INTERNATIONAL
Annual Report 2024
KRM22 Plc
Company number: 11231735
CONTENTS
Highlights ............................................................................................................................................................................... 1
Chairman’s statement ......................................................................................................................................................... 2
Chief Executive Officer’s Report ........................................................................................................................................ 3
Chief Financial Officer’s Report ......................................................................................................................................... 5
Our products ....................................................................................................................................................................... 10
Principal risks and uncertainties ..................................................................................................................................... 13
Section 172 statement ...................................................................................................................................................... 16
Board of Directors .............................................................................................................................................................. 19
Corporate Governance statement .................................................................................................................................. 21
Audit Committee report .................................................................................................................................................... 27
Remuneration Committee report .................................................................................................................................... 29
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 ................................ 46
Consolidated statement of financial position for the group ...................................................................................... 47
Company statement of financial position ..................................................................................................................... 48
Consolidated statement of changes in equity for the group ..................................................................................... 49
Company statement of changes in equity .................................................................................................................... 50
Consolidated statement of cash flows for the group ................................................................................................. 51
Notes to the consolidated financial statements .......................................................................................................... 52
Company information ....................................................................................................................................................... 82
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KRM22 plc
ANNUAL REPORT 2024
HIGHLIGHTS
Financial
•
Annualised Recurring Revenue (ARR)1 as at 31 December 2024 of £6.6m (2024: £5.4m) – growth of 22.2%
o
New contracted ARR in 2024 of £1.7m (2023: £1.1m)
o
Total ARR attributable to the relationship with Trading Technologies International, Inc. (“TT”) of £0.9m
(2023: £0.4m)
•
Total revenue recognised of £6.8m (2023: £5.3m) – growth of 28.3%
•
Adjusted EBITDA profit2 of £1.0m (2023: loss of £1.4m) – a maiden reported adjusted EBITDA profit since the
Company’s inception
•
Loss before tax of £1.4m (2023: loss of £4.9m)
•
Gross cash as at 31 December 2024 of £1.0m (2023: £0.9m)
Operational
•
12 new ARR contracts signed in the year including 6 new customers
•
44 institutional customers as at 31 December 2024
•
Launch of Risk Manager application, with first sales and ARR generated from this application
•
Group restructure and rationalisation to implement a focused cost savings programme, with annual cost
savings of £1.2m delivered
•
Board changes with the appointment of Dan Carter as CEO and Garry Jones as Non-Executive Chairman,
replacing Stephen Casner and Keith Todd respectively, with Keith Todd remaining on the Board as Executive
Director
Post Year-End Events
•
Growth in contractual ARR to £7.4m as at the date of this report at current FX rates
•
New contractual ARR in 2025 generated from three cross sales opportunities to existing customers for the
Limits Manager and Risk Manager applications
•
Amendments to the Convertible Loan with Trading Technologies International, Inc (“TT”) to defer all interest
payments until June 2026
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 profit/(loss) for the year, adjusted for recurring non-monetary costs including depreciation,
amortisation, unrealised foreign exchange (loss)/gain and share-based payment charge/(credit) and non-recurring costs, both
monetary and non-monetary, including Company reorganisation costs, impairment of intangible assets, profit on disposal of
tangible/intangible assets, deferred consideration write back, gain on distinguishment of debt and acquisition, funding and debt
related costs. A reconciliation of Adjusted EBITDA profit/(loss) to the reported operating loss for the year is detailed on page 6.
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KRM22 plc
ANNUAL REPORT 2024
CHAIRMAN’S STATEMENT
At the start of 2024, we implemented a focused cost savings programme and also made
changes to the Board with the appointment of Dan Carter and myself as CEO and Non-
Executive Chairman respectively. I am pleased to report that these changes have led to a
marked improvement in financial and operational performance as we progressed through
2024, with a maiden reported adjusted EBITDA profit since the Company’s inception, and which
we continue to progress in 2025.
We remain focused on continuing to grow our core business, with a substantial increase in
Annualised Recurring Revenue (“ARR”) and expansion of services to new and existing customers being delivered during
the year. Our customer base covers many of the largest banks and brokers in the world as well as regulators and buy
side companies. We are continuing to invest in harvesting new customers across the market spectrum and we now
look forward to broadening and accelerating our market coverage into new asset classes such as equities, FX and
digital currencies.
The management team of KRM22, under the leadership of CEO Dan Carter and CFO Kim Suter, has performed in an
exemplary fashion, in extremely challenging markets, and pleasingly our customer satisfaction is at an all-time high.
The Board and I wish to thank our loyal customers and shareholders for their continued commitment to our long-term
vision of delivering high quality applications and services to the capital markets and derivatives risk community. The
quality of our customers and their importance to the traded markets gives us much confidence that we are providing
much needed solutions and hitting the mark with industry professionals, who rely on KRM22’s applications and
services to add value to their business.
I also want to congratulate the entire KRM22 team globally for another year of progress, and to recognise their
continued hard work and loyalty to the Company. I look forward to further growth and continued increase in ARR in
2025.
Volatility in the financial system continues to increase, and the new normal sees an ever-growing focus on risk
management. KRM22’s applications, which can add value, transparency and security in uncertain times, are ideally
placed to meet our customers need for state of the art and scalable risk management systems.
KRM22 has never been in a better position as we progress through 2025 and beyond and our pipeline of sales
opportunities gives us confidence in our expectations for the year and full year outturn.
Garry Jones
Non-Executive Chairman
16 May 2025
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KRM22 plc
ANNUAL REPORT 2024
CHIEF EXECUTIVE OFFICER’S REPORT
As I reflect on my first year as CEO of KRM22, I do so with great pride, especially considering
what has been a record-breaking year for the Company with 22.2% growth in Annual Recurring
Revenue (“ARR”). We have remained focused on executing our business strategy, with a
continued emphasis on delivering for our customers and building a new industry-standard set
of applications. This commitment has contributed to our unprecedented growth, a true
testament to our team’s dedication and strategic vision. At the same time, we took decisive
steps to optimise our cost structure, ensuring long-term efficiency and sustainability. These
structural enhancements position us for continued success while enabling us to reinvest in key
areas of the business. Additionally, we have built a robust sales pipeline, strengthening our foundation for future
expansion. KRM22 is positioning itself as a market leader in Risk Management in capital markets, and we are excited
to continue our growth and achieve our strategic goals of becoming a cash-generative and profitable business.
Strong revenue growth
KRM22 delivered impressive growth in 2024, achieving a record ARR of £6.6m as of 31 December 2024, representing a
22.2% increase from £5.4m twelve months earlier. This growth was driven by £1.7m in new contracted ARR, a significant
rise from £1.1m in the previous year. Notably, £1.2m of this new ARR was generated through direct sales, while £0.5m
resulted from the continued and strengthening relationship with Trading Technologies International, Inc. (“TT”). These
achievements reflect KRM22’s strategic focus and the value driven by our Global Risk Platform delivering integrated Risk
Management to capital markets firms.
We launched the Risk Manager application at the start of 2024 and new ARR generated from this application accounted
for 48% of our total new ARR in the year. Meanwhile, Limits Manager and Market Surveillance continued to experience
strength growth with contributions to total new ARR of 31% and 19% respectively, driven by both new customer
acquisitions and existing customers expanding their engagement with our services.
Our sales pipeline continues to strengthen, led by the seamless integration of the Limits Manager and Risk Manager
applications. This powerful combination is resonating with both new and existing clients, as they recognise the
enhanced value of a unified risk and limit management solution. New customers are attracted by the comprehensive
functionality and efficiency gains, while existing customers are expanding their engagement by adopting both
applications to streamline their risk operations and enhance their audit capabilities. This momentum is creating
significant opportunities for growth, reinforcing our position as a trusted partner for risk management solutions.
Our Market Surveillance application sales pipeline is gaining momentum through our strategic partnership with TT.
Following the successful completion of development work in the latter half of 2024, we are now leveraging TT’s extensive
market reach to drive adoption among their global client base. This collaboration enhances our visibility and provides a
strong channel for expanding our customer footprint. With seamless integration into the TT platform, we are well-
positioned to accelerate sales growth and deliver best-in-class surveillance capabilities to a broader audience.
Cost saving programme
At the start of 2024, we undertook a comprehensive group restructure, an initiative to drive greater operational efficiency
and long-term sustainability. As part of this effort, we implemented a focused cost savings programme, streamlining
our organisational structure and optimising resources to enhance productivity. These strategic actions resulted in
annual cost savings of £1.2m, primarily through a reduction in workforce, reinforcing our commitment to maintaining a
lean and agile business while continuing to invest in growth opportunities. This disciplined approach ensures we remain
well-positioned to deliver value to our stakeholders while strengthening our financial foundations.
KRM22 risk applications
In 2024 we made significant strides across our application suite, advancing our mission to deliver risk management
solutions that are robust and adaptive. Risk Manager progressed from proof-of-concept to full production, now
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ANNUAL REPORT 2024
delivering real-time P&L exchange margin, parametrised stress scenario analysis and integration with the Portfolio
Science Risk API for Value at Risk (“VaR”). Limits Manager, having been launched and matured in 2022 and 2023
respectively, saw expanded Exchange Traded Derivative (“ETD”) connectivity and major enhancements to workflow
automation - enabling firms to automate limit changes based on their own risk thresholds. Live risk metrics from Risk
Manager are now directly integrated into Limits Manager, with full audit trail support, thus allowing for firms to not only
see who and what was changed at any time, but also the standing of the account at the time the change was approved.
Within Market Surveillance, we completed development of our API layer, enabling us to embark on a project to build a
new web-based GUI and add AI functionality focussed on monitoring near misses, and this will be launched in 2025. The
API layer has also allowed a strategic integration with TT’s own surveillance application enabling TT, in partnership with
KRM22, to launch a best-in-class surveillance solution at the end of 2024 which will drive future revenue for KRM22 via
a revenue share model. The Risk Cockpit saw important enhancements to incident management, including automated
PDF reporting to improve communication and documentation of risk events.
Looking ahead, we are focused on broadening asset class coverage, particularly within the Risk Manager and Limits
Manager applications, to match the multi-asset design already present in the Market Surveillance application.
Wider capital markets trends
The broader macro trends in the capital markets industry have seen a significant shift in focus over the past 15 years.
In the ten years that followed the 2008 financial crisis, regulatory reporting underwent significant changes, with the goal
of enhancing transparency, reducing risk and improving the stability of the financial system. As a result, capital markets
firms were primarily engaged in ensuring compliance with the regulatory changes. This was followed by the disruption
of the Covid pandemic in 2020 and 2021, which brought new challenges and operational complexities for businesses.
In a post-pandemic world, we are now seeing firms take a more proactive approach to risk management, reassessing
their processes and systems to ensure they have best-in-class technology solutions in place.
There is a growing recognition that legacy systems are no longer sufficient in managing today’s dynamic risk landscape.
At the same time, regulatory scrutiny remains high, with fines being issued for errors in risk management and process
failures. This heightened regulatory pressure is driving firms to refine their procedures, with technology playing a critical
role in enabling greater accuracy, efficiency, and compliance. As a result, the demand for modern, integrated risk
management solutions has never been stronger, reinforcing the need for continuous innovation in the space and the
benefits that KRM22’s applications bring to capital markets firms.
Globally, firms spend approximately £6.0 billion annually on Software-as-a-Service (“SaaS”) risk management software.
Even if the total addressable market for KRM22 is a fraction of this £6.0 billion annual spend, there is significant
opportunity for KRM22’s growth, both within existing asset classes that KRM22 already supports, and within new asset
classes that we are looking to expand into as outlined above.
Outlook
KRM22 delivered an outstanding 22.2% growth in ARR in 2024, reinforcing our strong market position and momentum
toward becoming a cash generative and profitable business. Limits Manager and Risk Manager are rapidly becoming
the industry standard for risk management, driving increased adoption across both new and existing clients.
Additionally, our partnership with TT has successfully launched a best-in-class Market Surveillance offering, setting the
stage for significant revenue growth in 2025. With a dedicated team and a clear strategic vision, we remain focused on
innovation, excellence, and delivering value to our customers. These are truly exciting times for KRM22, and we are well-
positioned for continued success in 2025 and beyond, as demonstrated by the growth in ARR to £7.4m at the date of
this report, with a strong sales pipeline that underpins our confidence in this year’s management expectations.
Dan Carter
CEO
16 May 2025
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KRM22 plc
ANNUAL REPORT 2024
CHIEF FINANCIAL OFFICER’S REPORT
From a financial performance perspective, 2024 was the most successful year since KRM22’s
IPO in 2018 with significant growth and improvements in all key financial performance metrics
including total revenue recognised, ARR, adjusted EBITDA and net cash position.
There was growth of 28.3% in total revenue recognised to £6.8m from £5.3m reported for the
year ended 31 December 2023. Growth in ARR continued with a net increase of £1.2m to end
the year at £6.6m from £5.4m at 31 December 2023 – a year-on-year increase of 22.2%.
Following the group restructure and rationalisation programme executed in early in 2024, with
annual cost savings of £1.2m, KRM22 has reported an adjusted EBITDA profit for the year of £1.0m – the first time it
has reported an adjusted EBITDA profit since its inception. All of this contributed to a closing cash balance of £1.0m
(2023: £0.9m).
Income Statement
Total revenue
Revenue recognised for the year to 31 December 2024 was £6.8m (2023: £5.3m), an increase of 28.3% compared with
the prior year, with 92.2% (2023: 90.6%) of total revenue generated from recurring customer contracts. Non-recurring
revenue for the year ended 31 December 2024 totalled £0.5m (2023: £0.5m) and related principally to customer
implementations, product development and proof of concept work.
Recurring revenue
ARR is a key metric and KPI for KRM22 and as at 31 December 2024, ARR had increased by 22.2% to £6.6m (2023: a net
increase of 17.4% to £5.4m), a net increase of £1.2m (2023: net increase of £0.8m).
New contracted ARR in the year totalled £1.7m (2023: £1.1m) of which £0.7m (2023: £0.6m) was from six new
customers, primarily for the Limits Manager and Risk Manager applications, and £1.0m (2023: £0.6m) was generated
from existing customers. Of the £1.0m of new ARR generated from existing customers, £0.8m was derived from existing
customers purchasing additional applications and £0.2m was contractual renewals for existing applications, with
increases in ARR value and extensions of contractual length.
The amount of ARR generated through partner products and services, primarily through data and news feeds, with
minimal margin to KRM22, accounted for 4.2% (2023: 4.6%).
Total churn in ARR for the year was £0.5m of which £0.4m was from three institutional customers, which included one
customer closing downs its operations. The second customer churn was from a Market Surveillance customer who,
following a public RFP process, decided to contract with an alternative supplier whilst the third customer was a specific
user case that could not be delivered.
Gross profit
Gross profit for the year to 31 December 2024 was £5.6m (2023: £4.1m). There was a small increase in gross profit
margin to 83% compared to the prior year margin of 78%.
Capitalised development
A total of £1.1m (2023: £1.1m) of development was capitalised in the year to 31 December 2024. Capitalised
development is amortised over three years.
Adjusted EBITDA
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 and one-off cash items such as Group reorganisation costs.
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KRM22 plc
ANNUAL REPORT 2024
Adjusted EBITDA for the year to 31 December 2024 was a profit of £1.0m (2023: loss of £1.4m). The adjusted EBITDA
reported for the year was a significant improvement on the prior year; driven by the increase in underlying total revenue
recognised in the year, together with the Group restructure plan actioned at the start of 2024 which implemented a
focused cost savings programme, primarily through a reduction in workforce, with annual cost savings of £1.2m.
A reconciliation of Adjusted EBITDA profit/(loss) to the reported operating loss is provided as follows:
2024
£’m
2023
£’m
Adjusted EBITDA profit/(loss)
1.0
(1.4)
Depreciation and amortisation
(1.2)
(1.3)
Impairment of intangible assets
–
(1.6)
Unrealised foreign exchange loss
0.0
(0.5)
Deferred consideration write back
–
0.1
Gain on extinguishment of debt
–
0.1
Group restructure costs
(0.6)
–
Share-based payment (expense)/credit
(0.1)
0.1
Operating loss
(0.9)
(4.5)
Operating loss
Reported operating loss for the year to 31 December 2024 was £0.9m (2023: loss of £4.5m) and included one-off costs
of £0.6m relating to Group restructure costs covering redundancy and separation costs associated with the cost savings
programme implemented in January 2024 and separation costs associated with the Executive changes announced in
March 2024.
Finance charges
Net finance expense in the year was £0.5m (2023: £0.4m) and primarily related to loan interest paid on the TT Convertible
Loan.
Taxation
The tax credit in the year was £0.1m (2023: credit of £0.3m) which includes a £0.1m (2023: £0.2m) R&D tax credit
received.
Financial position
Assets
The cash balance as at 31 December 2024 was £1.0m (2023: £0.9m).
Current assets at 31 December 2024 include trade and other receivables of £0.7m (2023: £1.1m).
Non-current assets were £5.6m (2023: £5.8m) relating principally to: £4.0m for goodwill and assets acquired (2023:
£4.2m) and £1.6m (2023: £1.4m) for capitalised development costs.
Liabilities
As at 31 December 2024, KRM22’s principal liabilities were:
•
£4.5m convertible loan owed to TT plus accrued interest of £0.8m.
•
£2.8m of deferred revenue; contracted and paid services that will be released in a future period.
•
£0.5m (US$0.6m) deferred consideration for earn out payments for the acquisition of Object+. The deferred
consideration can be satisfied in either cash or Company Ordinary Shares in KRM22 at the Company’s
discretion.
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ANNUAL REPORT 2024
•
£0.2m (US$0.3m) for the right of use assets relating to all future payments of leased-office rentals under IFRS16
‘Leases’ whereby such lease payments are provided for at today’s value. At 31 December 2024, KRM22 did not
have any leased-office rentals remaining under IFRS16 however the liability relates to an office lease that expired
in 2022.
Investors
As an AIM quoted business, a large proportion of KRM22’s shareholders are professional investment funds. In addition,
the Directors together owned 3,876,543 shares at the year end, representing 10.8% of the Company’s issued share
capital.
Funding
At 31 December 2024, the Company had a £5.0m convertible loan facility (the “TT Convertible Loan”) with TT, the
Company’s largest shareholder, of which KRM22 had drawn down £4.5m of the total facility amount. The interest rate
payable on the TT Convertible Loan is the average 90 day Secured Overnight Financing Rate (“SOFR”) and a margin of
5.5%, subject to a minimum aggregate percentage rate per annum of 9.25%. Interest is payable quarterly in arrears
however KRM22 had the ability to defer interest payments in the initial 18 months (the “Initial Interest Period”), with the
total deferred interest in the Initial Interest Period being due on the calendar quarter ending after the 21st month
anniversary of the facility, i.e. 31 March 2025. TT can convert the TT Convertible Loan into new ordinary shares at any
time at a conversion price of £0.46. 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 including ARR, revenue recognition and solvency.
Since the year end, the Company has amended the terms of the TT Convertible Loan to reduce the total facility to £4.5m,
i.e. the value of the loan that had been drawn down at 31 December 2024, and defer all interest payments in the initial
three year term until the three year maturity date in June 2026. The deferral of the interest payments conserves cash
for the Group over the next 12 months. Further detail on the amendments to the TT Convertible Loan is detailed in the
Directors report on page 37.
Use of cash in the year
Net cash inflow from operating activities in the year was £1.4m, with £1.1m used for capitalised development.
Going concern
The financial statements have been prepared on a going concern basis based on a range of cashflow forecasts and
scenarios covering a period of at least twelve months from the date of this report. The time to close new customers
and the value of each customer, which are deemed individually as high value and low volume in nature, is key to the
forecast being achieved. Even if the forecast is achieved, KRM22 is required to operate within the financial covenants
associated with the TT Convertible Loan. Further analysis of KRM22’s going concern position is detailed in the Directors
report on pages 36 – 37.
Shareholdings and earnings per share
As at 31 December 2024, KRM22 had 35,960,729 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 3.6p loss per share (2023: loss of 13.0p).
Due to the loss made by the Company in the year, the diluted EPS is the same as EPS.
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ANNUAL REPORT 2024
Conclusion
The financial performance of KRM22 in 2024, both in terms of the increase in total revenue recognised by 28.3% and the
movement to an adjusted EBITDA profit of £1.0m from adjusted EBITDA loss position of £1.3m in 2023 demonstrates
that KRM22 has made significant progress in moving towards becoming a profitable business. The growth in ARR to
£6.6m at 31 December 2024 which, at the date of this report, has further increased to £7.4m, together with the significant
sales pipeline opportunities, both from direct selling opportunities and through the TT distribution agreement, puts
KRM22 in a solid position to continue this strong financial performance in 2025 and beyond as it becomes a cash
generative and profitable business.
Approved by the Board and signed on its behalf by:
Kim Suter
CFO
16 May 2025
Strategic Report
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KRM22 plc
ANNUAL REPORT 2024
OUR PRODUCTS
Built on the Global Risk Platform, KRM22 offer products addressing risk management challenges across Trading and
Corporate 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 portal for Trading and Corporate risk that securely connects and
integrates into existing and new client portals from one integrated system.
Trading Risk
Limits Manager
Limits Manager, formerly called Pre-Trade Centralised Risk Management, 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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ANNUAL REPORT 2024
Risk Manager
Risk Manager integrates the legacy functionality from the At-Trade P&L and Post-Trade Stress applications helping firms
achieve effective risk management monitoring
•
View real-time P&L, margin,
Value at Risk (VaR) and
parameterised stress risk
from the account level down
to the contract level
•
Create user defined risk
metrics to arrive at an overall
account risk score and
generate alerts for any
breaches
•
Use historical account risk
data to deliver context to
current standing of a portfolio
•
Integrate with KRM22 Limits
Manager to validate limit
change decisions using
post-trade metrics
Corporate Risk
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 and operational breaches
•
Comprehensive suite of
market abuse 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
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ANNUAL REPORT 2024
Risk Cockpit
The Risk Cockpit is a digital risk register and incident management portal that brings risk policies and operational controls
to life through a proven risk assessment workflow
• Enforce compliance and
operational risk controls with
automated checklists
• Capture, assess and
remediate events related to
firmwide KPIs
• Track and understand
metrics to support risk-
based decision making
• Generate regulatory and
historic reporting
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ANNUAL REPORT 2024
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
volatility
Changes in US economic policy announced in
April 2025 created immediate volatility in global
capital markets and impacts all of KRM22’s
stakeholders. Whilst KRM22’s sales are not
currently directly affected by proposed US trade
tariffs, the economic volatility and uncertainty
has impacted FX rates, and market forecasts
around growth, inflation and interest rates. High
inflation, and the impact on cost of goods and
services for KRM22 staff could lead to an
increase
in
salary
and
compensation
expectations.
The mitigating actions associated with global economic
volatility related risks and uncertainties are included in
further detail under each risk and uncertainty
component listed below.
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.
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.
Customer retention
Given KRM22’s strategic focus on Annualised
Recurring Revenue (“ARR”), the retention of key
customers is critical to the maintenance of
revenue streams. The loss of key customers
could adversely impact business results.
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.
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.
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.
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ANNUAL REPORT 2024
Risk and uncertainty
Potential impact
Mitigating actions
Foreign exchange
KRM22 operates internationally and is therefore
exposed to fluctuations in foreign exchange
rates.
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
to
assess
whether
forward
currency
transactions are necessary.
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.
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.
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.
The
Remuneration
Committee
reviews
KRM22’s
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.
Failure to recruit, retain and motivate an
appropriate number of suitably qualified
people in critical areas could lead to a
deterioration in the quality of its 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.
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
round of appraisals is discussed by the Executive team
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.
Debt facility
The convertible loan facility with Trading
Technologies International, Inc. (“TT”) 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 TT withdrawing the TT
Convertible Loan with all amounts accrued
becoming immediately due and payable which
would impact KRM22’s cashflow.
The risk of failing to adhere with financial covenants is
mitigated by growth in ARR generated through new
customer
agreements,
management
of
cash,
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.
There are defined reporting obligations that KRM22 has to
TT and this includes a process to engage together in
advance of any forecasted issues and risks.
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ANNUAL REPORT 2024
Risk and uncertainty
Potential impact
Mitigating actions
The interest rate on the TT Convertible Loan is
the 90 day average Secured Overnight
Financing Rate (“SOFR”) and, following the
changes made to the TT Convertible Loan on
28 April 2025, a margin of 5.75%, subject to a
minimum rate of 9.50%. Any adverse
movement in the SOFR could adversely affect
KRM22 cashflows and the ability to repay
amounts as they become due which could
result in an Event of Default.
The CFO regularly monitors the SOFR and market
forecasts and ensures that these are factored into cash
forecasts which are reviewed and discussed at each
Board meeting.
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.
The CEO and CFO meet institutional shareholders, fund
managers and analysts at least twice a year on release of
the full year and interim financial results 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 Cavendish, as Broker and
Nominated Advisor, who keep in regular contact with
KRM22’s investor base.
Technology
To remain successful, KRM22 must ensure
that its applications continue to meet the
requirements of customers. If applications do
not meet the requirements of customers, they
could seek alternative solutions, resulting in
loss of revenue.
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 feedback that information to product
development. KRM22’s Chief Technology Officer and
Chief Product Officer, together with the Product
Managers, use this information and feedback to invest in
the
underlying
technology
to
enhance
existing
applications and develop new features.
Information security
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.
SOC 2 is an internationally recognised framework that
helps ensure that service providers protect customer data
by establishing and following strict information security
policies and procedures, encompassing the security,
availability, processing, integrity and confidentiality of
customer data. KRM22 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 SOC 2, 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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ANNUAL REPORT 2024
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) the likely consequences of any decision in the long-term;
b) the interests of the company’s employees;
c) the need to foster the company’s business relationships with suppliers, customers and others;
d) the impact of the company’s operations on the community and environment;
e) the desirability of the company maintaining a reputation for high standards of business conduct; and
f)
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.
Face-to-face meetings with key customers
and sales prospects are held on a regular
basis.
Open dialogue with customers and
understanding their needs continued to
influence the product roadmap of ongoing
development work and release on new
features in the KRM22 application suite.
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.
During 2023 and at the start of 2024,
investors
expressed
their
concerns
directly with the Executive Directors about
the potential conflict of interest around the
role of Keith Todd as Executive Chairman
of KRM22 whilst also being CEO of TT,
KRM22’s largest shareholder and debt
provider. The Board listened to these
concerns, and consulting with Cavendish,
as NOMAD, and Fieldfisher, as its
Solicitors,
agreed
to
review
Board
composition.
Regular Board meetings include a number
of standing items, including conflicts of
interest. Whilst the Board took action to
exclude any Board member with a
potential or actual conflict of interest from
the relevant discussion topic, they made a
strategic
decision
to
review
Board
composition to further minimise any
potential conflicts of interest risks. On 7
March 2024, KRM22 announced changes
to the Board composition by appointing
Garry Jones as Non-Executive Chairman
thus avoiding any negative interpretation
of one individual combining leading the
Board whilst also bearing some executive
responsibility for KRM22’s operations.
Following the announcement of the Board
changes on 7 March 2024, Garry Jones
and Dan Carter, as the incoming Non-
Executive Chairman and CEO respectively,
made themselves available and met with
existing investors so that they could
communicate
KRM22’s
long-term
strategic objectives and answer any
questions from investors.
No strategic decisions were made in the
year affecting investors as a result of
these meetings.
Following release of the Company’s 2023
full year results and 2024 interim results in
June and September 2024 respectively,
the CEO and CFO met with individual
investors to discuss the results.
No strategic decisions were made in the
year affecting investors as a result of
these meetings.
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ANNUAL REPORT 2024
Why engagement is important
How Directors and/or management
engage
Strategic decisions in the year
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.
Monthly “All Hands” meetings in which
management update staff on company
progress
with
two-way
participation
encouraged.
Staff appraisals completed twice a year
with a review of accountabilities and the
setting of objectives.
Anonymous
monthly
“pulse”
survey
completed with results discussed by
management and action taken where
appropriate.
Regular visits to overseas offices by
management.
Whilst KRM22 reported strong ARR
growth in 2023, the Group’s operational
runrate costs continued to be significantly
higher than the runrate ARR. At the start
of 2024 the Board agreed to implement a
cost
savings
programme,
primarily
through a reduction in workforce, with the
aim of improving the underlying financial
performance
of
the
business
and
significantly reduce the time to become
cash profitable on an operational runrate
basis. The programme included detailed
analysis of roles marked for redundancy
and the impact this would have on the
business regarding existing customers,
sales prospects and the operational
impact and morale of the wider KRM22
team.
Suppliers
Engagement with key suppliers ensures
that
KRM22
operates
its
business
effectively and without disruption.
KRM22 nominates internal resource to
manage key supplier relationships with
regular meetings between these parties
which is reported back to management.
No strategic decisions were made in the
year affecting suppliers.
Trading Technologies International, Inc., as strategic partner
Under a distribution agreement with TT,
TT are able to distribute certain KRM22
applications into the TT customer base
which represents significant opportunities
for growth and cross selling. Collaborative
engagement is important as it would
enable products to be launched in a timely
manner to help drive the growth of
KRM22.
A project team, represented by key
individuals from both parties, meet on a
regular basis to agree on the order of
priority for making KRM22 applications
available to TT customers. The team meet
on a weekly basis to collaborate on ideas
and resolve any operational and technical
issues. The KRM22 Revenue team
collaborate with the TT sales team to
assist
in
the
conversion
of
sales
opportunities.
No strategic decisions were made in the
year affecting suppliers.
Trading Technologies International, Inc., as debt provider
Communication
of
forward-looking
compliance information under the terms
of the TT Convertible Loan allows the
Directors and TT to evaluate any risks and
agree remedial action if required.
KRM22 reports on compliance with
financial covenants and provides forward-
looking compliance information at the end
of each quarter. In addition, the CEO and
CFO meet with TT to discuss the
underlying data and projections.
No strategic decisions were made in the
year affecting TT as the debt provider.
Corporate Governance
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KRM22 plc
ANNUAL REPORT 2024
BOARD OF DIRECTORS
Garry Jones
Non-Executive Chairman
Until recently, Garry Jones was
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 Non-Executive
Chairman of KRM22, he is a
member of the Board of ICBCS, an
emerging
markets
investment
bank.
With over 40 years of experience in
financial services, Garry 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. Garry was elected as
a member of the FIA Hall of Fame
in 2018.
Dan Carter
Chief Executive Officer
With almost two decades of
experience
in
delivering
SaaS
solutions to capital markets firms,
Dan was promoted to CEO of
KRM22 in March 2024.
Since KRM22’s IPO in 2018, and
prior to his appointment as CEO,
Dan
served
in
various
roles
including Chief Services Officer
and in Business Development.
Prior to joining KRM22 Dan worked
at Colnvestor as Head of Product
Management and Operations. He
also worked at ION, and prior to its
acquisition by ION, FFastFill where
he was responsible for the firms
exchange
connectivity
and
relationships
for
front-office
market data and execution and
middle office clearing connectors.
Kim Suter
Chief Financial Officer
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, providing 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 following the
IPO in 2018 as Head of Finance to
set up the Finance function for the
KRM22 group. He has served as
CFO since 2019, with responsibility
for Finance, HR and Legal, and
joined the KRM22 Board in 2020.
Kim is a qualified Chartered
Certified Accountant.
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KRM22 plc
ANNUAL REPORT 2024
Keith Todd CBE
Executive Director
Keith has over 40 years of global
technology business experience
from publicly listed and large multi-
nationals to start-up businesses.
Keith is an Executive Director of
KRM22, having previously held the
role of Executive Chairman and
CEO of KRM22. As well as being
an Executive Director of KRM22, he
is currently Deputy Chairman 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 (previously
CEO, resigned 6 March 2024)
Sandy Broderick
Non-Executive Director
Sandy
was
previously
Non-
Executive Director of AIM quoted
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.
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
continued as an advisor until
March 2024. Steve was previously
a NED of NYSE Euronext LIFFE
(now ICE Europe) and at PATS
Systems, an AIM quoted DMA
system provider.
Steve has a Law degree from
Nottingham University.
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KRM22 plc
ANNUAL REPORT 2024
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 the Code are detailed in this Annual Report and on our website
(www.krm22.com/investors).
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. On 13 November 2023, the QCA issued the third edition
of its QCA code (the “QCA Code (2023)”) for accounting periods commencing on or after 1 April 2024 and the Directors
are working towards compliance with the QCA Code (2023).
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 was admitted to trading 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.
The Board continues to review and refine the strategy of the business 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.
Corporate status: KRM22 (KRM:L) is a closed-ended investment company (CEIC) quoted on the Alternative Investment
Market 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.
Cavendish Capital Markets Limited (“Cavendish”) act as the Company’s NOMAD and broker.
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ANNUAL REPORT 2024
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, Cavendish advises and guides the KRM22
Board on its responsibilities as an AIM quoted business, undertakes due diligence and works as the primary
advisor of the business.
Broker: Cavendish is also the appointed broker of KRM22. In this role Cavendish facilitate communications
with existing and potential new investors. The CEO and CFO regularly meet investors together with
representatives of the broker. Cavendish 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, Legal advisors 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: All financial reports and publicly available information is published on the investor information
section of the KRM22 website. In addition, the CEO and CFO meet with existing institutional fund investors to
communicate progress and plans at least twice a year following the release of the full year and interim results
and are available to meet with them at other times when requested. Other investors are provided a channel
for communication via the KRM22 investor information section of the website and via email contact at
InvestorRelations@krm22.com.
Customers: The Customer Service team hold regular meetings with existing customers to understand their
evolving service needs and customer contracts include defined communication channels for both the
customer and KRM22 to escalate and resolve any service issues. The Revenue team hold meetings and
product demonstrations with potential customers to identify and fully understand their needs as part of the
sales process.
Team: KRM22 has a cross-country, multi-national and diverse team and communicates regularly with the
team in multiple ways. Monthly internal company meetings are held where the Executive team update all staff
on business-wide issues and encourage team participation. In addition, KRM22 uses centralised internal
systems including team-wide easy-to-use 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 new customer contract wins, customer projects and other
business-wide news).
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ANNUAL REPORT 2024
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’s Risk Cockpit application is not only
marketed and sold by KRM22 but is also used 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.
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 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 and three non-executives, which includes the Non-Executive Chairman, which
encourages healthy challenge and debate with the non-executives providing additional independence.
The principal role of the Chairman is to manage and provide leadership to the Board of Directors of the Company and
is accountable to the Board. The principal role of the CEO 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 19 – 20.
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 quoted business.
Skills: Of the six Directors, five have worked within capital markets and two are qualified accountants. All six Directors
have experience of growing businesses and understand 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.
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KRM22 plc
ANNUAL REPORT 2024
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 August 2024. The Non-Executive Directors assessed the Board on:
•
risk management (including Going Concern);
•
adequacy of management information to make decisions and manage risk;
•
the effectiveness of decision processes and decision making;
•
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, especially given the Board changes announced in March 2024, and that they
would 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. The Directors believe in building and maintaining a culture of
transparency and performance and 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 and are
assigned accountabilities which the employee and their line manager are required to review and agree as part of the
appraisal process. 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. As part of compliance
with SOC 2, certain corporate policies and staff handbooks are required to be reviewed by all staff on an annual basis,
thus ensuring that staff are reminded of the corporate culture, ethical values and behaviours which they are expected
to uphold.
In addition, and 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.
25
KRM22 plc
ANNUAL REPORT 2024
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 approval of the
annual budget, share subscriptions and acquisitions, 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.
Risk Management
The Company uses its own Risk Cockpit application 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 delivers much more visibility to the Directors on the
performance KRM22 as a whole.
Independence
At 31 December 2024 the Board was comprised of three Executive Directors and three Non-Executive Directors, which
includes the Non-Executive Chairman. The Non-Executive Directors are considered independent as they have not
previously worked with the executive team.
Under their letters of appointment, the Chairman has a time commitment of four days per month and the two
remaining Non-Executive Directors have a time commitment of two days per month. The executives employed as
CEO and CFO are employed full-time (with time allowed for agreed external professional activities), with the remaining
Executive Director, Keith Todd, required to provide sufficient hours as is reasonably required for the performance of
his duties and responsibilities. All Directors are able to allocate sufficient time to KRM22 to fulfil their responsibilities.
Twelve board meetings were held during the year.
Board meeting
attendance 2024
Maximum possible
meeting attendance
Number of meetings
attended
% of meetings
attended
Executive Directors
Dan Cater
9
9
100
Kim Suter
12
12
100
Keith Todd
12
12
100
Non-Executive Directors
Sandy Broderick
12
11
92
Garry Jones
12
12
100
Steve Sparke
12
11
92
Former Executive Directors
Stephen Casner
2
1
50
Board committees
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/investors). 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 Trading Technologies
International, Inc. (“TT”) to report on financial covenants and forward-looking compliance information as part of the
reporting obligations of the TT Convertible Loan.
The Directors believe that these meetings provide valuable two-way communication and allow investors and TT, as
debt provider, to provide feedback. Other investors are provided a channel for communication via the KRM22 investor
information section on the website and via email contact at InvestorRelations@krm22.com.
26
KRM22 plc
ANNUAL REPORT 2024
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.
Board Committees
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. Each committee has written terms of reference which are available
for review in the investor information section of the website. The committees meet independently of Board meetings.
Audit Committee: The Audit Committee, which meets at least two times a year and at other times as agreed
between the members of the committee, 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 2024, 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 27.
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.
During the year to 31 December 2024, 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
29.
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. During
the year to 31 December 2024, 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
Garry Jones
Non-Executive Chairman
16 May 2025
27
KRM22 plc
ANNUAL REPORT 2024
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 PKF Littlejohn LLP was appointed as auditor of KRM22 plc with the Audit Committee having
undertaken a thorough tender process. In addition to the appointment of PKF Littlejohn LP as auditor, the Audit
Committee reviewed the 2023 annual report, 2024 interim report and the associated announcements whilst also
considering 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 2024 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, 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), members of the Finance team and other Executive Directors may attend Committee meetings by
invitation. The Committee formally met on three 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 2023 audit plan presented by KRM22’s previous auditor, BDO LLP, which set out
the proposed scope of work, audit approach, materiality and identified key audit risk areas;
•
review of the 2023 audited annual report and financial statements;
•
consideration of key audit matters and how they are addressed;
•
review of the unaudited 2024 interim report;
•
reviewing the suitability of the external auditor and the appointment of PKF Littlejohn LLP as the auditor in
October 2024; 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 2024. 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.
28
KRM22 plc
ANNUAL REPORT 2024
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 13 – 15.
Through the control systems outlined in the Statement of Corporate Governance on pages 21 – 26, 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
PKF Littlejohn LLP was appointed auditor of KRM22 in October 2024. Whilst the relationship with the auditor is in its
infancy, 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. PKF Littlejohn LLP did not provide any
non-audit services during the year.
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 2024.
For and on behalf of the Audit Committee
Steve Sparke
Audit Committee Chairman
16 May 2025
29
KRM22 plc
ANNUAL REPORT 2024
REMUNERATION COMMITTEE REPORT
The Board has prepared this report in relation to all Directors who have served during the year to 31 December 2024.
As an AIM quoted 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 2024 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 April
each year. Adjustments are made, if required, to reflect Company and individual performance and competitive pay
levels. The salaries of all Board members were reviewed and amended with effect from 7 March 2024, the date on
which Board changes were announced including the appointment of Dan Carter as Chief Executive Officer and Garry
Jones as Non-Executive Chairman.
30
KRM22 plc
ANNUAL REPORT 2024
Performance bonus
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 cash 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
Date of grant
Exercise price
Vesting period
Number of ordinary
shares under option
Dan Carter 1
23/12/2019
£0.525
23/12/2019 – 22/12/2024
20,000
22/07/2020
£0.300
22/07/2020 – 22/08/2020
7,263
01/10/2020
£0.380
01/10/2020 – 31/10/2020
5,734
06/05/2021
£0.500
06/05/2021 – 06/05/2026
150,000
20/08/2024
£0.400
20/08/2024 – 20/08/2027
250,000
432,997
Kim Suter 2
10/06/2019
£0.850
10/06/2019 – 10/06/2024
50,000
10/06/2019
£0.850
10/06/2019 – 01/03/2020
30,000
23/12/2019
£0.525
23/12/2019 – 22/12/2022
60,000
22/07/2020
£0.300
22/07/2020 – 22/08/2020
21,875
18/09/2020
£0.380
18/09/2020 – 17/09/2023
124,342
01/10/2020
£0.380
01/10/2020 – 31/10/2020
17,270
12/01/2021
£0.365
12/01/2021 – 12/02/2021
17,979
16/12/2022
£0.630
16/12/2022 – 15/12/2025
100,000
20/08/2024
£0.400
20/08/2024 – 20/08/2027
200,000
621,466
Keith Todd
18/09/2020
£0.380
18/09/2020 – 17/09/2023
287,831
287,831
Sandy Broderick 3
10/06/2019
£0.850
10/06/2019 – 03/04/2024
10,000
18/09/2020
£0.380
18/09/2020 – 17/09/2023
59,210
01/10/2020
£0.380
01/10/2020 – 31/12/2020
59,211
128,421
Garry Jones 4
10/06/2019
£0.850
10/06/2019 – 03/04/2024
176,471
01/10/2020
£0.380
01/10/2020 – 31/12/2020
49,342
20/08/2024
£0.400
20/08/2024 – 07/03/2025
100,000
20/08/2024
£0.400
20/08/2024 – 07/03/2026
100,000
425,813
Steve Sparke
01/10/2020
£0.380
01/10/2020 – 31/12/2020
59,211
59,211
Total
1,955,739
RSU holder
Name
Date of award
Vesting period
Number of ordinary
shares under option
Dan Carter
04/08/2023
04/08/2023 – 03/08/2028
64,794
Kim Suter
30/11/2023
30/11/2023 – 29/11/2028
68,685
Stephen Casner 5
18/09/2020
18/09/2020 – 17/09/2025
253,162
Total
386,641
Warrant holder
name
Date of grant
Exercise price
Vesting period
Warrants
Held
Keith Todd
30/04/2018
£1.00
30/04/2018 – 29/04/2021
3,300,000
Stephen Casner
24/04/2018
£1.00
24/04/2018 – 23/04/2021
1,200,000
Total
4,500,000
31
KRM22 plc
ANNUAL REPORT 2024
1 The 20,000 share options awarded to Dan Carter on 23 December 2019 as part of a LTIP automatically lapsed on 22
December 2024 as the performance condition, which formed part of the vesting conditions, was not achieved.
2 The 50,000 and 60,000 share options awarded to Kim Suter as part of a LTIP on 10 June 2019 and 23 December
2019 respectively automatically lapsed on the fifth anniversary of the grant date as the performance condition, which
formed part of the vesting conditions, was not achieved.
3 The 10,000 share options awarded to Sandy Broderick on 10 June 2019 as part of a LTIP automatically lapsed on 10
June 2024 as the performance condition, which formed part of the vesting conditions, was not achieved.
4 The 176,471 share options awarded to Garry Jones on 10 June 2019 as part of a LTIP automatically lapsed on 10
June 2024 as the performance condition, which formed part of the vesting conditions, was not achieved.
5 Following the resignation of Stephen Casner as CEO on 6 March 2024, the 253,162 RSUs awarded on 18 September
2020 were forfeited.
During the year, a total of 920,000 share options were awarded, of which 250,000 were awarded to Dan Carter, 200,000
were awarded to Kim Suter and 200,000 were awarded to Garry Jones as part of a LTIP.
Further information on Equity Incentive Awards is detailed in note 25 to the financial statements.
Outgoing Executive Director remuneration arrangements and payments for loss of office
Stephen Casner, the former CEO of KRM22, stepped down from his role, and departed the Company, effective 6 March
2024. As compensation for loss of office, the Company agreed to pay Stephen Casner a total sum of £0.4m
(US$0.5m). The compensation, which included payment in lieu of notice, private healthcare benefits and forfeiture of
RSU awards, was to be paid over 24 equal instalments, twice a month, commencing in April 2024. The final instalment
was paid in March 2025.
Service contracts
Following the Board changes announced on 7 March 2024, all Executive Directors have employment contracts which
are subject to six months’ notice from either the executive or KRM22 at any given time. Prior to this, the Executive
Director employment contracts were subject to between six and twelve months notice from either the executive or
KRM22. With the exception of the Non-Executive Chairman, the Non-Executive Directors service contracts are subject
to three months’ prior notice from either party. The Non-Executive Chairman was appointed on 7 March 2024 for a
fixed term of two years. Following the two year fixed term, his contract is subject to six months’ notice from either
party.
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.
32
KRM22 plc
ANNUAL REPORT 2024
Directors’ emoluments
The remuneration of the Executive and Non-Executive Directors (audited) for the year ended 31 December 2024 was
as follows:
2024
2023
Salary
& Fees
Benefits
Pension
Total
Salary
& Fees
Benefits
Pension
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Executive Directors
Dan Carter
155
1
8
164
–
–
–
–
Kim Suter
167
1
9
177
161
4
9
174
Keith Todd
35
31
–
66
60
17
–
77
Non-Executive Directors
Sandy Broderick
34
–
–
34
31
–
–
31
Garry Jones
66
–
–
66
26
–
–
26
Steve Sparke
34
–
–
34
31
–
–
31
Former Directors
Stephen Casner
43
–
–
43
241
–
–
241
Total
534
33
17
584
550
21
9
580
The benefits relate to private medical insurance, life insurance, critical illness cover and income protection insurance
for Directors and their immediate families.
Percentage change in Director’s remuneration
The table below shows the percentage change in Executive and Non-Executive Director total remuneration compared
to the change in the average of employees within the Group.
Salary/fees
Taxable benefits
2020
2021 5
2022
2023
2024
2020
2021
2022
2023
2024
Executive Directors
Dan Carter 1
–
–
–
–
–
–
–
–
–
–
Kim Suter
0%
25%
8%
0%
6%
36%
39%
27%
17%
(20%)
Keith Todd 2
0%
0%
(66%)
0%
(50%)
80%
42%
43%
12%
92%
Non-Executive Directors
Sandy Broderick
0%
0%
0%
5%
11%
–
–
–
–
–
Garry Jones 3
0%
0%
0%
6%
183%
–
–
–
–
–
Steve Sparke
0%
0%
0%
5%
11%
–
–
–
–
–
All other employees 4
1%
8%
6%
6%
8%
36%
95%
22%
(6%)
16%
1 Dan Carter was appointed to the Board on 7 March 2024.
2 Prior to 2022, Keith Todd was Executive Chair and CEO of KRM22. From 2022 and up to 6 March 2024 he was
Executive Chairman of KRM22 and, following the Boad changes announced on 7 March 2024, he relinquished the role
of Executive Chairman and became Executive Director only.
3 Garry Jones salary increase reflects the additional responsibility following his appointment as Non-Executive
Chairman on 7 March 2024.
4 Reflects the average of all employees of the Group due to KRM22 plc, the listed parent company, having no
employees who are not Directors.
5 For Board members and ‘All other employees’, the percentage change has been calculated by comparing basic
salaries at the start of the year to those at the end of the year (for those in employment for the full year) and therefore
does not capture any voluntary pay reductions taken by the workforce during the Covid pandemic.
33
KRM22 plc
ANNUAL REPORT 2024
CEO remuneration
The table below shows the remuneration of the CEO for each of the financial years listed below noting that a ten year
comparison is not applicable as KRM22 plc was only incorporated 2018.
Financial Year
2018 1
2019
2020 2
2021 2
2022
2023
2024 3
GBP’000
GBP’000
GBP’000
GBP’000
GBP’000
GBP’000
GBP’000
Incumbent
K Todd
K Todd
K Todd
K Todd
S Casner
S Casner
S Casner/
D Carter
CEO single figure of
remuneration
126
177
20
36
244
241
43/164
Annual bonus (% of maximum)
0%
0%
0%
0%
0%
0%
0%
LTIPs (% of maximum)
0%
0%
0%
0%
0%
0%
0%
1 The CEO single figure of remuneration (excluding share-based payment charge) relates to CEO remuneration paid to
Keith Todd effective from 30 April 2018, this being the date that KRM22 plc listed on AIM.
2 During 2020 and 2021, the CEO took a voluntary pay reduction during the Covid pandemic to help the Company’s
cashflow.
3 Stephen Casner resigned as CEO on 6 March 2024 and Dan Carter was appointed as Group CEO with effect from 7
March 2024. The single figure for 2024 includes the amounts received by Stephen Casner and Dan Carter in relation
to their Executive positions during the year.
Relative importance of spend on pay
During the year ended 31 December 2024, the total pay for all Group employees decreased by 12.4% to £3.5m (2023:
£4.0m). There were no dividends or share buybacks in either year.
Directors’ interests
The Directors who held office at 31 December 2024 had the following interest in the ordinary share capital of the
Company as at that date:
Director
At 31 December 2024
No. of ordinary shares of 10p each
At 31 December 2023
No. of ordinary shares of 10p each
Dan Carter
6,757
5,000
Kim Suter
31,494
26,666
Keith Todd
2,763,677
2,763,677
Sandy Broderick
11,765
11,765
Garry Jones
276,471
176,471
Steve Sparke
273,236
273,236
Sandy Broderick
Remuneration Committee Chairman
16 May 2025
34
KRM22 plc
ANNUAL REPORT 2024
NOMINATION COMMITTEE REPORT
During 2024 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 formally on two occasions in 2024 to consider the appointment of Dan Carter to the Board as Chief
Executive Officer, along with the wider Board changes announced in March 2024, and to undertake an annual review
of Board performance.
The annual review of Board performance was undertaken in August 2024 and 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, especially given the Board changes announced in
March 2024, and that they 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 June 2024. Having reviewed their
performance, the Committee recommended to the Board that the retiring Directors be reappointed to the Board.
Sandy Broderick
Nomination Committee Chairman
16 May 2025
35
KRM22 plc
ANNUAL REPORT 2024
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 2024. 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:
Garry Jones
Non-Executive Chairman (previously Non-Executive Director until 6 March 2024)
Dan Carter
Chief Executive Officer (appointed 7 March 2024)
Kim Suter
Chief Financial Officer
Keith Todd CBE
Executive Director (previously Executive Chairman until 6 March 2024)
Sandy Broderick
Non-Executive Director
Steve Sparke
Non-Executive Director
Stephen Casner
Previously Chief Executive Officer until 6 March 2024 (resigned 6 March 2024)
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.
Credit risk
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.
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KRM22 plc
ANNUAL REPORT 2024
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 (Limits Manager
and Risk Manager) and Corporate (Risk Cockpit and Market Surveillance) risk management applications.
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 13). For the year ended
31 December 2024, total expenditure that has been capitalised on these projects totalled £1.1m (2023: £1.1m).
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 9 – 17 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 51 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 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 forecast 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 KRM22 remaining a going concern and not
being in breach of the financial covenants associated with the TT Convertible Loan is existing customers paying on
payment terms and within 45 days of invoice, customer churn or up to 10%, conversion of some of the sales
opportunities that are currently at contract negotiation stage and maintaining control of the cost base.
The time to close new customers and the value of each customer, which are deemed individually as high value and
low volume in nature, is key to the forecast being achieved and KRM22 continuing to operate within its existing
facilities. However, even if the forecast is achieved, there remains a material uncertainty around KRM22 operating
within the financial covenants associated with TT Convertible Loan. The TT Convertible Loan includes financial
covenants, reported at the end of each quarter, based on the Group’s financial performance and there is a risk that
KRM22 breaches the Cash Covenant, which requires KRM22 to retain a minimum amount of cash, on the 31 December
2025 and 31 March 2026 measurement dates. Failure to comply with a financial covenant will result in an Event of
Default which may result in TT withdrawing the TT Convertible Loan with all accrued amounts becoming immediately
due and payable which would result in KRM22 becoming insolvent.
TT have previously been very supportive of KRM22 in amending the terms of the TT Convertible Loan, as demonstrated
by the revisions agreed in December 2024, March 2025 and April 2025, to ensure that KRM22 did not breach the Cash
Covenants. Past practice provides no guarantee that TT would be amenable to making future changes however
KRM22 and TT are in early discussion on the longer-term plans for the TT Convertible Loan, noting that the three year
term of the facility ends in June 2026. As part of these discussions, and where there is a risk to the Cash Covenant,
amendments could include, but are not limited to, reducing the value of the Cash Covenant at each measurement date
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KRM22 plc
ANNUAL REPORT 2024
so that KRM22’s cash exceeds the minimum cash requirement on each measurement date, conversion of the TT
Convertible Loan or refinancing the TT Convertible Loan with a new debt facility. If the TT Convertible Loan was not
amended, converted or a debt refinance is not completed, KRM22 would be obliged to seek alternative resolution
including implementing extensive cost reduction measures, and in addition the Group is reliant upon the ability to raise
additional funds to ensure it could meet its future liabilities as they fall due.
The Directors have concluded that the circumstances set forth above indicates the existence of a material uncertainty
that may cast significant doubt on KRM22’s ability to continue as a going concern. However, given KRM22’s forecast,
visible sales pipeline, working capital needs and continued support and open dialogue with TT, the Directors have
considered it appropriate to prepare the financial statements on a going concern basis and the financial statements
do not include the adjustments that would be required if KRM22 were unable to continue as a going concern.
See note 3 on page 54 for further information on going concern.
Post year-end reporting date events
On 10 January 2025, the Company issued 70,093 new ordinary shares of 10 pence each in the Company and on 21
March 2025, the Company issued a further 70,093 new ordinary shares of 10 pence each in the Company. Both share
issue transactions were at a price of 85 pence per Ordinary Share and were as consideration for a partial settlement
of the deferred consideration payable in respect of the historical acquisition of Object+ Holding B.V.
On 31 March 2025, the Company amended the terms of the TT Convertible Loan to defer the interest payment that
was due for payment on that date to 30 April 2025. On 28 April 2025, the terms of the TT Convertible Loan were further
amended to reduce the total facility amount from £5.0m to £4.5m, marginally increase the interest rate by 0.25% rising
from 5.5% to 5.75% over SOFR, and resulting in a minimum aggregate rate of 9.5% (previously 9.25%) and defer all
interest payments until 30 June 2026.
Substantial shareholders
The shareholders listed below had a disclosable interest of 3% or more in the nominal value of the ordinary share
capital of the Company.
Number of
ordinary shares
Percentage of
ordinary shares %
Trading Technologies International, Inc.
8,916,584
24.7
Kestrel Partners
6,161,922
17.1
KRM22 Concert Party
4,497,604
12.4
Canaccord Genuity Wealth Management
3,735,000
10.3
Cinnober Financial Technology AB
2,654,434
7.4
Herald Investment Management
2,077,624
5.8
Octopus Investments
1,134,308
3.1
Energy and carbon
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.
Corporate governance
The Company adopts the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (“QCA
guidelines”) as set out on pages 21 – 26.
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KRM22 plc
ANNUAL REPORT 2024
Dividends
No interim dividends were paid and the Directors do not recommend payment of a final dividend however the Directors
may wish to do so in future years.
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.
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.
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KRM22 plc
ANNUAL REPORT 2024
Auditor
PKF Littlejohn 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
16 May 2025
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KRM22 plc
ANNUAL REPORT 2024
Financial Statements
41
KRM22 plc
ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF KRM22 PLC
Opinion
We have audited the financial statements of KRM22 Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for
the year ended 31 December 2024 which comprise the Consolidated Income Statement and Statement of
Comprehensive Income, the Consolidated and Parent Company Statement of Financial Position, the Consolidated and
Parent Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial
statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation 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 United Kingdom Accounting Standards, including FRS 101 Reduced Disclosure Framework.
In our opinion, the financial statements:
•
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 31st December 2024 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.
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 are independent of the 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to note 3 in the financial statements, which indicates that the Group and the Parent Company are
dependent on amending the terms of the convertible loan to ensure associated covenants are not breached, which is
not guaranteed, the Group would also be required to seek alternative sources of funding to meet liabilities as they fall
due. These events or conditions, along with the other matters as set forth in note 3, indicate that a material uncertainty
exists that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
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’s and Parent Company’s ability to continue to adopt the going concern basis of accounting included:
•
We obtained an understanding of the business model, objectives, strategies and related business risk, the
measurement and review of the entity’s financial performance including forecasting and budgeting processes
and the entity’s risk assessment process;
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KRM22 plc
ANNUAL REPORT 2024
•
We assessed Directors’ assumptions into the going concern model including the reliability of underlying data
used to make the assumptions, whether assumptions and changes to assumptions from prior years are
appropriate and consistent with each other;
•
We challenged Directors’ plans for future actions in relation to the going concern assessment including
whether such plans are feasible in the circumstances;
•
We evaluated the base case of the cash forecast prepared by the Directors and performed appropriate audit
procedures around the various scenarios, including reviewing correspondence with the lender regarding the
debt facility.
•
We evaluated the reasonableness of the proposed mitigations and Director's ability to implement them within
12 months from the date of approval of the financial statements.
•
We assessed adequacy and appropriateness of disclosures in the financial statements regarding the going
concern assessment.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and
extent of our audit procedures. The materiality applied to the Group financial statements was £179,000 based on 2%
of the total expenditure at the planning stage. The performance materiality for the Group was set at £125,000, which
is 70% of overall materiality. We have selected 70% based on our risk assessment of the control environment.
The materiality applied to the parent financial statements was £37,000 based on 1% of the total assets at the planning
stage. The performance materiality for the parent was set at £25,000, which is 70% of overall materiality. We have
selected 70% based on our risk assessment of the control environment.
As a Group whose trade is in the process of expanding through product development and existing product revenue
streams, total expenditure was considered the most appropriate benchmark to shareholders. For each component in
the scope of our Group audit, we allocated a materiality that was less than our overall Group materiality.
We agreed with those charged with governance that we would report all differences identified during the course of our
audit in excess of £2,000. We also agreed to report any other differences below that threshold that we believe warrant
reporting on qualitative grounds.
For each component in scope of the audit, we allocated a performance materiality that was less than the Group
performance materiality. The range of performance materiality allocated across the components was between
£62,500 and £68,750.
Our approach to the audit
In designing our audit approach, we determined materiality and assessed the risk of material misstatement in the
Group financial statements. In particular, we looked at areas involving significant accounting estimates and
judgements by the Directors and considered future events that are inherently uncertain including the recognition and
valuation of intangible assets. Procedures were then performed to address the risks identified and for the most
significant assessed risks of misstatement, the procedures performed are outlined below in the key audit matters
section of this report. We also assessed the risk of management override of internal controls, including among other
matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to
fraud.
In addition to the Company, we identified seven material components, which were subject to an audit conducted
directly by us.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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
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KRM22 plc
ANNUAL REPORT 2024
(whether or not due to fraud) 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. In addition to the matter described in the Material uncertainty
related to going concern section we have determined the matters described below to be the key audit matters to be
communicated in our report.
Key audit matter
How our scope addressed this matter
Carrying value of Goodwill and Other Intangible Assets (Note 13)
As shown in note 13 of the financial statements, the
Group reported £5,613,000 (2023: £5,621,000) of
intangible assets as at 31 December 2024.
The Groups intangible assets consist of Goodwill on
Consolidation, Acquired software and related assets, and
capitalised development costs.
A formal impairment assessment for Goodwill is
required an annual basis, with other intangible assets
assessed for impairment indicators under IAS 36.
Management subsequently perform an assessment of
the recoverable amount, which includes a value in use
calculation.
There is a risk that the carrying value of said assets are
in excess of the recoverable amount, and therefore
should be impaired.
Significant management judgement and estimation
uncertainty arises within the value in use calculation, and
therefore this area is deemed to be a Key Audit Matter.
Our work on this key audit matter included but was not
limited to:
•
We obtained the impairment assessment
performed by management at the year end, and
challenged the key inputs and assumptions
used in the model including, but not limited to;
the weighted average cost of capital (“WACC”),
growth rate, terminal values and the forecasted
cash flows.
•
We engaged our internal valuations team to
review
to
key
inputs
to
management’s
impairment assessment.
•
We ensured that the forecasted amounts
included within the value in use assessment
have been approved by the Board, are consistent
with other forecasts provided, were reasonable
based on our understanding of the entity and its
environment.
•
We performed a “look back” test to assess
management’s ability to accurately forecast, by
assessing prior year forecasted figures against
current year actuals.
•
We reviewed the disclosures made in the
financial statements and ensured they meet the
requirements of IAS 36.
Other information
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information contained within the annual
report. 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.
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KRM22 plc
ANNUAL REPORT 2024
Opinions on other matters prescribed by the Companies Act 2006
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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the 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, or returns adequate for our audit have not been received
from branches not visited by us; or
•
the 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, 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 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 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.
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:
•
We obtained an understanding of the Group and Parent Company, the sector in which they operate to identify
laws and regulations that could reasonably be expected to have a direct effect on the financial statements.
We obtained our understanding in this regard through discussions with management, industry research, and
application of cumulative audit knowledge and experience of the sector.
•
We determined the principal laws and regulations relevant to the Group and the Parent Company in this regard
to be those arising from Listing rules, the Companies Act 2006, HM Revenue & Customs Tax Legislation and
Guidance.
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KRM22 plc
ANNUAL REPORT 2024
•
We designed our audit procedures to ensure the audit team considered whether there were any indications of
non-compliance by the Group with those laws and regulations. These procedures included, but were not
limited to:
o
enquiring of management;
o
reviewing of board minutes;
o
reviewing Regulatory News Service announcements; and
o
reviewing legal and regulatory correspondence.
•
We also identified the risks of material misstatement of the financial statements due to fraud. We considered,
in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls,
that the potential for management bias was identified in relation to the recognition and valuation of intangible
assets (refer to the key audit matters section of this report). We addressed this by challenging the
assumptions and judgements made by management when evaluating any indicators of impairment.
•
As in all of our audits, we addressed the risk of fraud arising from management override of controls by
performing audit procedures which included but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business.
•
We addressed matters of non-compliance with laws and regulations by reviewing board minutes, enquiring
about provisions or contingent liabilities and enquiring about any pending litigation and claims.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases
the more that compliance with a law or regulation is removed from the events and transactions reflected in the
financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery,
collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located 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 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 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 company and the company's members
as a body, for our audit work, for this report, or for the opinions we have formed.
Nicholas Joel ACCA (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London E14 4HD
Date: 16 May 2025
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KRM22 plc
ANNUAL REPORT 2024
CONSOLIDATED INCOME STATEMENT AND
STATEMENT OF COMPREHENSIVE INCOME FOR THE
GROUP
For the year ended 31 December 2024
Note
2024
£’000
2023
£’000
Revenue
5
6,769
5,266
Cost of sales
(1,167)
(1,145)
Gross profit
5,602
4,121
Other operating income
6
84
142
Administrative expenses
7
(6,566)
(8,788)
Operating profit/(loss) before interest, taxation, depreciation, amortisation,
share based payment and exceptional items (“Adjusted EBITDA”)
976
(1,399)
Depreciation and amortisation
(1,225)
(1,298)
Impairment on intangible assets
–
(1,593)
Group reorganisation costs
(561)
–
Deferred consideration write back
–
115
Gain on extinguishment of debt (net)
–
127
Unrealised foreign exchange loss
(13)
(539)
Acquisition, funding and debt related expenses
–
(38)
Share-based payment (charge)/credit
(57)
100
Operating loss
(880)
(4,525)
Finance charge (net)
10
(547)
(353)
Loss before taxation
(1,427)
(4,878)
Taxation credit
11
133
259
Loss for the year
(1,294)
(4,619)
Loss for the year attributable to:
Equity shareholders of the parent
(1,294)
(4,619)
(1,294)
(4,619)
Other comprehensive income
Item that may be reclassified subsequently to profit and loss:
Exchange (loss)/gain on translation of foreign operations
(145)
334
Total comprehensive loss for the year
(1,439)
(4,285)
Total comprehensive loss for the year attributable to:
Equity shareholders of the parent
(1,439)
(4,285)
(1,439)
(4,285)
Loss per ordinary share
Basic losses share
12
(3.6p)
(13.0p)
Diluted losses per share
12
(3.6p)
(13.0p)
All amounts relate to continuing activities.
The notes on pages 52 to 80 form part of these financial statements.
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KRM22 plc
ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION FOR THE GROUP
As at 31 December 2024
Note
2024
£’000
2023
£’000
Non-current assets
Goodwill
13
3,485
3,516
Other intangible assets
13
2,128
2,105
Property, plant and equipment
14
19
21
Right of use assets
20
–
136
5,632
5,778
Current assets
Trade and other receivables
16
733
1,142
Cash and cash equivalents
18
1,035
886
1,768
2,028
Total assets
7,400
7,806
Current liabilities
Trade and other payables
19
4,218
3,900
Lease liabilities
20
249
369
Loans and borrowings
21
774
391
Derivative financial liability
27
209
196
5,450
4,856
Net current liabilities
(3,682)
(2,828)
Non-current liabilities
Loans and borrowings
21
4,039
3,887
Deferred tax liability
22
145
164
4,184
4,051
Total liabilities
9,634
8,907
Net liabilities
(2,234)
(1,101)
Equity
Share capital
24
3,596
3,567
Share premium
20,737
20,517
Merger reserve
(190)
(190)
Convertible debt reserve
327
327
Foreign exchange reserve
(259)
(114)
Share-based payment reserve
25
2,723
2,945
Retained deficit
(29,168)
(28,153)
Total equity
(2,234)
(1,101)
The financial statements were approved by the Board and authorised for issue on 16 May 2025 and are signed on its
behalf by:
Kim Suter
Company Secretary
The notes on pages 52 to 80 form part of these financial statements.
48
KRM22 plc
ANNUAL REPORT 2024
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2024
Note
2024
£’000
2023
£’000
Non-current assets
Investments
15
15
1
15
1
Current assets
Trade and other receivables
16
90
82
Cash and cash equivalents
18
35
214
125
296
Total assets
140
297
Current liabilities
Trade and other payables
19
144
195
Loans and borrowings
21
774
391
918
586
Net current liabilities
(778)
(289)
Non-current liabilities
Loans and borrowings
21
4,039
3,887
4,039
3,887
Total liabilities
4,957
4,473
Net liabilities
(4,817)
(4,176)
Equity
Share capital
24
3,596
3,567
Share premium
20,737
20,517
Convertible debt reserve
327
327
Share-based payment reserve
25
2,723
2,945
Retained earnings
(32,200)
(31,532)
Total equity
(4,817)
(4,176)
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 £725,000 (2023: loss of £3,415,000).
The financial statements were approved by the Board and authorised for issue 16 May 2025 and are signed on its
behalf by:
Kim Suter
Company Secretary
The notes on pages 52 to 80 form part of these financial statements.
49
KRM22 plc
ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE GROUP
For the year ended 31 December 2024
Ordinary
Shares
Share
premium
Merger
reserve
Convertible
debt reserve
Foreign
exchange
reserve
SBP
Reserve
Retained
losses
Total
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January 2024
3,567
20,517
(190)
327
(114)
2,945
(28,153)
(1,101)
Loss for the year
–
–
–
–
–
–
(1,294)
(1,294)
Other comprehensive
loss
–
–
–
–
(145)
–
–
(145)
Total comprehensive
loss
–
–
–
–
(145)
–
(1,294)
(1,439)
Allotment of share
capital
29
220
–
–
–
–
–
249
Share-based payments
–
–
–
–
–
(222)
279
57
At 31 December 2024
3,596
20,737
(190)
327
(259)
2,723
(29,168)
(2,234)
For the year ended 31 December 2023
Ordinary
Shares
Share
premium
Merger
reserve
Convertible
debt reserve
Foreign
exchange
reserve
SBP
Reserve
Retained
losses
Total
Equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January 2023
3,567
20,517
(190)
224
(448)
3,045
(23,534)
3,181
Loss for the year
–
–
–
–
–
–
(4,619)
(4,619)
Other comprehensive
gain
–
–
–
–
334
–
–
334
Total comprehensive
gain/(loss)
Convertible debt option
–
–
–
–
–
–
–
103
334
–
–
–
(4,619)
–
(4,285)
103
Share-based payments
–
–
–
–
–
(100)
–
(100)
At 31 December 2023
3,567
20,517
(190)
327
(114)
2,945
(28,153)
(1,101)
The notes on pages 52 to 80 form part of these financial statements.
50
KRM22 plc
ANNUAL REPORT 2024
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
Ordinary
shares
Share
premium
Convertible
debt reserve
SBP
Reserve
Retained
losses
Total
Equity
£’000
£’000
£’000
£’000
£’000
£’000
As at 1 January 2024
3,567
20,517
327
2,945
(31,532)
(4,176)
Loss for the year
–
–
–
–
(725)
(725)
Allotment of share capital
29
220
–
–
–
249
Share-based payments
–
–
–
(222)
57
(165)
As at 31 December 2024
3,596
20,737
327
2,723
(32,200)
(4,817)
For the year ended 31 December 2023
Ordinary
Shares
Share
Premium
Convertible
debt reserve
SBP
Reserve
Retained
losses
Total
Equity
£’000
£’000
£’000
£’000
£’000
£’000
As at 1 January 2023
3,567
20,517
224
3,045
(28,117)
(764)
Loss for the year
Convertible debt option
–
–
–
–
–
103
–
–
(3,415)
–
(3,415)
103
Share-based payments
–
–
–
(100)
–
(100)
As at 31 December 2023
3,567
20,517
327
2,945
(31,532)
(4,176)
The notes on pages 52 to 80 form part of these financial statements.
51
KRM22 plc
ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE GROUP
For the year ended 31 December 2024
2024
£’000
2023
£’000
Cash flows from operating activities
Loss for the year
(1,294)
(4,619)
Adjustments for:
Tax credit
(133)
(259)
Net finance expense
547
353
Amortisation of intangible assets (note 13)
1,081
1,059
Depreciation of property, plant and equipment and right of use assets (note 14)
144
239
Impairment of intangible assets (note 13)
–
1,593
Deferred consideration write back (note 7)
–
(115)
Gain on extinguishment of debt
–
(127)
Unrealised loss on non-GBP denominated loans
13
539
Equity-settled share-based payment charge/(credit) (note 25)
57
(100)
Income taxes received
97
186
512
(1,251)
Decrease in trade and other receivables
409
320
Increase in trade and other payables
502
52
Net cash flows from/(used in) operating activities
1,423
(879)
Cash flows from investing activities
Acquisition deferred consideration payment
–
(43)
Purchase of intangible assets
(1,148)
(1,105)
Purchase of property, plant and equipment
(7)
(16)
Net cash used in investing activities
(1,155)
(1,164)
Cash flows from financing activities
Lease payments principal
(119)
(232)
Lease payments interest
(3)
(18)
Receipts from borrowings
–
4,500
Interest paid
–
(208)
Repayments of borrowings
–
(3,000)
Net cash (used in)/from financing activities
(122)
1,042
Net increase/(decrease) in cash and cash equivalents
146
(1,001)
Cash and cash equivalents at beginning of the year
886
1,900
Effect of foreign exchange rate changes
3
(13)
Cash and cash equivalents at the end of the year
1,035
886
The notes on pages 52 to 80 form part of these financial statements
52
KRM22 plc
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
For the year ended 31 December 2024
1. General information
KRM22 Plc, (the “Company”), is a public company, limited by shares and is quoted on the Alternative Investment Market
(“AIM”). The Company is incorporated and domiciled in the UK. The registered office is 8th Floor, Capital House, 84-
86 King William Street, London, EC4N 7BL. Further Company information can be found on page 82.
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 2024. 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.
The separate financial statements of the Company have been prepared in accordance with Financial Reporting
Standard 101, ‘Reduced Disclosure Framework’ (“FRS 101”), on a historical cost basis and in accordance with the
Companies Act 2006.
The principal accounting policies adopted are the same as those set out in this note 2 to the consolidated financial
statements of the Group except as described in this note.
Disclosure exemptions adopted:
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial
statements, in accordance with FRS 101:
•
The following paragraphs of IAS 1, ‘Presentation of financial statements’:
(a) 10(d) (statement of cashflows);
(b) 16 (statement of compliance with IFRS);
(c) 38A (requirement for minimum of two primary statements, including cash flow statements);
(d) 388-D (additional comparative information);
53
KRM22 plc
ANNUAL REPORT 2024
(e) 111 (statement of cash flows information); and
(f)
134-136 (capital management disclosures).
•
IAS 7, ‘Statement of cash flows’
•
The requirements in IAS 24, ‘Related party disclosures’
Adoption of new and revised standards
The following new accounting standards, and amendments to published standards, effective on or after 1 January
2024, have been endorsed:
•
Amendments to IAS 1: Non-current liabilities with covenants
•
Amendments to IFRS16: Lease liability in a Sale-and-Leaseback
•
Amendments to IAS7 and IFRS7: Supplier Finance Arrangements
The Group has considered the new or revised standards above and concluded that either they are not relevant to the
Group or would not have a material impact on its financial statements
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:
Issue
date
Effective date for
annual periods
beginning
on/after
Expected
Impact
Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rates –
Lack of exchangeability
01-Aug-23
01-Jan-25
None
Amendments to IFRS 1: First-time Adoption of International Financial
Reporting Standards
01-Jul-24
01-Jan-26
None
Amendments to IFRS 7: Financial Instruments: Disclosures and Amendments
to Guidance on Implementing IFRS 7 Financial Instruments: Disclosures
01-Jul-24
01-Jan-26
None
Amendments to IFRS 9: Financial Instruments
01-Jul-24
01-Jan-26
None
Amendments to IFRS 10: Consolidate Financial Statements
01-Jul-24
01-Jan-26
None
Amendments to IAS 7: Statement of Cash Flows
01-Jul-24
01-Jan-26
None
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.
54
KRM22 plc
ANNUAL REPORT 2024
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 KRM22’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 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 forecast 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 KRM22 remaining a going concern and not
being in breach of the financial covenants associated with the TT Convertible Loan is existing customers paying on
payment terms and within 45 days of invoice, customer churn or up to 10%, conversion of some of the sales
opportunities that are currently at contract negotiation stage and maintaining control of the cost base.
The time to close new customers and the value of each customer, which are deemed individually as high value and
low volume in nature, is key to the forecast being achieved and KRM22 continuing to operate within its existing
facilities. However, even if the forecast is achieved, there remains a material uncertainty around KRM22 operating
within the financial covenants associated with TT Convertible Loan. The TT Convertible Loan includes financial
covenants, reported at the end of each quarter, based on the Group’s financial performance and there is a risk that
KRM22 breaches the Cash Covenant, which requires KRM22 to retain a minimum amount of cash, on the 31 December
2025 and 31 March 2026 measurement dates. Failure to comply with a financial covenant will result in an Event of
Default which may result in TT withdrawing the TT Convertible Loan with all accrued amounts becoming immediately
due and payable which would result in KRM22 becoming insolvent.
TT have previously been very supportive of KRM22 in amending the terms of the TT Convertible Loan, as demonstrated
by the revisions agreed in December 2024, March 2025 and April 2025, to ensure that KRM22 did not breach the Cash
Covenants. Past practice provides no guarantee that TT would be amenable to making future changes however
KRM22 and TT are in early discussion on the longer-term plans for the TT Convertible Loan, noting that the three year
term of the facility ends in June 2026. As part of these discussions, and where there is a risk to the Cash Covenant,
amendments could include, but are not limited to, reducing the value of the Cash Covenant at each measurement date
so that KRM22’s cash exceeds the minimum cash requirement on each measurement date, conversion of the TT
Convertible Loan or refinancing the TT Convertible Loan with a new debt facility. If the TT Convertible Loan was not
amended, converted or a debt refinance is not completed, KRM22 would be obliged to seek alternative resolution
including implementing extensive cost reduction measures, and in addition the Group is reliant upon the ability to raise
additional funds to ensure it could meet its future liabilities as they fall due.
The Directors have concluded that the circumstances set forth above indicates the existence of a material uncertainty
that may cast significant doubt on KRM22’s ability to continue as a going concern. However, given KRM22’s forecast,
55
KRM22 plc
ANNUAL REPORT 2024
visible sales pipeline, working capital needs and continued support and open dialogue with TT, the Directors have
considered it appropriate to prepare the financial statements on a going concern basis and the financial statements
do not include the adjustments that would be required if KRM22 were unable to continue as a going concern.
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, ad-hoc development services which are outside the scope of post-contract customer services
covered by the license fee and any other invoiced revenue that is not recognised as recurring revenue.
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 2024, the balance of deferred revenue was £2.8m (2023: £2.2m) 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.
56
KRM22 plc
ANNUAL REPORT 2024
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.
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
-
straight line over 5 – 10 years
Capitalised development costs
-
straight line over 3 years
Customer contracts and relationships
-
straight line over 10 years
Brand (including trademarks)
-
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
-
straight line over 4 years
Office and computer equipment
-
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.
57
KRM22 plc
ANNUAL REPORT 2024
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
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.
58
KRM22 plc
ANNUAL REPORT 2024
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.
Fair value measurement
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
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ANNUAL REPORT 2024
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.
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
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ANNUAL REPORT 2024
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
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.
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ANNUAL REPORT 2024
•
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, warrants and restricted
stock units (“RSUs”) 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.
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 two areas within the financial statements which constitute critical accounting judgements and estimates
as follows:
I.
Capitalisation of development costs (see note 13)
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.
II.
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.
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.
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ANNUAL REPORT 2024
KRM22’s revenue from external customers and information about its non-current assets, excluding deferred tax, by
geography is detailed below:
2024
2023
2024
Revenue
£’000
Non-current
assets
£’000
2023
Revenue
£’000
Non-current
assets
£’000
UK
2,418
2,200
1,906
2,109
Europe
692
1,333
792
1,466
USA
3,315
2,099
2,215
2,203
Rest of world
344
–
353
–
Total
6,769
5,632
5,266
5,778
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 recognised during the year ended 31 December 2024. The
total revenue received from this customer was £1.2m (2023: £0.7m) and is included within the USA segment. No
customer generated more than 10% of revenue in the year ended 31 December 2023.
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.
2024
£’000
2023
£’000
Recurring revenue
6,239
4,769
Non-recurring revenue
530
497
Total
6,769
5,266
2024
£’000
2023
£’000
Trading Risk
3,359
2,487
Corporate Risk
3,002
2,593
Multiple Risk
60
72
TT Platform
348
114
Total
6,769
5,266
6. Other operating income
2024
£’000
2023
£’000
Operating lease income (net)
84
142
Total
84
142
In April 2023, KRM22 entered into an agreement to extend the sublease of some of its office space until the end term
of the headlease which ended in July 2024. The terms of the sublease differed 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 (2023: £0.1m).
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ANNUAL REPORT 2024
7. Operating loss
Operating loss for the year has been arrived at after charging/(crediting) the following:
2024
£’000
2023
£’000
Depreciation of property, plant and equipment
8
6
Depreciation of right of use assets
136
233
Amortisation of intangible assets
1,083
1,054
Impairment of intangible assets
–
1,593
Group reorganisation costs (refer to note below)
561
–
Acquisition, funding and debt expenses (refer to note below)
–
38
Deferred consideration write back (refer to note below)
–
(115)
Short-term rent
46
38
Foreign currency exchange losses
47
544
I.
Group reorganisation costs
The Group incurred total one-off costs of £0.6m for the year ended 31 December 2024 covering redundancy
and separation costs associated with a cost savings programme implemented in January 2024. There were
no Group reorganisation costs incurred in the year ended 31 December 2023.
II.
Acquisition, funding and debt related costs
In the year ended 31 December 2023, acquisition, funding and debt related costs of £0.04m were incurred in
connection with the replacement of the Kestrel Convertible Loan facility with the TT Convertible Loan facility.
There were no acquisition, funding and debt related costs incurred in the year ended 31 December 2024.
III.
Deferred consideration write back
On 19 December 2023, the Company signed an addendum (the “2023 Addendum”) to the Object+ Share
Purchase Agreement dated 29 May 2019. Under the terms of the 2023 Addendum, the deferred consideration
of US$1.1m (£0.9m) associated with the third and final performance milestone, which the Directors believe
has been achieved, was reduced by US$0.2m (£0.2m) to US$0.9m (£0.7m) in return for a cash payment of
US$0.1m (£0.04m) to the Seller of Object+. There was no deferred consideration write back or charge
recognised in the year ended 31 December 2024.
8. Auditor’s remuneration
2024
£’000
2023
£’000
For audit services
Audit of the financial statements of the Company
90
152
90
152
For other services
Tax services of the Company
–
8
Tax services for the Company’s subsidiaries
–
25
–
33
Auditor’s remuneration recognised in the year ended 31 December 2023 relate to fees paid the Company’s previous
auditor, BDO LLP.
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ANNUAL REPORT 2024
9. Employee information
I.
Employee numbers
With the exception of the Directors of the Company, all employees of the KRM22 Group are employed by the
various subsidiary undertakings of KRM22 plc and therefore the information below reflects the average monthly
number of employees of the Group, including Executive Directors, employed by KRM22 during the year.
2024
No.
2023
No.
UK
25
25
Europe
9
10
USA
12
14
Rest of world
–
1
Total
46
50
II.
Employee benefits
The aggregate payroll cost of these persons were as follows:
2024
£’000
2023
£’000
Wages and salaries
3,329
3,802
Social security costs
247
270
Pension costs to defined contribution schemes
133
149
Share-based payments charge/(credit)
57
(100)
Total
3,766
4,121
III.
Directors’ remuneration
The remuneration of the Directors, who also represent the key management personnel of KRM22, during the
year was as follows:
2024
£’000
2023
£’000
Remuneration for qualifying services
567
571
Pension contributions to defined contribution schemes
17
9
Share-based payment charge
16
21
Total
600
601
Full details of Directors’ remuneration is presented in the Remuneration Committee report on pages 29 – 33.
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2024
£’000
2023
£’000
Remuneration for qualifying services
167
241
Total
167
241
The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to
2 (2023: 1).
10. Finance expense
2024
£’000
2023
£’000
Interest income
(5)
(4)
Interest expense on financial liabilities
549
339
Interest expense on lease liabilities
3
18
Net finance expense
547
353
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KRM22 plc
ANNUAL REPORT 2024
11. Taxation
2024
£’000
2023
£’000
Current tax
UK Corporation tax at 25% on loss for the year (2023: 23.5%)
–
–
Income tax on foreign subsidiaries
–
(2)
Research and Development tax credits
(97)
(186)
Total current tax
(97)
(188)
Deferred tax
Origination and reversal of temporary differences
–
–
Intangible assets recognised on acquisition
(36)
(71)
Total deferred tax (note 22)
(36)
(71)
Total tax credit
(133)
(259)
The tax expense differs from the standard rate of corporate tax in the UK for the year of 25.0% for the following
reasons:
2024
£’000
2023
£’000
Losses before tax
(1,294)
(4,619)
Loss before tax based on corporation tax 25% (2023: 23.5%)
(324)
(1,085)
Expenses not deductible for tax purposes
30
68
Intangible assets recognised on acquisition
(36)
(71)
Income tax on foreign subsidiaries
–
(2)
Losses carried forward
197
831
Total tax credit
(133)
(259)
For information on the Group’s total available tax losses, see note 22.
12. Loss per share
Basic earnings per share is calculated by dividing the loss attributable to the equity holders of KRM22 by the basic
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.
2024
£’000
2023
£’000
Loss for the year attributable to equity holders of the parent
(1,294)
(4,619)
Basic weighted average number of shares in issue
35,815,256
35,666,336
Diluted weighted average number of shares in issue
46,318,047
46,492,491
(3.6p)
(13.0p)
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ANNUAL REPORT 2024
13. Intangible assets
2024
Goodwill on
Consolidation
£’000
Acquired
software and
related assets
£’000
Capitalised
development
costs
£’000
Total
£’000
Cost
At 1 January 2024
7,807
2,887
4,649
15,343
Additions
–
–
1,148
1,148
Foreign exchange movements
(35)
(7)
(284)
(326)
At 31 December 2024
7,772
2,880
5,513
16,165
Accumulated amortisation
At 1 January 2024
4,291
2,223
3,208
9,722
Amortisation for the year
–
126
957
1,083
Foreign exchange movements
(4)
35
(284)
(253)
At 31 December 2024
4,287
2,384
3,881
10,552
At 31 December 2023
3,516
664
1,441
5,621
At 31 December 2024
3,485
496
1,632
5,613
2023
Goodwill on
Consolidation
£’000
Acquired
software and
related assets
£’000
Capitalised
development
costs
£’000
Total
£’000
Cost
At 1 January 2023
8,053
2,944
3,564
14,561
Additions
–
–
1,105
1,105
Foreign exchange movements
(246)
(57)
(20)
(323)
At 31 December 2023
7,807
2,887
4,649
15,343
Accumulated amortisation
At 1 January 2023
2,886
1,976
2,288
7,150
Amortisation for the year
–
228
826
1,054
Impairment charge for the year
1,497
–
96
1,593
Foreign exchange movements
(92)
19
(2)
(75)
At 31 December 2023
4,291
2,223
3,208
9,722
At 31 December 2022
5,167
968
1,276
7,411
At 31 December 2023
3,516
664
1,441
5,621
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 of intangible assets at £5.6m 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 FY25 budget approved by the Directors. The other key assumptions
used were:
•
The discount rate (WACC) of 14.7% (2023: 13.0%) and has been calculated using a capital asset pricing model.
The WACC has been adjusted to reflect risks specific to each CGU not already reflected in the future cash
flows for that CGU. An increase of 1% in WACC rate would result in a reduction of £0.2m in the recoverable
amount of intangible assets.
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ANNUAL REPORT 2024
•
Long-term growth rate of 2.0% (2023: 2.0%). The long-term growth rate is derived from management’s
estimates, taking into account the long-term nature of the market in which each CGU operates and external
long-term growth forecasts. An increase of 1%, in the long-term growth rate would result in an increase of
£0.9m in the recoverable amount of intangible assets.
14. Property, plant and equipment
Fixtures and
Fittings
Office
equipment
Total
2024
£’000
£’000
£’000
Cost
At 1 January 2024
157
87
244
Additions
–
7
7
Disposals
(152)
(57)
(209)
Foreign exchange movements
(5)
–
(5)
At 31 December 2024
–
37
37
Accumulated depreciation
At 1 January 2024
157
66
223
Depreciation charge for the year
–
8
8
Disposals
(152)
(56)
(208)
Foreign exchange movements
(5)
–
(5)
At 31 December 2024
–
18
18
Net book value at 31 December 2023
–
21
21
Net book value at 31 December 2024
–
19
19
Fixtures and
Fittings
Office
equipment
Total
2023
£’000
£’000
£’000
Cost
At 1 January 2023
164
103
267
Additions
–
16
16
Disposals
–
(30)
(30)
Foreign exchange movements
(7)
(2)
(9)
At 31 December 2023
157
87
244
Accumulated depreciation
At 1 January 2023
164
92
256
Depreciation charge for the year
–
6
6
Disposals
–
(30)
(30)
Foreign exchange movements
(7)
(2)
(9)
At 31 December 2023
157
66
223
Net book value at 31 December 2022
–
11
11
Net book value at 31 December 2023
–
21
21
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ANNUAL REPORT 2024
15. Investment in subsidiaries
2024
£’000
2023
£’000
Cost
At 1 January 2024
1
732
Additions
14
48
Adjustments
–
(162)
Impairment
–
(617)
At 31 December 2024
15
1
Carrying amount
At 1 January 2024
1
732
At 31 December 2024
15
1
The additions recognised in 2024 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 adjustments in 2023 represents the write back of previously recognised share capital
contributions from share options issued by the Company to employees of the appropriate subsidiaries, and where the
performance condition attached to these share options lapsed, resulting in the write back of share option expense
recognised in the appropriate subsidiaries. The capital contribution transaction is a non-cash transaction.
Details of the Company’s subsidiaries at 31 December 2024 are as follows:
Name of undertaking
Registered office
Ownership interest and
voting rights
Nature of business
KRM22 Central Limited *
8th Floor, Capital House
84-86 King William Street
London, EC4N 7BL, UK
100%
Administrative and sales
company
KRM22 Development Limited
8th Floor, Capital House
84-86 King William Street
London, EC4N 7BL, UK
100%
Development services
KRM22 Americas Inc.
1 South Wacker Drive,
Suite 1200, Chicago
IL 60606, USA
100%
Administrative and sales
company
KRM22 ProOpticus LLC
1 South Wacker Drive,
Suite 1200, Chicago
IL 60606, USA
100%
Administrative and sales
company
KRM22 Netherlands B.V.
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
100%
Non-trading intermediate
holding company
KRM22 Market Surveillance
Limited **
The Old Brewhouse
49 – 51 Brewhouse Hill
St Albans, AL4 8AN, UK
100%
In liquidation
Object+ Holding B.V.
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
100%
Non-trading intermediate
holding company
Object+ B.V.
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
100%
Non-trading intermediate
holding company
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ANNUAL REPORT 2024
Name of undertaking
Registered office
Ownership interest and
voting rights
Nature of business
Object+ Financial Services B.V.
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
100%
Administrative company
Object+ Financial Products B.V.
Kleine-Gartmanplantsoen 21-2
1017RP, Amsterdam
The Netherlands
100%
Sales company
Object+ Americas LLC
1 South Wacker Drive,
Suite 1200, Chicago
IL 60606, USA
100%
Sales company
* Shares held directly by KRM22 Plc
** KRM22 Market Surveillance Limited was dissolved on 7 January 2025
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)
16. Trade and other receivables
Trade receivables disclosed below are classified as loans and receivables and are therefore measured at amortised
cost.
Aging of due and past due but not impaired receivables
2024
Group
£’000
2024
Company
£’000
2023
Group
£’000
2023
Company
£’000
Amounts falling due within one year:
Trade receivables
335
–
706
–
Other receivables
63
11
227
6
Prepayments and accrued income
335
79
209
76
Total trade and other receivables due within one year
733
90
1,142
82
The carrying value of trade and other receivables approximates fair value.
At 31 December 2024, the Group had trade receivables falling due within one year of £0.3m including provisions of
£0.0m (2023: £0.7m including provisions of £0.1m), other receivables falling due within one year of £0.1m including
provisions of £0.0 (2023: £0.2m including provisions of £nil). As noted below at 31 December 2024, the Company had
amounts due from group undertakings falling due after more than one year of £nil (2023: £nil).
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. Based on historical observed default rates, the estimated impairment
loss is immaterial. In line with Group policy, outstanding receivables are actively monitored and discussed by
management. There are no doubts as to the future recoverability of these balances.
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.
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KRM22 plc
ANNUAL REPORT 2024
There are significant doubts as to the future recoverability of these intercompany balances, and as such, a provision
for bad and doubtful debts of £2.1m (2023: £4.0m) 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
2024
£’000
2023
£’000
0 – 30 days
61
357
31 – 60 days
274
–
61 – 90 days
–
272
91+ days
–
77
Total trade and other receivables due in less than one year
335
706
18. Cash and cash equivalents
2024
Group
£’000
2024
Company
£’000
2023
Group
£’000
2023
Company
£’000
Cash at banks and on hand
1,035
35
886
214
1,035
35
886
214
19. Trade and other payables
2024
Group
£’000
2024
Company
£’000
2023
Group
£’000
2023
Company
£’000
Amounts falling due within one year:
Trade payables
337
65
367
38
Accruals and deferred income
3,215
79
2,494
157
Social security and other taxation
145
–
138
–
Other payables
521
–
871
–
Provision for dilapidations
–
–
30
–
Total due within one year
4,218
144
3,900
195
The fair value of trade and other payables are the same as the carrying values.
Other payables at 31 December 2024 of £0.5m (2023: £0.9m) include £0.5m (2023: £0.7m) related to deferred
consideration associated with the acquisition of Object+. The deferred 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.
At 31 December 2023 trade and other payables included a provision for dilapidations in connection with expected
future expenditure in accordance with lease obligations based on the Group’s best estimate of the likely committed
cash outflow. The Group’s final lease ended in July 2024, with the final dilapidation costs known and settled in the
year ended 31 December 2024.
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KRM22 plc
ANNUAL REPORT 2024
20. Leases – right of use assets and lease liabilities
Right of use assets
2024
Total
£’000
Cost
At 1 January 2024
1,092
Disposals
(1,092)
At 31 December 2024
–
Accumulated depreciation
At 1 January 2024
956
Depreciation charge for year
136
Disposals
(1,092)
At 31 December 2024
–
Net book value at 31 December 2023
136
Net book value at 31 December 2024
–
2023
Total
£’000
Cost
At 1 January and 31 December 2023
1,092
Accumulated depreciation
At 1 January 2023
723
Depreciation charge for year
233
At 31 December 2023
956
Net book value at 31 December 2022
369
Net book value at 31 December 2023
136
Lease liabilities
2024
£’000
2023
£’000
Cost
At 1 January
369
615
Interest expense
3
18
Lease Payments
(119)
(250)
Foreign exchange movements
(4)
(14)
At 31 December
249
369
The maturity of the lease liabilities is as follows:
2024
£’000
2023
£’000
Amounts payable under leases
Within one year
249
369
249
369
At 31 December 2024, KRM22 no longer had any office leases accounted for as right of use assets, however the lease
liability of £0.2m relates to a disputed liability associated with a lease that expired in 2022.
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KRM22 plc
ANNUAL REPORT 2024
21. Loans and borrowings
2024
£’000
2023
£’000
Current
Secured loans
774
391
774
391
Non-Current
Secured loans
4,039
3,887
4,039
3,887
4,813
4,278
The fair value of loans and borrowings are the same as the carrying values.
On 17 June 2023, the Company entered into an agreement for a new three year £5.0m convertible loan facility (the
“TT Convertible Loan”) with Trading Technologies International, Inc. (“TT”), with a total of £4.5m drawn down in the
year ended 31 December 2023, of which £3.1m of the proceeds was used to replace the Company’s outstanding
balance, inclusive of principal and accrued interest, of the existing convertible loan (the “Kestrel Convertible Loan”)
with Kestrel Partners LLP. The term of the TT Convertible Loan can be extended by a further year to a total of four
years.
At 31 December 2024, the interest rate payable on the TT Convertible Loan is the average 90 day Secured Overnight
Financing Rate (“SOFR”) and a margin of 5.5%, subject to a minimum aggregate percentage rate per annum of 9.25%.
Interest is payable quarterly in arrears with KRM22 having the ability to defer interest payments in the initial 18 months
(the “Initial Interest Period”), with the total deferred interest in the Initial Interest Period being paid in two equal
instalments on the calendar quarters ending after the 18th and 21st month anniversary of the facility, i.e. 31 December
2024 and 31 March 2025. On 20 December 2024, the TT Convertible Loan agreement (the “TT Loan Agreement”) was
amended to defer the total deferred interest in the Initial Interest Period to being paid in one instalment on the calendar
quarter ending after the 21st month anniversary of the facility, i.e. 31 March 2025.
Under the terms of the TT Loan Agreement, including any amendments to the TT Loan Agreement, any amounts
drawn down form the TT Convertible Loan can be converted into new Ordinary Shares in the Company by TT at any
time at a fixed price of £0.46. 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 including ARR, revenue recognition and solvency.
The TT 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, which was deferred for the initial 18 months and
to be paid on the calendar quarters ending after 21st month anniversary of the facility, and a requirement to repay the
principal amount at the end of three-year TT Convertible Loan term, subject to the conversion option not being
exercised by TT. The TT Convertible Loan is classified as being a compound financial instrument and on this basis
IAS 32 requires that the TT 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 (12.427%). The equity component is
assigned as the residual amount of £0.3m (see SOCE on page 49), by deducting the amount calculated for the liability
component from the fair value of the instrument as a whole. As the TT Convertible Loan is not quoted on an active
market, the total amounts drawn down of £4.5m for the instrument is its fair value. The carrying amount of the liability
component of the TT Convertible Loan is adjusted for total transaction costs incurred of £0.2m.
As detailed in note 30, on 28 April 2025, the TT Loan Agreement was amended to reduce the facility amount to £4.5m,
this being the total amounts drawn down from the facility, defer payment of all interest until June 2026 and increase
the margin to 5.75%, subject to a minimum aggregate percentage rate per annum of 9.50%.
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KRM22 plc
ANNUAL REPORT 2024
22. Deferred tax
Intangible assets recognised
on acquisition
Total
£’000
£’000
Deferred tax liability at 1 January 2023
245
245
Income statement (credit)
(71)
(71)
Foreign exchange movements
(10)
(10)
Deferred tax liability at 31 December 2023
164
164
Income statement (credit)
(36)
(36)
Foreign exchange movements
17
(10)
Deferred tax liability at 31 December 2024
145
118
KRM22 has tax losses of £16.9m (2023: £16.2m) 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 £4.3m
(2023: £4.0m).
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.
A deferred tax liability of £0.1m (2023: £0.2m) has been recognised in relation to intangible assets of £2.9m (2023:
£2.9m) that arose on the acquisition of 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 26% on our overseas jurisdictions.
23. Commitments
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:
2024
£’000
2023
£’000
Due within one year
14
3
14
3
24. Share capital
2024
No.
2024
£’000
2023
No.
2023
£’000
Issued and fully paid 10p Ordinary shares
At 1 January
Additions
35,666,336
294,393
3,567
29
35,666,336
–
3,567
–
At 31 December
35,960,729
3,596
35,666,336
3,567
74
KRM22 plc
ANNUAL REPORT 2024
During the year ended 31 December 2024, the Company issued a total of 294,393 new ordinary shares at a price of 85
pence per share as consideration for partial settlement of the Object+ Holding BV deferred consideration. See note
28 for further information.
25. Share–based payments
Warrants
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. A total of 920,000 share options were granted to employees during the year
ended 31 December 2024 and in prior years, the Company has granted a combination of LTIP Options, Salary Sacrifice
Options, Salary Deferral Options and Salary Deferral Bonus Options under the ESOP.
LTIP Options are awarded as part of a long-term incentive plan. The LTIP Options that were awarded prior to the year
ended 31 December 2024 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. If the share price performance has not been achieved by the third anniversary of the grant date,
the vesting period is extended for a further two years to the fifth anniversary of the grant date, provided the employee
remains employed by KRM22. If the share price performance has not been achieved by the fifth anniversary of the
grant date, the LTIP Options automatically lapse. The LTIP Options awarded in the year ended 31 December 2024
vest over a three-year period and are not subject to any share price performance conditions.
Salary Sacrifice Options have previously been awarded to employees who waived a proportion of their salary on a
short-term basis to help the Company’s cashflow. 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.
Salary Deferral Options were granted in 2019 to employees who accepted a temporary salary deferral to help the
Company’s cashflow and who were due to be paid the amount of salary deferred as a cash bonus (the “Salary Deferral
Cash Bonus”) when the Company’s cashflows permitted. The Salary Deferral Options vested over a one-year period,
are not subject to any share price performance conditions and lapse on termination of employment with the Company.
Salary Deferral Bonus Options were granted in 2020 to employees who waived their right to receive their Salary Deferral
Cash Bonus to help the Company’s cashflow. The Salary Deferral Bonus Options 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.
Under the terms of the ESOP, the Directors can exercise their discretion to allow employees to retain their LTIP Options,
Salary Sacrifice Options and Salary Deferral Options if an employee ceases to be employed by KRM22. All other terms
within the ESOP and individual option agreements remain, and in respect of the LTIP Options, are subject to the
performance conditions (if applicable) being achieved.
75
KRM22 plc
ANNUAL REPORT 2024
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 85.0 pence per share. The weighted average
remaining contractual life of the share options outstanding at 31 December 2024 is 2 years and 4 months (2023: 11
months).
Weighted
average
exercise price
£
2024
Number
Weighted
average
exercise price
£
2023
Number
Outstanding at 1 January
0.79
9,870,523
0.79
10,556,004
Granted during the year
0.40
920,000
–
–
Forfeited during the year
0.42
(63,815)
0.52
(12,481)
Lapsed during the year
0.66
(638,471)
1.01
(673,000)
Outstanding at 31 December
0.77
10,088,237
0.80
9,870,523
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:
Grant month
Jun
2019
Jul
2020
Sep
2020
Oct
2020
Jan
2021
Weighted average share price at grant date
£0.770
£0.280
£0.380
£0.380
£0.365
Exercise price
£0.850
£0.300
£0.380
£0.380
£0.365
Weighted average contractual life
1 year
3 years
3 years
3 years
3 years
Expected volatility
30%
30%
30%
30%
30%
Expected dividend growth rate
–
–
–
–
–
Risk-free interest rate
0.86%
0.86%
0.86%
0.86%
0.86%
Note
(c)
(d)
(e)
(d)
(d)
Grant month
May
2021
Feb
2022
Dec
2022
Aug
2024
Weighted average share price at grant date
£0.475
£0.450
£0.480
£0.285
Exercise price
£0.500
£0.450
£0.630
£0.400
Weighted average contractual life
3 years
3 years
3 years
3 years
Expected volatility
30%
30%
30%
30%
Expected dividend growth rate
–
–
–
–
Risk-free interest rate
0.86%
1.07%
3.30%
3.79%
Note
(a)
(d)
(a)
(b)
Note:
(a) LTIP Share Options (with performance conditions)
(b) LTIP Share Options (with no performance conditions)
(c) Salary Deferral Options
(d) Salary Sacrifice Options
(d) Salary Deferral Bonus Options
76
KRM22 plc
ANNUAL REPORT 2024
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:
2018
Weighted average share price at grant date
£1.3198
Exercise price
£1.00
Weighted average contractual life
3 years
Expected volatility
30%
Expected dividend growth rate
–
Risk-free interest rate
0.8287%
Restricted Stock Units
KRM22 has awarded staff Restricted Stock Units (“RSUs”) to employees, including Executive Directors, as part of a
long-term incentive plan. The RSUs vest over a period of five years from the date of award and lapse if an employee
ceases to be employed by KRM22.
2024
Number
2023
Number
Outstanding at 1 January
843,077
253,162
Awarded during the year
5,000
608,344
Forfeited during the year
(341,175)
(18,429)
Outstanding at 31 December
506,902
843,077
At 31 December 2024, the remaining balance of RSUs that had been awarded, and which had not been forfeited, was
506,902 (2023: 843,077) and the RSUs vest on the fifth anniversary of the award date.
Award date
Aug
2023
Nov
2023
Jun
2024
Aug
2024
Total
Number
432,217
69,685
3,000
2,000
506,902
The net share-based payment expense recognised in the income statement for the year ending 31 December 2024
arising from equity-settled share-based payment transactions, including Warrants, ESOP and RSUs amounted to a
charge of £0.1m (2023: credit of £0.1m). As a result of the lapsed and forfeited equity-settled share-based payment
transactions in the year ended 31 December 2024, there was a credit of £0.3m (2023: £nil) recognised directly to
reserves. The share-based payment reserve at 31 December 2024 amounted to £2.7m (2023: £2.9m).
26. Capital commitments
At 31 December 2024 KRM22 had no material capital commitments (2023: £nil).
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.
77
KRM22 plc
ANNUAL REPORT 2024
The table below analyses financial instruments carried at fair value by hierarchy level.
2024
Group
£’000
2024
Company
£’000
2023
Group
£’000
2023
Company
£’000
Financial assets
Cash at banks and on hand – unrestricted
1,035
35
886
214
Trade and other receivables
398
11
933
6
1,433
46
1,819
220
Financial liabilities
Trade and other payables
858
65
1,238
38
Accruals
414
79
330
157
Derivative financial liability at FVTPL (Level 1)
209
–
196
–
Loans and borrowings
4,813
–
4,278
–
Finance lease obligations
249
–
369
–
6,543
144
6,411
195
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 “Harbert 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 Harbert
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:
2024
Share price at reporting date
£0.275
Exercise price
£1.01
Expiry period
4 years
Expected volatility
30%
Expected dividend growth rate
–
Risk-free interest rate
5.13%
Financial risk management
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.
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.
78
KRM22 plc
ANNUAL REPORT 2024
USD
EUR
CZK
Year ended 31 December 2023
Average rate
1.25
1.15
27.59
Year-end spot rate
1.27
1.15
28.48
Year ended 31 December 2024
Average rate
1.28
1.18
29.77
Year-end spot rate
1.26
1.21
30.38
Foreign currency sensitivity analysis
The following table details KRM22’s sensitivity analysis to a 10% (2023: 10%) 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% (2023: 10%) strengthening of Sterling against the relevant currency there
would be a comparable impact on financial performance.
Loss
2024
£’000
Other equity
2024
£’000
Loss
2023
£’000
Other equity
2023
£’000
US Dollar
(58)
(312)
(79)
(250)
Euros
3
(7)
(4)
(9)
Czech Kroner
(120)
(474)
(89)
(355)
(175)
(793)
(172)
(614)
Interest rate sensitivity analysis
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 interest rate payable on the TT Convertible Loan is the
average 90 day Secured Overnight Financing Rate (“SOFR”) and a margin of 5.5%, subject to a minimum
aggregate percentage rate per annum of 9.25%. The Directors therefore believe that any movement in the 90
day SOFR could have a significant impact on the amount of interest paid on the TT Convertible Loan on an
annual basis compared with the annual interest being paid of £0.5m based on the 90 day SOFR at 31
December 2024 of 4.69157%.
Change in 90 day
average SOFR rate
Total sensitised interest rate
(90 day average SOFR plus margin)
Annual interest charge
£’000
0.0%
10.19157%
459
(1.5%)
8.69157%
391
1.5%
11.69157%
526
3.0%
13.19157%
594
5.0%
15.19157%
684
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.
Trade receivables
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.
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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 17.
c) Liquidity risk
KRM22 is not currently cash generative, however funds were raised as part of the IPO, subsequent share
placements and the TT 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:
Within 1 year
£’000
1 to 2 years
£’000
2 to 5 years
£’000
Total
£’000
At 31 December 2023
Trade and other payables
1,736
–
–
1,736
Secured loans (gross)
391
893
4,733
6,017
Finance lease obligations
369
–
–
369
At 31 December 2024
Trade and other payables
1,417
–
–
1,417
Secured loans (gross)
1,262
4,652
–
5,914
Finance lease obligations
249
–
–
249
Capital risk management
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.
28. Business combinations
Object+ Holding B.V.
On 30 May 2019 KRM22 Netherlands B.V., a wholly owned subsidiary of KRM22 Central Limited, acquired Object+
Holding B.V. and its subsidiaries Object+ B.V., Object+ Financial Services B.V., Object+ Financial Products B.V. and
Object+ Americas LLC (collectively “Object+”), a risk management and post-trade services technology business
focused on capital markets.
The acquisition included deferred consideration which was payable in three tranches subject to earn-out conditions
which can be satisfied in either cash or Company ordinary shares at the Company’s discretion. The first two earn-out
conditions were not achieved however the Directors believe that the third and final performance milestone has
previously been achieved.
During the year ended 31 December 2024, a total of US$0.3m (£0.3m) of the deferred consideration was settled in
Company ordinary shares. At 31 December 2024, the fair value of the balance of deferred consideration was US$0.6m
(£0.5m). As detailed in note 30, US$0.75m of the deferred consideration was settled in Company ordinary shares on
15 January 2025 and a further US$0.75m of the deferred consideration was settled in Company ordinary shares on
21 March 2025.
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29. 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:
2024
£’000
2023
£’000
Short-term employee benefits
567
571
Retirement benefits
17
9
Share-based payment charge
16
21
Total
600
601
Related party transactions
Trading Technologies International, Inc. (“TT”) is a 24.8% shareholder of the Company and during the year, the Group
recognised revenue from TT of £1.2m (2023: £0.5m) under normal commercial terms. At 31 December 2024, the
balance due to the Group from TT was £0.1m (2023: £0.1m). In addition, TT and its subsidiaries provided services to
the Group during the year ended 31 December 2024 of £0.1m (2023: £0.02m) and the balance due to TT and its
subsidiaries from the Group at 31 December 2024 was £0.02m (2023: £0.01m).
On 17 June 2023, the Company entered into an agreement for a £5.0m convertible loan facility (the “TT Convertible
Loan”) arranged by TT, with a total of £4.5m drawn down in the year ended 31 December 2023, of which £3.1m was
used to repay the outstanding Kestrel Convertible Loan debt of £3.0m plus interest of £0.1m and to support future
business growth. No further amounts were drawn down in the year ended 31 December 2024.
The interest rate payable on the TT Convertible Loan is the average 90 day Secured Overnight Financing Rate (“SOFR”)
and a margin of 5.5%, subject to a minimum aggregate percentage rate per annum of 9.25%. Interest is payable
quarterly in arrears with KRM22 having the ability to defer interest payments in the initial 18 months (the “Initial Interest
Period”), with the total deferred interest in the Initial Interest Period being paid in two equal instalments on the calendar
quarters ending after the 18th and 21st month anniversary of the facility, i.e. 31 December 2024 and 31 March 2025.
On 20 December 2024, the terms of the TT Convertible Loan (the “TT Loan Agreement”) was amended to defer the
total deferred interest in the Initial Interest Period to be paid in one instalment on the calendar quarter ending after the
21st month anniversary of the facility, i.e. 31 March 2025. The total interest charged in the year ended 31 December
2024 was £0.5m (2023: £0.2m). At 31 December 2024, the total amount of loan, including accrued interest, due to TT
from the Company was £5.3m (2023: £4.7m).
Under the terms of the TT Loan Agreement, including any amendments to the TT Loan Agreement, any amounts
drawn down form the TT Convertible Loan can be converted into new Ordinary Shares in the Company by TT at any
time at a fixed price of £0.46. 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 including ARR, revenue recognition and solvency.
In the year ended 31 December 2023, KRM22 repaid its previous £3.0m loan facility (the “Kestrel Convertible Loan”)
with Kestrel Partners LLP (“Kestrel”) plus accrued interest at the settlement date of £0.1m. There were no related
party transactions with Kestrel in the year ended 31 December 2024. Kestrel, inclusive of beneficial interests, is a
17.1% shareholder of the Company.
30. Events after the reporting date
On 10 January 2025, the Company issued 70,093 new ordinary shares of 10 pence each in the Company and on 21
March 2025, the Company issued a further 70,093 new ordinary shares of 10 pence each in the Company. Both share
issue transactions were at a price of 85 pence per Ordinary Share and were as consideration for a partial settlement
of the deferred consideration payable in respect of the historical acquisition of Object+ Holding B.V.
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On 31 March 2025, the Company amended the terms of the TT Convertible Loan to defer the interest payment that
was due for payment on that date to 30 April 2025. On 28 April 2025, the terms of the TT Convertible Loan were further
amended to reduce the total facility amount from £5.0m to £4.5m, marginally increase the interest rate by 0.25% rising
from 5.5% to 5.75% over SOFR, and resulting in a minimum aggregate rate of 9.5% (previously 9.25%) and defer all
interest payments until 30 June 2026.
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COMPANY INFORMATION
The board of directors
Garry Jones
Non-Executive Chairman (previously Non-Executive
Director until 6 March 2024)
Dan Cater
Chief Executive Officer (appointed 7 March 2024)
Kim Suter
Chief Financial Officer
Keith Todd CBE
Executive Director (previously Executive Chairman
until 6 March 2024)
Sandy Broderick
Non-Executive Director
Steve Sparke
Non-Executive Director
Stephen Casner
Previously CEO until 6 March 2024 (resigned 6 March
2024)
Registered office
8th Floor, 84 - 86 King William Street, London, EC4N 7BL
Company number
11231735
Company Secretary
Kim Suter
Nominated Adviser and Broker
Cavendish Capital Markets Limited, 1 Bartholomew
Close, London, EC1A 7BL
Solicitors
Fieldfisher LLP, Riverbank House, 2 Swan Lane,
London, EC4R 3TT
Auditor
PKF Littlejohn LLP, 15 Westferry Circus, London E14
4HD
Registrars
Equiniti, Aspect House, Spencer Road, Lancing, West
Sussex, BN99 6DA
ANNUAL REPORT 2024 |
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