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.
25 May 2023
DRUMZ PLC
("Drumz" or the "Company")
Final results for the year ended 31 December 2022
Drumz plc (AIM: DRUM) is pleased to announce its final results for the year
ended 31 December 2022 (the "Period").
Highlights
· In the Period the Company focused on developing the business of Acuity
Risk Management Limited ("Acuity"), the award winning cybersecurity software
company.
· Post the Period end the Company acquired the balance of the issued and
to be issued share capital of Acuity and as a result the Company is now a
trading Company.
Following the acquisition of Acuity the Company's registered office and place
of business is situated at 80 Cheapside, London EC2V 6EE. The Company is in the
process of changing the Company's name to Acuity RM Group Plc and Tradable
Instrument Display Mnemonic to "AIM:ACRM"; a further announcement will be made
once the timing has been confirmed.
Angus Forrest, Chief Executive commented on the results:
"During the year, Acuity's performance continued to improve based on all KPI
measurements; and Drumz directors decided that the opportunity offered by
Acuity merited acquisition of all the outstanding Acuity shares to enable focus
on the continuing development of the business for the benefit of Drumz
shareholders. I look forward to reporting on the further progress at Acuity
over the coming months."
For further information:
Acuity RM Group plc 020 3582 0566
Angus Forrest, Chief Executive Officer www.drumzplc.com
WH Ireland (NOMAD & Joint Broker) https://www.whirelandplc.com/
capital-markets
Mike Coe / Sarah Mather 020 7220 1666
Peterhouse Capital Limited (Joint
Broker)
Lucy Williams / Duncan Vasey 020 7469 0936
Clear Capital Markets Limited (Joint 020 3869 6080
Broker)
Andrew Blaylock
Chairman's Statement
I am pleased to present the results of Drumz for the year ended 31 December
2022.
Results and performance
The Group's results for the year ended 31 December 2022 showed revenues of £
60,000 (2021: £44,000) and an operating loss of £256,000 (2021: loss £239,000).
The principal asset of the Group was its investment in Acuity Risk Management
Limited ("Acuity"), a supplier of Governance, Risk, Compliance ("GRC") software
and services. At the year end, the Company owned a 25 per cent equity stake in
Acuity which was valued at cost of £625,000. Acuity's award winning proprietary
software platform STREAM® collects data about organisations to improve business
decisions and management. It is used by around 70 organisations in markets
including government, utilities, defence, broadcasting, manufacturing and
healthcare. Most customers use it for managing cybersecurity and IT risks and
for compliance with ISO 27001 and other standards and regulations. STREAM® is
sold on a SaaS or private cloud delivery (on-premise) basis, typically with a
three year licence, invoiced annually in advance. Sales are made directly
through the Company's own sales team and via a growing network of partners in
the UK and the US. During the year, Acuity has continued to make further
progress with its commercialisation, including adding to the number of
distributors of the product in the US. Further details on the progress being
achieved at 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 performance of KCR once again has
been extremely disappointing and as a result, the value of the KCR holding has
declined further from £390,000 to £305,000, equating to a loss of £85,000
(2021: loss of £183,000). I am also disappointed to report that the KCR share
price has fallen 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
2022, show a loss before taxation of £341,000 (2021: loss of £422,000), of
which £85,000 (2021: loss of £183,000) was due to the fall in value of the
Group's investment in KCR. No dividend is being declared for the year (2021: £
nil).
As a result of the losses incurred during the year shareholders' funds have
fallen to £1,227,000 (2021: £1,547,000).
Post balance sheet event
I am pleased to be able to report that in April 2023 Drumz completed the
acquisition of all the outstanding shares in Acuity that it did not previously
own. As a result, the Group is now classified as a trading company .
The Board considers that Acuity is a high growth business with excellent
prospects. Further details of the post balance sheet event are set out in the
Chief Executive's report and in note 15 to these financial statements.
Board changes
There have been a number of Board changes during the period under review. Nick
Clark joined the Board on 7 June 2022. Nick was the founder and Chief Executive
of Torpedo Factory Group, a technology systems integrator, which was recently
acquired by Aukett Swanke Group plc, where Nick is now the Group's Chief
Executive.
Post the year end, Nish Malde resigned from the Board on 9 March 2023 in order
to focus on his other business commitments. The Board would like to thank Nish
for his contribution to the Group and to wish him well in the future.
Following the Company's acquisition of Acuity, as referred to above, Simon
Marvell, one of the founders of that company, joined the Board with effect from
24 April 2023.
Outlook
Acuity is a business with considerable potential and I look forward to
reporting on the progress we are making in the coming months. Furthermore, I
would like to thank all shareholders for their continuing support and to thank
my colleagues and our advisors for their respective contributions throughout
the period covered by these financial statements.
Simon Bennett
Chairman
24 May 2023
Chief Executive's Report
Introduction
Over the past two years the Company has worked with Acuity Risk Management
Limited ("Acuity"), it has developed its business and is now intent on
developing its potential. The focus for the year ended 31 December 2022 was to
work with Acuity to improve its business and make the changes necessary for
faster expansion to grow scale and value. Post the year end, we were delighted
to announce that we acquired all the remaining shares not already owned by us.
The acquisition completed on 24 April 2023 when all the necessary resolutions
to complete the acquisition of Acuity and other related matters were duly
passed by shareholders in a general meeting. As a result, Acuity is now wholly
owned by the Group as a trading company for the purposes of the AIM Rules
rather than an investing company.
Following the acquisition of Acuity, the Group's future strategy will be to
develop its business to deliver long term, sustainable growth in shareholder
value. In the short to medium term this is expected to come from organic growth
and thereafter may also come from complementary acquisitions.
The Group will be focused on key business objectives including to:
* accelerate revenue growth both organically in existing and other global
markets;
* further penetrate existing markets by forging stronger customer and partner
relationships;
* improve productivity;
* continue to invest in developing STREAM® to enhance its offering; and
* become a profitable and cash generative group.
Acuity
With its headquarters located in London, Acuity is an established provider of
GRC risk management software and services via its award-winning software
platform STREAM®.
STREAM® collects data about organisations and provides functionality to improve
business decisions and management. It is in use with around 70 organisations in
sectors including government, utilities, defence, broadcasting, manufacturing
and healthcare. Most customers use STREAM® for GRC, managing cybersecurity and
IT risks and for compliance with ISO 27001 and other standards and regulations,
although it can be configured to manage other risks such as vendor management
to provide a comprehensive view of risk and compliance across an organisation.
STREAM® is sold via subscription on a SaaS or private cloud delivery
(on-premise) basis (using a customer's infrastructure) typically on a three
year licence, invoiced annually in advance. Sales are made directly through
Acuity's own sales team and via a growing network of partners in the UK and the
US.
The principal use of STREAM® by Acuity's customers is in managing cybersecurity
and other IT risks and the product is well rated by leading analysts, including
Gartner.
The GRC market is growing; it was valued at $14.9bn in 2022 and is forecast to
grow to $27.1bn by 2027. The market is being driven by a combination of
legislation (e.g. GDPR) and the requirement of organisations to more
effectively manage the risks that are affecting them and so improve
decision-making.
The Group acquired its initial stake in September 2020 and at the same time I
was appointed Chairman of Acuity. Since our original investment significant
progress has been made in the commercialisation of Acuity, with the aim of
accelerating its growth and achieving greater scale. The business model has
been revised, to a SaaS model, with customers typically signing three year
contracts, which are invoiced annually in advance. As a result, Acuity is
strongly cash generative and the visibility of future income flows has been
significantly improved. At present, Acuity's customers are mostly in the UK and
Europe and the Company's sales are made by Acuity's existing sales team. Acuity
has also been developing new sales channels, particularly through partnerships,
to accelerate sales growth in North America, which represents almost half of
the world market for GRC products.
In the table below are a number of Key Performance Indicators ("KPIs") as
sourced from its unaudited management information, which demonstrate the
improvement in the performance of Acuity, since the Group made its initial
investment:
* monthly recurring revenue: £0.14 million as at 28 February 2023 (30
September 2022: £0.13 million, 31 March 2022: £0.10 million)
* forward contracted revenue: £2.17 million as at 28 February 2023 (30
September 2022: £1.99 million, 31 March 2022: £2.17 million)
* renewal rate: 96 per cent. as at 28 February 2023 (30 September 2022: 96
per cent., 31 March 2022: 82 per cent.)
* sales pipeline: £3.83 million as at 22 March 2023 (30 September 2022: £1.67
million, 31 March 2022: £1.36 million).
Year to 31 March 2023 2022 2021
*
Annual Revenues £'000 1,762 1,558 1,226
Gross margin % 92% 92% 92%
Renewal rate 96% 82% 81%
Sales pipeline £'000 4,200 (Mar 23) 2,370 (Sept 22) 1,549 (Mar 21)
Net recurring Revenue % 125.6% _ _
*Year to 31 March 2023 unaudited
Further details are set out in note 15 to these financial statements and on the
Company's website:
www.drumzplc.com
KCR Residential REIT plc ("KCR")
The Company's other investment is its legacy holding in KCR. This continues to
be an asset identified for disposal. In the most recent half year to 31
December 2022 KCR did generate higher revenues, but there were higher costs,
albeit some of the rise related to a major refurbishment of properties.
Summary and Outlook
Following the acquisition of Acuity post the Period end, the Group is now being
treated as a trading company for the purposes of the AIM Rules. The Group is
focussed on its strategy to deliver long term, sustainable growth in
shareholder value and in the short to medium term this is expected to come from
organic growth and thereafter may also come from complementary acquisitions.
We believe that Acuity is an exciting prospect with much potential and I look
forward to reporting on the further progress being made in the coming months.
Angus Forrest
Chief Executive
24 May 2023
Group statement of comprehensive income
for the year ended 31 December 2022
Notes 2022 2021
£'000 £'000
Continuing operations
Revenue 60 44
Cost of sales - -
Gross profit 60 44
Administrative expenses (316) (283)
Operating (loss) 2 (256) (239)
Loss on investments 6 (85) (183)
Loss before taxation (341) (422)
Taxation 4 - -
Loss for the year attributable to shareholders of the parent (341) (422)
company
Total comprehensive income for the year attributable to (341) (422)
shareholders of the parent company
Earnings per share
Basic and diluted earnings per share from total and continuing 5 (0.8)p (1.2)p
operations
Group statement of financial position
as at 31 December 2022
2022 2021
Notes £'000 £'000
ASSETS
Non-current assets
Investments at fair value through profit or loss 6 930 1,015
930 1,015
Current assets
Trade and other receivables 7 122 23
Cash and cash equivalents 222 561
344 584
Total assets 1,274 1,599
LIABILITIES
Current liabilities
Trade and other payables 8 47 52
Total liabilities 47 52
Net assets 1,227 1,547
EQUITY
Share capital 9 2,688 2,688
Share premium 8,385 8,385
Share option reserve 51 30
Merger reserve 1,012 1,012
Retained earnings (10,909) (10,568)
Total equity 1,227 1,547
Group statement of changes in equity
for the year ended 31 December 2022
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 2021 2,613 8,039 - 88 1,012 (10,234) 1,518
Issue of shares 75 346 - - - - 421
Total comprehensive income - - - - - (422) (422)
Share options 30 30
Write-off of convertible (88) 88
equity
Balance at 31 December 2021 2,688 8,385 30 - 1,012 (10,568) 1,547
Balance at 1 January 2022 2,688 8,385 30 - 1,012 (10,568) 1,547
Transactions with owners in
their capacity as owners:
Share options - - 21 - - - 21
Total comprehensive income - - - - - (341) (341)
Balance at 31 December 2022 2,688 8,385 51 - 1,012 (10,909) 1,227
Group statement of cash flows
for the year ended 31 December 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Loss before taxation (341) (422)
Adjustments for:
Fair value adjustment for listed investments 85 183
Increase in share based payments 21 30
(Increase) in trade and other receivables (99) (9)
(Decrease) in trade and other payables (5) (8)
Net cash used in operating activities (339) (226)
Cash flows from investing activities
Purchase of investments - (125)
- (125)
Cash flows from financing activities
Cash raised through issue of shares (net of transaction costs) - 421
Net increase / (decrease) in cash and cash equivalents (339) 70
Cash and cash equivalents at beginning of financial year 561 491
Cash and cash equivalents at end of financial year 222 561
Principal accounting policies
for the year ended 31 December 2022
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 2nd Floor, 80 Cheapside, London EC2V 6EE.
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 2022
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
2022 2021
£'000 £'000
Segment result
Operating income 60 44
Investment activities:
Administrative expenses (316) (283)
Operating loss/profit (256) (239)
Loss in value of quoted investment (85) (183)
Loss before tax (341) (422)
2022 2021
£'000 £'000
Segment assets
Investment activities:
Non-current assets - investment 930 1,015
Other 344 584
Total assets 1,274 1,599
Segment liabilities
Investment activities:
Current liabilities 47 52
Total liabilities 47 52
Total assets less total liabilities 1,227 1,547
The activity of investments arose wholly in the United Kingdom.
2. Operating profit / (loss)
Operating profit / (loss) is stated after charging:
2022 2021
£'000 £'000
Auditor's remuneration for:
Audit services
- audit of the Group's and Company's annual accounts 18 16
- audit of subsidiaries pursuant to legislation 4 3
3. Directors and employees
Staff costs during the year were as follows:
2022 2021
£'000 £'000
Wages and salaries 119 105
The average number of employees (including Directors) of the Group was:
2022 2021
Number Number
Management of investments 5 4
4. Income tax
There is no tax charge or credit for the current year. The tax assessed for the
prior year is higher than the standard rate of corporation tax in the UK of 19%
(2021: 19%). The differences are explained as follows:
2022 2021
£'000 £'000
Loss on ordinary activities before taxation (341) (422)
Loss on ordinary activities multiplied by standard rate of UK corporation tax (65) (80)
of 19% (2021: 19%)
Effect of:
Disallowable items 20 35
Addition / (utilisation) of tax losses arising 45 45
Total tax charge/(credit) - -
The Group has unrecognised deferred tax assets of £1,504,000 (2021: £1,459,000)
as a result of losses in the current year and prior periods carried forward of
£8,018,000 (2021: £7,677,000).
5. 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 419,822,048 ordinary shares of
0.1p. The 2022 loss per ordinary share is based on post consolidation number
of shares in issue 41,982,204 ordinary shares of 0.1p. (2021: 35,107,204
ordinary shares of 0.1p adjusted for 2023 consolidation) and the following
figures:
2022 2021
Loss attributable to equity shareholders (£'000) (341) (422)
Loss per ordinary share (0.8)p (1.2)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.
6. Investments
Investments
£'000
Cost
At 1 January 2022 2,330
Additions -
At 31 December 2022 2,330
Fair value movements
At 1 January 2022 (1,315)
Fair value adjustment (85)
At 31 December 2022 (1,400)
Fair value
At 31 December 2022 930
At 31 December 2021 1,015
Drumz plc acquired its legacy investment 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
2022 was £304,714.
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 exercise 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 (2021:
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 2022 625 1,705 2,330
Additions - -
At 31 December 2022 625 1,705 2,330
Fair value losses
At 1 January - (1,315) (1,315)
2022
Fair value - (85) (85)
adjustment
At 31 December 2022 - (1,400) (1,400)
Fair value
At 31 December 2022 625 305 930
At 31 December 2021 625 390 1,015
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.
Investments in the subsidiaries are carried by the parent company at £nil
(2021: £nil). See notes 12 and 15 for details of subsidiary undertakings.
7. Trade and other receivables
Group Company
2022 2021 2022 2021
£ £'000 £'000 £'000
'000
Other debtors 122 23 122 23
In the opinion of the Directors, fair value is equal to carrying value.
8. Trade and other payables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Current
Trade creditors 2 9 2 9
Other creditors and accruals 45 43 45 43
Total trade and other payables 47 52 47 52
In the opinion of the Directors, fair value is equal to carrying value.
9. Share capital
2022 2021
£'000 £'000
Allotted, called up and fully paid
419,822,048 (2021: 419,822,048) ordinary shares of 0.1p each 420 420
2,268,113,165 (2021: 2,268,113,165) deferred shares of 0.1p each 2,268 2,268
2,688 2,688
2022 2022 2021 2021
Number £'000 Number £'000
Ordinary shares
At 1 January 419,822,048 420 344,822,048 345
Additions 75,000,000 75
At 31 December 419,822,048 420 419,822,048 420
On 24 April 2023 a resolution was approved by shareholders in general meeting
whereby the Ordinary shares were subject to a consolidation and subdivision
effectively reducing the number of shares and share options by a factor of 10.
Deferred shares
In November 2022 at a General Meeting of the Ordinary Shareholders and at a
separate Class Meeting of the Deferred Shareholders new Articles were
approved. The new Articles have amended the rights of the deferred shares
so on a distribution of assets on a liquidation or a return of capital (other
than a conversion, redemption or purchase of shares) the surplus assets of the
Company remaining after payment of its liabilities shall be applied (to the
extent that the Company is lawfully permitted to do so), first in paying to the
holders of the Deferred Shares, if any, a total of £1.00 for all of the
Deferred Shares (which payment shall be deemed satisfied by payment to any one
holder of Deferred Shares).
The other rights of the deferred shares are unaltered, they 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.
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 2022 is
shown below:
Number
Outstanding at 31 December 2021 and 31 December 2022 15,000,000
On 24 April 2023 a resolution was approved by shareholders in general meeting
whereby the Ordinary shares were subject to a consolidation and subdivision
effectively reducing the number of shares and share options by a factor of 10.
At 31 December 2022 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 2022: 0.62p
Options exercisable at 31 December 2022: nil
The weighted average remaining contractual life of the share options
outstanding at the end of the year is 7 years (2021: 8 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 2022 is
£21,000 (2021: £30,000). 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
The warrants over 75,000,000 ordinary shares of the Company with an exercise
price of 1.0 pence per share issued in the year ended 31 December 2021, expired
during the year.
10. Transactions with related parties
Group and Company
The key management personnel of the Company are considered to be the Directors.
Acuity Risk Management Limited, a company in which the Group owned 25% of the
equity, owed £12,000 for unpaid management fees at the year end. Post the
balance sheet date the Group acquired the whole of the share capital of Acuity.
Further details are set out in note 15 to these financial statements and on the
Company's website:
11. Financial instruments and risk profile
The Group's and Company's financial instruments comprise of its investment
portfolio, cash balances, debtors and creditors that arise directly from its
operations and derivative instruments. The Group and Company are exposed to
risk through the use of financial instruments and specifically to liquidity
risk, market price risk and credit risk, which result from the Group's
operating activities.
The Board's policy for managing these risks is summarised below.
Liquidity risk
The Group and Company make investments for the long term. Accordingly, the
Group and Company rarely trade investments in the short term. The Group
currently has an investment in KCR Residential REIT plc. Although this is a
traded investment it has limited liquidity.
Market price risk
The Group and Company are exposed to market price risk as shown by movements in
the value of its equity investments. Any such risk is regularly monitored
by the Directors.
Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders, benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. The Group monitors capital on
the basis of the carrying amount of equity, less cash and cash equivalents as
presented on the face of the Statement of financial position. The movement in
the capital to overall financing ratio is shown below:
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Equity 1,227 1,547 1,227 1,547
Less: cash and cash equivalents (222) (561) (222) (561)
Capital 1,005 986 1,005 986
Equity 1,227 1,547 1,227 1,547
Borrowings - - - -
Overall financing 1,227 1,547 1,227 1,547
Capital to overall financing 81.9% 63.7% 81.9% 63.7%
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt.
Credit risk
The Group's exposure to credit risk is limited to the carrying amount of
financial assets recognised at the balance sheet date.
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade and other receivables 122 23 122 23
Cash and cash equivalents 222 561 222 561
344 584 344 584
The Directors consider that all the above financial assets are of reasonable
quality. No amounts shown above are considered to be past their due date.
Summary of financial assets and liabilities by category
The carrying amount of financial assets and liabilities as recognised at the
balance sheet date of the reporting periods under review may also
be categorised as below:
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Current assets
Trade and other receivables 122 23 122 23
Cash and cash equivalents 222 561 222 561
Financial assets at amortised cost 344 584 344 584
Fair value though profit and loss assets 930 1,015 930 1,015
Current liabilities
Financial liabilities carried at amortised cost 47 52 47 52
Non-current liabilities
Financial liabilities carried at amortised cost - - - -
The financial instruments held at fair value through profit or loss have been
valued in accordance with the International Private Equity and Venture Capital
Valuation guidelines. In the current year, these are determined by reference to
quoted prices where there is an active market for identical assets or
liabilities. Otherwise, the fair value is determined by using valuation
techniques such as earnings multiples. There is no material difference between
the carrying value and fair value of the Group's aggregate financial assets and
liabilities.
Interest rate risk profile of financial liabilities
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Floating rate financial liabilities - - - -
Fixed rate financial liabilities - - - -
Financial liabilities on which no interest is paid 47 52 47 52
47 52 47 52
Sensitivity analysis
The following table illustrates the sensitivity of loss and equity to a
reasonably possible change in interest rates of +/- 1%. These changes are
considered to be reasonably possible, based on observation of current market
conditions. The calculations are based on a change in the average market
interest rate for each period, and the financial instruments held at each
reporting date that are sensitive to changes in interest rates. All other
variables are held constant.
Group
Loss for the year Equity
£000 £000
+ 1% - 1% + 1% - 1%
31 December 2022 (344) (338) 1,239 1,215
31 December 2021 (426) (418) 1,562 1,532
Company
Loss for the year Equity
£000 £000
+ 1% - 1% + 1% - 1%
31 December 2022 (344) (338) 1,239 1,215
31 December 2021 (426) (418) 1,562 1,532
12. Subsidiary undertakings
At 31 December 2022 the Group held 50% or more of the equity of the following:
Company name Country of Principal activity Holding Class of
registration shares
World Life Sciences Limited England Dormant 100% Ordinary
The registered address of the subsidiary is the same as that of the parent
company.
13. Company information
The Company is a Public Limited Company registered in England and Wales. The
registered office is 2nd Floor, 80 Cheapside, London EC2V 6EE
14. Ultimate controlling party
The Directors believe that there is no overall controlling party of the
Company.
15. Events after the balance sheet date
The Company announced on 5 April 2023 that it had conditionally agreed terms to
acquire all the shares in Acuity Risk Management Limited ("Acuity") it did not
already own. Acuity is a supplier of governance, risk and compliance software
and services. Drumz then owned 25% of the issued share capital of Acuity and
proposed to acquire the balance of the issued and to be issued share capital.
The acquisition of the outstanding c.75% of Acuity was for a total
consideration of approximately £3.6 million. The consideration was to be
satisfied by the payment of £0.5 million in cash and the issue of 45,709,570
New Ordinary Shares at 6.75p per share. In addition, in order to settle the
cash consideration of the acquisition and pay for the transaction costs the
Company's Board organised a conditional placing and subscription to raise £1.45
million (before expenses) by the issue of 32,222,222 New Ordinary Shares at a
price of 4.5 pence per New Ordinary Share. In addition certain advisers were
issued with warrants over 2,159,999 New Ordinary Shares at 4.5p per share
expiring on the third anniversary of Admission. This transaction was treated
as a reverse takeover under the AIM Rules. The acquisition was approved by
shareholders in a General Meeting on 24 April 2023 and Simon Marvell joined the
Company's Board.
In connection with the transaction to acquire Acuity £78,000 professional costs
were incurred during the year which have been treated as prepayments and will
be recognised in the year to 31 December 2023.
On 24 April 2023 a resolution was also approved by shareholders in general
meeting whereby the Ordinary shares were subject to a consolidation and
subdivision effectively reducing the number of shares and share options by a
factor of 10.
At the date of this report it is impracticable to disclose the provisional fair
values of the total consideration paid and the acquired assets, liabilities,
contingent liabilities and goodwill.
The goodwill that will be recognised is expected to capture synergies that will
be achieved as an enlarged business, as well as intangible assets which do not
qualify for separate recognition such as workforce. It is impracticable to
conclude at the date of this report the total amount of goodwill which is
expected to be deductible for tax purposes.
As this acquisition took place on 24 April 2023, the statement of comprehensive
income does not include any revenue, profit or loss relating to the acquired
Acuity business for the year ended 31 December 2022.
16. Contingent Liabilities
In connection with the transaction to acquire Acuity, £78,000 of professional
costs were incurred during the year which are included as an asset in the
balance sheet at 31 December 2022, subject to the successful acquisition of
Acuity in 2023. It is anticipated that further costs of £575,000 for this
acquisition will be incurred in 2023, which have not been provided for in these
financial statements.
Annual Report and AGM Notice
The Company confirms the Annual Report and AGM Notice will be available on the
Company's website drumzplc.com in due course.
END
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May 25, 2023 02:00 ET (06:00 GMT)
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