Drumz : Notice of General Meeting – 4 April 23

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER ARTICLE 7 OF THE EU REGULATION 596/2014 AS IT FORMS PART OF THE UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

THIS ANNOUNCEMENT, INCLUDING THE APPENDICES TO THIS ANNOUNCEMENT, AND THE INFORMATION CONTAINED IN IT, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, REPUBLIC OF IRELAND, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.

THIS ANNOUNCEMENT, INCLUDING THE APPENDICES TO THIS ANNOUNCEMENT, IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT AND THE APPENDICES DO NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF DRUMZ PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT SHOULD BE READ IN ITS ENTIRETY. THE DEFINITIONS USED IN THIS ANNOUNCEMENT ARE SET OUT IN APPENDIX III OF THIS ANNOUNCEMENT.

5 April 2023

DRUMZ PLC

("Drumz" or the "Company")

Acquisition of Acuity Risk Management Limited

Approval of waiver of obligations under Rule 9 of the Takeover Code

Placing and Subscription of 32,222,222 New Ordinary Shares at 4.5 pence per share

Share Reorganisation

Admission to trading on AIM

Change of Name

and

Notice of General Meeting

Drumz plc (AIM: DRUM), the investing company focused on building value in technology, is pleased to announce that it has conditionally agreed terms to acquire Acuity Risk Management Limited ("ARM"), a supplier of Governance, Risk, Compliance ("GRC") software and services. Drumz currently owns 25 per cent. of the issued share capital of ARM and it is proposing to acquire the balance of the issued and to be issued share capital.

Highlights

• Acquisition of ARM for a total consideration of approximately £3.6 million. The Consideration will be satisfied by the payment of £0.5 million in cash and the issue of 45,709,570 New Ordinary Shares which at closing mid-market price of 6.75 pence per Existing Ordinary Share on 3 April 2023 as adjusted by the Share Reorganisation, being the latest practicable date prior to the publication of this announcement, are valued at £3.1 million.
• In addition, Acquisition Options over 2,420,506 New Ordinary Shares may be granted to the Founders in the event that the Company's share price does not at any time exceed an average of 6.99 pence on any five consecutive trading days during the three months immediately following Admission.
• 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 (the Issue Price represents a discount of approximately 33.3 per cent. to the Closing Price.
• Clear Capital has been appointed as a Joint Broker with immediate effect

• The key performance indicators of ARM are:

1. monthly recurring revenue: £0.14 million as at 28 February 2023 (30 September 2022:

£0.13 million, 31 March 2022: £0.10 million)

1. forward contracted revenue: £2.17 million as at 28 February 2023 (30 September
   2022: £1.99 million, 31 March 2022: £2.17 million)

1. renewal rate: 96 per cent. as at 28 February 2023 (30 September 2022: 96 per cent.,
   31 March 2022: 82 per cent.)

• 1. sales pipeline: £3.83 million as at 22 March 2023 (30 September 2022: £1.67 million,
     31 March 2022: £1.36 million).
• Subject to, inter alia, shareholder approval and admission to trading on AIM, the Acquisition and Placing are expected to complete on 25 April 2023.
• Subject to, inter alia, shareholder approval and admission to trading on AIM, the Company will change its name to Acuity RM Group plc and TIDM will be (AIM:ACRM)

The acquisition of ARM will constitute a reverse takeover pursuant to Rule 14 of the AIM Rules for Companies and as such will require Shareholder approval. The Admission Document is being posted today to shareholders which sets out in more detail the background and reasons for the Acquisition, the Placing, Subscription, Change of Name, and certain other proposals and also includes a notice of General Meeting. A General Meeting of the Company is being convened for 10:00 a.m. on 24 April 2023 at the offices of Marriott Harrison LLP 80 Cheapside London EC2V 6EE. The Admission Document will be available on the Company's website: www.drumzplc.comand following Admission on Company's new website: www.acuityrmgroup.com.

Angus Forrest, CEO of Drumz said: "We are delighted to announce Drumz's acquisition of Acuity Risk Management Ltd (Acuity). Over the past two and a half years we have worked closely with the Acuity team. Since we invested the business has taken greater control of its activities particularly sales and marketing resulting in consistent growth and improvement in the Key Performance Indicators. We believe this is a very exciting time and stage in the Company's development as it expands its activities in North America, the world's largest market for Governance, Risk and Compliance (GRC). GRC is a large market - $14bn in 2022 rising to $27bn in 2027 (MarketsandMarkets)."

Simon Marvell, CEO of ARM said: "Drumz has been a great supporter of Acuity since its original investment in September 2020. Over the intervening period, Drumz has helped us to strengthen our commercial team and grow the business. We operate in a large and fast-growing market so we are delighted and excited to be proceeding with this transaction which we believe will help us to raise our profile as a public company and further accelerate development of the business and its expansion in new markets".

The expected timetable of principal events is set out in Appendix II to this Announcement. Capitalised terms have the meaning set out in Appendix III to this Announcement.

For further information:
Drumz plc	020 3582 0566
Angus Forrest, Chief Executive Officer
WH Ireland (NOMAD & Joint Bookrunner)	www.whirelandcb.com
Mike Coe / Sarah Mather	020 7220 1666
Peterhouse Capital Limited (Joint Bookrunner)
Lucy Williams / Duncan Vasey	020 7469 0936
Clear Capital Markets Limited (Joint Bookrunner)	020 3869 6080
Andrew Blaylock

ADDITIONAL INFORMATION

1. Introduction

On 5 April 2023, the Company announced that it had conditionally agreed terms to acquire Acuity Risk Management Limited ("ARM"), a supplier of Governance, Risk, Compliance ("GRC") software and services. Drumz currently owns 25 per cent. of the issued share capital of ARM and it is proposing to acquire the balance of the issued and to be issued share capital for a total consideration of approximately £3.6 million. The Consideration will be satisfied by the payment of £0.5 million in cash and the issue of 45,709,570 New Ordinary Shares which at the Closing Price are valued at £3.1 million. In addition, Acquisition Options over 2,420,506 New Ordinary Shares may be granted to the Founders in the event that the Company's share price does not at any time exceed an average of 6.99 pence on any five consecutive trading days during the three months immediately following Admission.

The Company also announces that it has conditionally raised £1.45 million (before expenses) pursuant to a Placing and Subscription, with certain institutions and other investors, through the proposed issue of 32,222,222 New Ordinary Shares at a price of 4.5 pence per New Ordinary Share. The Placing and Subscription are conditional (amongst other things) upon the passing of certain resolutions in order to ensure that the Directors have the necessary authorities and powers to allot the New Ordinary Shares.

The Issue Price represents a discount of approximately 33.3 per cent. to the Closing Price.

In conjunction with the Acquisition, Placing and Subscription the Existing Directors believe it is appropriate to undertake a share reorganisation to simplify the number and pricing of the Company's Existing Ordinary Shares. Details of the Share Reorganisation which will comprise a consolidation and sub-division are set out in paragraph 6 below.

The Directors believe that it is appropriate, should the Acquisition be approved by Shareholders at the General Meeting and be completed, that the name of the Company be changed to Acuity RM Group plc to reflect the business of the Enlarged Group.

The Placing, and Subscription, Acquisition and Change of Name are conditional (amongst other things) upon the passing of certain resolutions in order to ensure that the Directors have the necessary authorities and powers to allot the New Ordinary Shares. As a result, a number of proposals are to be put to Shareholders at the General Meeting.

The Acquisition, if completed, will constitute a reverse takeover of the Company under Rule 14 of the AIM Rules and is, therefore, subject to the approval of Shareholders at the General Meeting.

The Founders are presumed to be acting in concert for the purposes of the Takeover Code. On Admission the Concert Party will hold 44,973,171 New Ordinary Shares, as a result of the issue of the Concert Party Consideration Shares, representing approximately 37.16 per cent. of the Enlarged Ordinary Share Capital. In addition if all the Acquisition Options, held by or to be issued to the Founders were exercised (and no other Options or Adviser Warrants were exercised) the Founders would hold a total of 47,393,677 New Ordinary Shares, representing 38.39 per cent. of the Company's then issued New Ordinary Share capital. Under Rule 9 of the Takeover Code, the Concert Party would normally be obliged to make an offer as a result of the (1) Concert Party Consideration Shares and (2) the exercise of the Acquisition Options, to all Shareholders (other than the Concert Party) to acquire their New Ordinary Shares for cash at the Closing Price. The Panel has agreed to waive this obligation, subject to the approval of the Independent Shareholders on a poll of the Waiver Resolution at the General Meeting.

On completion of the Acquisition and readmission to AIM the Company will own 100 per cent. of the shares of ARM and be treated as a trading company for the purposes of the AIM Rules. The Enlarged Group's 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.

2. Background on the Company and reasons for the Acquisition

Drumz was incorporated under the name J. Billam Limited in 1935 and in 1964 it became a public company with its shares traded on the London Stock Exchange. In June 1995, its name changed to Billam PLC and in 1997 its shares were admitted to AIM. In 2000, it became an investing company on AIM. It subsequently

changed its name to Energiser Investments plc in 2008 and to Drumz in 2020. Drumz is an investing company admitted to trading on AIM with an investment policy focused principally, but not exclusively, on acquiring investments in technology businesses based in Europe.

Drumz currently has two investments, being a 25 per cent. shareholding in ARM and a 5.85 per cent. legacy shareholding in KCR. Drumz is proposing to acquire the remaining issued shares and to be issued shares in ARM as part of the Proposals. Further details on ARM are set out in paragraph 3 below. KCR is an AIM listed property business focused on the residential sector and the Existing Directors are looking to dispose of this investment, which is outside the Company's current investment policy. 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 or if a disposal of this investment might be effected.

On 4 September 2020, Drumz acquired a 20 per cent. stake in ARM and Angus Forrest was appointed chairman of the board of ARM as a board representative of Drumz. On 6 September 2021 Drumz exercised an option to acquire a further five per cent., thereby increasing its shareholding to 25 per cent.

Since Drumz's investment, the focus of the ARM Directors has been on increasing the commercialisation of ARM. Contract terms have been revised and all sales of ARM's risk management software, STREAM®, have been on a SaaS or private cloud (on-premise) subscription basis. Sales and marketing activities have been revised and strengthened, with a new digital marketing programme and the sales team has been strengthened through a combination of recruitment, training and management. This has resulted in several new customer wins including a major UK broadcaster, a US technology company and a German engineering company. STREAM® is currently being used by around 70 organisations, across the UK, Germany, US and other territories.

ARM has demonstrated strong growth over the past two years and the Existing Directors believe that there continue to be opportunities for rapid organic expansion and therefore the Acquisition presents the Company and its Shareholders with what the Directors believe is an exciting opportunity.

Accordingly, the Existing Directors propose that, subject to approval of the Resolutions by the Shareholders at the General Meeting, the Company should acquire the entire issued share capital of ARM not already owned by Drumz.

3. Summary information on ARM

ARM was incorporated on 18 December 2019 as a limited company and commenced trading in March 2020 when it acquired the trade and assets of Acuity RM LLP.

ARM is an established provider of risk management services. ARM's award-winning STREAM® is a GRC software platform, which 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.

The Directors believe that Acuity is well placed to continue to build market share in the growing GRC market which was valued at c.$14.9 billion in 2022 and is expected to grow strongly to c.$27.1 billion in 2027, as more organisations accept the need and importance to manage the risks affecting them (Source: MarketsandMarketsTM).

ARM is headquartered and operates from its office in the UK (London). ARM currently employs or contracts with 19 people, all of whom are UK based.

The table below sets out a summary of financial information on ARM, prepared in accordance with IFRS, for the periods indicated. As this is only a summary, Shareholders are advised to read the Admission Document and not rely solely on this summarised information.

Summary historical financial information of ARM

Unaudited Unaudited

Audited AuditedSixSix

Year Period* months months

	ended	ended	ended	ended
	31 March	31 March 30 September 30 September
	2022	2021	2022	2021
	£'000	£'000	£'000	£'000
Revenue	1,558	1,226	853	735
Gross profit	1,455	1,123	788	683
EBITDA**	(319)	(411)	(289)	(185)
Loss from operations	(525)	(599)	(385)	(293)

*Being the period from incorporation on 18 December 2019 **Earnings before interest, tax, depreciation and amortisation

The Directors believe that two of the largest drivers of enterprise value for a business using a SaaS/ subscriptions model are growth rate and scale. Since Drumz invested in ARM, ARM has been focused on building its commercial infrastructure to enable it to accelerate its growth and achieve greater scale.

4. Principal terms of the Acquisition

On 5 April 2023, the Company entered into the Acquisition Agreements with the Founders and the Option Holders pursuant to which the Company has conditionally agreed to acquire the entire issued and to be issued share capital of ARM, not already owned by Drumz. The Sellers comprise (i) the Founders and (ii) the Option Holders (who are certain employees of ARM that have been granted options over shares in ARM).

The Company entered into the SPA with the Founders on 5 April 2023. The options held by the Option Holders will be exercised and the shares issued as a result of that exercise shall be acquired by the Company on Completion pursuant to the terms of the Option Holder SPAs, which were entered into by the Company and each of the Option Holders on 5 April 2023.

The total consideration for the Acquisition is £3.6 million, to be satisfied as to £0.5 million payable in cash and 45,709,570 New Ordinary Shares with a value of £3.1 million at the Closing Price.

In addition, Acquisition Options over 2,420,506 New Ordinary Shares have been granted to the Founders in the event that the Company's share price does not at any time exceed an average of

6.99 pence on any five consecutive trading days during the three months immediately following Admission.

The Cash Consideration and 44,973,171 Consideration Shares will be paid/issued to the Founders pursuant to the SPA. 736,399 Consideration Shares will be issued to the Option Holders pursuant to the Option Holder SPAs.

Completion is conditional, inter alia, on the approval of the Resolutions at the General Meeting, Admission and no material adverse change having occurred in respect of ARM prior to Completion. Pursuant to the SPA, the Founders have also agreed to enter into new service agreements with the Company and have entered into the Lock-in Deeds.

5. Change of Name

To reflect the new direction of the Company, the Board is proposing to change the name of the Company to:

"Acuity RM Group plc"

The change of name will become effective once the Registrar of Companies has issued a new certificate of incorporation on the change of name. This is expected to occur on or around 2 May 2023. The tradeable instrument display mnemonic ("TIDM") of the Company is expected to change to AIM:ACRM effective from 8.00 a.m. on or around 2 May 2023.

6. Share Reorganisation