# KRM22 plc on track to deliver full year expectations

- Link: https://www.directorstalkinterviews.com/krm22-plc-on-track-to-deliver-full-year-expectations/412844284
- Published: 2020-07-21T07:08:03+01:00
- Author: Giles Arbor

**KRM22 plc**, ([LON:KRM](https://www.directorstalkinterviews.com/company/krm22-plc/krm.l))
the technology and software investment company that focuses on risk management for
capital markets, today issued the following trading update for the 6 months to 30
June 2020.

The first half has been impacted by the effects of COVID-19 but progress has been
made with two new customer wins and cost and debt reduction in the Period.

As described in the trading update of 2 April 2020, the Company has experienced 
slowed business activity and extended sales cycles as customers and prospects have
transitioned to home working and with the increased operational burden resulting
from market volatility. Notwithstanding the backdrop, the Company has secured two
new customers in the period and sold additional products to an existing customer
adding an aggregate of £0.3m in ARR in the period resulting in a total ARR as at
30 June 2020 of £4.0m (which excludes the disputed contract with ARR of £0.3m as
described below). The new contracts include the purchase of Enterprise and Market
Risk products.

The total ARR of £4.0m is after the loss of four institutional customers who have
terminated their contracts with the Company in the Period amounting to an aggregate
of £0.3m ARR. These terminations were due to a variety of market factors and COVID-
19 but are not related to the performance of the Company. As detailed in the trading
update of 2 April 2020, the Company had disputed ARR of £0.4m from two customers.
With one of these customers, the Company has now negotiated a contract at a lower
value to retain them as a customer and assist their early stage development and 
this contract is now included in the ARR of £4.0m as described above.  Discussions
continue with the other customer to try and find a commercial resolution for the
remaining £0.3m.

The Company continues to have a strong pipeline of opportunities and is progressing
well through the procurement process with two further tier one banks which the Company
expects will close in the second half of the year. The UK Brokerage referenced in
the Company’s trading update of 2 April 2020 is in the final stages of approval,
will add a further £0.3m of ARR.

**Costs and operations**

As detailed in the update of 2 April 2020, the new contract wins, together with 
the cost reduction actions implemented, have resulted in a substantial reduction
in adjusted EBITDA loss at the period end. This has been achieved through a combination
of salary sacrifices across all staff in 2020, staff redundancies and general overhead
reductions. The Company tracks the Group’s booked ARR when compared to the cash 
burn run rate within the business and reports that this ratio is 1.27 as at the 
period end (compared to 1.59 in January 2020). As a result, the Group’s total monthly
cash recurring burn run rate in July from all operations will be £0.08m plus £0.03m
for interest and capital repayments.

Cash as at 30 June 2020 was £0.8m (31 December 2019: £1.1m and 21 May 2020: £1.4m).
The Group’s debt as at 30 June 2020 reduced to £0.8m (31 December 2019: £2.0m) after
the conversion of the Convertible loan note (“CLN”).  As detailed in the announcement
of 29 June 2020, the CLN was converted into 1,454,434 ordinary shares in the Company.
The Harbert Debt facility remains in place with the ability to drawdown on the facility
until 31 December 2020. In addition, the Company is in the process of finalising
a further R&D tax claim with an initial submission of c. £0.2m. 

**Outlook**

The first half has been impacted by the effects of COVID-19 but the Company remains
encouraged by its pipeline of opportunities. The Company is focused on continuing
to drive organic growth and has made good progress in the Period and remains confident
of meeting management expectations for the year.

> **Keith Todd CBE, KRM22 plc Executive Chairman and Chief Executive Officer at 
> KRM22 commented: **The first half has been impacted by the effects of COVID-19
> but I remain encouraged by our customer engagement. We have managed through these
> recent turbulent times and are on track to deliver the full year expectations.
> The outlook for our offering continues to be positive with a broad engagement 
> of prospects in Europe, Asia and USA.

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