Placing

7 November 2019

THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY. IT IS NOT AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF KRM22 PLC WHETHER IN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR OTHERWISE OR IN ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THE INFORMATION COMMUNICATED IN THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AND UPON PUBLICATION OF THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

KRM22 plc
("KRM22", the "Group" or the "Company")

Placing

KRM22 plc (AIM: KRM.L), the technology and software investment company, is pleased to announce that it has conditionally raised gross proceeds of approximately £1.0 million through a placing of 1,895,765 new ordinary shares of 10 pence each in the Company ("Ordinary Shares") (the "Placing Shares") at a price of 52 pence per Ordinary Share (the "Placing Price") (the "Placing"). The Placing uses the Company's existing share authorities to issue the Placing Shares.

Summary of the Placing and Admission

·    The Placing shall raise gross proceeds of approximately £1.0 million at a price of 52 pence per Placing Share; 

·    finnCap Ltd ("finnCap") has acted as nominated adviser, broker and sole bookrunner in connection with the Placing. The Placing is not underwritten; and 

·    Application will be made for the Placing Shares to be admitted to trading on AIM ("Admission"). It is expected that that Admission will become effective at 8.00 a.m. on 13 November 2019 and that dealings in the Placing Shares will commence at that time. 

Reasons for the Placing and use of proceeds

The Placing has been conducted with existing institutional and certain other investors. The net proceeds of the Placing will be used to provide the Company with additional working capital.

Update on Current Trading

As announced on 31 October 2019, the Company has recently entered into three new contracts, and renegotiated one existing contract, resulting in an increase in ARR to £4.3m at 31 October 2019 (at constant exchange rates), increasing to £4.4m in 2020. The Company now remains focused on organic revenue growth and converting the remaining pipeline of opportunities, as well as carefully monitoring the cash position, which, as announced on 31 October 2019, has been supplemented by the receipt of £0.6m of R&D tax credits. Costs have also been reduced further by the strategic decision to reduce the scope of certain activities in 2020 resulting in cost savings of approximately £1.0m.

Details of the Placing

The Placing Shares, when issued, will represent approximately 9.92 per cent. of the Company's issued share capital prior to the Placing. The Placing Price of 52 pence per Placing Share represents a discount of approximately 4.58 per cent. to the closing mid-market price of 54.5 pence per Ordinary Share on 6 November 2019, being the last trading day immediately preceding the date of this Announcement.

The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of such Ordinary Shares after the date of issue.

In accordance with the terms of the placing agreement dated 7 November 2019 entered into between the Company and finnCap (the "Placing Agreement"), the Company has, via finnCap as placing agent, conducted a conditional placing to raise approximately £1.0 million by way of the issue of 1,895,765 Placing Shares at the Placing Price.

The Placing Agreement is conditional, inter alia, upon:

a.         the Company complying with its obligations under the Placing Agreement to the extent that they fall to be performed on or before Admission;

b.         the Company having allotted, subject only to Admission, the Placing Shares in accordance with the Placing Agreement; and

c.         Admission having become effective at or before 8.00 a.m. on 13 November 2019 or such later time as finnCap may agree with the Company (being not later than 13 December 2019).

Application has been made for the Placing Shares to be admitted to trading on AIM. Settlement for the Placing Shares and Admission is expected to take place at 8.00 a.m. on 13 November 2019. On Admission, the Company's issued share capital will comprise 20,998,029 Ordinary Shares, with no Ordinary Shares held in treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights will be 20,998,029. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Related Party Transactions

Keith Todd and persons closely associated with him have subscribed for an aggregate of 288,461 new Ordinary Shares at the Placing Price. Following this subscription Keith Todd will have a beneficial interest in 2,347,052 Ordinary Shares in the Company, representing approximately 11.18 per cent. of the enlarged issued share capital on Admission.

Keith Todd is considered a "related party" as defined under the AIM Rules due to his Board position. Keith Todd's participation in the Fundraising constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules.

Of the aggregate 288,461 Placing Shares subscribed for by Mr Todd, 96,153 of the Placing Shares will be settled within 60 days following Admission, during which period Mr Todd may elect to find an alternative placee to acquire and therefore settle these Placing Shares. Should this be the case, a further announcement will be made in due course.

In addition, Canaccord Genuity Wealth Management ("Canaccord Genuity") has subscribed for 192,307 new Ordinary Shares at the Issue Price. Following this subscription, Canaccord Genuity will in aggregate hold 2,240,298 Ordinary Shares in the Company, representing approximately 10.64 per cent of the enlarged issued share capital on Admission.

Canaccord Genuity is considered a "related party" as defined under the AIM Rules as a result of its substantial shareholding in the Company. Canaccord Genuity's participation in the Placing constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules.

The Independent Directors (being the Directors of the Board, other than Keith Todd) consider, having consulted with the Company's nominated adviser for the purposes of the AIM Rules, finnCap, that the terms of Keith Todd's and Canaccord Genuity's participation for shares fair and reasonable insofar as the Company's shareholders are concerned.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section of this Announcement.

Keith Todd CBE, Executive Chairman and Chief Executive Officer at KRM22 commented: 

"I am delighted that we have been supported by core and new shareholders to provide the Company with additional working capital to support our growth strategy. The recent contract wins and steady increase in recurring revenue demonstrates the traction with customers and our commitment to investors to building a strong recurring revenue business."

For further information please contact:

KRM22 plc                                                                               InvestorRelations@krm22.com

Keith Todd CBE, Executive Chairman and CEO

Kim Suter, CFO

finnCap Ltd (Nominated Adviser and Sole Broker)            +44 (0)20 7220 0500

Carl Holmes / Matthew Radley

Alice Lane / Sunila de Silva (ECM)

About KRM22 plc

KRM22 is a closed-ended investment company which listed on AIM on 30 April 2018. The Company has been established with the objective of creating value for its investors through the investment in, and subsequent growth and development of, target companies in the technology and software sector, with a focus on risk management in capital markets.

Through its investments and the Global Risk Platform, KRM22 helps capital market companies reduce the cost and complexity of risk management. The Global Risk Platform provides applications to help address firms' regulatory, market, technology and operations risk challenges and to manage their entire enterprise risk profile.

Capital markets companies' partner with KRM22 to optimise risk management systems and processes, improving profitability and expanding opportunities to increase portfolio returns by leveraging risk as alpha.

KRM22 PLC is quoted on AIM and the Group is headquartered in London, with offices in several of the world's major financial centres.

See more about KRM22 at KRM22.com.

IMPORTANT NOTICES

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in this "Important Notices" section of this Announcement.

This Announcement does not constitute a prospectus for the purposes of the Prospectus Rules of the FCA, nor does it comprise an admission document prepared in accordance with the AIM Rules. Accordingly, this Announcement has not been approved by or filed with the FCA.

finnCap, which is authorised and regulated in the United Kingdom by the FCA, is acting as nominated adviser, broker and sole bookrunner to the Company for the purposes of the AIM Rules exclusively for the Company and no one else and will not be responsible to any other person for providing protections afforded to their customers nor for providing advice in relation to the contents of this Announcement. No representation, warranty, express or implied, is made by finnCap for the accuracy of any information or opinions contained in this Announcement or the omission of any material information, nor has finnCap authorised the contents of this Announcement for any purpose and no liability whatsoever is accepted by finnCap. finnCap expressly disclaims all and any responsibility or liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this Announcement.

 Forward-Looking Statements

This Announcement contains forward-looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as "potential", "estimate", "expect", "may", "will" or the negative of such terms and phrases, variations or comparable expressions, including references to assumptions. The forward-looking statements in this Announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this Announcement. No statement in this Announcement is intended to constitute a profit forecast or profit estimate for any period. Neither the Directors nor the Company undertake any obligation to update forward-looking statements other than as required by the AIM Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.