TIDMDRUM
16 September 2022
Drumz plc
('Drumz' or the 'Company')
Interim Results to 30 June 2022
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Interim Results for Drumz, which is
focused on investment in the technology sector, for the six months ended 30
June 2022.
Results and performance
The Group's results for the six months ended 30 June 2022 showed revenue of £
30,000 (2021: £18,000) and an operating loss of £184,000 (2021: loss of £
261,000).
At 30 June 2022 the two principal assets of the Group continue to be its
holding in Acuity Risk Management Limited ("Acuity"), an award-winning business
specialising in risk management and cybersecurity; and its legacy holding in
KCR Residential REIT plc ("KCR"), a company listed on AIM, which owns property
in the private rented residential sector.
Acuity's principal product is STREAMT, which is used by private and public
sector clients to manage their cyber security and other enterprise risks.
Acuity is in a sector where customer demand is exceptionally strong, as more
businesses seek to protect their data for financial, reputational and
regulatory reasons. Acuity continues to perform well and showed a 26 per cent
increase in turnover for the year ended 31 March 2022.
In line with current accounting practice, Drumz's investment in Acuity is shown
at cost and therefore does not reflect the improvement in valuation that its
growing turnover would suggest. Demand for Acuity's proprietary software
continues to grow and further details of the progress achieved by the company
are set out in the Chief Executive's Report.
The share price performance of KCR, our legacy investment, in the six months
ended 30 June 2022 continued to be disappointing. The value of Drumz's holding
in KCR at 30 June 2022 was £317,000 (31 December 2021: £390,000), which
represents a further book loss on this investment of £73,000 (2021: loss of £
183,000). I am however, pleased to report that in recent weeks the KCR share
price has improved somewhat and at the date of this announcement, the book loss
suffered in the first half has been reduced by approximately £50,000.
The Group's loss before and after taxation amounted to £184,000 (2021: £
261,000). The basic and diluted loss per share amounted to 0.04p (2020: loss
0.08p). No dividend has been declared.
At 30 June 2022 the Group had cash resources of £413,000 (2021: £380,000) and
shareholders' funds of £1,374,000 (2021: £1,276,000).
Board
In June 2022 we welcomed Nick Clark to the Board as a non-executive Director.
Nick is a significant shareholder in Drumz and a successful smaller companies
investor. His skill set is in buying and investing in technology companies and
he has already made a significant contribution in identifying possible
acquisition targets.
Outlook
We continue to be pleased with the progress at the award-winning Acuity. The
improvement in the number and the quality of the sales leads Acuity is now
generating is a growing testament to the progress that has been made and bodes
well for the future. We continue to look for new investment opportunities and I
would like to take this opportunity to thank my colleagues and our shareholders
for their continued support.
Simon Bennett
Chairman
16 September 2022
Chief Executive's Report
Existing portfolio
Acuity Risk Management Limited ("Acuity")
As outlined in the annual results, the commercial team at Acuity was
strengthened in 2021 and revenue growth accelerated in the second half of the
year. I am encouraged to report that revenues in the year to 31 March 2022
showed an increase of 26 per cent at £1.55 million (2021: £1.23 million). This
growth has continued into the current year.
New appointments to the management team continue and I look forward to
reporting on progress made in Acuity's existing markets in the coming
months. Other important developments at Acuity include:
(a) Gartner identifying Acuity's product STREAM and Gartner's peer insights
identifying STREAM as one of the top four cyber risk products in the world; and
further
(b) G2.com the world's largest and most trusted tech marketplace for software,
named Acuity (1) a Leader in 'IT Risk Management Software', (2) High Performer
in 'Audit Management Software' and (3) number two for Quality of Support; and
(c) the expansion of distribution channels by the recruitment of well-connected
VARs in the UK and North America.
We believe that these and other developments will enable substantial advances
to be made in the coming months.
KCR Residential REIT plc ("KCR")
The management of KCR has taken steps to improve cash flow, but the share price
continues to disappoint. We continue to look for opportunities to realise this
non-core asset.
New opportunities
We have identified several interesting target businesses during the period and
made a number of proposals to acquire them, which would have turned Drumz from
an investment company to a trading company. To date we have not been able to
agree terms, but the Board considers that in the current economic climate that
there will be opportunities which offer good value for Drumz and its
shareholders.
Outlook
We are pleased with developments at Acuity where the contributions Drumz has
made to the business has helped to grow its value. There remain major
opportunities to grow shareholder value and achieve returns at Acuity and I
look forward to reporting on further progress this year.
Angus Forrest
Chief Executive
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 +44 (0) 20 7220 1666
Peterhouse Capital Limited (Joint
broker)
Lucy Williams / Duncan Vasey +44 (0) 20 7469 0936
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months year to
to 30 to 30 31
June 2022 June 2021 December
2021
Note £'000 £'000 £'000
Continuing operations
Revenue 30 18 44
Cost of sales - - -
Gross profit 30 18 44
Administrative expenses (141) (133) (283)
Operating loss 5 (111) (115) (239)
Loss on investments (73) (146) (183)
Loss before and after taxation 5 (184) (261) (422)
Loss for the period attributable to shareholders of the (184) (261) (422)
company
Total comprehensive income attributable to shareholders (184) (261) (422)
of the company
Earnings per share
Basic and diluted earnings per share from total and 4 (0.04)p (0.08)p (0.12)p
continuing operations
Diluted earnings per share is taken as equal to basic earnings per share as the
Company is loss making and the average share price during the period is lower
than the exercise price and therefore the effect of including share options is
anti-dilutive.
Condensed consolidated statement of financial position
Unaudited Unaudited Audited as
as at 30 as at 30 at 31
June 2022 June 2021 December
2021
Note £'000 £'000 £'000
ASSETS
Non-current assets
Investments at fair value through profit or loss 6 942 927 1,015
942 927 1,015
Current assets
Trade and other receivables 34 20 23
Cash and cash equivalents 413 380 561
447 400 584
Total assets 1,389 1,327 1,599
LIABILITIES
Current liabilities
Trade and other payables 15 51 52
Total liabilities 15 51 52
Net assets 1,374 1,276 1,547
EQUITY
Share capital 2,688 2,613 2,688
Share premium account 8,385 8,039 8,385
Share option reserve 41 19 30
Convertible loan - 88 -
Merger reserve 1,012 1,012 1,012
Retained earnings (10,752) (10,495) (10,568)
Total equity attributable to shareholders of the company 1,374 1,276 1,547
Condensed consolidated statement of changes in equity
Share Share
Share premium option Convertible Merger Retained Total
capital account Reserve loan reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021 2,613 8,039 __ 88 1,012 (10,234) 1,518
Total comprehensive profit - - __ - - (261) (261)
Share option reserve __ __ 19 __ __ __ 19
Balance at 30 June 2021 2,613 8,039 19 88 1,012 (10,495) 1,276
Total comprehensive loss - - __- (88) - (73) (161)
Issue of shares net of costs 75 346 421
Share option reserve __ __ 11 __ __ __ 11
Balance at 31 December 2021 2,688 8,385 30 __ 1,012 (10,568) 1,547
Total comprehensive loss - - - - - (184) (184)
Share option reserve __ __ 11 __ __ __ 11
Balance at 30 June 2022 2,688 8,385 41 __ 1,012 (10,752) 1,374
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
6 months 6 months year to
to 30 to 30 June 31
June 2022 2021 December
2021
£'000 £'000 £'000
Cash flows from operating activities
(Loss)/profit before taxation (184) (261) (422)
Adjustments for:
Fair value adjustment for listed investments 73 146 183
Share option reserve 11 19 30
Changes in working capital:
- (Increase)/decrease in trade and other receivables (11) (6) (9)
- (Decrease)/increase in trade and other payables (37) (9) (8)
Net cash used in operating activities (148) (111) (226)
Cash flows from investing activities
Purchase of investments (125)
Cash flows from financing activities
Cash raised through issue of shares (net of transaction 421
costs)
Net increase (decrease) in cash and cash equivalents (148) (111) 70
Cash and cash equivalents at beginning of period 561 491 491
Cash and cash equivalents at end of period 413 380 561
1. Nature of operations and general information
The principal activity of the Company is investing in technology companies,
which offer value creation opportunities over the short and medium term.
The Company is incorporated and domiciled in the United Kingdom. The address of
Drumz plc's registered office is Burnham Yard, London End, Beaconsfield,
Buckinghamshire, HP9 2JH.
Drumz plc's shares are listed on AIM, a market operated by the London Stock
Exchange. The condensed consolidated interim financial report was approved for
issue by the Board of Directors on 16 September 2022.
The financial information set out in this interim financial report does not
constitute statutory accounts as defined in Sections 434(3) and 435(3) of the
Companies Act 2006. The Company's statutory financial statements for the year
ended 31 December 2021 have been filed with the Registrar of Companies and are
available at www.drumzplc.com. The auditor's report on those financial
statements was unqualified and did not contain any statement under Section 498
(2) or Section 498(3) of the Companies Act 2006.
2. Basis of preparation
The condensed consolidated interim financial report has been prepared in
accordance with the requirements of the AIM Rules for Companies. As permitted,
the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in
preparing this interim financial information. The condensed consolidated
interim financial statements should be read in conjunction with the annual
financial statements for the year ended 31 December 2021. The interim financial
statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the United Kingdom which have not
differed from the previously EU-endorsed IFRS, and hence the previously
reported accounting policies still apply.
The Directors believe that whilst the impact of COVID-19 appears to be reducing
there is still significant uncertainty as to what foreseen or unforeseen action
or actions the Company may be required to take in order to respond to any
circumstances that may arise in the future. They have considered the possible
impact of COVID-19 on Drumz and its business activities, which are now
increasingly focussed on software businesses, many businesses in the software
sector can be operated remotely in a virtual environment which should reduce
the impact of COVID-19 on their activities.
Going concern
The Directors, having made appropriate enquiries, consider that adequate
resources exist for the Company and Group to continue in operational existence
for the foreseeable future and that, therefore, it is appropriate to adopt the
going concern basis in preparing the condensed consolidated interim financial
statements for the period ended 30 June 2022.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business. The
key risks that could affect the Group's medium-term performance and the factors
that mitigate those risks have not substantially changed from those set out in
the Company's 2021 Annual Report and Financial Statements, a copy of which is
available on the Company's website: www.drumzplc.com.
Critical accounting estimates
The preparation of condensed consolidated interim financial report requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the end of the reporting period. Significant items
subject to such estimates are set out in the Company's 2021 Annual Report and
Financial Statements. The nature and amounts of such estimates have not changed
significantly during the interim period.
3. Accounting policies
Except as described below, the same accounting policies, presentation and
methods of computation have been followed in these condensed consolidated
interim financial statements as were applied in the preparation of the Group's
annual financial statements for the year ended 31 December 2021.
3.1 Changes in accounting policy and disclosures
(a) Accounting developments during 2022
The International Accounting Standards Board (IASB) issued various amendments
and revisions to International Financial Reporting Standards and IFRIC
interpretations. The amendments and revisions were applicable for the period
ended 30 June 2022 but did not result in any material changes to the financial
statements of the Group or Company.
(b) New standards, amendments and interpretations in issue but not yet
effective or not yet endorsed and not early adopted
Standard Impact on initial application Effective date
IAS 8 Accounting estimates 1 January 2023
IAS 1 Classification of Liabilities as 1 January 2023
Current or Non-Current.
IAS 1 Disclosure of Accounting Policies 1 January 2023
The Group is evaluating the impact of the new and amended standards above which
are not expected to have a material impact on the Group's results or
shareholders' funds.
4. Loss per ordinary share
The loss per ordinary share is based on the weighted average number of ordinary
shares in issue during the period of 419,822,048 ordinary shares of 0.1p (2021:
351,072,048 ordinary shares of 0.1p) and the following figures:
Unaudited Unaudited Audited
6 months 6 months year to
to 30 to 30 31
June 2022 June 2021 December
2021
Loss attributable to equity shareholders £'000 (184) (261) (422)
Loss per ordinary share (0.04)p (0.08)p (0.12)p
Diluted loss per share is taken as equal to basic earnings per share as the
Company's average share price during the period is lower than the exercise
price and therefore the effect of including share options is anti-dilutive.
5. Income and segmental analysis
There is one operating segment.
The activity of both the investments is based mainly in the United Kingdom.
6. Investments
The Company made investments as follows during the years ended 31 December:
2018 It acquired 2,435,710 shares in KCR Residential REIT PLC, an AIM listed
real estate investment trust specialising in the acquisition and management of
rented residential portfolios in the UK.
In 2020 it invested £500,000 for a 20% holding in Acuity Risk Management
Limited. In September 2021 Drumz exercised its option and invested a further £
125,000 in Acuity Risk Management Limited, increasing the holding to 25%.
Investments
£'000
Cost
At 1 January 2022 2,330
At 30 June 2022 2,330
Fair value losses
At 1 January 2022 (1,315)
Change in fair value recognised in profit and loss (73)
At 30 June 2022 (1,388)
Fair Value
At 30 June 2022 942
At 31 December 2021 1,015
Fair value hierarchy
In accordance with IFRS 7, 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.
7. Post balance sheet events
There are none.
END
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