonable and not absolute assurances against material
misstatement or loss. KRM22 faces a number of risks, the significant ones of which are set out in the section on Principal
risks and uncertainties on pages 14 – 16.
Through the control systems outlined in the Statement of Corporate Governance on pages 23 – 28, KRM22 operates an
ongoing process of identifying, evaluating and managing significant risks faced by the business. This process includes
the following:
• defined organisation structure and appropriate delegation of authority;
•
•
formal authorisation procedure for investments;
clear responsibility for management to maintain good financial control and the production and review of detailed,
accurate and timely financial information;
identification of operational risks and mitigation plans developed by senior management; and
regular reports to the Board from Executive Directors.
•
•
During the year, internal control processes have been monitored and reviewed by the Committee and the Board and, where
necessary improvements, have been identified and implemented.
External Auditor
BDO was appointed auditor of KRM22 in 2018. The Committee considers that its relationship with the auditor is working
well and is satisfied with their effectiveness.
The Committee is responsible for implementing a suitable policy for ensuring that non-audit work undertaken by the
auditor is reviewed so that it will not impact their independence and objectivity. The breakdown of fees between audit
and non-audit services is provided in note 8 to KRM22’s financial statements. The non-audit fees primarily relate to
taxation advice and compliance.
As necessary, the Committee held private meetings with the auditor to review key items within its scope of responsibility.
Taking into account the auditor’s knowledge of KRM22 and experience, the Committee has recommended to the Board
that the auditor is reappointed for the year ending 31 December 2023.
For and on behalf of the Audit Committee
Steve Sparke
Audit Committee Chairman
27 June 2023
31
KRM22 plc
ANNUAL REPORT 2022
REMUNERATION COMMITTEE REPORT
The Board has prepared this report in relation to all Directors who have served during the year to 31 December 2022. As
an AIM listed company KRM22 Plc is not required to provide the full disclosures required of fully listed companies,
however, the Board has chosen to provide the following details as a voluntary disclosure. As a result, the Auditor is not
required to and has not audited the information included in this report.
Composition
The terms of reference for the Remuneration Committee require the committee to consist of preferably three members
but not less than two members and that a majority of the members shall be independent non-executives.
Throughout 2022 the Committee was composed of myself (Sandy Broderick) as Chairman, Garry Jones and Steve Sparke.
Role of the Committee
The purpose of the Committee is to ensure that the executive directors and other key employees of KRM22 (together,
‘Executive Directors’) are fairly rewarded for their individual contribution to the overall performance of KRM22. The
Committee’s main role and responsibilities are to:
• have responsibility for setting the remuneration policy for Executive Directors and such other members of the
executive management as it is designated to consider;
recommend and monitor the level and structure of remuneration for senior management;
•
• obtain reliable, up-to-date information about remuneration in other companies of comparable scale and
complexity in the light of reviewing the ongoing appropriateness of and relevance of remuneration policy;
review the design of all share incentive plans for approval by the Board; and
•
• approve the design of, and determine targets for, any performance-related pay schemes operated by KRM22 and
approve the annual payments made under such schemes.
Remuneration Policy
In setting the remuneration policy, the Committee recognises the need to be competitive in an international market. The
Committee’s policy is to set remuneration levels which ensure that the Executive Directors are fairly rewarded in line with
high levels of performance and not in excess of market rates for comparable companies. Remuneration policy is designed
to support business growth strategies and to create a strong performance-oriented environment. The policy must also
attract, retain, and motivate high calibre individuals. The Remuneration Committee believes that a successful
remuneration policy must ensure that a significant proportion of the remuneration package is linked to the achievement
of ambitious corporate performance targets and a strong alignment with the interests of shareholders.
Consistent with the pay for performance policy, annual cash bonuses are linked to performance criteria. Share options,
restricted stock units (“RSUs”) and warrant awards (collectively “Equity Incentive Awards”) to Executive Directors are linked
to performance as well as being time vested.
Annual salary
Salaries are set at a level appropriate for the role and the individual and are reviewed annually with effect from 1 January.
Adjustments are made, if required, to reflect company and individual performance and competitive pay levels. The
Executive Chairman and Executive Director salaries and employment contracts were reviewed and amended with effect
from 1 January 2022.
32
Performance bonus
KRM22 plc
ANNUAL REPORT 2022
These are designed to reflect KRM22’s performance taking into account the performance of its peers, the markets in
which KRM22 operates and the Executive Directors’ contribution to that performance. No bonuses were paid to the
Directors in the year.
Equity Incentive Awards
The following Equity Incentive Awards covering share options, RSUs and warrants were held by Directors in the year.
Option holder
Name
Keith Todd
Kim Suter
Sandy Broderick
Garry Jones
Date of grant
18/09/2020
Exercise price
£0.380
Vesting period
18/09/2020 – 17/09/2023
28/09/2018
10/06/2019
10/06/2019
23/12/2019
22/07/2020
18/09/2020
01/10/2020
12/01/2021
16/12/2022
10/06/2019
18/09/2020
01/10/2020
10/06/2019
01/10/2020
£1.000
£0.850
£0.850
£0.525
£0.300
£0.380
£0.380
£0.365
£0.630
£0.850
£0.380
£0.380
£0.850
£0.380
28/09/2018 – 27/09/2021
10/06/2019 – 10/06/2022
10/06/2019 – 01/03/2020
23/12/2019 – 22/12/2022
22/07/2020 – 22/08/2020
18/09/2020 – 17/09/2023
01/10/2020 – 31/10/2020
12/01/2021 – 12/02/2021
16/12/2022 – 15/12/2025
10/06/2019 – 03/04/2022
18/09/2020 – 17/09/2023
01/10/2020 – 31/12/2020
10/06/2019 – 03/04/2022
01/10/2020 – 31/12/2020
Steve Sparke
01/10/2020
£0.380
01/10/2020 – 31/12/2020
Total
RSU holder
Name
Stephen Casner
Total
Warrant holder
name
Keith Todd
Stephen Casner
Total
award
Date of award
18/09/2020
Exercise price
£0.380
Vesting period
18/09/2020 – 17/09/2023
Date of grant
30/04/2018
24/04/2018
Exercise price
£1.00
£1.00
Vesting period
30/04/2018 – 29/04/2021
24/04/2018 – 23/04/2021
Number of ordinary
shares under option
287,831
287,831
50,000
50,000
30,000
60,000
21,875
124,342
17,270
17,979
100,000
471,466
10,000
59,210
59,211
128,421
176,471
49,342
225,813
59,211
59,211
1,172,742
Number of ordinary
shares under option
253,162
253,162
Warrants
held
3,300,000
1,200,000
4,500,000
During the year, a total of 425,557 share options were granted, of which 100,000 share options were granted to Kim Suter
as part of a LTIP.
Further information on Equity Incentive Awards is detailed in note 25 to the financial statements.
33
Service contracts
KRM22 plc
ANNUAL REPORT 2022
The Executive Directors have employment contracts which are subject to between 6- and 12-months’ notice from either
the executive or KRM22 at any given time.
Non-Executive Directors’ fees are determined by the Executive Directors having regard to the need to attract high calibre
individuals with the right experience, the anticipated time commitment to fulfil their duties and comparative fees paid in
the market to which KRM22 operates. They may be invited to participate in KRM22’s Equity Incentive Award schemes.
Directors’ Emoluments
The remuneration of the Executive and Non-Executive Directors (audited) for the year ended 31 December 2022 was as
follows:
Salary
& Fees
£’000
60
244
160
31
25
30
550
Benefits
£’000
13
–
4
–
–
–
17
2022
Share
based
payments
£’000
8
32
10
2
2
–
54
Pension
£’000
–
–
9
–
–
–
9
Total
£’000
81
276
183
33
27
30
630
Salary
& Fees
£’000
28
111
119
30
25
30
343
Benefits
£’000
8
–
3
–
–
–
11
2021
Share
based
payments
£’000
105
68
17
2
9
–
201
Pension
£’000
–
–
6
–
–
–
6
Total
£’000
141
179
145
32
34
30
561
Keith Todd
Stephen Casner
Kim Suter
Sandy Broderick
Garry Jones
Steve Sparke
Total
The benefits relate to private medical insurance, life insurance, critical illness cover and income protection insurance for
Directors and their immediate families.
Directors’ Interests
The Directors who held office at 31 December 2022 had the following interest in the ordinary share capital of the Company
as at that date:
Director
Keith Todd
Stephen Casner
Kim Suter
Sandy Broderick
Garry Jones
Steve Sparke
At 31 December 2022
No. of ordinary shares of 10p each
At 31 December 2021
No. of ordinary shares of 10p each
2,763,677
513,143
26,666
11,765
176,471
273,236
2,763,677
513,143
26,666
11,765
176,471
273,236
Sandy Broderick
Remuneration Committee Chairman
27 June 2023
34
KRM22 plc
ANNUAL REPORT 2022
NOMINATION COMMITTEE REPORT
During 2022 the Nomination Committee was composed of Sandy Broderick, as Chairman, Garry Jones and Steve Sparke.
The main duties of the Committee are set out in its terms of reference, which are available on KRM22’s website. The
Committee met on one occasion in 2022 to undertake an annual review of Board performance.
The annual review of Board performance considered the time spent by Non-Executive board members, the structure, size
and composition of the Board, the Board’s performance and the Nomination Committee’s performance. The Committee
concluded that the Board’s performance, effectiveness and composition was appropriate considering the size of the
Company and would continue to monitor the Board’s construction and remit. In considering the performance of the
Nomination Committee, the Committee deemed their performance as satisfactory and that everything within its scope
had been considered satisfactorily.
In addition to evaluating Board performance, the Committee considered the reappointment of Directors that were required
to retire and offer themselves for reappointment at the AGM in May 2022. Having reviewed their performance, the
Committee recommended to the Board that the retiring Directors be reappointed to the Board.
Sandy Broderick
Nomination Committee Chairman
27 June 2023
35
KRM22 plc
ANNUAL REPORT 2022
DIRECTORS’ REPORT
The Directors present their report and the audited financial statements of KRM22 Plc (the “Company”) and its subsidiary
companies (together “KRM22”, the “Group”), for the year ended 31 December 2022. An indication of likely future
developments in the business is set out in the Strategic Report.
Principal activities
The principal activity of KRM22 is the development and sale of risk management software to the financial services
industry.
Directors
The Directors of the Company who served throughout the year and to the date of signing this report, except as noted
below were:
Keith Todd CBE
Executive Chairman
Stephen Casner
CEO
Kim Suter
CFO
Sandy Broderick
Non-Executive Director
Garry Jones
Non-Executive Director
Steve Sparke
Non-Executive Director
Director indemnification and insurance
KRM22 maintains Directors’ and Officers’ liability insurance for each of its directors. The insurance covers any liabilities
that may arise to a third party, other than KRM22 or Company, for negligence, default or breach of trust or duty.
Financial risk management objectives and policies
Further detailed commentary on financial risk management is included in note 27.
Liquidity risk
KRM22 seeks to manage financial risk by ensuring adequate liquidity is available to meet foreseeable needs and to invest
cash assets safely and profitably. Short-term flexibility is achieved by holding significant cash balances in KRM22’s main
operational currencies, notably UK Sterling, US Dollar, Euro and Czech Kroner.
36
Credit risk
KRM22 plc
ANNUAL REPORT 2022
KRM22 is exposed to credit risk from its operations, primarily from trade receivables. The credit risk is managed through
setting payment terms and credit limits with its customers and, where possible, for revenue to be invoiced in advance of
the service being provided.
Foreign exchange risk
KRM22 has significant operations in both the UK and overseas. Revenue and costs are exposed to variations in exchange
rates and therefore reported losses. There is some natural hedging of transactional foreign exchange risk, however
KRM22 remains subject to translation exchange risk.
Overseas branches
KRM22 has one branch outside the UK located in Czech Republic.
Development
KRM22 continues to dedicate resource to develop the Global Risk Platform and its suite of Trading (Pre-Trade, At-Trade
and Post-Trade) and Corporate (Risk Cockpit and Market Surveillance) risk management products.
In accordance with IAS38 ‘Intangible Assets’, expenses are capitalised when it is probable that future economic benefits
will be attributable to the asset and these costs can be measured reliably (see note 3). For the year ended 31 December
2022, total expenditure that has been capitalised on these projects totalled £0.8m (2021: £0.7m).
Going Concern
KRM22’s business activities, together with the factors likely to affect its future development, performance and position
are set out in the Strategic report on pages 10 – 18 and the financial position of KRM22, its cash flows, liquidity position
and borrowing facilities are described in the notes to the financial statements, in particular in the consolidated cash flow
statement on page 54 and in note 27 (financial instruments).
These financial statements have been prepared on the going concern basis. The Directors have reviewed KRM22’s going
concern position taking into account its current business activities, budgeted performance and the factors likely to affect
its future development, which are set out in this Annual Report, and include KRM22’s objectives, policies and processes
for managing its capital, its financial risk management objectives and its exposure to credit and liquidity risks.
The Directors have undertaken a significant assessment of the cashflow forecasts covering a period of at least twelve
months from the date of approval of the financial statements. 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 the KRM22 remaining a going concern without
implementing extensive cost reduction measures 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.
If the forecast is achieved, KRM22 will be able to operate within its existing facilities. However, 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.
Reasonable downside scenarios have been considered and management consider with appropriate actions being
undertaken KRM22 has the ability to meet the various financial covenants.
Given KRM22’s forecast, visible sales pipeline and working capital needs, the Directors have considered it is appropriate
to prepare the financial statements on a going concern basis.
37
KRM22 plc
ANNUAL REPORT 2022
See note 3 on page 56 for further information on going concern.
Post year-end reporting date events
On 17 June 2023, the Company entered into an agreement for a new £5.0m convertible loan facility (the “TT Convertible
Loan”) arranged by Trading Technologies International, Inc. (“TT”), the Company’s largest shareholder, to replace the
existing Kestrel Convertible Loan and to support future business growth.
The TT Convertible Loan is for up to £5.0m with an initial £4.0m drawn down on 23 June 2023, of which £3.1m was used
to repay the outstanding Kestrel Convertible Loan debt of £3.0m plus interest of £0.1m.
The interest rate payable on the TT Convertible Loan is the aggregate of the SOFR average rate and a margin of 5.5%
provided that the amount of such aggregate percentage rate shall be a minimum of 9.25%. Interest on the TT Convertible
Loan is paid quarterly however in the first 18 months of the TT Convertible Loan term, interest can be deferred with 50%
of any deferred interest being paid at 18 months and the remaining balance of deferred interest being paid at 21 months.
The term of the TT Convertible Loan is three years with the option to extend by a further year to four years.
TT can convert the TT Convertible Loan into new ordinary shares in the Company at any time at the lowest conversion
price of: 46p, the volume weighted average price of the Company’s ordinary shares for the three-month period prior to
service of a conversion notice; or the lowest daily closing price for the 30 completed calendar days prior to service of a
conversion notice. TT has the right to prevent any conversion which would trigger a Rule 9 event under the Takeover
Code. The TT Convertible Loan is secured on certain KRM22 assets and includes covenants based on the Group’s
financial performance, based on ARR, revenue recognised and solvency.
Substantial Shareholders
As at 31 December 2022, the Shareholders listed below had a disclosable interest of 3% or more in the nominal value of
the ordinary share capital of the Company.
Trading Technologies International, Inc.
Kestrel Partners
KRM22 Concert Party
Canaccord Genuity Wealth Management
Cinnober Financial Technology AB
Herald Investment Management
Octopus Investments
Energy and carbon
Number of
ordinary shares
8,916,584
6,322,956
4,392,827
3,750,000
2,654,434
2,077,624
1,134,308
Percentage of
ordinary shares %
25.0
17.7
12.3
10.5
7.4
5.8
3.2
The 2018 Regulations introduced requirements under Part 15 of the Companies Act 2006 for an enhanced group of
companies, which are defined as large by the Companies Act 2006, to disclose their annual energy use and greenhouse
gas emissions, and related information. The Group is not currently defined as large. However given the Group’s values
and taking account of its energy consumption has chosen to apply the 2018 Regulations. KRM22 plc, itself consumes
less than 40MWh and therefore as a low energy user, which negates the need to make detailed disclosures of its energy
and carbon information. Furthermore and taking account of this, it has applied the option permitted by the 2018
Regulations to exclude any energy and carbon information relating to its subsidiaries where the subsidiary would not itself
be obliged to include if reporting on its own account; this applies to all subsidiaries within the group.
38
KRM22 plc
ANNUAL REPORT 2022
Corporate governance
The Company adopts the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (“QCA guidelines”)
as set out on pages 23 – 28.
Dividends
No interim dividends were paid and the Directors do not recommend payment of a final dividend.
Staff Equity Incentive Schemes
Details of staff Equity Incentive Schemes are set out in note 25 to the financial statements.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, Directors
have prepared the Group and Company financial statements in accordance with UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006. Under company law the Directors must not
approve the financial statements unless they are satisfied that they give a true and fair view of the state of the affairs of
KRM22 and the Company and for the profit or loss of KRM22 and the Company for that period. The Directors are also
required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies
trading securities on the AIM.
In preparing these financial statements, the Directors are also required to:
• Select suitable accounting policies and apply them consistently;
• Make judgements and estimates that are reasonable and prudent;
• State whether they have been prepared in accordance with UK adopted international accounting standards in
conformity with the requirements of the Companies Act 2006; and
• Prepare the financial statements on the going concern basis, unless it is inappropriate to presume the Group and
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring that the annual report and the financial statements are made available on the
Company’s website. Financial statements are published on the Company’s website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The
Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
39
KRM22 plc
ANNUAL REPORT 2022
Disclosure of information to the auditor
Each of the Directors of the Company at the time when this report was approved confirms that:
• So far, as the Director is aware, there is no relevant audit information which the Company’s auditor is unaware;
and
• He has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant
audit information and to establish that the Company’s auditor is aware of that information. This confirmation is
given in accordance with Section 418(2) of the Act.
Auditor
BDO LLP was appointed as auditor to the Company and in accordance with Section 485 of the Companies Act 2006, a
resolution proposing that they be reappointed will be tabled at a General Meeting.
Approval
The Directors’ report was approved on behalf of the Board by:
Kim Suter
Company Secretary
27 June 2023
Financial Statements
41
KRM22 plc
ANNUAL REPORT 2022
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF KRM22 PLC
Opinion on the financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 December 2022 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
the Parent Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of KRM22 Plc (the “Parent Company”) and its subsidiaries (the “Group”) for
the year ended 31 December 2022 which comprise the consolidated income statement and the statement of
comprehensive income for the Group, the consolidated statement of financial position for the Group, the Company
statement of financial position, the consolidated statement of changes in equity for the Group, the Company statement
of changes in equity, the consolidated statement of cash flows for the Group and notes to the consolidated financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and UK adopted international accounting standards. The financial reporting framework that has been
applied in the preparation of the Parent Company financial statements is applicable law and Financial Reporting
Standard 101 reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusion relating to the going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the
going concern basis of accounting included:
Challenge of the internal forecasting process to confirm the projections are prepared by an appropriate level of staff
that are aware of the detailed figures included in the forecast but also have an understanding of the entity’s market,
strategy and changes in the customer base that might impact on these projections;
42
KRM22 plc
ANNUAL REPORT 2022
• Challenge of Director’s assessment of going concern through analysis of the Group’s cash flow forecast
through to 30 June 2024, including assessing and challenging Director’s assumptions underlying the
forecasts and comparison against post year-end results to date;
• Checking and challenging the sensitivity analysis performed by Director’s, including the reverse stress test, to
assess the impact on cash flow for changes in the level of estimated revenue and costs and considered the
likelihood that those fact patterns could occur;
• Reviewing the terms of the Group’s new financing agreement and covenants attached to it, including
assessing the likelihood of a covenant breach within the going concern assessment period;
• Reviewed post-balance sheet events, specifically the actual cash flow position against that budgeted; and
• Considering the adequacy of the disclosures in the financial statements against the requirements of the
accounting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability
to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Overview
Coverage
90% (2021: 96%) of Group loss before tax
94% (2021: 87%) of Group revenue
95% (2021: 90%) of Group total assets
Key audit matters
2022
2021
Going Concern
Revenue Recognition
Impairment of intangible assets
(including Goodwill)
-
✓
✓
✓
✓
✓
Going concern was no longer considered to be a key audit matter due to the Group
obtaining new funding providing sufficient funds available for next 12 months from
the date of approval of the accounts by the directors.
Materiality
Group financial statements as a whole
£198,000 (2021: £193,000) based 6.05% of loss before tax (2021: 5.65% of loss
before tax).
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
43
KRM22 plc
ANNUAL REPORT 2022
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
In establishing the overall approach to the Group audit, we assessed the audit significance of each component in the
Group by reference to both its individual financial significance to the Group or other specific nature or circumstances.
We identified six individually significant components, including the parent company, which makes up 90% of Group
loss before tax and also covers 95% of the total assets of the Group.
The significant components in all territories were audited by the Group audit team, as the Group’s finance team and
information for all territories are based within the UK and to this extent:
• The Group audit team performed full scope audits for KRM22 Plc and its subsidiaries KRM22 Central Limited,
KRM22 Americas Inc, KRM22 Development Limited, KRM22 Market Surveillance Ltd and KRM22 ProOpticus
LLC;
• The Group audit team performed specified audit procedures around administrative expenses for Object +
Americas LLC , Object + Financial Products BV and Object + Financial Services BV due to their significance to
the Group ; and
• The remaining components not subject to full scope audit or specific procedures have been reviewed for
Group reporting purposes, by the Group auditor, using analytic procedures to corroborate the conclusions
reached that there are no significant risks of material misstatement of the aggregated financial information
of these components.
The Group audit team performed the audit of 94% of the Group revenue using the materiality levels set out above.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter
Revenue
Recognition
(Note 3,4 and
5)
As disclosed in note 3, the Group, as a software
business, generates revenue primarily from the
sale of recurring software as a service licenses,
from software
and non-recurring
implementation and set up services.
revenue
•
•
How the scope of our audit addressed the key
audit matter
•
We performed the following specific testing:
•
•
from
inappropriate or
We considered there to be a significant audit risk
incorrect
arising
•
recognition of revenue from new contracts
entered during the period and the non-recurring
revenue.
•
The key audit matters related to revenue
recognition are as follows:
inaccurately
to ensure each revenue stream had a
standalone value and that revenue is not
recorded
recognised
prematurely.
• For new contracts the risk of material
misstatement is in relation to revenue
recognition of new licenses prior to
delivery of the service; and
/
To address the risk of new license contracts we:
• Verified a sample of Software-as-a-
Service (‘SaaS’) licence fees recognised
from new contracts
the year,
reconciling to underlying agreements;
in
that
• For the selected samples we have also
revenue has
license
checked
commenced when access has been
provided to the customer over the
period of the license by reviewing the
activity on the software platform, whilst
the maintenance and support has also
been correctly apportioned over the
contract;
44
KRM22 plc
ANNUAL REPORT 2022
• There
is also a
risk of material
misstatement in relation to recognition
of non-recurring revenue prior to the
services being delivered.
For non-recurring revenue;
revenue
• Agreed a sample of the Group’s non-
(mainly
recurring
fees)
implementation and support
received
delivery
order
confirmations, to underlying contracts
and checked that services provided had
a standalone value;
and
to
Impairment
of intangible
assets
(including
Goodwill)
(Note 3 and
13)
Taking account of the Group’s accounting policy
in note 3, and as disclosed in note 13, the
Directors have not determined any impairment
of intangible assets (including goodwill) exists.
This has been determined based on a value in
use model, which includes consideration of
probability adjusted scenarios based on
different revenue and cost growth assumptions,
to assess the recoverability of the intangible
assets (including goodwill).
There are significant estimated involved in the
determination of the recoverable amount of the
intangibles (including goodwill).
Key observations:
Based on the work performed we consider that
revenue has been recognised appropriately.
Our audit procedures included the following:
• We challenged management’s inputs to
the impairment assessment - growth
rate, weighted average cost of capital,
terminal value and model based on our
knowledge of the Group’s business and
performance to date.
• We considered whether the discounted
cash flow model applied to value the
recoverable amount of the intangibles
appropriately supports the asset value.
• We checked that the forecast figures
included within the model had been
approved by the Board and the base
case scenario was consistent with
information obtained
in other audit
procedures as well as considering the
identified by
overall sales pipeline
management.
• We have also recalculated the different
by
scenarios
used
downside
management and
ran our own
sensitives to evaluate management’s
assessment of the recoverability of
intangibles (including goodwill).
• We assessed the adequacy of the
financial reporting requirements of the
and
related
disclosures in the financial statements
against
the
the
accounting standards.
requirements of
accounting
policies
• We have assessed and compared the
current market capitalisation with the
carrying value of the Goodwill and
Intangibles,
adequate
observed
headroom was available.
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KRM22 plc
ANNUAL REPORT 2022
Key observations
that management’s estimates
the procedures performed, we
Based on
in
consider
determining
recoverable amount of
intangibles including goodwill are reasonable.
We consider the disclosure within the accounts
is appropriate.
the
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a
lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Group financial statements
Parent company financial statements
2022
2021
2022
2021
Materiality
£ 198,000
£ 193,000
£ 31,240
£ 146,000
Basis for
determining
materiality
6.05%
before tax
of
losses
5.65%
before tax
of
losses
1.3% of total assets
2% of total assets
Rationale for the
benchmark applied
A primary KPI used by management to
assess the performance of the business.
As a holding company an asset based metric
was considered most appropriate.
Performance
materiality
Basis for
determining
performance
materiality
£ 138,000
£ 135,000
£ 21,868
£ 102,000
a number of factors including the expected total value of known and likely misstatements
(based on past experience and other factors) and management’s attitude towards proposed
adjustments
46
Component materiality
KRM22 plc
ANNUAL REPORT 2022
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, apart
from the Parent Company whose materiality is set out above, at 50%-75% of Group materiality, dependent on the size
and our assessment of the risk of material misstatement of that component, at £55,000 - £148,500 for components.
In the audit of each component, we further applied performance materiality levels of 70% of the component materiality
to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £9,900
(2021: £5,790). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required
by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report
and Directors’
report
Matters on which
we are required to
report by
exception
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic report and the Directors’ report for the financial year
for which the financial statements are prepared is consistent with the financial statements;
and
the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its
environment obtained in the course of the audit, we have not identified material misstatements
in the Strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting
records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
47
KRM22 plc
ANNUAL REPORT 2022
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Group and the industry in which it operates;
• Discussion with management and those charged with governance including the Audit Committee;
• Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws and
regulations; and
we considered the significant laws and regulations to be the applicable accounting framework, UK tax legislation, AIM
Listing Rules and Companies Act 2006.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a material
effect on the amount or disclosures in the financial statements, for example through the imposition of fines or
litigations. We identified such laws and regulations to be the health and safety legislation etc.
Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with governance for any instances of non-compliance with
laws and regulations;
• Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws
and regulations; and
• Review of financial statement disclosures and agreeing to supporting documentation;
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk
assessment procedures included:
• Enquiry with management and those charged with governance also considered Audit Committee regarding
any known or suspected instances of fraud;
• Obtaining an understanding of the Group’s policies and procedures relating to:
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KRM22 plc
ANNUAL REPORT 2022
• Detecting and responding to the risks of fraud; and
•
• Review of minutes of meeting of those charged with governance for any known or suspected instances of
Internal controls established to mitigate risks related to fraud.
fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the financial
statements;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks
of material misstatement due to fraud; and
• Considering remuneration incentive schemes and performance targets and the related financial statement
areas impacted by these;
Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of
controls and revenue recognition.
Our procedures, in addition to those set out in the Key Audit Matter regarding Revenue, in respect of the above included:
• A review and verification of specific journal entries made in the year, agreeing the journals to supporting
documentation and considering whether they are appropriate. We determined key risk characteristics, such
as unusual pairings with a particular emphasis on revenue and cash journals;
• A critical review of the consolidation and, in particular, manual “top side journals” or late journals posted at
consolidated level;
• A review of estimates and judgements applied by Management in the financial statements to assess their
appropriateness and the existence of any systematic bias; and
• Review of unadjusted audit differences for indications of bias or deliberate misstatement.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members who were all deemed to have appropriate competence and capabilities and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures performed and the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the financial statements, the
less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the
Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Matthew Haverson (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
Date: 27 June 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
49
KRM22 plc
ANNUAL REPORT 2022
CONSOLIDATED INCOME STATEMENT AND
STATEMENT OF COMPREHENSIVE INCOME FOR THE
GROUP
For the year ended 31 December 2022
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Operating loss before interest, taxation, depreciation, amortisation, share
based payment and exceptional items (“Adjusted EBITDA”)
Depreciation and amortisation
Profit on disposal of tangible/intangible assets
Contingent consideration charge
Unrealised foreign exchange gain/(loss)
Acquisition, funding and debt related expenses
Share-based payment charge
Operating loss
Finance charge (net)
Loss before taxation
Taxation credit
Loss for the year
Loss for the year attributable to:
Equity shareholders of the parent
Other comprehensive income
Item that may be reclassified subsequently to profit and loss:
Exchange loss on translation of foreign operations
Total comprehensive loss for the year
Total comprehensive loss for the year attributable to:
Equity shareholders of the parent
Loss per ordinary share
Basic losses share
Diluted losses per share
All amounts relate to continuing activities.
Note
5
6
7
10
11
12
12
2022
£’000
4,273
(955)
3,318
131
(6,077)
(1,684)
(1,637)
14
–
812
–
(133)
(2,628)
(641)
(3,269)
168
(3,101)
(3,101)
(3,101)
(563)
(3,664)
(3,664)
(3,664)
(8.7p)
(8.7p)
2021
£’000
4,128
(676)
3,452
259
(6,695)
(687)
(1,696)
6
(126)
(112)
(20)
(349)
(2,984)
(438)
(3,422)
92
(3,330)
(3,330)
(3,330)
(7)
(3,337)
(3,337)
(3,337)
(12.4p)
(12.4p)
The notes on pages 55 to 82 form part of these financial statements.
50
KRM22 plc
ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION FOR THE GROUP
As at 31 December 2022
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right of use assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Loans and borrowings
Derivative financial liability
Net current (liabilities)/assets
Non-current liabilities
Trade and other payables
Lease liabilities
Loans and borrowings
Deferred tax liability
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Convertible debt reserve
Foreign exchange reserve
Share-based payment reserve
Retained deficit
Total equity
Note
13
13
14
20
16
18
19
20
21
21
19
20
21
22
24
25
2022
£’000
5,167
2,244
11
369
7,791
1,462
1,900
3,362
11,153
3,853
493
2,974
255
7,575
(4,213)
30
122
–
245
397
7,972
3,181
3,567
20,517
(190)
224
(448)
3,045
(23,534)
3,181
2021
£’000
4,841
2,573
54
632
8,100
741
5,362
6,103
14,203
3,436
483
97
45
4,061
2,042
45
321
2,763
301
3,430
7,491
6,712
3,567
20,517
(190)
224
115
2,912
(20,433)
6,712
The financial statements were approved by the Board and authorised for issue on 27 June 2023 and are signed on
its behalf by:
Kim Suter
Company Secretary
The notes on pages 55 to 82 form part of these financial statements.
51
KRM22 plc
ANNUAL REPORT 2022
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Non-current assets
Investments
Intercompany loans
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Net current (liabilities)/assets
Non-current liabilities
Loans and borrowings
Total liabilities
Net (liabilities)/assets
Equity
Share capital
Share premium
Convertible debt reserve
Share-based payment reserve
Retained earnings
Total equity
Note
15
16
16
18
19
21
21
24
25
2022
£’000
732
77
809
96
1,475
1,571
2,380
170
2,974
3,144
(1,573)
–
–
3,144
(764)
3,567
20,517
224
3,045
(28,117)
(764)
2021
£’000
642
332
974
64
4,527
4,591
5,565
210
97
307
4,284
2,763
2,763
3,070
2,495
3,567
20,517
224
2,912
(24,725)
2,495
As permitted by s408 Companies Act 2006, the Company has not prepared its own statement of comprehensive
Income and related notes. The Company’s loss for the year was £3,392,000 (2021: loss of £1,138,000).
The financial statements were approved by the Board and authorised for issue 27 June 2023 and are signed on its
behalf by:
Kim Suter
Company Secretary
The notes on pages 55 to 82 form part of these financial statements.
52
KRM22 plc
ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE GROUP
For the year ended 31 December 2022
At 1 January 2022
Loss for the year
Other comprehensive
loss
Total comprehensive
loss
Share-based payments
Ordinary
Shares
£’000
3,567
–
Share
premium
£’000
20,517
–
Merger
reserve
£’000
(190)
–
Convertible
debt reserve
£’000
224
–
Foreign
exchange
reserve
£’000
115
–
SBP
Reserve
£’000
2,912
–
Retained
losses
£’000
(20,433)
(3,101)
Total
equity
£’000
6,712
(3,101)
–
–
–
–
–
–
–
–
–
–
–
–
(563)
(563)
–
(448)
–
–
133
–
(563)
(3,101)
–
(3,664)
133
3,045
(23,534)
3,181
At 31 December 2022
3,567
20,517
(190)
224
For the year ended 31 December 2021
At 1 January 2021
Loss for the year
Other comprehensive
loss
Total comprehensive
loss
Allotment of share
capital
Share-based payments
Ordinary
Shares
£’000
2,672
–
Share
premium
£’000
16,676
–
Merger
reserve
£’000
(190)
–
Convertible
debt reserve
£’000
224
–
Foreign
exchange
reserve
£’000
108
–
SBP
Reserve
£’000
2,563
–
Retained
losses
£’000
(17,103)
(3,330)
Total
equity
£’000
4,950
(3,330)
–
–
–
–
895
–
3,841
–
–
–
–
–
–
–
–
–
7
7
–
–
–
–
–
349
–
7
(3,330)
(3,323)
–
–
4,736
349
6,712
At 31 December 2021
3,567
20,517
(190)
224
115
2,912
(20,433)
The notes on pages 55 to 82 form part of these financial statements.
53
KRM22 plc
ANNUAL REPORT 2022
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
As at 1 January 2022
Loss for the period
Share-based payments
Ordinary
shares
£’000
3,567
–
–
Share
premium
£’000
20,517
–
–
Convertible
debt reserve
£’000
224
–
–
SBP
Reserve
£’000
2,912
–
133
Retained
losses
£’000
(24,725)
(3,392)
–
As at 31 December 2022
3,567
20,517
224
3,045
(28,117)
For the year ended 31 December 2021
As at 1 January 2021
Loss for the period
Allotment of share capital
Share-based payments
As at 31 December 2021
Ordinary
shares
£’000
2,672
–
895
–
Share
premium
£’000
16,676
–
3,841
–
Convertible
debt reserve
£’000
224
–
–
–
SBP
Reserve
£’000
2,563
–
–
349
Retained
losses
£’000
(23,587)
(1,138)
–
–
3,567
20,517
224
2,912
(24,725)
Total
equity
£’000
2,495
(3,392)
133
(764)
Total
equity
£’000
(1,452)
(1,138)
4,736
349
2,495
The notes on pages 55 to 82 form part of these financial statements.
54
KRM22 plc
ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE GROUP
For the year ended 31 December 2022
Cash flows from operating activities
Loss for the year
Adjustments for:
Tax credit
Net finance expense
Amortisation of intangible assets
Depreciation of property, plant and equipment and right of use assets
Profit on disposal of intangible/tangible assets
Contingent consideration charge
Unrealised (gain)/loss on non-GBP denominated loans
Equity-settled share-based payment expense
Bad debt provision
Income taxes received
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash flows used in operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Lease payments principal
Lease payments interest
Interest paid
Net cash (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
2022
£’000
2021
£’000
(3,101)
(3,330)
(168)
641
1,324
313
(14)
–
(812)
133
–
97
(1,587)
(721)
187
(534)
(2,121)
(840)
(8)
(848)
–
(217)
(33)
(285)
(535)
(3,504)
5,362
42
1,900
3)
(92)
438
1,201
495
(6)
126
112
349
127
–
(580)
566
(33)
533
(47)
(749)
(6)
(755)
4,735
(204)
(56)
(285)
4,190
3,388
1,974
–
5,362
The notes on pages 55 to 82 form part of these financial statements.
55
KRM22 plc
ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
For the year ended 31 December 2022
1. General information
KRM22 Plc, (the “Company”), is a public company, limited by shares and is listed on the Alternative Investment Market
(AIM). The Company is incorporated and domiciled in the UK. The registered office is 5 Ireland Yard, London, EC4V
5EH.
The principal activity of the Company, and together with its subsidiaries (“KRM22”, the “Group”), is to develop and
invest in leading risk tools to support enterprise, market, compliance, operational and technology risks.
2. Basis of Preparation and Consolidation
Basis of preparation
The financial reporting framework that has been applied in their preparation is applicable law and UK Adopted
international accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards
the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
The financial information has been prepared on the historical cost basis except that financial instruments are stated
at the fair value.
The financial statements are prepared in Sterling, which is the functional currency of the Parent Company too.
Monetary amounts in these financial statements are rounded to the nearest £’000.
KRM22 applied all standards and interpretations issued by the IASB that were effective as of 1 January 2022. The
accounting policies set out below have, unless otherwise stated, been applied consistently to all years presented in
this financial information.
The preparation of the financial statements, in conformity with UK Adopted international accounting standards,
requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the
process of applying KRM22’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note
4.
Adoption of new and revised standards
There are no new standards impacting the Group that have been adopted in the annual financial statements for the
year ended 31 December 2022, which have given rise to material changes in the Group's accounting policies.
Standards, amendments and interpretations to published standards not yet effective
There are a number of new standards and amendments to and interpretations of existing standards, which have been
published and are not yet mandatory and which the Group has decided not to adopt early, as below:
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
(not EU endorsed)
23-Jan-20
01-Jan-24
None
Effective date for
annual periods
beginning
on/after
Issue
date
Expected
impact
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KRM22 plc
ANNUAL REPORT 2022
Basis of consolidation
The financial information represents the consolidated financial information of the Company and its subsidiaries
(“KRM22”, the “Group”) as if they are formed as a single entity. Intercompany transactions and balances between
KRM22 companies are therefore eliminated in full. The results of subsidiary undertakings are included in the
consolidated statement of comprehensive income from the date that control commences until the date that control
ceases. The Company controls a subsidiary if all three of the following elements are present:
• power over the investee;
•
•
exposure to variable returns from the investee; and
the ability of the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements
of control. In assessing control, KRM22 takes into consideration potential voting rights that are currently exercisable.
On 19 April 2018, KRM22 Plc, a company under common control of the KRM22 Central Limited shareholders, acquired
KRM22 Central Limited from its shareholders in return for an issue of shares. As a combination of entities under
common control, the transaction falls outside the scope of the standard IFRS 3 ‘Business Combinations’.
Paragraph 10 of IAS8 Accounting Policies, Changes in Accounting Estimates and Errors requires management to use
its judgement in developing and applying a policy that is relevant, reliable, represents faithfully the transaction, reflects
the economic substance of the transaction, is neutral, is prudent and is complete in all material respects when selecting
appropriate methodology for consolidation accounting.
In the absence of IFRS guidance, KRM22 has applied merger accounting in accordance with ‘FRS102: Section 19
Business Combinations and Goodwill’, as the business combination meets the requirements set out in paragraph 27,
namely:
•
•
the use of the merger accounting method is not prohibited by company law or other relevant legislation;
the ultimate equity holders remain the same, and the rights of each equity shareholder, relative to others before
and after the acquisition are unchanged; and
• no non-controlling interest in the net assets of KRM22 is altered by the transfer.
In accordance with merger accounting, consolidated accounts have been prepared for the restructured Group as if it
has always been in existence. The carrying value of assets and liabilities have not been adjusted to fair value. The
difference between the nominal value of the shares issued and the nominal value of the shares received has been
recorded in the merger reserve.
3. Accounting policies
Going concern
These financial statements have been prepared on the going concern basis. The Directors have reviewed the Group
and Company’s going concern position taking into account of its current business activities, budgeted performance
and the factors likely to affect its future development, which are set out in this Annual Report, and include the Group’s
objectives, policies and processes for managing its capital, its financial risk management objectives and its exposure
to credit and liquidity risks.
The Group and Company meets their day-to-day working capital requirements through cash generated from the capital
it has raised on AIM, and a loan facility (the “Kestrel Convertible Loan”) with Kestrel Partners LLP (“Kestrel”). At 31
December 2022 the Group had £1.9m of cash at bank and debt due to Kestrel of £3.0m (gross). As detailed in note
29, on 17 June 2023, the Company entered into an agreement for a new £5.0m convertible loan facility (the “TT
Convertible Loan”) arranged by Trading Technologies International, Inc. (“TT”), the Company’s largest shareholder, to
replace the existing Kestrel Convertible Loan.
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ANNUAL REPORT 2022
The TT Convertible Loan is for up to £5.0m with an initial £4.0m drawn down on 23 June 2023, of which £3.1m was
used to repay the outstanding Kestrel Convertible Loan debt of £3.0m plus interest of £0.1m. The remaining £1.0m
of the £5.0m facility can be drawn down at any point by KRM22.
The Directors have undertaken a significant assessment of the cashflow forecasts covering a period of at least twelve
months from the date of approval of the financial statements. 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 the Group remaining a going concern without
implementing extensive cost reduction measures is existing customers paying on payment terms and within 45 days
of invoice, customer churn of up to 10%, conversion of the sales opportunities that are currently at contract negotiation
stage and maintaining control of the cost base.
If the forecast is achieved, the Group will be able to operate within its existing facilities. However, 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. Reasonable downside scenarios have been considered and management consider with appropriate actions
being taken KRM22 has the ability to meet the various financial covenants.
Given the Group’s forecast, visible sales pipeline and working capital needs, the Directors have considered it is
appropriate to prepare financial statements on a going concern basis.
Revenue recognition
Revenue comprises recurring revenue, non-recurring revenue and other revenue and is stated exclusive of VAT and
sales tax.
All revenue is only recognised to the extent when services have been delivered and the revenue can be reliably
measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration
received or receivable.
The following specific recognition criteria are applied to each revenue stream:
Recurring revenue
Recurring revenue comprises Software-as-a-Service (“SaaS”) license fees which give the licensee a right to
access the software for a fixed period of time together with ongoing post-contract customer support services
comprising customer support (including designated contacts, telephone and onsite support), hosting and
maintenance services, enhancements and minor and major upgrades. All of the post-contract customer
support services are bundled into one service and are not readily distinguishable in terms of apportioning the
license fee between its constituent parts.
In applying the principles of IFRS15 ‘Revenue from Contracts with Customers’ the Directors consider that
SaaS licenses provide the customer with a right to access the software over a period of time and that revenue
generated from sales of software licenses is recognised over the term of the license.
Where license fees are invoiced in advance, the income is deferred and released over the term of the license
with the balance recorded within accruals and deferred income in the statement of financial position.
Non-recurring revenue
Non-recurring revenue comprises one-off pieces of work including implementation fees related to initial set-up
services and ad-hoc development services which are outside the scope of post-contract customer services
covered by the license fee.
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KRM22 plc
ANNUAL REPORT 2022
Where implementation fees have only been partially completed at the statement of financial position date,
revenue represents the value of service provided to date based on completed implementations as defined in
the contract. Where payments have been received from customers in advance of services provided, the
amounts are recorded within accruals and deferred income in the statement of financial position. The
implementation fee is a distinct obligation and therefore recognised at a point in time.
Deferred revenue
At 31 December 2022, the balance of deferred revenue was £1.8m (2021: £1.7m) and this will be released to
the income statement in full within one year of the statement of financial position date.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief
operating decision maker (CODM). The CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Chief Executive Officer.
Business combinations and goodwill
KRM22 applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities assumed by the former owners of the
acquiree and the equity interests issued by KRM22. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets and liabilities acquired, and liabilities assumed are measured initially at their fair values at the
acquisition date. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquired entity measured on the proportionate net asset basis, over the net of the
acquisition-date amounts of the identifiable assets acquired and liabilities assumed. If, after reassessment, the net of
the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the
consideration transferred, the excess is recognised immediately in the income statement as a bargain purchase gain.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the KRM22’s
cash-generating unit that is expected to benefit from the combination, irrespective of whether other assets of liabilities
of the acquiree are assigned to that unit.
Intangible assets
Research expenditure is expensed to the income statement in the year in which it is incurred. Expenditure on internal
projects is capitalised if it can be demonstrated that:
it is technically and commercially feasible to develop the asset for future economic benefit;
•
• adequate resources are available to maintain and complete the development;
• KRM22 is able to use the asset;
• use of the asset will generate future economic benefit;
•
•
expenditure on the development of the asset can be measured reliably; and
it is KRM22’s intention to complete the development and use or sell it.
Other development expenditure is recognised in the income statement as an expense as incurred.
Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated
impairment losses.
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KRM22 plc
ANNUAL REPORT 2022
Amortisation is charged to the income statement on a straight line basis over the estimated useful lives of intangible
assets. Intangibles assets are amortised from the date they are available for use. The estimated useful lives are as
follows:
Acquired software
Capitalised development costs
Customer contracts and relationships
Brand (including trademarks)
-
-
-
-
straight line over 5 – 10 years
straight line over 3 years
straight line over 10 years
straight line over 3–- 10 years
The basis for choosing these useful lives is with reference to the years over which they can continue to generate value
for KRM22.
Amortisation charges are included within administrative expenses in the consolidated statement of income statement.
KRM22 reviews the amortisation year and methodology when events and circumstances indicate that the useful life
may have changed since the last reporting date.
Property, plant and equipment
Property, plant and equipment are initially measured at historical cost and subsequently measured at historical cost,
net of depreciation and any impairment losses.
Depreciation on other assets is calculated on a straight-line method to allocate their cost or revalued amounts to their
residual values over their estimated useful lives, as follows:
Fixtures and fittings
Office and computer equipment
-
-
straight line over 4 years
straight line over 4 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the
carrying value of the asset and is recognised in the income statement.
Right of use assets
KRM22 recognises right of use assets for all applicable leases at the lease liability commencement date. The right of
use asset is initially measured at cost, and consists of the amount of:
the initial measurement of lease liability, plus;
•
• any lease payments made to the lessor at or before the commencement date, less;
• any lease incentives received;
•
the initial estimation of restoration costs; and
• any initial direct costs incurred by the lessee.
Depreciation on right of use assets is calculated on a straight line method over the lease term.
Non-current assets
The Company’s interests in subsidiaries are initially measured at cost and subsequently measured at cost less
accumulated impairment losses.
Impairment of tangible and intangibles assets
All tangible and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount might not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
60
KRM22 plc
ANNUAL REPORT 2022
less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are largely independent cash inflows or Cash Generating Units (CGUs).
Financial assets
Financial assets are recognised in KRM22 and the Company’s statement of financial position when KRM22 and the
Company becomes party to the contractual provisions of the instrument. Under IFRS 9 the classification of financial
assets is based both on the business model and cash flow type under which the assets are held. There are three
principal classification categories for financial assets: amortised cost; fair value through other comprehensive income;
and fair value through profit or loss. KRM22 has not classified any of its financial assets as fair value through other
comprehensive income.
Amortised cost
These assets are non-derivative financial assets held under the ‘held to collect’ business model and attracting cash
flows that are solely payments of principal and interest. They comprise trade and other receivables and cash and
cash equivalents. They are initially measured at fair value plus transaction costs and are subsequently carried at
amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions for trade and other receivables are calculated using an expected credit loss model. Under this
model, impairment provisions are recognised to reflect expected credit losses based on a combination of historic and
forward-looking information, the amount of such a provision being the difference between the net carrying amount
and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables,
which are reported net; such provisions are recorded in a separate allowance account. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short term highly liquid
investments with maturities of three months or less.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial
liabilities.
(a) Financial liabilities at fair value through profit or loss
Financial liabilities are stated at fair value with differences taken to the consolidated income statement. Interest on
financial liabilities up to maturity are included as a finance expense in the consolidated income statement.
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or is a derivative (except for
effective hedge) or are designated upon initial recognition as FVTPL.
Gains or Losses, including any interest expense on liabilities held for trading or a derivative, are recognised in the
consolidated income statement.
(b) Trade and other payables
Trade payables and other payables are not interest bearing and are stated at their full value on initial recognition. For
disclosure purposes, the fair values of trade and other payables are estimated at the present value of future cash
flows, discounted at the market rate of interest at the reporting date. As trade payables and other payables are short
term in nature at the reporting date, the carrying value is considered to be a reasonable approximation of fair value.
(c) Other financial liabilities
Other financial liabilities are initially measured at fair value, net of transaction costs. They are subsequently measured
at amortised cost using the effective interest method, with interest recognised on an effective rate basis.
61
Fair value measurement
KRM22 plc
ANNUAL REPORT 2022
Fair value is measured using the following fair value hierarchy that reflects the significance of the inputs used in
making the measurements. The different levels can be defined as follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included within level that are observable for the asset or liability, either
directly (i.e. prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Taxation
The tax expense represents the sum of tax currently payable and deferred tax.
(a) Current tax
Any current tax payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
income statement because it excludes certain items of income or expense that are either taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Companies within the Group may be entitled to claim special tax allowances in relation to qualifying research and
development expenditure, e.g. R&D tax credits. The Group accounts for such allowances as tax credits which means
they are recognised when it is probable that the benefit will flow to the Group and that the benefit can be reliably
measured. R&D tax credits reduce current tax expense and, to the extent the amounts are due in respect of them and
not settled by the statement of financial position date, reduce current tax payable.
(b) Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit
and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or the initial recognition (other than in a business
combination) of assets and other liabilities in a transaction that affects neither the tax profit or loss nor the accounting
profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the
asset is realised. Deferred tax is charged or credited to the income statement, except when it relates to items
charged or credited directly to ‘other comprehensive income’, in which case the deferred tax is dealt with in ‘other
comprehensive income’. Deferred tax assets and liabilities are offset when the Company has a legally enforceable
right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by
the same tax authority.
Provisions
Provisions are recognised when KRM22 has a legal or constructive present obligation as a result of a past event, it is
probable that KRM22 will be required to settle that obligation and a reliable estimate can be made of the amount of
KRM22’s obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation
at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision
is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value
of those cash flows.
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KRM22 plc
ANNUAL REPORT 2022
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount
of the receivable can be measured reliably.
Employee benefits
The costs of short-term employee benefits are recognised as a liability and as an expense, unless those costs are
required to be recognised as part of the cost of inventories or non-current assets. The cost of any unused holiday
entitlement is recognised in the year in which the employee’s services are received.
Retirement benefits
KRM22 operates a defined contribution plan, under which KRM22 pays contributions to independently administered
pension plans on a mandatory, contractual or voluntary basis. KRM22 has no further payment obligations once the
contributions have been paid. The contributions are recognised as an employee benefit expense in the income
statement when they are due.
Share-based payments
The Company issues equity-settled share-based payments to certain employees and these payments are measured
at fair value (excluding the effect of non-market-based vesting conditions) at the date of the grant using appropriate
pricing models. The fair value determined at the grant date of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest
and adjusted for the effect of non-market-based vesting conditions.
At the date of each statement of financial position, the Company revises its estimate of the number of equity
instruments that are expected to become exercisable. It recognises the impact of the revision of original estimates, if
any, in the income statement, and a corresponding adjustment is made to equity over the remaining vesting period.
The fair value of the awards and ultimate expense are not adjusted on a change in market vesting conditions during
the vesting period.
The value of share-based payment is taken directly to reserves and the charge for the period is recorded in the income
statement.
KRM22’s scheme, which awards shares in the parent entity, includes recipients who are employees in all subsidiaries.
In the consolidated financial statements, the transaction is treated as an equity-settled share-based payment, as
KRM22 has received services in consideration for KRM22’s equity instruments. An expense is recognised in the Group
income statement for the fair value of share-based payment over the vesting period, with a credit recognised in equity.
In the subsidiaries’ financial statements, the awards, in proportion to the recipients who are employees in said
subsidiary, are treated as an equity-settled share-based payment, as the subsidiaries do not have an obligation to
settle the award. An expense for the grant date fair value of the award is recognised over the vesting period, with a
credit recognised in equity. The credit is treated as a capital contribution, as the parent is compensating the
subsidiaries’ employees with no cost to the subsidiaries as there is no expectation to recharge the cost. In the parent
company’s financial statements, there is no share-based payment charge where the recipients are employed by a
subsidiary, with the parent company recognising an increase in the investment in the subsidiaries as a capital
contribution from the parent and a credit to equity.
Earnings per share
Earnings per share are calculated by dividing profit or loss after tax attributable to equity shareholders of the parent
company by the weighted average number of ordinary shares in issue during the period.
Diluted earnings per share requires that the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares. These arise from awards made under share-based incentive
schemes. Instruments that could potentially dilute basic earnings per share in the future have been considered but
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KRM22 plc
ANNUAL REPORT 2022
were not included in the calculation of diluted earnings per share because they are anti-dilutive for the periods
presented. This is due to the KRM22 incurring losses on continuing operations for the year.
Leases
Under IFRS16 ‘Leases’, KRM22 recognises a lease liability at the commencement date of the lease at an amount equal
to the present value of the lease payments during the lease term that are not yet paid. The present value of the lease
payments is based on applying a discount rate which is either the interest rate implicit in the lease or the incremental
borrowing rate. The interest rate is treated as an interest expense and charged to the income statement.
KRM22 also recognises a right of use asset at the lease liability commencement date and is measured at cost as
detailed in the Right of use assets accounting policy. The right of use asset is depreciated over the term of the lease.
Where a lease has less than twelve months until the lease expiry date from the date of commencement, KRM22
continues to classify these as operating leases and are charged as an expense to the income statement on a straight
line basis.
Where KRM22 sublets office space for periods of less than twelve months from the date of commencement of the
sublease or where the terms of the sublease differ significantly to the terms of the headlease, these subleases are
classified as operating leases. Operating lease income, net of agency management charges, is accounted for as other
operating income and credited to the income statement on a straight line basis over the term of the sublease.
Foreign currency
Foreign currency transactions are translated at the exchange rates prevailing at the date of transactions. Monetary
assets and liabilities denominated in foreign currencies are translated at rates of exchange at the statement of
financial position date. Any gain or loss arising from a change in the exchange rates of exchange subsequent to the
date of the transaction is included as a gain or loss in the income statement.
The statement of financial position of the foreign subsidiaries are translated into Sterling at the exchange rate at the
year end. The results of foreign subsidiaries are translated into Sterling at the average rate of exchange during the
financial year. Exchange differences which arise from the translation of opening net assets of the foreign subsidiary
undertakings are included in the consolidated statement of comprehensive income and transferred to the KRM22’s
translation reserve.
Descriptions of nature of each component of equity
The components of KRM22’s equity can be described as follows:
• Share capital – The amount for the nominal value of shares issued.
• Share premium – The amount subscribed for share capital in excess of nominal value after deducting certain
costs of issue.
• Merger reserve – See note 2.
• Convertible debt reserve – This relates to the residual amount of any liability component from the fair value
of debt instruments as a whole where the debt instrument includes a liability and embedded equity feature.
• Foreign exchange reserve – This reserve relates to exchange differences arising on the translation of the
statement of financial position of the KRM22’s foreign operations at the closing rate and the translation of the
income statement of those operations at the average rate.
• Share-based payment (SBP) reserve – This relates to the fair value of share options and warrants determined
at the grant date of the equity- settled share-based payments.
• Retained deficit – The net gains and losses recognised in the consolidated statement of comprehensive
income.
64
Government grants
KRM22 plc
ANNUAL REPORT 2022
Government grants received by KRM22 are initially recognised as deferred income on the statement of financial
position and credited to the income statement when there is reasonable assurance that the Company will comply with
the conditions attached to the grant and that the grant will be received. Government grants are recognised in the
income statement as ‘Other operating income’ on a systematic basis over the periods in which KRM22 recognises the
related costs for which the grants are intended to compensate.
4. Critical accounting judgements and key sources of estimation uncertainty
IAS 1 requires disclosure of the judgements, apart from those involving estimations, that management has made in
the process of applying the entity’s accounting policies that have the most significant effect on the amounts
recognised in the financial statements.
In the application of KRM22 and Company’s accounting policies, the Directors are required to make certain
judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ from these estimates. The Directors believe
that there are four areas within the financial statements which constitute critical accounting judgements as follows:
I.
Revenue
The allocation and timing of the recognition of revenue requires management judgement. Contracts can
include both the sale of licences and the provision of services including integration and development.
The point at which the significant risks and rewards of ownership transfer is dependent on the contractual
terms and on this basis an analysis is made of each separable component of revenue. In respect of a licence,
this would usually be across the license term as the license is deemed to provide a ‘right of access’ to the
customer. In respect of provision of services and integration and development this would usually be the
period of time in which the integration and development services were completed.
II.
Capitalisation of development costs
Development costs are capitalised based on an assessment on whether they meet the criteria specified in IAS
38 for capitalisation. During each reporting period, an assessment is performed by management to determine
time spent developing the intangible assets as a proportion of total time spent in the year. This represents an
area of judgement and impacts the value of intangible costs capitalised.
III.
Leases
The recognition of leases in line with IFRS 16 requires significant judgement around the interest rate used to
calculate the discount rate of the present value of future cash flows.
IV.
Business combinations
The valuation of contingent consideration based on the future performance of acquired businesses relies
upon significant judgments made by management.
In addition, IAS 1 requires disclosure of information about the assumptions the entity makes about the future,
and other major sources of estimation uncertainty at the end of the reporting period, that have a significant
risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next
financial year. In respect of those assets and liabilities, the notes to the financial statements include details
of their nature and carrying amount at the end of the reporting period.
In addition, judgments are made around the fair value of certain acquired assets to disclose their fair value,
based on areas such as expected credit risk of assumptions around performance.
65
KRM22 plc
ANNUAL REPORT 2022
V.
Impairment of goodwill and other intangible assets
The Group has carried out an impairment review of its cash generating unit (“CGU”). The recoverable amount
of the CGU is based on estimates of future cash flows discounted using an appropriate discount rate.
Estimates of future cash flows are inherently uncertain and, to take account of this uncertainty, management
have used the “expected cash flow approach” which involves probability weighting several alternate scenarios.
It is possible that changes in economic conditions or deviations in actual performance from forecast could
result in a material adjustment to the carrying value of the CGU within the next financial year. The key
estimates made by management are set out in note 13. The information in note 13 given on each scenario
also provides an indication of the amount of any further impairment for other reasonably possible outcomes.
5. 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 internal management accounting information has been prepared in accordance with IFRS but has a non-GAAP
‘Adjusted EBITDA’ as a profit measure for the overall group. This amount is reported on the face of the income
statement.
KRM22’s revenue from external customers and information about its non-current assets, excluding deferred tax, by
geography is detailed below:
UK
Europe
USA
Rest of world
Total
2022
Revenue
£’000
1,712
716
1,520
325
4,273
2022
Non-current
assets
£’000
2,694
1,955
3,141
1
7,791
2021
Revenue
£’000
1,234
895
1,697
302
4,128
2021
Non-current
assets
£’000
3,224
1,918
2,958
–
8,100
The Directors consider that the business has two areas of risk management: Trading Risk and Corporate Risk as is
described in the Strategic Report. Within these segments, there are two revenue streams with different characteristics,
which are generated from the same assets and cost base.
One customer generated more than 10% of total revenue during the year ended 31 December 2022. The total revenue
received from this customer was £0.5m (2021: £0.4m) and is included within the UK segment. No customer generated
more than 10% of total revenue in the year ended 31 December 2021.
Non-current assets include goodwill and intangible assets recognised on consolidation and are classified by reference
to the geographical location of the KRM22 group company which initially acquired the acquiree.
Recurring revenue is recognised over the period of time and non-recurring revenue is recognised at a point in time.
Recurring revenue
Non-recurring revenue
Total revenue
2022
£’000
3,945
328
4,273
2021
£’000
3,955
173
4,128
66
KRM22 plc
ANNUAL REPORT 2022
Trading Risk
Corporate Risk
Multiple Risk
Total
6. Other operating income
Grant income relate to COVID 19 (refer to note below)
Operating lease income (net)
Total revenue
2022
£’000
1,867
2,258
148
4,273
2022
£’000
–
131
131
2021
£’000
1,881
2,247
–
4,128
2021
£’000
188
71
259
I.
II.
Grant income related to COVID 19
During the year ended 31 December 2021, KRM22 received a £0.2m (US$0.3m) Payback Protection Program
(“PPP”) loan, a US government backed loan, under the US Department of Treasury CARES Act. The proceeds
of the loan were used to cover specific US based payroll costs as specified under the rules of the scheme. As
KRM22 was able to demonstrate that the PPP loan proceeds had been used for eligible expenses, the total
value of the loan was forgiven by the Small Business Administration and at that point, the value of the loan
was released to the income statement as an income-related grant. There was no grant income related to
COVID-19 received in the year ended 31 December 2022.
Operating lease income (net)
In April 2021, KRM22 entered into an agreement to sublet some of its office space on a two-year lease. The
terms of the sublease differ to the terms of the headlease, which KRM22 recognises as a finance lease, and
therefore the sublease is treated as an operational lease with net income generated in the year of £0.1m
(2021: £0.1m).
7. Operating loss
Operating loss for the year has been arrived at after charging/(crediting) the following:
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible assets
Acquisition, funding and debt expenses (refer to note below)
Contingent consideration charge (refer to note below)
Operating lease costs
Foreign currency exchange (gains)/losses
2022
£’000
48
265
1,324
–
–
28
(843)
2021
£’000
86
409
1,201
20
126
23
110
I.
Contingent consideration charge
In the year ended 31 December 2021, a contingent consideration charge of £0.1m was recognised in
connection with deferred consideration associated with the acquisition of Object+. The Directors believe that
the third and final performance milestone was achieved and that the related deferred contingent consideration
of £0.9m (US$1.1m) is now payable. Accordingly, the fair value of the third tranche of consideration was
adjusted to reflect the amount payable. There was no contingent consideration charge recognised in the year
ended 31 December 2022.
67
8. Auditor’s remuneration
KRM22 plc
ANNUAL REPORT 2022
For audit services
Audit of the financial statements of the Company
Audit of the financial statements of the Company’s subsidiaries
For other services
Tax services of the Company
Tax services for the Company’s subsidiaries
9. Employee information
I.
Employee numbers
2022
£’000
106
–
106
3
32
35
2021
£’000
85
8
93
12
4
16
The average monthly number of people, including Executive Directors, employed by KRM22 during the year was
as follows:
UK
Europe
USA
Rest of world
Total
II.
Employee benefits
The aggregate payroll cost of these persons were as follows:
Wages and salaries
Social security costs
Pension costs to defined contribution schemes
Share-based payments
Total
III.
Directors’ remuneration
2022
No.
23
9
11
2
45
2022
£’000
3,597
252
145
133
4,127
2021
No.
25
11
11
2
49
2021
£’000
2,855
188
126
349
3,518
The remuneration of the Directors, who also represent the key management personnel of KRM22, during the
year was as follows:
Remuneration for qualifying services
Pension contributions to defined contribution schemes
Share-based payments
Total
2022
£’000
567
9
54
630
2021
£’000
354
6
201
561
68
KRM22 plc
ANNUAL REPORT 2022
Full details of Directors’ remuneration is presented in the Remuneration Committee report on page 33. Remuneration
disclosed above includes the following amounts paid to the highest paid director:
Remuneration for qualifying services
Total
2022
£’000
244
244
2021
£’000
128
128
The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to
1 (2021: 1).
10. Finance expense
Interest income
Interest expense on financial liabilities
Interest expense on lease liabilities
Net finance expense
11. Taxation
Current tax
UK Corporation tax at 19% on loss for the year (2021:19%)
Income tax on foreign subsidiaries
Research and Development tax credits
Total current tax
Deferred tax
Origination and reversal of temporary differences
Intangible assets recognised on acquisition
Total deferred tax (note 22)
Total tax credit
2022
£’000
(2)
610
33
641
2022
£’000
–
8
(97)
(89)
–
(79)
(79)
(168)
2021
£’000
(2)
384
56
438
2021
£’000
–
–
–
–
(9)
(83)
(92)
(92)
The tax expense differs from the standard rate of corporate tax in the UK for the year of 19% for the following reasons:
Losses before tax
Loss before tax based on corporation tax 19% (2021: 19%)
Accelerated capital allowances
Expenses not deductible for tax purposes
Intangible assets recognised on acquisition
Income tax on foreign subsidiaries
Losses carried forward
Total tax credit
For information on the Group’s total available tax losses, see note 22.
2022
£’000
(3,269)
(621)
–
21
(79)
8
503
(168)
2021
£’000
(3,422)
(650)
(9)
27
(83)
–
623
(92)
69
12. Loss per share
KRM22 plc
ANNUAL REPORT 2022
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 year.
KRM22 has dilutive ordinary shares, this being warrants, restricted stock awards and share options granted to
employees. As KRM22 has incurred a loss in the year, the diluted loss per share is the same as the basic earnings per
share as the loss has an anti-dilutive effect.
Loss for the year attributable to equity holders of the parent
Basic weighted average number of shares in issue
Diluted weighted average number of shares in issue
13. Intangible assets
Cost
At 1 January 2022
Additions
Disposals
Foreign exchange movements
At 31 December 2022
Accumulated amortisation
At 1 January 2022
Amortisation for the year
Disposals
Foreign exchange movements
At 31 December 2022
2022
£’000
(3,101)
35,666,336
46,671,529
(8.7p)
2021
£’000
(3,330)
26,765,037
35,502,896
(12.4p)
Goodwill on
Consolidation
£’000
Acquired
software and
related assets
£’000
Capitalised
development
costs
£’000
7,537
–
–
516
8,053
2,696
–
–
190
2,886
2,826
–
–
118
2,944
1,525
453
–
(2)
1,976
5,002
840
(2,353)
75
3,564
3,730
871
(2,353)
40
2,288
Total
£’000
15,365
840
(2,353)
709
14,561
7,951
1,324
(2,353)
228
7,150
At 31 December 2021
4,841
1,301
1,272
7,414
At 31 December 2022
5,167
968
1,276
7,411
Goodwill that arose in prior periods is not amortised. Impairment testing is carried out at Cash Generating Units (CGU)
level on an annual basis.
The Company has estimated the recoverable amount at £12.8m using a value-in-use model by projecting cashflows
for the next five years together with a terminal value using a growth rate. The five-year projections used in the model
are based on the FY23 budget approved by the Directors. Given the uncertainty involved in predicting long-term
projections, management developed expectations of future performance under a range of scenarios with different
levels of future revenue growth, which includes significant growth from the strategic partnership with Trading
Technologies International, Inc. (“TT”). The value in use was estimated by probability weighting the value in use under
each scenario as summarised below.
70
KRM22 plc
ANNUAL REPORT 2022
Scenario
Upside
Base case
Downside
Severe downside
Probability weighted average
Annual
Revenue growth
FY23 to FY27
%
40%
34%
20%
10%
Annual
cost growth
FY23 to FY27
%
6%
5%
3%
2%
Value in use
£’000
21,047
13,988
1,472
(5,868)
30,639
Headroom/
(Impairment)
£’000
13,636
6,577
(5,939)
(13,279)
Probability
%
15%
70%
10%
5%
995
100%
The single most likely scenario assumed revenue growth of 34% per annum over the period (2021: 25%). The other
key assumptions used were:
• The discount rate (WACC) of 20% (2021: 13%). An increase of 1% in WACC rate would result in a £3.6m
•
decrease in the headroom.
Long-term growth rate of 1.5% (2021: 1.5%). An increase of 1%, in the long-term growth rate would result in a
£2.3m increase in the headroom.
14. Property, plant and equipment
Cost
At 1 January 2022
Additions
Disposals
Foreign exchange movements
At 31 December 2022
Accumulated depreciations
At 1 January 2022
Depreciation charge for the year
Disposals
Foreign exchange movements
At 31 December 2022
Net book value at 31 December 2021
Net book value at 31 December 2022
15. Investment in subsidiaries
Cost
At 1 January 2022
Additions
At 31 December 2022
Carrying amount
At 1 January 2022
At 31 December 2022
Fixtures and
Fittings
£’000
Office
equipment
£’000
239
–
(90)
15
164
210
30
(89)
13
164
29
–
124
8
(30)
1
103
99
18
(27)
2
92
25
11
£’000
2022
£’000
642
90
732
642
732
Total
£’000
363
8
(120)
16
267
309
48
(116)
15
256
54
11
2021
£’000
)
£’000
489
153
642
489
642
The additions in 2022 represents share capital contributions made to the Company’s subsidiaries in respect of the
share option expense recognised on share options issued by the Company to employees of the appropriate
subsidiaries. The capital contribution transaction is a non-cash transaction.
71
KRM22 plc
ANNUAL REPORT 2022
Details of the Company’s subsidiaries at 31 December 2022 are as follows:
Name of undertaking
Registered office
KRM22 Central Limited *
KRM22 Development Limited
KRM22 Development Spain SL**
KRM22 Singapore Pte Limited **
KRM22 Americas Inc.
KRM22 ProOpticus LLC
5 Ireland Yard
London, EC4V 5EH
England
5 Ireland Yard
London, EC4V 5EH
England
Travessera de Gràcia, 11
5th floor
08021, Barcelona
Spain
10 Anson Road, #23-02
International Plaza
079903
Singapore
1 South Wacker Drive,
Suite 1200, Chicago
IL 60606
USA
1 South Wacker Drive,
Suite 1200, Chicago
IL 60606
USA
KRM22 Netherlands B.V.
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
KRM22 Market Surveillance
Limited
5 Ireland Yard
London, EC4V 5EH
England
Object+ Holding B.V.
Object+ B.V.
Object+ Financial Services B.V.
Object+ Financial Products B.V.
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
Ownership interest and
voting rights
Nature of business
100%
Administrative and sales
company
100%
Development services
100%
Development services
100%
Sales company
100%
100%
100%
100%
100%
100%
Administrative and sales
company
Administrative and sales
company
Non-trading intermediate
holding company
Administrative and sales
company
Non-trading intermediate
holding company
Non-trading intermediate
holding company
100%
Administrative company
100%
Sales company
72
KRM22 plc
ANNUAL REPORT 2022
Name of undertaking
Registered office
Object+ Americas LLC
1 South Wacker Drive,
Suite 1200, Chicago
IL 60606
USA
* Shares held directly by KRM22 Plc
** In liquidation
Ownership interest and
voting rights
Nature of business
100%
Sales company
The following subsidiaries have been granted exemption from audit of their individual accounts under section 479A
of the Companies Act 2006 following a guarantee given by the parent entity, KRM22 Plc:
• KRM22 Development Limited (Company number: 11082447)
• KRM22 Market Surveillance Limited (Company number: 10754403)
16. Trade and other receivables
Trade receivables disclosed below are classified as loans and receivables and are therefore measured at amortised
cost.
Amounts falling due within one year:
Trade receivables
Other receivables
Prepayments and accrued income
Total trade and other receivables due within one year
Amounts falling due after more than one year:
Amounts due from group undertakings
Total trade and other receivables due in more than one year
2022
Group
£’000
939
276
247
1,462
–
–
2022
Company
£’000
2021
Group
£’000
2021
Company
£’000
2
9
85
96
77
77
328
217
196
741
–
–
–
6
58
64
332
332
The carrying value of trade and other receivables approximates fair value.
At 31 December 2022, the Group had trade receivables falling due within one year of £0.9m including provisions of
£nil (2021: £0.4m including provisions of £0.1m), other receivables falling due within one year of £0.3m including
provisions of £nil (2021: £0.2m including provisions of £nil). At 31 December 2022, the Company had amounts due
from group undertakings falling due after more than one year of £0.1m including provisions of £0.3m (2021: £0.3m
with provisions of £1.8m).
KRM22 has elected to apply the simplified approach available under IFRS 9:5.5.15 for its trade receivables. KRM22’s
trade receivables result from transactions in the scope of IFRS 15 ‘Revenue from Contracts with Customers’. Under
this simplified approach, a lifetime expected loss allowance is always recognised (both at initial recognition and
throughout the life of the trade receivable).
KRM22’s trade receivables have a short duration of less than twelve months, and do not have a contractual interest
rate. Therefore an EIR of zero has been applied to cash flows. KRM22 has used a provision matrix to determine the
lifetime ECL of the portfolio. It is based on KRM22’s historical, observed default rates, and is adjusted by a forward
looking estimate of future economic conditions.
KRM22 group revenue was derived from organic customer growth and acquired customer growth through the
previous acquisitions: KRM22 Market Surveillance, KRM22 ProOpticus and the Object+ Group. Based on historical
observed default rates of the acquired companies, the estimated impairment loss is immaterial. Furthermore, since
acquisition the Group has managed customer credit risk in line with Group policy and outstanding receivables are
actively monitored and discussed by management. There are no doubts as to the future recoverability of these
balances. Therefore, any impairment would be immaterial.
73
KRM22 plc
ANNUAL REPORT 2022
Amounts due from group undertakings have been classified as falling due after more than one year based on the
agreed terms of repayment by subsidiaries in future periods. The Company provides regular funding to KRM22 Central
Limited at an appropriate interest rate of 8.14%. The Directors consider the terms of the transaction to be at arm’s
length.
There are significant doubts as to the future recoverability of these intercompany balances, and as such, a provision
for bad and doubtful debts of £0.3m (2021: £1.8m) has been raised against the amounts due from group undertakings
in the Company statement of financial position and recorded as a charge in the Company income statement.
17. Trade receivables – credit risk
Aging of due and past due but not impaired receivables
0 – 30 days
31 – 60 days
61 – 90 days
Total trade and other receivables due in less than one year
18. Cash and cash equivalents
Cash at banks and on hand
19. Trade and other payables
Amounts falling due within one year:
Trade payables
Accruals and deferred income
Social security and other taxation
Other payables
Total due within one year
Amounts falling due after more than one year:
Provision for dilapidations
Total due in more than one year
2022
£’000
897
30
12
939
2021
£’000
306
3
19
328
2022
Group
£’000
1,900
1,900
2022
Company
£’000
1,475
1,475
2021
Group
£’000
5,362
5,362
2021
Company
£’000
4,527
4,527
2022
Group
£’000
2022
Company
£’000
2021
Group
£’000
2021
Company
£’000
393
2,137
325
998
3,853
30
30
32
138
–
–
170
–
–
479
1,959
121
877
3,436
45
45
67
143
–
–
210
–
–
The fair value of trade and other payables are the same as the carrying values.
Provisions for dilapidation for expected future expenditure in accordance with lease obligations are based on the
Group’s best estimate of the likely committed cash outflow. These costs are expected to be incurred at the end of the
lease and therefore have been classified as non-current.
Other payables at 31 December 2022 of £1.0m (2021: £0.9m) relate to contingent consideration associated with the
acquisition of Object+. The contingent consideration is payable subject to earnout conditions and performance
milestones and the Directors believe that the third and final performance milestone was achieved. The liability can be
satisfied in either cash or Company ordinary shares at the Company’s discretion.
74
KRM22 plc
ANNUAL REPORT 2022
20. Leases – right of use assets and lease liabilities
Right of use assets
Cost
At 1 January 2022
Disposals
Foreign exchange movements
At 31 December 2022
Accumulated depreciation
At 1 January 2022
Depreciation charge for year
Disposals
Foreign exchange movements
At 31 December 2022
Net book value at 31 December 2021
Net book value at 31 December 2022
Lease liabilities
Cost
At 1 January 2022
Interest expense
Lease payments
Foreign exchange movements
At 31 December 2022
The maturity of the lease liabilities is as follows:
Amounts payable under leases
Within one year
In two to five years
KRM22’s leases relate to various office leases held by subsidiary undertakings.
21. Loans and borrowings
Current
Secured loans
Non-Current
Secured loans
The fair value of loans and borrowings are the same as the carrying values.
Total
£’000
1,708
(689)
73
1,092
1,076
265
(689)
71
723
632
369
Total
£’000
804
33
(250)
28
615
2021
£’000
483
321
804
2021
£’000
97
97
2,763
2,763
2,860
2022
£’000
493
122
615
2022
£’000
2,974
2,974
–
–
2,974
75
KRM22 plc
ANNUAL REPORT 2022
On 15 September 2020, the Company entered into an agreement for a new three year £3.0m convertible loan facility
(the “Kestrel Convertible Loan”) with Kestrel Partners LLP (“Kestrel”). The interest rate payable on the Kestrel
Convertible Loan is 9.5% per annum and is paid quarterly in arrears. Kestrel can convert the Kestrel Convertible Loan
into new ordinary shares in the Company at any time at a conversion price of 38p. The Company has the right to
request conversion at any time after eighteen months following the date of the agreement, subject to certain
conditions regarding the Company's share price at that time. Kestrel has the right to prevent any conversion which
would trigger a Rule 9 event under the Takeover Code. The Kestrel Convertible Loan is secured on certain Group
assets and includes covenants based on Group financial performance, based on Annualised Recurring Revenue
(“ARR”) and solvency.
The Kestrel Convertible Loan contains a host liability and embedded (fixed-for-fixed) equity conversion feature on the
basis that there is a contractual cash obligation to pay quarterly interest and a requirement to repay the principal
amount at the end of three-year Kestrel Convertible Loan term, subject to the conversion option not being exercised
by either Kestrel or KRM22. The Kestrel Convertible Loan is classified as being a compound financial instrument and
on this basis IAS 32 requires that the Kestrel Convertible Loan is split into equity and liability components. The fair
value of the liability component, included in current and non-current borrowings, at initial recognition was calculated
using a market interest rate that would apply to a stand-alone loan without a conversion feature (12.65%). The equity
component is assigned as the residual amount of £0.2m (see SOCE on page 52), by deducting the amount calculated
for the liability component from the fair value of the instrument as a whole. As the Kestrel Convertible Loan is not
quoted on an active market, the transaction price of £3.0m for the instrument is its fair value. The carrying amount of
the liability component of the Kestrel Convertible Loan is adjusted for total transaction costs incurred of £0.1m.
As detailed in note 29, on 17 June 2023, the Company entered into an agreement for a new £5.0m convertible loan
facility (the “TT Convertible Loan”) arranged by Trading Technologies International, Inc. (“TT”), the Company’s largest
shareholder, with an initial £4.0m drawn down on 23 June 2023, of which £3.1m was used to repay the outstanding
Kestrel Convertible Loan debt of £3.0m plus interest of £0.1m.
22. Deferred tax
Deferred tax liability at 1 January 2021
Income statement (credit)
Foreign exchange movements
Deferred tax liability at 31 December 2021
Income statement (credit)
Foreign exchange movements
Deferred tax liability at 31 December 2022
Intangible assets recognised
on acquisition
£’000
396
(83)
(12)
301
(79)
23
245
Accelerated capital
allowances
£’000
9
(9)
–
–
–
–
–
Total
£’000
405
(92)
(12)
301
(79)
23
245
KRM22 has tax losses of £19.8m (2021: £16.4m) that are available for offset against future taxable profits of those
subsidiary companies in which the tax losses arose. 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
whose future taxable profits are uncertain. The estimated value of the deferred tax asset not recognised is £5.0m
(2021: £3.9m).
In addition to the above operating tax losses, a potential deferred tax asset could relate to pre-acquisition tax losses
of KRM22 ProOpticus. The availability and future utilisation of these losses remains under consideration, taking
account of both its legacy ownership structure and Section 382 of the US Internal Revenue Code, whereby the ability
to utilise net operating losses arising prior to a change of ownership is limited to a percentage of the entity value of
the entity at the date of change of ownership. These potential operating tax losses (and related potential deferred tax
asset) have not been included in the available operating tax losses (and related deferred tax asset) owing to current
uncertainties on their actual usability.
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KRM22 plc
ANNUAL REPORT 2022
A deferred tax liability of £0.2m (2021: £0.3m) has been recognised in relation to intangible assets of £2.9m (2021:
£2.9m) that arose on the acquisition of KRM22 Market Surveillance, KRM22 ProOpticus and the Object+ group in prior
periods.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in that jurisdiction in the
year when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively
enacted at the statement of financial position date and therefore these have been measured at 25% UK and an
effective rate of 23% on our overseas jurisdictions.
23. Operating leases
KRM22 operates from various leased properties around the world and the terms of property leases vary by location.
Any property leases that have less than twelve months at the date of inception until termination date are deemed to
be short–term leases and recognised as operating leases.
KRM22 has total minimum future lease commitments under non–cancellable operating leases as set out below:
Due within one year
24. Share capital
Issued and fully paid 10p Ordinary shares
At 1 January
Issued for cash during the year
At 31 December
25. Share–based payments
Warrants
2022
£’000
–
–
2022
No.
2022
£’000
2021
No.
35,666,336
–
35,666,336
3,567
–
3,567
26,719,127
8,947,209
35,666,336
2021
£’000
2
2
2021
£’000
2,672
895
3,567
On 24 April 2018, the Company passed a resolution for a total of 6,000,000 warrants to be granted to certain directors
and members of staff conditional on the Company’s admission to the AIM. The warrants are exercisable in full in
three equal tranches, in the event that the Company’s share price equals or exceeds three separate hurdles at the
relevant testing or vesting date. The earliest testing date for tranche one was two years following admission to the
AIM, i.e. 30 April 2020, with the earliest testing date for tranche two and three being one year later, i.e. 30 April 2021.
If these conditions are met the warrants are exercisable at a 100 pence per share. The vesting period is three years
and the warrants can be exercised if, at a testing date, the specific performance conditions are met, or the Directors,
in their absolute discretion, determine that a warrant may be exercised at any other time and in any other
circumstances. If the warrants remain unexercised after a period of ten years from the date of the grant the warrants
expire.
Employee share option plan
The KRM22 Employee Share Option Plan (“ESOP”), a UK tax authority approved Enterprise Management Incentive
(“EMI”), was set up on 24 April 2018. During the year the Company granted a total of 425,557 options to employees
of KRM22 and this included 300,000 options (the “LTIP Options”) granted to employees as part of long-term incentive
plans and 125,557 options (the “Salary Sacrifice Options”) granted to employees who waived a proportion of their
salary in 2021 to help the Company’s cashflow.
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KRM22 plc
ANNUAL REPORT 2022
The LTIP Options vest over a three-year period and are exercisable on the third anniversary of the grant date provided
that the share price has increased by 5% compounded during the period and provided the employee remains employed
by KRM22.
The Salary Sacrifice Options granted to Executive Directors and employees vest over a one-month period from the
date of grant and the Salary Sacrifice Options granted to Non-Executive Directors vest over a three-month period from
the date of grant. All Salary Sacrifice Options lapse on termination of employment with the Company and are not
subject to any share price performance conditions.
The Salary Deferral Bonus Options granted in 2020 vest over a three-year period in thirty-six equal monthly instalments,
are not subject to any share price performance conditions and do not lapse if an employee ceases to be employed by
KRM22.
The Salary Deferral Options granted in 2019 vested over a one-year period, are not subject to any share price
performance conditions and lapse on termination of employment with the Company.
All options unexercised after a period of ten years from the date of grant expire. KRM22 has no legal or constructive
obligation to repurchase or settle the options for cash.
Options are exercisable at a range of between 30.0 pence per share and 109.5 pence per share. The weighted average
remaining contractual life of the share options outstanding at 31 December 2022 is 1 year and 2 months (2021: 1 year
and 2 months).
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 31 December
Weighted
average
exercise price
£
2022
Number
0.80 10,146,447
425,557
0.58
(16,000)
0.51
–
–
0.79 10,556,004
Weighted
average
exercise price
£
0.72
0.46
0.64
0.30
0.80
2021
Number
9,703,716
617,719
(144,363)
(30,625)
10,146,447
The fair value of options subject to non–market based vesting conditions are measured using a Black Scholes model
and those options with market based conditions are measured using a Monte Carlo pricing model.
The fair value of the outstanding options without performance conditions was measured using the Black Scholes
options valuation model. The inputs to that model in respect of the share options outstanding under each issue
were as follows:
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KRM22 plc
ANNUAL REPORT 2022
Grant month
Weighted average share price at grant date
Exercise price
Weighted average contractual life
Expected volatility
Expected dividend growth rate
Risk-free interest rate
Grant month
Weighted average share price at grant date
Exercise price
Weighted average contractual life
Expected volatility
Expected dividend growth rate
Risk-free interest rate
Grant month
Weighted average share price at grant date
Exercise price
Weighted average contractual life
Expected volatility
Expected dividend growth rate
Risk-free interest rate
Sep
2018
£1.0950
£1.000
3 years
30%
–
0.86%
Dec
2019
£0.525
£0.525
3 years
30%
–
0.86%
Jan
2021
£0.365
£0.365
3 years
30%
–
0.86%
Jun
2019
£0.770
£0.850
3 years
30%
–
0.86%
Jul
2020
£0.280
£0.300
3 years
30%
–
0.86%
May
2021
£0.475
£0.500
3 years
30%
–
0.86%
Jun
2019
£0.770
£0.850
1 year
30%
–
0.86%
Sep
2020
£0.380
£0.380
3 years
30%
–
0.86%
Feb
2022
£0.450
£0.450
3 years
30%
–
1.07%
Nov
2019
£0.535
£0.850
3 years
30%
–
0.86%
Oct
2020
£0.380
£0.380
3 years
30%
–
0.86%
Dec
2022
£0.480
£0.630
3 years
30%
–
3.30%
The fair value of the outstanding warrants with performance conditions was measured using the Monte Carlo
simulation model and the inputs to that model in respect of the share options outstanding under each issue were as
follows:
Weighted average share price at grant date
Exercise price
Weighted average contractual life
Expected volatility
Expected dividend growth rate
Risk-free interest rate
Restricted Stock Units
2018
£1.3198
£1.00
3 years
30%
–
0.8287%
On 18 September 2020, the Company awarded 253,162 Restricted Stock Units (“RSUs”) to an Executive Director which
vest over three years with an exercise price of 38.0 pence per share and are not subject to any share price performance
conditions and do not lapse if the Executive Director ceases to be employed by KRM22. On 27 April 2023, the vesting
period for the RSUs was extended from three to five years from the date of award.
The total expense recognised for the year ending 31 December 2022 arising from equity-settled share-based payment
transactions amounted to £0.1m (2021: £0.3m) and the share-based payment reserve as at 31 December 2022
amounted to £3.0m (2021: £2.9m).
26. Capital commitments
At 31 December 2022 KRM22 had no material capital commitments (2021: £nil).
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KRM22 plc
ANNUAL REPORT 2022
27. Financial instruments and financial risk management
KRM22’s principal financial liabilities comprise trade and other payables and borrowings. The primary purpose of
these financial liabilities is to finance the operations. KRM22 has trade and other receivables and cash that derive
directly from its operations.
The Company has limited financial liabilities as its primary purpose is to hold investments in other group companies.
The Company’s receivables largely relate to its funding of the operations of KRM22. All items below are stated at
amortised cost unless explicitly stated. The Company measures fair values using the following fair value hierarchy
that reflects the significance of the inputs used in making the measurements.
The table below analyses financial instruments carried at fair value by hierarchy level.
Financial assets
Cash at banks and on hand – unrestricted
Trade receivables group companies
Trade and other receivables
Financial liabilities
Trade and other payables
Accruals
Borrowings
Derivative financial liability at FVTPL (Level 1)
Finance lease obligations
2022
Group
£’000
2022
Company
£’000
2021
Group
£’000
2021
Company
£’000
1,900
–
1,215
3,115
1,421
293
2,974
255
615
5,558
1,475
77
–
1,552
32
138
–
–
–
170
5,362
–
545
5,907
1,401
268
2,860
45
804
5,378
4,527
332
–
4,859
67
143
–
–
–
210
The Directors consider that the carrying amount for all financial assets and liabilities which are not held at fair value
through profit or loss approximates to their fair value.
In conjunction with a debt facility (the “Debt Facility”) arranged with Harbert European Growth Capital Fund II
(“Harbert”) in 2019, the Company constituted warrants over 495,049 Ordinary shares. Whilst the balance of the Debt
Facility was settled during the year ended 31 December 2020, the warrants remain in place and are exercisable by
Harbert until 29 April 2029. The warrants are treated as a derivative financial instrument and recorded at fair value as
a current liability with any adjustment in fair value at the statement of financial position dated recognised within
finance charge on financial liabilities in the income statement.
The fair value of the warrant instrument was measured using the binomial option valuation model. The inputs to the
model are as follows:
Share price at reporting date
Exercise price
Expiry period
Expected volatility
Expected dividend growth rate
Risk-free interest rate
Financial risk management
2022
£0.48
£1.01
6years
30%
–
3.58%
KRM22 is exposed to market risk, which includes interest rate risk and currency risk, credit risk and liquidity risk. The
senior management oversees the management of these risks and ensures that the financial risk taken is governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with
KRM22’s policies and risk appetite.
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KRM22 plc
ANNUAL REPORT 2022
The Board of Directors review and agree polices for managing each of these risks, which are summarised below:
a) Market risk
KRM22’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
Financial currency risk management
KRM22 is exposed to transactional exchange risk. Transactional foreign exchange risk arises from sales or
purchases by a group company in a currency other than that Company’s functional currency. Further the
Group and the Company have inter-company loans made in currencies other than their functional currency.
Year ended 31 December 2021
Average rate
Year-end spot rate
Year ended 31 December 2022
Average rate
Year-end spot rate
Foreign currency sensitivity analysis
USD
EUR
CZK
SGD
1.38
1.35
1.23
1.21
1.17
1.19
1.17
1.13
29.87
29.67
28.68
27.28
1.85
1.82
1.70
1.62
The following table details KRM22’s sensitivity analysis to a 10% (2021: 5%) decrease in Sterling against the
relevant foreign currencies which the Directors believe could have the most significant impact on the
performance of KRM22. For a 10% (2021: 5%) strengthening of Sterling against the relevant currency there
would be a comparable impact on financial performance.
US Dollar
Euros
Czech Kroner
Singapore Dollar
Interest rate risk
Loss
2022
£’000
(151)
(19)
(185)
(6)
(361)
Other equity
2022
£’000
(386)
(15)
(555)
(3)
(959)
Loss
2021
£’000
(33)
(7)
(75)
–
(115)
Other equity
2021
£’000
(96)
5
(176)
1
(266)
Interest rate risk is the risk that the fair value of future cash flows or a financial instrument will fluctuate
because of changes in market interest rates. The Directors do not believe the interest rate risk to be material
and therefore no sensitivity analysis has been prepared.
b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. KRM22 is exposed to credit risk from its operations, primarily from trade
receivables, and from loans provided to related parties.
81
Trade receivables
KRM22 plc
ANNUAL REPORT 2022
Customer credit risk is managed subject to KRM22’s established policy, procedures and control relating to
customer credit risk management. Outstanding receivables are regularly monitored and discussed at
executive management and Board level of group companies.
Financial instruments and cash deposits
Credit risk from cash balances with banks and financial institutions is managed in accordance with KRM22
policy. Credit risk with respect to cash is managed by carefully selecting the institutions with which cash is
deposited.
Impairment
The financial assets of the Group comprise cash at banks, trade receivables and other receivables. Having
reviewed the recoverability of KRM22’s financial assets since the reporting date, as well as the likelihood of
future losses over the next twelve months and the lifetime of the assets, the Directors have recognised credit
losses in respect of other receivables, as detailed in note 16.
c) Liquidity risk
KRM22 is not currently cash generative, however funds were raised as part of the IPO, subsequent share
placements and the Kestrel Convertible Loan facility. The Board carefully monitors the levels of cash and is
comfortable that it has sufficient cash for normal operating requirements. KRM22 has no committed lines of
credit.
The following table details KRM22’s remaining contractual maturity for its financial liabilities based on
contractual payments:
At 31 December 2021
Trade and other payables
Secured loans (gross)
Finance lease obligations
At 31 December 2022
Trade and other payables
Secured loans (gross)
Finance lease obligations
Capital risk management
Within 1 year
£’000
1 to 2 years
£’000
2 to 5 years
£’000
3,436
285
483
2,009
3,210
493
–
3,210
250
–
–
122
–
–
71
–
–
–
Total
£’000
3,436
3,495
804
2,009
3,210
615
KRM22 manages its capital to ensure that it will be able to continue as a going concern while also maximising
the operational potential of the business. The capital structure of KRM22 consists of cash and cash
equivalents and equity attributable to equity holders of the Company, comprising issued capital and reserves
as disclosed in the consolidated statement of changes in equity. KRM22 is not exposed to externally imposed
capital requirements.
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KRM22 plc
ANNUAL REPORT 2022
28. Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, including Directors, is set out in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures as follows:
Short-term employee benefits
Retirement benefits
Share-based payment benefits
Total
Related party transactions
2022
£’000
567
9
54
630
2021
£’000
354
6
201
561
During the year, the Group recognised revenue from Trading Technologies International, Inc. (“TT”) of £0.1m (2021: £nil)
under normal commercial terms. At 31 December 2022, the balance due to the Group from TT was £0.0m (2021:
£nil). In addition, TT provided services to the Group of £0.0m and the balance due to TT from the Group at 31
December 2022 was £0.0m (2021: £nil). As detailed in note 29, on 17 June 2023, the Company entered into an
agreement for a new £5.0m convertible loan facility (the “TT Convertible Loan”) arranged by TT, with an initial £4.0m
drawn down on 23 June 2023. TT is a 25.0% shareholder of the Company.
On 15 September 2020, KRM22 entered into an agreement for a new three year £3.0m loan facility (the “Kestrel
Convertible Loan”) with Kestrel Partners LLP (“Kestrel”). The interest rate payable on the Kestrel Convertible Loan is
9.5% per annum payable quarterly in arrears and the total interest charged in the year ended 31 December 2022 was
£0.3m (2021: £0.3m). Kestrel can convert the Kestrel Convertible Loan into new ordinary shares in the Company at
any time at a conversion price of 38p. The Company has the right to request conversion at any time, subject to certain
conditions regarding the Company’s share price at that time. Kestrel has the right to prevent any conversion which
would trigger a Rule 9 event under the Takeover Code. The Kestrel Convertible Loan is secured on certain KRM22
assets and includes covenants based on the Group’s financial performance, based on ARR and solvency. As detailed
in note 29, on 23 June 2023, the Company repaid the Kestrel Convertible Loan. Kestrel, inclusive of beneficial interests,
is a 17.7% shareholder of the Company.
29. Events after the reporting date
On 17 June 2023, the Company entered into an agreement for a new £5.0m convertible loan facility (the “TT
Convertible Loan”) arranged by TT, the Company’s largest shareholder, to replace the existing Kestrel Convertible Loan
and to support future business growth.
The TT Convertible Loan is for up to £5.0m with an initial £4.0m drawn down on 23 June 2023, of which £3.1m was
used to repay the outstanding Kestrel Convertible Loan debt of £3.0m plus interest of £0.1m.
The interest rate payable on the TT Convertible Loan is the aggregate of the SOFR average rate and a margin of 5.5%
provided that the amount of such aggregate percentage rate shall be a minimum of 9.25%. Interest on the TT
Convertible Loan is paid quarterly however in the first 18 months of the TT Convertible Loan term, interest can be
deferred with 50% of any deferred interest being paid at 18 months and the remaining balance of deferred interest
being paid at 21 months. The term of the TT Convertible Loan is three years with the option to extend by a further
year to four years.
TT can convert the TT Convertible Loan into new ordinary shares in the Company at any time at the lowest conversion
price of: 46p, the volume weighted average price of the Company’s ordinary shares for the three-month period prior to
service of a conversion notice; or the lowest daily closing price for the 30 completed calendar days prior to service of
a conversion notice. TT has the right to prevent any conversion which would trigger a Rule 9 event under the Takeover
Code. The TT Convertible Loan is secured on certain KRM22 assets and includes covenants based on the Group’s
financial performance, based on ARR, revenue recognised and solvency.
83
KRM22 plc
ANNUAL REPORT 2022
COMPANY INFORMATION
The board of directors
Registered office
Keith Todd CBE
Executive Chairman
Stephen Casner
CEO
Kim Suter
CFO
Sandy Broderick
Non-Executive Director
Garry Jones
Non-Executive Director
Steve Sparke
Non-Executive Director
5 Ireland Yard, London, EC4V 5EH
Company number
11231735
Company Secretary
Kim Suter
Nominated Adviser and Broker
finnCap, 1 Bartholomew Close, London, EC1A 7BL
Solicitors
Fieldfisher LLP, Riverbank House, 2 Swan Lane,
London, EC4R 3TT
Auditor
BDO LLP, 55 Baker Street, London, W1U 7EU
Registrars
Equiniti, Aspect House, Spencer Road, Lancing, West
Sussex, BN99 6DA
ANNUAL REPORT 2022 |
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