KRM22 PLC (LON:KRM) has entered into a new GBP3mln convertible loan facility provided by its largest shareholder Kestrel Partners, and at the same time has confirmed stronger revenues in the first half of 2020.
The interim results statement from the investment software firm included total revenue of GBP2.3mln, up from GBP1.8mln in the same period last year, with organic revenue growth at 19%.
Adjusted underlying earnings (EBITDA) in the first half was marked as a GBP0.3mln loss, while the loss before tax narrowed significantly to GBP1.2mln from GBP4.4mln in 2019.
“The first half has naturally been impacted by the effects of COVID-19, with extending sales cycles and delays in decision making but we remain encouraged by our customer engagement and the pipeline remains strong which we are looking to convert in the second half of the year,” Keith Todd, KRM22’s executive chairman said in the results statement.
“We have managed through these recent turbulent times and are on track to deliver full-year market expectations. The outlook for the second half of the year continues to be positive with a broad engagement of prospects in Europe, Asia and North America,” Todd added.
KRM22 noted that the group’s ‘undisputed annualised recurring revenue (ARR) – which represents the value of contracted software-as-a-service (SaaS) revenue normalised over a year – amounted to GBP4mln during the period, and since then has improved to GBP4.3mln.
The company had some GBP800,000 of cash at the end of June, 2020.
In a separate statement, the group said the new debt facility will be drawn down immediately and it replaces the company’s existing debt facility, which was provided by Harbert European Growth Capital Fund II.
Outstanding debts and charges attached to the Harbert facility are intended to be paid early also, using the proceeds, the company added.
KRM22 noted that the new facility strengthens its balance sheet and provides both working capital and growth capital. Altogether it supports the company’s short to mid-term opportunities.
The coronavirus (COVID-19) pandemic has reinforced the principle that companies need access to greater liquidity to address uncertainties and give customers confidence in the company’s financial strength, the group added.
“This facility will support our current strategy and continued growth and will allow us to make small additional investments in critical resources and support our ongoing working capital requirements,” Todd noted.
The new debt facility has a three-year life span and carries interest at 9.5%, plus a 2% arrangement fee. It can be converted to equity at a conversion price of 38p.