TIDMFDBK
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 GBP563,092 (FY2018: GBP458,389)
driven from existing product lines
-- Loss before tax of GBP1.13 million (FY2018: GBP0.75) 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 GBP3.375m 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 +44 (0)1954 718072
Tom Oakley, CEO IR@fbk.com
Lindsay Melvin, CFO
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 +44 20 3815 8880
Broker)
Patrick Claridge / John Howes
+44 (0)20 7457 2020
Instinctif Partners feedbackplc@instinctif.com
Rozi Morris / Phillip Marriage
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 GBP563,092, an increase
of 23% over the previous year (GBP458,389) after a flat year the
year before. The loss before tax for the year ended 31 May 2019 was
GBP1.13 million compared to GBP0.75 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 GBP1.375 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 GBP2 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 GBP1.375 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 GBP2 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 GBP2 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 GBP540,735 (2018 GBP632,285). 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 GBP973,109
and had a net cash outflow of GBP983,191 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 Fraud and error in revenue recognition
revenue recognition We reviewed the group's material revenue streams
to consider whether revenue is recognised and
For the Feedback PLC treated appropriately, and in accordance with
group the principal IFRS.
revenue recognition
risk is the risk of Our review included an assessment of revenue
overstatement through recognition policies, including the use of judgements
non-deferral of income and substantive testing of revenue recognised
which should be deferred in the year, and deferred revenue.
as the criteria for
recognition have yet Additionally we reviewed the recognition and
to be met. recoverability of trade receivables at the year-end
to assess the validity of their recognition
This year the group and carrying values as at 31 May 2019.
must also apply IFRS
15 for the first time.
-------------------------------------------------------
Intangible assets Intangible assets - Capitalised development
- Capitalised development costs
costs We reviewed development cost additions to supporting
invoices and documentation received from those
During the year the third-party developers employed to develop the
group has significantly group's products.
increased its investment
in product development The rationale for recognition of these costs
as it seeks to bring was discussed with management, and the products
to market a new product for which items had been capitalised assessed
based on its existing against the recognition criteria of IAS 38 by
technology. reference to supporting evidence.
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.
-------------------------------------------------------
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 GBP20,000, based on
2.25% of the draft pre-tax net loss of the group. For the parent
company, GBP9,000 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 GBP15,000.
The equivalent figure for the parent company was set at
GBP6,750.
We agreed to report to the Audit Committee all audit differences
more than GBP1,000, 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
GBP GBP
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 Retained Translation Convertible Total
Reserve Earnings Reserve Debt Option
Reserve
GBP GBP GBP GBP GBP GBP GBP
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
GBP GBP
--------------------------------------- ------------ ------------
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
GBP GBP
---------------------------------------- ------------ ----------
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 GBP973,109 and had a net cash
outflow of GBP983,191 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 GBP2m 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 Head Office Total
Imaging
GBP GBP GBP
------------------------ ------------------- ------------ ------------
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 Head Office Total
Imaging
GBP GBP GBP
------------------------ ------------------- ------------ ------------
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 Total assets Capital expenditure
by by by
location of customer location of assets location of
assets
----------------------- ----------------------
2019 2018 2019 2018 2019 2018
GBP GBP GBP GBP GBP GBP
------------------- ----------- ---------- ------------------- ---------- ---------- ----------
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
GBP222,000 (2018: GBP150,000) 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
GBP GBP
------------------------------- ---------- ----------
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
GBP GBP
--------------------------------- -------- -------
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 38,408 -
expensed
--------------------------------- --------
7. Net finance income
2019 2018
GBP GBP
------------------- ------ -----
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
GBP GBP
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 Total
in kind
GBP GBP GBP GBP GBP
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 GBP5,000 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
GBP GBP
----- -------------------------------------------------- ------------- ------------
(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 7,235 -
tax to average rate
----- -------------------------------------------------- -------------
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 GBP446,364 (2018:
GBP422,587) 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 GBP425,318 (2018:
GBP349,421) 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 GBP1,203,651 (2018: GBP931,379 loss)
11. Loss per share
. Basic earnings per share is calculated by reference to the
loss on ordinary activities after taxation of GBP973,109 (2018:
GBP630,787) and on the weighted average of 333,151,019 (2018:
252,403,981) shares in issue.
As at 31 As at 31 May
May 2019 2018
GBP GBP
------------------------------ ------------ -------------
Net loss attributable
to ordinary equity holders (973,109) (630,787)
------------------------------- ------------ -------------
As at 31 As at 31 May
May 2019 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 Shares Total
group undertakings in joint
venture
GBP GBP GBP
--------------------------------------------- -------------------- ---------- ----------
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 Proportion of Shares
incorporation held
and operation
--------------------- ---------------- --------------- ---------------------
Feedback Black Dormant England 100%
Box Company Limited Ordinary GBP1
Brickshield Limited Dormant England 100%
Ordinary GBP1
Feedback Medical Medical Imaging England 100%
Limited A Ordinary GBP1
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 GBP GBP
--------------------- ------------------ -------
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 Customer Patents Goodwill Total
development relationships
Group GBP GBP GBP GBP GBP
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
-------- -------- ------- -------
GBP GBP GBP GBP
----------------------------- -------- -------- ------- -------
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
-------- -------- ------- --------
GBP GBP GBP GBP
--------------------------------- -------- -------- ------- --------
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
GBP GBP
---------------------------------------------- ---------- ---------- ---------- ----------
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
30 days 60 days 90 days
Total Current past due past due past due
GBP GBP GBP GBP GBP
-------------------------------- ------------ ---------- ---------- ---------- ----------
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 GBPNil (2018: GBPNil).
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
GBP GBP
------------------- -------- -------
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 GBP5,245. 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
-------------------------------------------- ------------ -----------
GBP GBP
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 6 months
GBP cash flow or less
GBP GBP
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
GBP GBP
-------------------------------- ------------ ------------
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 Lapsed Exercised Issued At 31 May Exercise Exercise
2018 2019 price date
(pence)
----------- ------- ---------- ----------- ----------- --------- -------------
21/05/14
2,400,000 - - - 2,400,000 1.25 to19/05/24
21/05/15
4,000,000 - - - 4,000,000 3.00 to19/05/24
21/05/15
4,000,000 - - - 4,000,000 5.00 to19/05/24
26/06/18
- - - 4,000,000 4,000,000 1.86 to 26/06/28
26/06/18
- - - 2,500,000 2,500,000 1.86 to 26/06/28
01/03/19
- - - 2,800,000 2,800,000 1.86 to 26/06/28
01/03/19
- - - 2,800,000 2,800,000 1.86 to 26/06/28
01/03/19
- - - 2,800,000 2,800,000 1.86 to 26/06/28
09/04/19
- - - 9,332,081 9,332,081 1.09 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 Granted Exercised At 31 May Exercise Exercise
2018 2019 price (pence) date
----------- -------- ---------- ----------- --------------- -------------
19/05/16
4,200,000 - - 4,200,000 1.25 to 19/05/24
19/05/17
18,200,000 - - 18,200,000 3.00 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
GBP GBP
------ ---------------------------------------- ------- -------
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 GBP57,067 (2018:
GBP61,563). A balance of GBP- (2018: GBP5,431) 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 GBP2m by the issue of
166,666,667 new ordinary share at a price of 1.2 pence per share,
raising GBP2m before expenses totalling GBP86,000.
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 rns@lseg.com or visit www.rns.com.
END
FR CKQDBOBDKDKB
(END) Dow Jones Newswires
October 24, 2019 03:28 ET (07:28 GMT)
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