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Feedback PLC - Final Results: Revenue up 23%

RNS Number : 9921Q
Feedback PLC
24 October 2019
 

 

Feedback plc

 

Final Results for the year to 31 May 2019: Revenue up 23%

 

Cambridge, UK, 24 October 2019 - Feedback plc (AIM: FDBK, "Feedback" or the "Company"), the specialist medical imaging technology company, announces its full year results for the year to 31 May 2019.

 

Operational highlights (including post period end)

●      Partnership agreement with software development partner, Future Processing, in January 2019

●      Appointment of Dr Tom Oakley as CEO in April 2019

●      Strategic review of Cadran completed, TexRAD review underway

●      Development and launch of Bleepa, a new secure, encrypted medical communication app for clinicians, based on Cadran technology

●      TexRAD achieved new contracts from Korea and the USA.

 

Financial summary (including post period end)

●      Reported revenue up 23% to £563,092 (FY2018: £458,389) driven from existing product lines

●      Loss before tax of £1.13 million (FY2018: £0.75) due to changes in accounting practices and increased investment in staff as the Company gears up to deliver its new products and strategic direction

●      Equity fundraises in November 2018 and August 2019 raised total of £3.375m before expenses, from new and existing investors

●      Healthy cash balance as at 31 May 2019

 

Dr Tom Oakley, CEO of Feedback plc, commented:

 

"This has been a transformational year for Feedback and we believe that we have the technology and strategy to make a meaningful change in the medical imaging and communications market. Following successful fundraises, we are well positioned to continue to build our team and capabilities to support the roll-out of Bleepa, both in the UK and further afield. We look forward to driving further future growth from this significant opportunity."

 

Enquiries:

 

Feedback plc

Tom Oakley, CEO

Lindsay Melvin, CFO

 

+44 (0)1954 718072

[email protected]

Allenby Capital Limited (Nominated Adviser)

David Worlidge / Asha Chotai

 

+44 (0)20 3328 5656

Peterhouse Capital Ltd (Joint Broker)

Lucy Williams / Duncan Vasey

 

+44 (0)20 7469 0936

Stanford Capital Partners Limited (Joint Broker)

Patrick Claridge / John Howes

 

Instinctif Partners

Rozi Morris / Phillip Marriage

+44 20 3815 8880

 

 

+44 (0)20 7457 2020

[email protected]

 

 

About Feedback plc

Feedback plc (AIM: FDBK) is a specialist medical imaging technology company providing innovative software and systems, through its fully-owned trading subsidiary, Feedback Medical Limited. Its products advance the work of radiologists, clinicians and medical researchers by improving workflows and giving unique insights into diseases, particularly cancer.

 

Feedback has launched Bleepa, a new secure, encrypted medical communication app for clinicians accessible through smartphones, tablets and desktops that facilitates rapid clinical messaging and review of medical grade imaging for all members of a clinical team, directly from a hospital Picture Archiving and Communications System (PACS). For more information on Bleepa, see www.bleepa.com 

 

 

Chairman's Statement

 

In my last report of November 2018, I indicated that we had increased our efforts to recruit a new CEO.
I recruited Dr Tom Oakley in December, initially to undertake a comprehensive review of all of our TexRAD publications and Cadran's potential. His thorough professional and clinical analysis of these and the conclusions reached convinced both of us of the merits of him assuming the role of CEO for Feedback Medical Ltd in February 2019. The clinical review evolved into a strategic business review and directional change. Tom demonstrated very quickly his vision, commercial awareness and management drive and the Board was pleased to promote him to being CEO of Feedback plc in April 2019.

 

He has galvanised the operational team and focused efforts on the development and commercial launch of Bleepa, an evolution from Cadran. This exciting new product that is set to transform the group's potential for accelerated growth, was announced in July 2019. It will provide a secure platform for instant sharing via mobile devices by medical staff of clinical grade images and medical information that meets GDPR requirements.

 

Alongside the major management and strategic directional changes occurring during the period, commercial progress has continued. Revenue for the year ended 31 May 2019 was £563,092, an increase of 23% over the previous year (£458,389) after a flat year the year before. The loss before tax for the year ended 31 May 2019 was £1.13 million compared to £0.75 million in the prior year. TexRAD achieved new contracts from Korea and the USA. TexRAD Lung, the CE Marked clinical development of TexRAD research, was evaluated in two major pilot studies during the year which yielded important technical information that will assist future developments for its clinical utility. A strategic review by the CEO of TexRAD and its potential has commenced, with results to follow in the next few months.

 

On quality, we were pleased to announce a retention of our ISO 13485:2016 certification in November 2018, a mark of our continued focus on high standards.

 

The placing in November 2018 of £1.375 million enabled the appointment of a new CEO and other key hires. It also triggered the formal signing of our agreement with Future Processing, our software development partner in Poland, in January 2019. The dedicated resource we have been able to call on has been instrumental in progressing Bleepa to launch readiness in September 2019. Post year end, however, it was clear that to achieve the successful launch and market penetration of Bleepa more investment was required and Tom Oakley led the fundraise in August 2019 raising £2 million from existing and new investors, including institutional investors.

 

At the end of August 2019, we announced the appointment of Professor Rory Shaw as Deputy Chairman following his successful role as Medical Director of Feedback Medical Ltd. He will subsequently become Chairman following my retirement after the AGM. As I come to the end of more than three years as Chairman of Feedback plc I have to acknowledge the significant challenges we faced in bringing about the means to develop the full potential of the products that the founders of Cambridge Computed Imaging and TexRAD created. This required a strengthening of the board with industry experience, rationalising the corporate structure, securing adequate investment and the injection of new ideas and energy from our new CEO. He and Professor Shaw have demonstrated real synergy of ideas and enthusiasm in unlocking the possibilities for our technology. They now have the means to transform those ideas into commercial return for the Company and our shareholders.

 

Dr AJ Riddell

Chairman

23 October 2019

 

 

Financial summary

 

In the year to 31 May 2019, the recognised turnover increased by 23% over the previous year. 40% of the turnover is attributable to one customer. Overheads, especially employment costs, have increased in the year due to gearing up to deliver the new strategic direction as outlined below.

 

In line with International Financial Reporting Standards, Feedback's accounting policy is to spread the income from its software licence and support sales over the duration of the contract, usually one to two years. The Group's balance sheet contains a significant deferred revenue liability to reflect this.

 

In November 2018, the Company raised £1.375 million before expenses, by way of a placing and subscription of 91,666,666 new Ordinary Shares at a price of 1.5 pence per share with new and existing investors. The proceeds of this fundraise were invested in developing products and enhancing existing products, developing new markets for TexRAD - TexRAD now has customers in Portugal, Romania, Belgium, and the Czech-Republic.

 

In August 2019, the Company raised £2 million, before expenses, by way of a placing and subscription of 166,666,667 new Ordinary Shares at a price of 1.2 pence per share with new and existing investors. The proceeds from this fundraise will be invested to develop the innovative Bleepa product for UK and Worldwide usage as announced to shareholders in July 2019.

 

Operational cash flows have been satisfactory and reflect customer payments for new purchases and contracts before the periods in which the revenue is recognised. The share issue in November 2018 provided a healthy cash balance at the financial year end and has financed an acceleration in product development expenditure leading to increased intangible assets.

 

Operational review

 

Feedback Medical

Feedback Medical (FM Ltd) develops and sells Group's proprietary technologies - TexRAD, the quantitative texture analysis platform and Cadran, a Picture Archiving and Communication System (PACS).

 

TexRAD

The main focus on research and development has been creating products associated with Cadran technology. However, the Group has also been developing the Grey Level Co-Occurrence Matrix (GLCM) enhancement to its existing product range. This was finally achieved post year end. During the year, Feedback Medical's TexRAD product had sales in new countries including Portugal, Romania, Belgium and Czech-Republic.

 

Cadran

Cadran is Feedback's established Picture Archiving and Communications System (PACS) which facilitates the review of medical imaging studies by clinicians. TexRAD is typically installed on the Cadran picture archiving platform. Cadran PACS technology provides storage and display of medical images throughout a hospital. It has been used successfully at the Royal Papworth Hospital for over 15 years and a further two-year support contract renewal for the Cadran platform was announced in April 2018. During the year the Group successfully project managed the PACS migration from the Papworth Hospital site to the new Addenbrooke's site. Cadran is also installed in a number of NHS sites in the East of England.

 

The Cadran platform has significant potential to bring a competitive product offering to new global markets especially in developing economies. Cadran products can support the storage and viewing needs of individual clinicians right up to mid-scale hospital departments and specialist centres. It is a progressive and rigorously tested Class 1 medical device with a longstanding legacy of service at NHS institutions, such as the Royal Papworth Hospital. However, it is currently positioned in a competitive market that shows little opportunity for future growth.

 

Cadran's innovative features, such as the ability to view clinical grade medical images flexibly on mobile and personal devices, allow it to be repositioned to meet the needs of an emerging medical communications market, particularly in medical imaging.  The potential to improve the efficiencies and lives of medical professionals and patients alike, through more flexible, secure and accurate tools utilising the highest standards in global mobile communications.

 

According to an article in BMJ Innovations, 97% of hospital doctors routinely use WhatsApp to communicate about patients*. There is an increasing trend for clinicians to use personal devices to discuss patient care and make clinical decisions, as it is more convenient and efficient than traditional methods of clinical communication. Medical images are often shared as part of these chats as photos of computer screens, and do not meet diagnostic clinical standards. This raises a number of concerns with regard to safety of patient data, breaches of GDPR and the ability to make safe clinical decisions without using clinical grade medical images.

 

By incorporating a dedicated, encrypted messaging function to Feedback's existing Cadran technology, The Company has created a medical communication device capable of sharing clinical grade medical imaging directly from a hospital PACS to mobile devices, ensuring the safe handling of patient data and facilitating a secure means of communication for clinicians.

 

The repositioning of Cadran marks a shift away from a traditional software sales model towards a SaaS (software as a service) model which is anticipated to generate considerably higher recurring revenues for the Group and lead to a new phase of growth. With over 15 million doctors globally, Cadran is uniquely positioned to set new standards in this emerging, sizeable, medical communications market.

 

Having undertaken a period of market research alongside NHS clinicians, the Group has invested in the product enhancement of Cadran, and launched a new product, Bleepa, in September 2019. This rapid turnaround is possible because the core technical features of the product are already established within Cadran and required minimal enhancement by the Company's outsourced development partner, Future Processing.

 

Based on Feedback's Cadran technology, Bleepa is a secure, encrypted medical communication tool accessible through smartphones, tablets and desktops that facilitates rapid clinical messaging and review of medical grade imaging for all members of a clinical team, directly from a hospital Picture Archiving and Communications System (PACS). Bleepa enables faster clinical decision making between team members wherever they are, accelerating and improving patient care. Bleepa addresses growing concerns about these messaging platforms not meeting diagnostics clinical standards and regarding patient data protection. Continued use of non-specialist communication tools could leave both hospitals and individual clinical users significantly exposed and therefore open to the risk of litigation.

 

* O'Sullivan DM, O'Sullivan E, O'Connor M, et al WhatsApp Doc? BMJ Innovations 2017;3:238-239.

 

R&D progress

 

Feedback recognises the potential in developing new products from its existing technologies and expertise within software and machine learning. It is working closely with existing customers to identify unmet needs. To increase its software development capabilities the Group is continuing and expanding its collaboration with Future Processing to develop new imaging software products.

 

Last year Feedback started to capitalise development costs for writing off against income generated in future accounting periods. The Directors carefully consider what elements of this development expenditure will generate future economic benefits. This is based upon customer feedback on new products and product enhancements. This policy has continued during the current year.

 

Current trading and future developments

 

The Group's revised strategy was announced to shareholders in July 2019 and a fundraise was completed in August 2019. The new product, Bleepa was launched at the Health and Care Innovation Expo in Manchester in early September 2019. This has generated considerable interest and the Company is presently arranging demos to a number of potential customers and is planning to pilot Bleepa as soon as potential customers are ready. A number of opportunities overseas are also being explored.

 

 

Principal risks and uncertainties

 

Economic and market risks

 

FM Ltd is in the medical imaging market. The market is fragmented and the future success of the business is dependent on the ability of Feedback Medical to secure new and renew current contracts. These contracts are often with Government supported organisations and the timing of these can be dependent on market conditions. The Group's dependence on the award or renewal of contracts means that its revenue stream is not constant and has the potential to be particularly irregular. The outcome of Brexit is unlikely to affect existing trading arrangements so is anticipated to l have little impact on the Group.

 

Regulatory approval

 

The development, evaluation and marketing of the Group's products and ongoing research and development activities are subject to regulation by governments and regulatory agencies in all territories within which the Group intends to market its products (whether itself or through a partner) and there can be no assurance that any of the Group's products will successfully complete the trial process or that regulatory approvals to market these products will ultimately be obtained. Failure to obtain regulatory approvals for its products could threaten the Group's ability to trade in the long term.

 

The time taken to obtain regulatory approval varies between territories and there can be no assurance that any of the Group's products will be approved in any territory within the timescale envisaged by the Board, or at all, and this may result in a delay, or make impossible, the commercial exploitation of the Group's products. Furthermore, each regulatory authority may impose its own requirements and may refuse to grant, or may require additional data before granting an approval, even though the relevant product may have been approved by another country's authority.

 

If regulatory approval is obtained, products will be subject to continual review and there can be no assurance that such approvals will not be withdrawn or restricted. Changes in applicable legislation or regulatory policies, or discovery of problems with products may result in the imposition of restrictions on sale, including withdrawal of the product from the market, or may otherwise have an adverse effect on the Company's business and/or revenue streams. The Group's ISO accreditation (ISO 13845 2016) was renewed in November 2018.

 

Product Development Risk

 

The Group capitalises development costs where there is an expectation that commercially successful products will be developed. The products in development may cost more and/or take longer to develop than the current estimates. It is possible that commercially successful products may not be developed. The Board monitors progress on product development on a regular basis and discusses with potential customers their requirements to mitigate this risk. The new Bleepa   is both innovative and unique but further iterations will be required to be produced quickly to ensure that Bleepa   retains this position.

 

Liquidity


Management of liquidity risk has concentrated on the maintenance of appropriate credit lines and funding sources to ensure adequate cash resources for the Company's operations. The Group was successful in raising additional cash through share issues in both 2018 and 2019 to enable it to achieve its strategy. The Board regularly monitors the cash position of the Group and ongoing cash requirements. The Board believes the Group is likely to have access to adequate cash resources from a combination of operational cash generation and, if necessary, obtaining further equity finance from the financial markets to support its corporate world strategy.

 

Credit Risk

 

The Group's credit risk is primarily attributable to its cash and cash equivalents and trade receivables. The credit risk on other classes of financial assets is considered insignificant. Credit risk is managed through credit review and approval processes for new customers and ongoing review of each customer's credit history.

 

Other Risks

 

There is a risk that existing and new customer relationships will not lead to the income currently forecast (especially, as noted above, from new products currently in development). As with other technology businesses, the Group is reliant on a small number of highly skilled staff.

 

Post Balance Sheet Events

 

On 29 August 2019, the Company raised £2 million via the issue of 166,666,667 new ordinary share at a price of 1.2 pence per share.  Bleepa Limited was incorporated on 24 July 2019 to protect the Bleepa product name pending the announcement to shareholders on 26 July 2019.

 

Key Performance Indicators

 

During the year the Company maintained its cash position as a key performance indicator. The consolidated cash balance at 31 May 2019 was £540,735 (2018 £632,285). Given the rapidly changing business profile of the Group, the Board are developing key performance indicators to assess performance. These will evolve as sales of Bleepa   emerge.

By Order of the Board on 23 October 2019 and signed on its behalf

 

Dr A J Riddell

Independent Auditors' Report

 

Opinion

We have audited the financial statements of Feedback PLC ("Feedback") for the year ended 31 May 2019 which comprise the group statement of comprehensive income, the group and parent company balance sheets, the group and parent company statements of changes in equity, the group and parent company cash flow statements and the notes to the financial statements, including its significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

In our opinion, the financial statements:

 

●     give a true and fair view of the state of the group's and of the parent company's affairs as at 31 May 2019 and of the group's loss for the year then ended;

●     have been properly prepared in accordance with IFRSs as adopted by the European Union; and

●     have been prepared in accordance with the requirements of the Companies Act 2006

 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to SME listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Material uncertainty related to going concern

We draw attention to the Note 3c in the financial statements, which indicates that the group incurred a net loss of £973,109 and had a net cash outflow of £983,191 from operating activities during the year ended 31 May 2019.  As stated in Note 3c, these facts, along with other matters disclosed in Note 3c indicate that a material uncertainties exist that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

Key audit matter

Our response

Fraud and error in revenue recognition

 

For the Feedback PLC group the principal revenue recognition risk is the risk of overstatement through non-deferral of income which should be deferred as the criteria for recognition have yet to be met.

 

This year the group must also apply IFRS 15 for the first time.

 

 

Fraud and error in revenue recognition

We reviewed the group's material revenue streams to consider whether revenue is recognised and treated appropriately, and in accordance with IFRS. 

 

Our review included an assessment of revenue recognition policies, including the use of judgements and substantive testing of revenue recognised in the year, and deferred revenue.

 

Additionally we reviewed the recognition and recoverability of trade receivables at the year-end to assess the validity of their recognition and carrying values as at 31 May 2019.

 

 

Intangible assets - Capitalised development costs

 

During the year the group has significantly increased its investment in product development as it seeks to bring to market a new product based on its existing technology.

 

IAS 38 sets out the recognition criteria that development costs must meet before being capitalised. There is a risk that if the group's development expenditure does not these requirements, intangible assets will be overstated.

 

 

Intangible assets - Capitalised development costs

We reviewed development cost additions to supporting invoices and documentation received from those third-party developers employed to develop the group's products. 

 

The rationale for recognition of these costs was discussed with management, and the products for which items had been capitalised assessed against the recognition criteria of IAS 38 by reference to supporting evidence.

 

 

Our application of materiality

The scope and focus of our audit was influenced by our assessment and application of materiality.  We define materiality as the magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of the financial statements. We use materiality to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.

 

Due to the nature of the group and its operations we considered pre-tax trading results to be the main focus for the readers of the financial statements, accordingly this consideration influenced our judgement of materiality.  Based on our professional judgement, we determined materiality for the group to be £20,000, based on 2.25% of the draft pre-tax net loss of the group.  For the parent company, £9,000 is used as materiality being approximately 2% of the net assets at the year end.  This level is considered appropriate given the status of the company and its role within the group which is that of a parent holding company bearing administrative expenses.

 

Based on our risk assessments and our assessment of the overall control environment, our judgement was that performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the group was 75% of materiality, namely £15,000.  The equivalent figure for the parent company was set at £6,750

 

We agreed to report to the Audit Committee all audit differences more than £1,000, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also reported to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

 

An overview of the scope of our audit

As Feedback is a group comprising three trading entities based in Cambridge the scope of our work was the audit of the financial statements of the group and the individual financial statements of the subsidiaries. Our audit strategy was developed by using our audit planning process to obtain an updated understanding of the group, its activities, developments in the year and its control environment.  Our audit testing was informed by this understanding of the group and accordingly was designed to focus on areas where we assessed there to be the most significant risks of material misstatement.

 

During the audit we performed specifically designed audit tests on significant transactions, balances and disclosures.  Our testing included a review of systems and controls relevant to our audit and our approach was primarily based around substantive audit tests and analytical review.

 

To maintain and reinforce our knowledge of the group and the risks it faces we met with management prior to the audit planning process.  This information gathering process continued throughout the audit process, as we reassessed and re-evaluated audit risks where necessary and amended our approach accordingly.

 

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

 

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

●     the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

●     the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

 

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

●     adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

●     the parent company financial statements are not in agreement with the accounting records and returns; or

●     certain disclosures of directors' remuneration specified by law are not made; or

●     we have not received all the information and explanations we require for our audit.

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the group and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or parent company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Laura Mott (Senior Statutory Auditor) 
For and on behalf of Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place                                                                                                                                
London  EC4R 1A
23 October 2019                    

                                                                                                                                                                                           

STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

Notes

2019

£

2018

£

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

4

563,092

458,389

 

 

 

 

 

 

Cost of sales

 

 

 

(4,896)

(16,083)

 

 

 

 

 

 

Gross profit

 

 

 

558,196

442,306

 

 

 

 

 

 

Other operating expenses

 

 

5

(1,690,052)

(1,190,159)

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

6

(1,131,856)

(747,853)

 

 

 

 

 

 

Net finance income

 

 

7

1,283

59

 

 

 

 

 

 

Loss on ordinary activities before taxation

 

 

 

(1,130,573)

(747,794)

 

 

 

 

 

 

Tax credit

 

 

9

157,464

117,007

 

 

 

 

 

 

 

Loss on ordinary activities after tax

 

 

 

 

 

attributable to the equity shareholders of the Company

 

 

 

(973,109)

(630,787)

 

 

 

 

 

 

Total comprehensive expense for the year

 

 

 

 

(973,109)

 

(630,787)

 

 

 

 

 

 

Loss per share (pence)

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

11

(0.29)

(0.25)

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

GROUP

Share Capital

Share Premium

Capital Reserve

Retained Earnings

Translation Reserve

Convertible Debt Option Reserve

Total

 

£

£

£

£

£

£

£

 

 

 

 

 

 

 

 

At 31 May 2017

615,167

2,376,033

299,900

(2,511,753)

(209,996)

-

569,351

 

 

 

 

 

 

 

 

New shares issued

  88,875

355,500

-

-

-

-

444,375

 

 

 

 

 

 

 

 

Costs associated with the

raising of funds

 

(17,600)

-

-

-

-

(17,600)

 

 

 

 

 

 

 

 

Total comprehensive expense for the year

-

 

-

 

-

 

(630,787)

 

              -

 

              -

 

(630,787)

 

 

 

 

 

 

 

 

 

At 31 May 2018

704,042

2,713,933

299,900

(3,142,540)

(209,996)

-

365,339

 

 

 

 

 

 

 

 

New Shares issued

 

229,167

1,145,833

-

-

-

-

1,375,000

Costs associated with the

raising of funds

 

-

(82,-912)

-

-

-

-

(82,912)

Share option expense reserve

 

-

-

-

(261,300)

-

261,300

-

Total comprehensive expense for the year

-

-

-

(711,809)

-

-

(711,809)

 

 

 

 

 

 

 

 

At 31 May 2019

933,209

3,776,854

299,900

(4,115,649)

(209,996)

261,300

945,618

 

 

CONSOLIDATED BALANCE SHEET

 

 

 

 

2019

2018

 

 

 

£

£

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

 

6,428

6,560

Intangible assets

 

 

449,497

154,416

 

 

 

455,925

160,976

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

493,446

261,862

Cash and cash equivalents

 

 

540,735

632,285

 

 

 

1,034,181

894,147

 

 

 

 

 

Total assets

 

 

1,490,106

1,055,123

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

Capital and reserves attributable to the Company's equity shareholders

 

 

 

 

Called up share capital

 

 

933,209

704,042

Share premium account

 

 

3,776,854

2,713,933

Capital reserve

 

 

299,900

299,900

Translation reserve

 

 

(209,996)

(209,996)

Share option expense reserve

 

 

261,300

-

Retained earnings

 

 

(4,115,649)

(3,142,540)

Total equity

 

 

945,618

365,339

 

 

 

 

 

Liabilities

 

 

 

 

Deferred tax liabilities

 

 

-

-

 

 

 

-

-

Current liabilities

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

498,342

500,859

 

 

 

 

 

 

 

 

498,342

500,859

 

 

 

 

 

 

Liabilities due after more than one year

 

 

 

 

Other payables

 

 

46,146

188,925

 

 

 

 

 

Total liabilities

 

 

544,488

689,784

 

 

 

 

 

Total equity and liabilities

 

 

1,490,106

1,055,123

 

The financial statements were approved and authorised for issue by the Board of Directors on 23October 2019 and were signed below on its behalf by:

Dr A J Riddell

Chairman

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

2019

2018

 

£

£

 

 

 

Cash flows from operating activities

 

 

Loss before tax

(1,130,573)

(747,794)

Adjustments for:

 

 

 

 

 

Net finance income

(1,283)

(59)

Depreciation and amortisation

106,781

57,143

Share based payment expense

261,300

-

Increase in trade receivables

(114,323)

(38,318)

Decrease in other receivables

2,248

1,523

Increase/(Decrease) in trade payables

8,870

(11,546)

(Decrease)/ Increase in other payables

(154,164)

381,466

Corporation tax received

37,953

-

Total adjustments

147,382

390,209

 

 

 

Net cash used in operating activities

(983,191)

(357,585)

 

 

 

Cash flows from investing activities

 

 

Purchase of tangible fixed assets

(3,422)

(6,250)

Purchase of intangible assets

(398,308)

(127,525)

Net finance income received

1,283

59

 

 

 

Net cash used in investing activities

(400,447)

(133,716)

 

 

 

Cash flows from financing activities

 

 

Net proceeds of share issue

1,292,088

426,775

 

 

 

Net cash generated from financing activities

1,292,088

426,775

 

 

 

Net decrease in cash and cash equivalents

(91,550)

(64,526)

Cash and cash equivalents at beginning of year

632,285

696,811

 

 

 

Cash and cash equivalents at end of year

540,735

632,285

 

NOTES TO THE FINANCIAL STATEMENTS

 

1.   General information

The Company is a public limited company domiciled in the United Kingdom and incorporated under registered number 00598696 in England and Wales. The Company's registered office is Unit 5, Grange Park, Broadway, Bourn, Cambridgeshire, CB23 2TA.

The Company is quoted on AIM of the London Stock Exchange. These Financial Statements were authorised for issue by the Board of Directors on 23 October 2019.

2.   Adoption of the new and revised International Financial Reporting Standards                              

New standards impacting the Group that were adopted in the annual financial statements for the year ended 31 May 2019, are:

 

• IFRS 9 Financial Instruments (IFRS 9); and

• IFRS 15 Revenue from Contracts with Customers (IFRS 15)

 

At the date of approval of this financial information, the following IFRS Standards and Interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective. These new Standards, Amendments and Interpretations are those in issue but not yet effective which are expected to impact on the Group and are effective for accounting periods beginning on or after the dates shown below:

 

Mandatory for accounting periods commencing on or after 1 January 2019:

 

●     IFRS 16 - Leases

 

The Group has not early adopted this new standard. The Directors do not anticipate that the adoption of this standard will have a material impact on the reported results aside from the recognition of a right to use asset and liability for the Group's office lease disclosed in note 19.      

 

●     Annual Improvements to IFRSs 2015-2017 Cycle (IFRS 3 Business Combinations and IFRS 11 Joint Arrangements, IAS 12 Income Taxes, and IAS 23 Borrowing Costs)

 

The Group has not early adopted these amendments. The Directors do not anticipate that the adoption of these amendments will have a material impact on the reported results of the Group.

 

3.   Significant accounting policies

(a)  Basis of preparation

These financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements. The policies set out below have been consistently applied to all the years presented.

No separate income statement is presented for the parent Company as provided by Section 408, Companies Act 2006.

(b)  Basis of consolidation

The Group financial statements consolidate the financial statements of Feedback plc and its subsidiaries (the "Group") for the years ended 31 May 2019 and 2018 using the acquisition method.

The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.  All inter-company balances and transactions, including unrealised profits arising from them, are eliminated.  Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

(c)  Going Concern

The Group incurred a net loss of £973,109 and had a net cash outflow of £983,191 from operating activities for the year which are matters which may indicate a material uncertainty about the Group's ability to continue as a going concern. However, on 29 August 2019, the Company raised £2m before expenses by the issue of 166,666,667 new ordinary shares at a price of 1.2 pence per share. Following this fundraise the directors updated and reviewed the Group's business plan and cash flow forecasts and consider that the Group and the Company will have adequate cash resources for at least the next twelve months to 31 October 2020, from existing cash balances. These cash balances will be used to provide working capital, enable continued product development and international expansion.  If further resources are required, the directors consider, that although future equity fundraising can never be guaranteed, the group's recent history of successful fundraising means it likely that the group will be able to raise further finance through future equity issues. Accordingly, the Directors believe that the Group and Company are a going concern and have therefore prepared the financial statements on a going concern basis.

(d)  Intangible assets

Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable or arises from contractual or other legal rights and its fair value can be reliably measured.

The significant intangible asset cost related to software development of products which are integral to the trade of the Group's medical imaging products. Amortisation is recognised in other operating expenses in the income and expenditure account.

The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstance indicate that the carrying value may not be recoverable. Impairment losses are recognised in other operating expenses in the income and expenditure account. Impairment reviews are carried out annually.

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success, considering its commercial and technological feasibility, and costs can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development costs that have a finite useful life and that have been capitalised are amortised from the commencement of the commercial production of the product on a straight line basis as follows:

Intangible asset

Useful economic life

 

 

Patents

Over the life of the patent

Customer relationships

4 years

Software development

Over the anticipated life of the product

Software development costs capitalised in the year relate to products and product improvements which are yet to be ready for use. They are not yet amortised.

(e)  Valuation of Investments

Investments held as non-current assets are stated at cost less provision for impairment.

(f)   Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. When used, bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(g)  Goodwill

Business combinations on or after 1 April 2006 are accounted for under IFRS 3 using the acquisition method. Any excess of the cost of business combinations over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is not amortised.

After initial recognition, goodwill is not amortised but is stated at cost less accumulated impairment loss, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstance indicate that the carrying value may be impaired.

For the purposes of impairment testing, goodwill is allocated to the related cash generating units monitored by management. Where the recoverable amount of the cash generating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement.

(h)  Property, plant and equipment

All property, plant and equipment is stated at historical cost less depreciation. Depreciation on other assets is provided on cost or valuation less estimated residual value in equal annual instalments over the estimated lives of the assets. The rates of depreciation are as follows:

            Computer equipment                       10 - 50% p.a.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.

(i)   Leases

Rental costs under operating leases are charged to the income statement in equal annual amounts over the period of the lease.

(j)   Foreign currency

Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the date of the transactions.  Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates ruling at that date. These translation differences are dealt with in the income statement.

(k)   Revenue recognition

Sales transactions include software installation, software licenses, scientific and software support and consultancy.  Revenue is measured at the fair value of the contractually agreed consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of VAT. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the company's activities, as described below.

 

Revenue relating to software consultancy and similar services is recognised as the services are performed and completed.

 

Revenue relating to the sale of software licences or associated support services is recognised over the contractual period to which the licence relates or the duration of the support contract.

 

Revenue recognised from the sale of TexRAD software and related scientific support services are recognised over the estimated duration of the Group's involvement in a customer's project which is considered to represent its performance obligation.  There are no explicit performance obligations as such but a clear understanding that the Group will provide the support required as agreed when the sale was made.

 

The Directors have carefully considered the impact of IFRS 15 and the impact on both current year's and prior year's accounting for sales revenue and they are of the opinion that the current accounting policy is complaint with this standard.

 

(l)   Pension Costs

The Group operated a defined contribution pension scheme during the year.  The pension charge represents the amounts payable by the Group to the scheme in respect of that year.

(m) Taxation

The tax credit represents the sum of the current tax credit and deferred tax credit.

The tax currently payable is based on taxable profit for the period.  Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

(n)  Financial instruments

In relation to the disclosures made in note 17:

●     the Group does not hold or issue derivative financial instruments for trading purposes.

(o)  Employee share options and warrants

The Group has applied the requirements of IFRS 2 Share-based Payment.

The Group has issued equity-settled share-based payment transactions to certain employees and previously issued warrants to the vendors of the acquired subsidiary, TexRAD Limited.  Equity-settled share-based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured by use of the Black Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.

(p)  Key sources of estimation uncertainty

 

The preparation of financial statements requires the Board of Directors to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The key areas of judgement are:

 

●     Intangible assets - Patents are included at cost less amortisation and impairment. Other intangible assets including development costs are recognised only when it is probable that a project will be a success. There is a risk therefore that a project previously assessed as likely to be successful fails to reach the desired level of commercial or technological feasibility. Where there is no probable income to be generated from these assets an estimation of the carrying value and the impairment of the intangible assets and development costs, including goodwill, has been made.

●     Fair value measurement - share options and warrants issued included in the Group's and Company's financial statements require measurement at fair value. The calculation of fair values requires the use of estimates and judgements.

●     Revenue recognition-revenue on the sale of TexRAD software and provision of related scientific support services is recognised over the expected duration of the group's involvement in customer's projects as the group's staff contribute significant support, analysis and input to those customers using TexRAD software for research purposes.  Judgement based on past experience is used to determine the expected duration of involvement over which income should be deferred and recognised however the duration of the group's involvement may vary from expectations. 

 

 

4.   Segmental reporting

The Directors have determined that the operating segments based on the management reports which are used to make strategic decisions are medical imaging and head office.

Year ended 31 May 2019

 

 

 

 

Medical Imaging

Head Office

Total

 

 

£

£

£

Revenue

 

 

 

 

External

 

563,092

-

563,092

Expenditure

 

 

 

 

External

 

(1,014,683)

(678,982)

(1,693,665)

 

 

 

 

 

Loss before tax

 

(451,591)

(678,982)

(1,130,573)

 

 

 

 

 

Balance sheet

 

 

 

 

External Assets

 

1,008,278

481,828

1,490,106

External Liabilities

 

(480,068)

(64,420)

(544,488)

 

 

 

 

 

 

 

528,210

417,408

945,618

Capital expenditure

 

401,724

-

401,724

 

 

 

 

 

Year ended 31 May 2018

 

 

 

 

 

 

 

Medical Imaging

Head Office

Total

 

 

£

£

£

Revenue

 

 

 

 

External

 

458,389

-

458,389

Expenditure

 

 

 

 

External

 

(774,179)

(432,004)

(1,206,183)

 

 

 

 

 

Loss before tax

 

(315,790)

(432,004)

(747,794)

 

 

 

 

 

Balance sheet

 

 

 

 

External Assets

 

840,814

214,309

1,091,395

External Liabilities

 

(581,287)

(108,497)

(726,056)

 

 

 

 

 

 

 

259,527

105,812

365,339

 

 

 

 

 

Capital expenditure

 

           133,775

-

133,775

 

 

 

 

 

 

 

Reported segments' assets are reconciled to total assets as follows:

 

 

External revenue by

Total assets by

Capital expenditure by

 

location of customer

location of assets

location of assets

 

2019

2018

2019

2018

2019

2018

 

£

£

£

£

£

£

 

 

 

 

 

 

 

United Kingdom

282,118

282,265

1,490,106

1,055,123

365,458

133,775

Europe

85,868

 15,875     

-

-

-

-

Rest of the world

195,106

160,249

-

-

-

-

Total

563,092

458,389

1,490,106

1055,123

365,458

133,775

 

 

 

 

 

 

 

                 

           Major customers

 

During the year ended 31 May 2019, the group generated £222,000 (2018: £150,000) of revenue from one customer in the United Kingdom, which is equal to 40% (2018: 33%) of total group revenues in the year.

 

5.         Other operating expenses

 

 

 

 

2019

2018

 

 

 

 

£

£

 

 

 

 

 

 

Administrative costs:

 

 

 

 

 

Employment and other costs

 

 

 

1,583,271

1,133,016

Amortisation and depreciation costs

 

 

 

106,781

57,143

 

 

 

 

 

 

 

 

 

 

1,690,052

1,190,159

 

 

 

 

 

 

 

6.         Operating loss

 

 

 

 

2019

2018

 

 

 

 

£

£

This is stated after charging

 

 

 

 

 

Depreciation and amortisation

 

 

 

 

 

   Owned assets

 

 

 

3,554

3,799

   Amortisation of intangible assets

 

 

 

103,227

53,344

 

 

 

 

 

 

Foreign exchange differences

 

 

 

8,488

11,181

Auditors' remuneration

 

 

 

 

 

Audit of parent company and group financial statements

 

 

 

14,000

10,000

   Audit of subsidiaries

 

 

 

8,500

6,500

   Tax and other services

 

 

 

-

5,000

Operating lease rentals

 

 

 

 

 

   Land and buildings

 

 

 

12,179

9,417

Research and development costs expensed

 

 

 

38,408

-

 

 

 

 

 

 

             

 

7.         Net finance income

 

 

 

 

2019

2018

 

 

 

 

£

£

 

 

 

 

 

 

Interest received

 

 

 

1,283

59

 

 

 

 

 

 

 

 

 

 

1,283

59

 

 

 

 

 

 

 

8.         Directors and employees

 

 

 

 

 

2019

2018

 

 

 

 

 

Average

Average

Number of employees

 

 

 

 

 

 

Selling and distribution

 

 

 

 

2

5

Administration

 

 

 

 

4

2

Research and development

 

 

 

 

3

1

 

 

 

 

 

9

8

 

 

 

 

 

 

 

 

 

 

 

 

2019

2018

 

 

 

 

 

£

£

Staff costs

 

 

 

 

 

 

Wages and salaries

 

 

 

 

656,007

477,881

Social security costs

 

 

 

 

72,950

47,334

Payments to defined contribution pension scheme

 

 

67,928

61,563

Share based payment expense

 

 

 

 

261,300

-

 

 

 

 

 

 

 

 

 

 

 

 

1,058,185

586,778

 

 

Directors and employees

 

The value of all elements of remuneration received by each Director in the year was as follows:

 

 

Salary

Fees

Pension

Benefits in kind

Total

 

£

£

£

£

£

Year ended 31 May 2019

 

 

 

 

 

Executive Directors

 

 

 

 

 

A Riddell

41,591

-

-

-

41,591

L Melvin

72,107

-

10,861

626

83,594

T. Oakley (appointed 9 April 2019)

18,712

-

-

-

18,712

D Crabb*** (to 6 July 2018)

                                                                           

30,178

 

-

2,708

28

32,914

Non-Executive Directors                                                                                 

 

 

 

 

 

T Irish**

-

25,000

-

-

25.000

S Sturge

-

-

-

-

-

A Riddell *

                                                        

-

2,667

-

-

2,667

 

 

 

 

 

 

Total

162,588

27,667

13,569

         654

204,478

 

 

 

 

 

 

Year ended 31 May 2018

 

 

 

 

 

Executive Directors

 

 

 

 

 

 

D Crabb

41,667

-

2083

 

43,750

L Melvin

9,533

-

476

-

10,009

 

M P Hayball (to 14 April 2018)

78,750

-

4,500

-

83,250

B Ganeshan (to 14 April 2018)                                                                    

70,000

 

-

-

-

70,000

Non-executive Directors

 

 

 

 

 

 

A H Menys

20,075

-

-

-

20,075

T Irish **

-

24,514

-

-

24,514

S Sturge

-

-

-

-

-

A Riddell*

-

45,417

-

-

45,417

 

 

 

 

 

 

Total

220,025

69,931

7,059

 

297,015

 

 

During the year, retirement benefits under money purchase pension schemes were accruing to 2 directors (2018: 2)

 

            * A Riddell was paid consultancy fees through an agreement with AJR & Associates limited.                                  

            ** T Irish was paid consultancy fees through an agreement with Pembrokeshire Retreats Limited.

            ***D Crabb was paid £5,000 ex-gratia payment

The following share options were issued and vested in the year and were outstanding at 31 May 2019 (2018: nil). Further information is provided in Note 18.

 

Number

 

 

A Riddell

4,000,000

L Melvin

2,800,000

T. Oakley

9,332,081

S Sturge                                                            

2.500,000

                                                                              

 

9.         Taxation on loss on ordinary activities

 

 

 

2019

2018

 

 

 

£

£

(a)

The tax credit for the year:

 

 

 

 

UK Corporation tax

 

(157,464)

(117,007)

 

 

 

 

 

 

 

 

 

 

 

Current tax credit

 

(157,464)

(73,232)

 

Under provision in prior year

 

-

(39,525)

 

Deferred tax charge

 

-

(4,250)

 

 

 

 

 

 

 

 

(157,464)

(117,007)

 

 

 

 

 

(b)

Tax reconciliation

 

 

 

 

Loss on ordinary activities before tax

 

(1,130,573)

(747,794)

 

 

 

 

 

 

Loss on ordinary activities at the standard rate of corporation tax in the UK of 19% (2018 - 19%)

 

 

(215,065)

 

(142,081)

 

Effects of:

 

 

 

 

Expenses non-deductible for tax purposes

 

56,624

2,155

 

Additional deduction for R&D expenditure

 

(116,623)

(54,238)

 

Surrender of tax losses for R & D tax credit refund

 

48,869

22,727

 

Adjustments to tax charge in respect of previous periods

 

-

(39,525)

 

Deferred tax not recognised

 

61,496

93,995

 

Adjusting opening and closing deferred tax to average rate

 

7,235

-

 

 

 

 

 

 

Tax charge for the year

 

(157,464)

(117,007)

 

 

 

 

 

 

 

 

 

 

(c)

Factors which may affect future tax charges

 

 

 

 

In view of the tax losses carried forward there is a deferred tax amount of approximately £446,364 (2018: £422,587) which has not been recognised in these Financial Statements. This contingent asset will be realised when the Group makes sufficient taxable profits in the relevant company.

 

 

 

 

 

 

(d)

Deferred tax - company

 

 

 

 

 

 

 

 

 

In view of the tax losses carried forward there is a deferred tax amount of approximately £425,318 (2018: £349,421) which has not been recognised in these Financial Statements. This contingent asset will be realised when the Company makes sufficient taxable profits.

 

             

 

10.        Results of Feedback Plc

As permitted by Section 408 of the Companies Act 2006, the income and expenditure account of the parent company is not presented as part of these financial statements.  The Company's loss for the financial year is £1,203,651 (2018: £931,379 loss)

11.        Loss per share

.     Basic earnings per share is calculated by reference to the loss on ordinary activities after taxation of £973,109 (2018: £630,787) and on the weighted average of 333,151,019 (2018: 252,403,981) shares in issue.

 

 

As at 31 May 2019

 

As at 31 May 2018

 

 

 

£

£

 

 

 

 

Net loss attributable to ordinary equity holders

 

(973,109)

(630,787)

 

 

 

 

 

 

As at 31 May 2019

 

As at 31 May 2018

 

Weighted average number of ordinary shares for basic earnings per share

 

333,151,019

252,403,981

Effect of dilution:

 

 

 

Share Options

 

-

-

       Warrants

 

-

-

Weighted average number of ordinary shares adjusted for the effect of dilution

 

333,151,019

252,403,981

 

 

 

 

Loss per share (pence)

 

 

 

Basic

 

(0.29)

(0.25)

Diluted

 

(0.29)

(0.25)

 

As disclosed in note 22, the Company issued 166,666,667 ordinary shares in August 2019. There is no dilutive effect of the share options and warrants as the dilution would be negative.

 

12.        Investments

 

 

Share in group undertakings

Shares in   joint venture

Total

 

 

£

£

£

 

Company Cost

 

 

 

 

 

 

 

 

 

At 31 May 2017

2,334,455

1,000

2,335,455

 

 

 

 

 

 

At 31 May 2018

2,334,455

1,000

2,335,455

 

 

 

 

 

 

As at 31 May 2019

2,334,455

1,000

2,335,455

 

 

 

 

 

 

Provision for impairment

 

 

 

 

 

 

 

 

 

At 31 May 2017

2,334,455

1,000

2,334,455

 

 

 

 

 

 

At 31 May 2018

2,334,455

1,000

2,335,455

 

 

 

 

 

 

At 31 May 2019

2,334,455

1,000

2,335,445

 

 

 

 

 

 

Net Book Value

 

 

 

 

At 31 May 2019

-

-

-

 

 

At 31 May 2018

 

-

 

-

 

-

 

 

All of the above investments are unlisted

 

 

 

 

             

The directors have made full provision against the cost of investment in the subsidiaries due to the net liabilities shown in the subsidiary financial statements.

Particulars of principal subsidiary and joint venture companies during the year, all the shares of which being beneficially held by Feedback PLC, were as follows:

Company

Activity

Country of incorporation and operation

Proportion of Shares held

 

 

 

 

Feedback Black Box Company Limited

Dormant

England

 

100%

Ordinary £1

 

 

 

 

 

 

Brickshield Limited

Dormant

England

100%
Ordinary £1

 

 

 

Feedback Medical Limited

Medical Imaging

England

100%

A Ordinary £1

 

 

 

100% B Ordinary 1p

 

 

 

 

TexRAD Limited

Medical Imaging

England

100%

Ordinary 1p
 

 

TexRAD Limited is owned 100% by virtue of a direct holding by Feedback plc of 91% and an indirect holding via Feedback Medical Ltd of 9%.

 

All the subsidiary companies have been included in these consolidated financial statements. Each subsidiary has a registered office of Unit 5, Grange Park, Broadway, Bourn, Cambridgeshire CB23 2TA

 

13.        Property, plant and equipment

 

 

 

Computer

 

 

 

Equipment

Total

Group

 

£

£

 

 

 

 

Cost or valuation

 

 

 

At 31 May 2017

 

13,818

13,818

Additions

 

             6,250

6,250

 

 

 

 

At 31 May 2018

 

20,068

20,068

Additions

 

3,422

3,422

 

 

 

 

As 31 May 2019

 

23,490

23,490

 

 

 

 

Depreciation

 

 

 

At 31 May 2017

 

9,709

9,709

 

 

 

 

Charge for the year

 

3,799

3,799

 

 

 

 

At 31 May 2018

 

13,508

13,508

 

 

 

 

Charge for the year

 

3,554

3,554

 

 

 

 

At 31 May 2019

 

17,062

17,062

 

 

 

 

 

Net Book Value

 

 

 

At 31 May 2019

 

6,428

6,428

 

 

 

 

At 31 May 2018

 

6,560

6,560

 

 

 

 

 

14.        Intangible assets

 

Software

development

Customer relationships

Patents

Goodwill

Total

Group

£

£

£

£

£

Cost

 

 

 

 

 

 

 

 

 

 

 

At 31 May 2017

563,099

100,000

103,558

271,415

1,038,072

Additions

89,363

-

38,162

-

127,525

At 31 May 2018

652,462

100,000

141,720

     271,415

1,165,597

Additions

385,602

-

12,700

-

398,302

 

 

 

 

 

 

At 31 May 2019

1,038,070

100,000

154,420

271,415

1,563,905

 

 

 

 

 

 

Amortisation

 

 

 

 

 

At 31 May 2017

563,099

75,000

48,323

271,415

957,837

Charge for the year

-

25,000

28,344

-

53,344

At 31 May 2018

563,099

100,000

76,667

271,415

1,011,181

 

Impairment charge

38,408

-

-

-

38,408

Amortisation charge for year

44,009

-

20,810

-

64,819

 

 

 

 

 

 

At 31 May 2019

645,516

100,000

97,477

271,415

1,114,408

 

 

 

 

 

 

Net Book Value

 

 

 

 

 

At 31 May 2019

392,554

-

56,943

-

449,497

 

 

 

 

 

 

At 31 May 2018

89,363

-

65,053

-

154,416

 

 

 

 

 

 

.

15.        Trade and other receivables

 

Group

Company

 

2019

2018

2019

2018

 

£

£

£

£

Amounts falling due within one year

 

 

 

 

Trade receivables

202,623

88,300

 

 

Other receivables

11,843

19,718

7,783

15,744

Corporation tax recoverable

248,585

129,075

 

-

Prepayments

30,395

24,769

21,348

16,682

 

 

 

 

 

 

493,446

261,862

29,131

32,426

 

 

 

 

 

 

 

16.        Trade and other payables

 

Group

Company

 

2019

2018

2019

2018

 

£

£

£

£

Amounts falling due within one year

 

 

 

 

Trade payables

30,538

57,400

14,608

38,000

Other payables

4,081

-

 

-

Other taxes and social security

39,311

77,892

7,312

6,817

Accruals

78,691

73,579

42,500

63,680

Deferred income

345,721

291,988

-

-

 

498,342

500,859

64,420

108,497

Amounts falling due after one year

 

 

 

 

Deferred income

46,146

188,925

-

-

 

 

 

 

 

 

17.        Financial instruments

 

The Group's overall risk management programme seeks to minimise potential adverse effects on the Group's financial performance.

 

The Group's financial instruments comprise cash and cash equivalents and various items such as trade payables and receivables that arise directly from its operations. The Group is exposed through its operations to the following financial risks:

 

●     Credit risk

●     Foreign currency risk

●     Liquidity risk

●     Cash flow interest rate risk

●     Reliance on one major customer

 

Fair value Hierarchy

 

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

●     Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

●     Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly

●     Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data

 

The share options and warrants issued by the group during the current year and prior years were valued under level three above as noted in note 18 below.

 

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.  This note describes the Group's objectives, policies and processes for managing those risks. Further quantitative information in respect of these risks is presented throughout these financial statements.

 

There have been no substantive changes in the Group's exposure to financial instrument risks and consequently the objectives, policies and processes are unchanged from the previous period.

 

The Board has overall responsibility for the determination of the Group's risk management policies.  The objective of the Board is to set policies that seek to reduce the risk as far as possible without unduly affecting the Group's competitiveness and effectiveness.  Further details of these policies are set out below:

 

Credit risk

 

The Group is exposed to credit risk primarily on its trade receivables, which are spread over a range of countries, a factor that helps to dilute the concentration of the risk. The IFRS 9 expected credit loss impairment model is applicable to the Group's financial assets including trade receivables.

 

Group policy, implemented locally, is to assess the credit risk of each new customer before entering into binding contracts.  Each customer account is then reviewed on an ongoing basis (at least once a year) based on available information and payment history.

 

The maximum exposure to credit risk is represented by the carrying value in the balance sheet.

 

The carrying amount of financial assets represents the maximum credit exposure.  The maximum exposure to credit risk at the reporting date is:

 

 

 

Cash, loans and receivables

 

 

 

2019

2018

 

 

 

£

£

Current financial assets

 

 

 

 

Trade and other receivables

 

 

214,466

108,018

Cash and cash equivalents

 

 

540,735

627,910

 

 

 

755,201

735,928

           

Analysis of trade receivables

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

Current

30 days past due

60 days past due

90 days past due

 

£

£

£

£

£

 

 

 

 

 

 

2019

202,623

68,149

51,602

38,225

44,646

 

 

 

 

 

 

2018

88,300

56,758

28,676

-

2,865

 

 

 

 

 

 

                 

 

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables.  The provision for credit losses on trade receivables is based on an expected credit loss model that calculates the expected loss applicable to the receivable balance over its lifetime.

 

The Group policy is to make provisions against those debts that are overdue, unless there are grounds for believing that the debts will be collected.  During the year the value of provisions made in respect of bad and doubtful debts was £Nil (2018: £Nil).  

 

Foreign currency risk

Foreign exchange transaction risk arises when the Group enters into transactions denominated in a currency other than the functional currency. Foreign currency amounts generated from trading are converted back to sterling and required foreign currency amounts for suppliers will be converted from sterling and the use of forward currency contracts is considered. However the Group does not currently use any forward contracts.

The Group's main foreign currency risk is the short-term risk associated with accounts receivable and payable denominated in currencies that are not the subsidiaries' functional currency.  The risk arises on the difference in the exchange rate between the time invoices were raised/received and the time invoices were settled/paid.

The following table shows the net assets, stated in pounds sterling, exposed to exchange rate risk that the Group has at 31 May 2019

 

 

 

2019

2018

 

 

 

£

£

 

 

 

 

 

Trade receivables

 

 

104,904

86,140

 

 

 

 

 

 

 

 

104,904

86,140

 

A 5% increase/fall in exchange rates at 31 May 2019 would had created a profit/loss of £5,245. The Group is exposed to currency risk because of the subsidiaries undertaking trading transactions in US dollars and Euros.  The Directors do not generally consider it necessary to enter into derivative financial instruments to manage the exchange risk arising from its operations, but from time to time where the Directors consider foreign currencies are weak and it is known that there would be a requirement to purchase those currencies, forward arrangements may be entered into. There were no outstanding forward currency arrangements as at 31 May 2019 or at 31 May 2018.

Liquidity risk

Cash flow forecasting is performed for both the Group and in the operating entities of the Group. Rolling forecasts of the Group's liquidity requirements are monitored to ensure it has sufficient cash to meet operational needs.

 

 

 

Financial liabilities measured at amortised cost

 

 

 

2019

2018

 

 

 

£

£

Current financial liabilities

 

 

 

 

Trade and other payables

 

 

153,621

208,746

 

 

 

 

 

The following are maturities of financial liabilities, including estimated contracted interest payments.

 

 

 

Carrying amount

£

Contractual cash flow

£

6 months or less

£

 

 

 

 

2019

 

 

 

Trade and other payables

116,349

116,349

116,349

 

 

 

 

2018

 

 

 

Trade and other payables

208,346

208,346

208,346

 

Cash flow interest rate risk

The Group presently has no substantial interest rate risk exposure.

Capital under management

The Group considers its capital to comprise its ordinary share capital, share premium, capital reserve, and accumulated retained earnings.

            The group's objectives when managing the capital are:

●     To safeguard the group's ability to remain a going concern.

●     To maximise returns for shareholders in order to meet capital requirements and appropriately adjust the capital structure, the group may issue new shares, dispose of assets to pay down debt, return capital to shareholders and vary dividend payments.

There have been no changes to the group's capital management objectives in the year, and there have been no changes to the group's exposure to financial instrument risk in the year.

18.        Share capital and reserves

 

 

 

 

 

 

2019

2018

 

 

 

£

£

Authorised and issued share capital

 

 

 

 

Ordinary shares of 0.25 pence each

 

 

933,209

704,042

 

 

 

 

 

Allotted, called up and fully paid share capital:

 

 

 

 

 

Number

Number

As at 31 May 2018

281,616,584

246,066,584

Issued

91,666,666

35,550,000

As at 31 May 2019

373,283,250

281,616,584

 

 

 

Share Options

Share options are granted to directors and employees. Options are conditional on the employee completing a specific length of service (the vesting period). The options are exercisable from the end of the vesting period and lapse after ten years after the grant date. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Share options are valued using the Black-Scholes option pricing model and no performance conditions are included in the fair value calculations. The risk free rate was 0.751%. The expected volatility is based on historical volatility over the last two years and is estimated to be 66%. The average share price during the year was 1.52 pence. During the year the Company had the following share options in issue:

Number of options

 

 

At 31 May 2018

Lapsed

Exercised

Issued

At 31 May 2019

Exercise price (pence)

Exercise date

 

 

 

 

 

 

 

2,400,000

-

-

-

2,400,000

1.25

21/05/14 to19/05/24

4,000,000

-

-

-

4,000,000

3.00

21/05/15 to19/05/24

4,000,000

-

-

-

4,000,000

5.00

21/05/15 to19/05/24

-

-

-

4,000,000

4,000,000

1.86

26/06/18 to 26/06/28

-

-

-

2,500,000

2,500,000

1.86

26/06/18 to 26/06/28

-

-

-

2,800,000

2,800,000

1.86

01/03/19 to 26/06/28

-

-

-

2,800,000

2,800,000

1.86

01/03/19 to 26/06/28

-

-

-

2,800,000

2,800,000

1.86

01/03/19 to 26/06/28

-

-

-

9,332,081

9,332,081

1.09

09/04/19 to 09/04/29

10,400,000

-

-

24,232,081

34,632,081

 

 

 

All share options vested one year after the grant date. Each option can only be exercised from one year after the grant date to ten years after the date of grant.

Warrants

Warrants were issued to the vendors of TexRAD Limited at the time of acquisition. The warrants are exercisable from the end of the vesting period and lapse ten years after the grant date. The Group has no legal or constructive obligation to repurchase or settle the warrants in cash.

 

Number of warrants

 

 

At 31 May 2018

Granted

Exercised

At 31 May 2019

Exercise price (pence)

Exercise date

 

 

 

 

 

 

4,200,000

-

-

4,200,000

1.25

19/05/16

 to 19/05/24

18,200,000

-

-

18,200,000

3.00

19/05/17

to 19/05/24

22,400,000

-

-

22,400,000

 

 

 

 

 

 

 

 

Reserves

The nature and purpose of each reserve within equity is as follows:

Share premium                     Amount subscribed for share capital in excess of nominal value.

Capital reserve                       Reserve on consolidation of subsidiaries

Translation reserve                Gains and losses on the translation of overseas operations into GBP

Retained earnings                All other net gains and losses and transactions with owners not recognised elsewhere                                                                             

19.        Financial commitments

Total future minimum lease payments under non-cancellable operating leases for the Group's business premises.

 

 

 

 

 

 

2019

2018

 

 

 

£

£

 

 

 

 

 

In less than one year

9,125

11,088

Later than one year and less than five years

48,296

37,884

Later than five years

-

-

 

20.        Pensions

The Company operated a defined contribution scheme during the year and the assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost represents contributions payable and amounted to £57,067 (2018: £61,563). A balance of £- (2018: £5,431) was payable at the year end.

21.        Related party transactions

Key management personnel

Refer to note 8 for detail on directors' remuneration.

 

The Directors interests in shares of the Company are contained in the Directors' Report

 

22.        Post balance sheet events

 

On 29 August 2019, the Company raised £2m by the issue of 166,666,667 new ordinary share at a price of 1.2 pence per share, raising £2m before expenses totalling £86,000. 

 

23.        Ultimate controlling party

            There is no ultimate controlling party.

 

24.        Copies of Report and Accounts

 

Copies of the Report and Accounts will be posted to shareholders later today and will be shortly be available from the Company's registered office, Grange Park, Broadway, Bourn, Cambridgeshire, CB23 2TA and from the Company's website www.fbkmed.com.

 

25.        Notice of Annual General Meeting

 

The annual general meeting of Feedback plc will be held at the offices of Peterhouse Corporate Finance Limited, 80 Cheapside, London, EC2V 6EE at 3:00 p.m. on 18 November 2019.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
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