TIDMDRUM
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue
of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the
publication of this announcement via a Regulatory Information Service, this
inside information is now considered to be in the public domain.
20 April 2022
Drumz plc
(the "Company" or the "Group")
Final results for the year ended 31 December 2021
Drumz plc (AIM: DRUM) the investing company focused on building value in
technology, is pleased to announce its final results for the year ended 31
December 2021.
Highlights
* In the year the Company focused on developing the business of Acuity Risk
Management Limited ("Acuity"), the award winning cybersecurity software
company.
* The Group is considering several new investment opportunities.
Angus Forrest, Chief Executive commented on the results:
"The Company has focused on its first investment, Acuity, much has been
achieved to develop and manage the business and its infrastructure for future
growth. Risk management and cybersecurity are areas of increasing interest to
all organisations of scale, government, private and public organisations. We
look forward to Acuity growing its business and are optimistic about its
future."
Annual General Meeting
COVID 19 - Whilst there are currently no restrictions on social contact or
meeting, the Board believes it is important that the welfare of shareholders
and employees is protected and to minimise public health risks. Shareholders
are encouraged to exercise their voting rights by completing and submitting a
Form of Proxy in advance of the meeting, appointing the Chairman of Annual
General Meeting as proxy rather than a named person. Shareholders are asked
not to attend the AGM if they are displaying symptoms of COVID-19 or have had
recent contact with anyone who has tested positive.
If there are changes to the UK Government guidelines or regulations which limit
gatherings and meetings, new arrangements will be notified to shareholders
through the Company's website www.drumzplc.com and as appropriate through an
announcement by the Company on the Regulatory Information Service.
For further information please contact:
Drumz Plc www.drumzplc.com
Angus Forrest +44 (0) 20 3582 0566
WH Ireland (NOMAD & Broker) www.whirelandcb.com
Mike Coe / Sarah Mather 020 7220 1666
Peterhouse Capital Limited (Joint broker)
Lucy Williams / Duncan Vasey 020 7469 0936
Chairman's Statement
I am pleased to present the results of Drumz for the year ended 31 December
2021.
Results and performance
The Group's results for the year ended 31 December 2021 showed revenues of £
44,000 (2020: £12,000) and an operating loss of £239,000 (2020: loss £149,000).
At the year end, the principal asset of the Group is its investment in Acuity
Risk Management Limited ("Acuity"), valued at cost of £625,000. The Group's
original investment was made in September 2020 and Drumz exercised its option
to acquire another 5% of Acuity's equity for £125,000 in September 2021.
Acuity is an award winning business, specialising in risk management for
cybersecurity. Acuity's proprietary software platform STREAMT provides its blue
chip customer base, on a Software as a Service ("SaaS") basis, with a
comprehensive view of critical business risk and compliance on an enterprise
wide basis. During the year, Acuity has widened its distribution channels
including completing a new partnership agreement with an established developer,
distributor and implementor of automated risk management software in the USA.
Further details on the progress achieved by Acuity are included in the Chief
Executive's report.
In addition, the Group continues to own its legacy holding in KCR Residential
REIT plc ('KCR'), which owns property in the private rented residential sector,
in particular blocks of studio, one and two bedroom apartments which are rented
to private tenants in the UK.
The share price of KCR stands at a significant discount to the stated net
assets per share. Notwithstanding, the share price performance of KCR has again
been disappointing over the year and as a result, the value of the KCR holding
has declined further from £573,000 to £390,000, equating to an unrealised loss
of £183,000. I am also disappointed to report that the KCR share price has
fallen a little further since the year end. Your Board is looking to dispose of
this investment, which is no longer core to the Group's current investment
policy, as soon as a buyer can be found. However, in common with many smaller
companies, there is limited liquidity in the shares of KCR and therefore the
Board is not able to give a view on when a disposal of this investment might be
effected.
Therefore, the overall results of the Group for the year ended 31 December
2021, show a loss before taxation of £422,000 (2020: loss of £757,000), of
which £183,000 (2019: loss of £608,000) was due to the fall in value of the
Group's investment in KCR. No dividend is being declared for the year (2020: £
nil).
Notwithstanding, shareholders' funds have increased to £1,547,000 (2020: £
1,518,000), principally as a result of the fund raising undertaken by the
Company in November 2021. The Group raised £450,000 (before expenses of the
issue), by the issue of 75,000,000 ordinary shares at a price of 0.6 pence per
ordinary share, together with a related warrants issue. I am pleased to be able
to report that all the Drumz directors subscribed for new ordinary shares in
this placing.
As a result, at the year end the Group had cash balances of £561,000 (2020: £
491,000).
Investment Policy
The Company's investing policy is to invest principally, but not exclusively,
in the technology sector within Europe. Drumz's strategy is to invest in and
acquire technology businesses, where the Board believes they can be improved by
a combination of our own management expertise and the provision of investment
to improve the businesses growth prospects.
Although the Company intends the main focus of the investing policy to be on
technology businesses, this will not preclude the Company from considering
investment in suitable projects in other sectors or geographies, where the
Directors believe that there are high-growth opportunities.
Macroeconomic impacts
During the current period there have been two major macroeconomic factors which
have impacted the economy, namely:
* COVID-19 - this global pandemic has had a major impact on the world economy
and the ways in which people work. On the positive side, the software
industry lends itself well to employees working effectively from remote
locations, but the broader impact of the pandemic on global demand remains
uncertain; and
* further uncertainty to demand caused by rising global inflation and
interest rates and disruption to global supply chains.
Outlook
The Board considers that the benefits of the actions already taken at Acuity
will be seen over the coming months. We are now considering several new
investment opportunities. I would like to thank all shareholders for their
continuing support and to thank my colleagues and our advisors for their
respective contributions. I look forward to further progress in the current
financial year.
Simon Bennett
Chairman
20 April 2022
Chief Executive's Report
Our strategy
Drumz' strategy is to invest and acquire, predominantly but not exclusively in
the technology sector, in order to achieve capital growth in the medium
term. We target operating companies whose activities include the sale of
enterprise software or the use of software in B2B markets. The Board seeks
opportunities where the value can be grown to achieve appropriate returns and
risks are managed given the expertise available.
Over the past 12 months, whilst the focus has been on developing Acuity Risk
Management Ltd, many other investment opportunities were reviewed to find a
second investment for the Group. Proposals were made to acquire some
interesting businesses, but on the final analysis none satisfied both our due
diligence examination and value expectations.
Our business model
Our business model is to take established software companies with an excellent
offering and potential to grow significantly in their market. We work with
companies contributing skills, expertise and knowledge to the business to
transform the value. The value will be realised either by way of trade sale or
Initial Public Offer ('IPO') so Drumz and/or its shareholders can realise all
or part of their holdings.
Established businesses not only reduce the risks for Drumz and its shareholders
but with the track record and statistical evidence on which to base decisions
there is a stronger and faster platform for growth and therefore value
creation. It is important that all parties are incentivised and interests
aligned to benefit from growth in value. Drumz' Board believes a combination
of scale, growth rate, profitability and cash generation are the most important
creators of value.
Investments and Portfolio update
Acuity Risk Management Limited
Acuity Risk Management's, STREAMÔ software platform was voted by users in
Gartner's 2021 Peer Insights review as a top three risk management
software. Acuity was shortlisted for Cyber security solution of the year at
the National Technology Awards 2021.
It recently became part of the UK's space team, Athena. Athena is the UK's
national consortium for the space industry bringing Acuity alongside many
leading UK and US defence and space companies and therefore may provide Acuity
with commercial opportunities.
Over the past 12 months several appointments were made including a new full
time Commercial Director, who has reorganised all marketing, sales and other
distribution activities. All marketing activities have been taken in house
following which the number and quality of leads has increased and improved
significantly. The sales team has been reorganised with further recruitment
planned and the distribution channel using VARs strengthened with appointments
made during the year, some of which were announced on the Stock Market's
Regulatory News Service.
In September Drumz exercised its existing option to invest a further £125,000
for a further 5% of the equity taking its ownership to 25%.
KCR Residential REIT plc
Whilst the company's largest shareholder increased its holding in November and
took a majority holding the share price of KCR again disappointed and is at a
significant discount to Net Asset Value, as disclosed in its accounts. There
is a new Chief Executive for KCR. Drumz continues to monitor the company, its
share performance and considers KCR to be a passive asset for realisation in
due course.
Summary and Outlook
There are opportunities for significant growth in value over the next 12 months
within the existing portfolio and potentially with new acquisitions and
investments.
Angus Forrest
Chief Executive
20 April 2022
Financial statements
Group statement of comprehensive income
for the year ended 31 December 2021
Notes 2021 2020
£'000 £'000
Continuing operations
Revenue 44 12
Cost of sales - -
Gross profit 44 12
Administrative expenses (283) (161)
Operating profit/(loss) 2 (239) (149)
Loss on investments 4 (183) (608)
Loss before taxation (422) (757)
Taxation - -
Loss for the year attributable to shareholders of the parent (422) (757)
company
Total comprehensive income for the year attributable to (422) (757)
shareholders of the parent company
Earnings per share
Basic and diluted earnings per share from total and continuing 3 (0.12)p (0.36)p
operations
Group statement of financial position
as at 31 December 2021
2021 2020
Notes £'000 £'000
ASSETS
Non-current assets
Investments at fair value through profit or loss 4 1,015 1,073
1,015 1,073
Current assets
Trade and other receivables 23 14
Cash and cash equivalents 561 491
584 505
Total assets 1,599 1,578
LIABILITIES
Current liabilities
Trade and other payables 52 60
Total liabilities 52 60
Net assets 1,547 1,518
EQUITY
Share capital 5 2,688 2,613
Share premium 8,385 8,039
Share option reserve 30 -
Convertible loan - 88
Merger reserve 1,012 1,012
Retained earnings (10,568) (10,234)
Total equity 1,547 1,518
Company statement of financial position
as at 31 December 2021
2021 2020
Notes £'000 £'000
ASSETS
Non-current assets
Investments at fair value through profit or loss 4 1,015 1,073
1,015 1,073
Current assets
Trade and other receivables 23 13
Cash and cash equivalents 561 491
584 504
Total assets 1,599 1,577
LIABILITIES
Current liabilities
Trade and other payables 52 59
Total liabilities 52 59
Net assets 1,547 1,518
EQUITY
Share capital 5 2,688 2,613
Share premium 8,385 8,039
Share option reserve 30
Convertible loan - 88
Merger reserve 1,012 1,012
Retained earnings (10,568) (10,234)
Total equity 1,547 1,518
Group statement of changes in equity
for the year ended 31 December 2021
Share Share Share Convertible Merger Retained Total
capital premium Option loan reserve earnings equity
£'000 £'000 Reserve £ £'000 £'000 £'000 £'000
'000
Balance at 1 January 2020 2,392 7,189 - 88 1,012 (9,477) 1,204
Issue of shares 221 850 - - - - 1,071
Total comprehensive income - - - - - (757) (757)
Balance at 31 December 2020 2,613 8,039 - 88 1,012 (10,234) 1,518
Balance at 1 January 2021 2,613 8,039 88 1,012 (10,234) 1,518
Transactions with owners in
their capacity as owners:
Issue of shares 75 375 - - - - 450
Share issue costs - (29) - - - - (29)
75 346 - - - - 421
Share options - - 30 - - - 30
Write-off of convertible - - - (88) - 88 -
equity
Total comprehensive income - - - - - (422) (422)
Balance at 31 December 2021 2,688 8,385 30 - 1,012 (10,568) 1,547
Group statement of cash flows
for the year ended 31 December 2021
2021 2020
£'000 £'000
Cash flows from operating activities
Loss before taxation (422) (757)
Adjustments for:
Fair value adjustment for listed investments 183 608
Increase / (Decrease) in share option reserve 30 -
(Increase) / Decrease in trade and other receivables (9) (2)
(Decrease) / increase in trade and other payables (8) ( 25)
Net cash used in operating activities (226) (176)
Cash flows from investing activities
Purchase of investments (125) (500)
(125) (500)
Cash flows from financing activities
Cash raised through issue of shares (net of transaction costs) 421 1,071
Net increase / (decrease) in cash and cash equivalents 70 395
Cash and cash equivalents at beginning of financial year 491 96
Cash and cash equivalents at end of financial year 561 491
Principal accounting policies
for the year ended 31 December 2021
General information
Drumz plc is a company incorporated and domiciled in the United Kingdom. The
Company is a public limited company, which is listed on AIM of the London Stock
Exchange, incorporated in the UK and domiciled in England and Wales. The
address of the registered office is Burnham Yard, London End, Beaconsfield, HP9
2JH.
The principal accounting policies adopted in the preparation of the Group and
Company financial statements are set out below.
Basis of accounting
Basis of preparation
The Group and Company financial statements have been prepared under the
historical cost convention, except as modified for financial assets at fair
value through profit or loss. The financial statements are presented in pounds
sterling (£'000), which is also the functional currency of the Company and
Group.
The Group and Company financial statements have been prepared in accordance
with the accounting policies set out below and international accounting
standards in conformity with the Companies Act 2006.
The accounting policies have been applied consistently throughout the Group and
the Company for the purposes of the preparation of these financial statements
and the same accounting policies, presentations and methods of computation are
followed in this set of financial statements as were applied in the previous
set of audited financial statements.
Going concern
The financial statements have been prepared on the going concern basis.
The Directors have reviewed the Company's budgets and considered plans. This
combined with a review of the Company's cash balances, saleable securities and
discussions with the advisers have led them to conclude there is a reasonable
expectation that the Company and Group has adequate resources to continue
operating for the foreseeable future. For this reason, they continue to adopt
the going concern basis in preparing the Company's and Group's financial
statements. This has been assessed using detailed cash flow analysis so that
the Board can conclude that the Company and Group has sufficient capital
resources for at least 12 months from the approval of these financial
statements.
Notes to the Financial Statements
for the year ended 31 December 2021
1. Income and segmental analysis
The Group generates income by charging investee companies fees and for profits
or losses on investments. These operating segments are monitored by the
Executive Directors and strategic decisions are made on the basis of segment
operating results. The segmental analysis of operations is as follows:
Segmental analysis by activity
2021 2020
£'000 £'000
Segment result
Operating income 44 12
Investment activities:
Administrative expenses (283) (161)
Operating loss/profit (239) (149)
Loss in value of quoted investment (183) (608)
Loss before tax (422) (757)
2021 2020
£'000 £'000
Segment assets
Investment activities:
Non-current assets - investment 1,015 1,073
Other 584 505
Total assets 1,599 1,578
Segment liabilities
Investment activities:
Current liabilities 52 60
Total liabilities 52 60
Total assets less total liabilities 1,547 1,518
2. Operating profit / (loss)
Operating profit / (loss) is stated after charging:
2021 2020
£'000 £'000
Auditor's remuneration for:
Audit services
- audit of the Group's and Company's annual accounts 16 12
- audit of subsidiaries pursuant to legislation 3 3
3. Earnings per ordinary share
The earnings per ordinary share is based on the weighted average number of
ordinary shares in issue during the year of 351,072,048 ordinary shares of 0.1p
(2020: 210,083,568 ordinary shares of 0.1p) and the following figures:
2021 2020
Loss attributable to equity shareholders (£'000) (422) (757)
Loss per ordinary share (0.12)p (0.36)p
Diluted earnings per share is taken as equal to basic earnings per share as the
Group's average share price during the period is lower than the exercise price
of the share options and therefore the effect of including share options is
anti-dilutive.
4. Investments
Investment
£'000
Cost
At 1 January 2021 2,205
Additions 125
At 31 December 2021 2,330
Fair value movements
At 1 January 2021 (1,132)
Fair value adjustment (183)
At 31 December 2021 (1,315)
Fair value
At 31 December 2021 1,015
At 31 December 2020 1,073
Drumz plc acquired shares in KCR Residential REIT plc at a price of £0.70 per
share in 2018. The investment was classed as fair value through profit and loss
in accordance with IFRS 9. The investment was valued downwards at the year-end
in accordance with IFRS 13. The closing value at 31 December 2021 was £389,713.
Drumz plc acquired shares in Acuity Risk Management Limited in September 2020
and additional shares in September 2021. The value of this investment is shown
at cost, £625,000. Although Drumz holds 25% of Acuity's shares the directors
believe that Drumz does not exercises significant influence over Acuity as such
it does not need to be accounted for as an associate.
Fair value hierarchy
In accordance with IFRS 13, financial instruments are measured by level of the
following fair value measurement hierarchy:
* Level 1: quoted prices in an active market for identical assets or
liabilities. The fair value of financial instruments traded in active
markets is based on quoted market prices at the balance sheet date. A
market is regarded as active if quoted prices are readily and regularly
available and those prices represent actual and regularly occurring market
transactions on an arm's-length basis. The quoted market price used for
financial assets held by the Group is the closing price on the last day of
the financial year of the Group. These instruments are included in level 1
and comprise FTSE and AIM-listed investments classified as held at fair
value through profit or loss.
* Level 2: the fair value of financial instruments that are not traded in an
active market is determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is available
and rely as little as possible on entity-specific estimates. If all
significant inputs required to fair value an instrument are observable, the
instrument is included in level 2.
* Level 3: the fair value of financial instruments that are not traded in an
active market (for example, investments in unquoted companies)
is determined by using valuation techniques such as earnings multiples. If
one or more of the significant inputs is not based on observable market
data, the instrument is included in level 3.
There have been no transfers between these classifications in the period (2020:
none). The change in fair value for the current and previous years is
recognised through profit or loss.
All assets held at fair value through profit or loss were designated as such
upon initial recognition.
Movements in investments held at fair value through profit or loss are
summarised as follows:
Level 3 Level 1 Total
Equity Equity investments
investments investments £'000
£'000 £'000
Cost
At 1 January 2021 500 1,705 2,205
Additions 125 125
At 31 December 2021 625 1,705 2,330
Fair value losses
At 1 January 2021 - (1,132) (1,132)
Fair value adjustment - (183) (183)
At 31 December 2021 - (1,315) (1,315)
Fair value
At 31 December 2021 625 390 1,015
At 31 December 2020 500 573 1,073
Level 3 investments are held at fair value at the date of the Consolidated
Financial Position with changes in value from cost being accounted for in the
Consolidated Statement of Comprehensive Income.
5. Share capital
2021 2020
£'000 £'000
Allotted, called up and fully paid
419,822,048 (2020: 344,822,048) ordinary shares of 0.1p each 420 345
2,268,113,165 (2020: 2,268,113,165) deferred shares of 0.1p each 2,268 2,268
2,688 2,613
2021 2021 2020 2020
Number £'000 Number £'000
Ordinary shares
At 1 January 2021 344,822,048 345 123,912,957 124
Additions 75,000,000 75 220,909,091 221
At 31 December 2021 419,822,048 420 344,822,048 345
On 30 November the Company issued 75,000,000 new Ordinary shares of 0.1p at
0.6p per share to raise approximately £450,000 before expenses.
Deferred shares
The deferred shares have:
* no right to any dividend;
* the right to receive notice of any general meeting and to attend such
meeting but no right to vote thereat; and
* the right on a winding up or other return of capital (after payment of the
debts and liabilities of the Company and an amount equal to the amounts
paid up, or credited as paid up, including any premium on the ordinary
shares of the Company, together with any unpaid arrears of dividend
declared on such shares) to an amount equal to the amounts paid up or
credited as paid up on such deferred shares.
Share options and warrants
The Group operates an unapproved share option scheme. Awards under each scheme
are made periodically to employees. The share options in this scheme vest three
years after the date of grant and have an exercise period of seven years. The
options may only be exercised by option holders while they are still employees
of the Group. If death in service occurs the options can be exercised (to the
extent that they have vested) by the option holder's personal representatives
within 12 months from the date of death. If an option holder ceases to be
employed and the Directors deem the option holder to be a 'Good Leaver' the
options can be exercised (to the extent that they have vested) within six
months from the date of cessation of employment.
A reconciliation of option movements over the year ended 31 December 2021 is
shown below:
Number
Outstanding at 31 December 2020 and 31 December 2021 15,000,000
At 31 December 2021 outstanding options granted over ordinary shares were as
follows:
Share option scheme Exercise price Number Dates exercisable
Company unapproved 0.65p 11,000,000 15 July 2020 to 14 July
2030
Company unapproved 0.55p 4,000,000 25 Nov 2020 to 24 Nov 2030
The weighted average exercise price for the Group's options are as follows:
Options outstanding at 31 December 2021: 0.62p
Options exercisable at 31 December 2021: nil
The weighted average remaining contractual life of the share options
outstanding at the end of the year is 8 years (2020: 9 years).
The Group has used the Black-Scholes formula to calculate the fair value of
outstanding share options. The assumptions applied to the Black-Scholes formula
for share options issued and the fair value per option are detailed in the
table below for options issued. The charge calculated up to 31 December 2021 is
£30,000 (2020: £nil). Volatility was calculated using historical share price
information for the six months prior to the date of grant.
Unapproved
share
options
2020 grant
Date of grant 15 July
2020
Expected life of options based on options exercised to date 3 years
Volatility of share price 87%
Dividend yield 0%
Risk free interest rate 0.01%
Share price at date of grant 0.65p
Exercise price 0.65p
Fair value per option 0.46p
Date of grant 25 Nov 2020
Expected life of options based on options exercised to date 3 years
Volatility of share price 96%
Dividend yield 0%
Risk free interest rate 0.01%
Share price at date of grant 0.48p
Exercise price 0.55p
Fair value per option 0.35p
Warrants
Warrants over 75,000,000 ordinary shares of the Company with an exercise price
of 1.0 pence per share were issued during the year ended 31 December 2021, in
conjunction with the share issues set out in this note. Warrants over
75,000,000 ordinary shares are outstanding as at 31 December 2021. No expense
was recorded in the year in respect of these warrants.
Annual Report
The Company confirms the Annual Report and AGM Notice will be available on the
Company's website drumzplc.com following the publication of this announcement.
END
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