TIDMFDBK
RNS Number : 9503I
Feedback PLC
29 November 2018
Feedback plc
Final Results for year ended 31 May 2018: Invoiced sales up 51%
following significant contract, investment and restructuring
Cambridge, UK, 29 November 2018 - 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 2018.
Operational highlights (including post period end)
-- CE marked release of TexRAD(R) Lung in November 2017
-- Restructuring in April 2018 brought TexRAD Ltd and Cambridge
Computed Imaging (CCI) subsidiaries together under Feedback Medical
brand
-- Signed world-wide non-exclusive distributorship with GE Healthcare in April 2018
-- Two year contract renewal with Papworth Hospital, Cambridge,
UK for Cadran archiving system agreed in April 2018
-- First order through GE Healthcare received in August 2018
-- Samsung Medical Centre order for TexRAD(R) received in
September 2018, following distribution agreement with ISG Korea in
June 2017
-- European customer expansion for TexRAD(R), signing four
university hospitals in Belgium, France, Italy and Portugal during
September and October 2018
Financial summary (including post period end)
-- Equity fundraise in March 2018 raised GBP440k before
expenses, from new and existing investors
-- Invoiced sales for the year up 51% to GBP771k (FY2017:
GBP508k) due to a significant two-year contract with an existing
major customer, as well as investment in recruitment and
training
-- Recognised revenue of GBP458k (FY2017: GBP466k)
-- Operating loss of GBP750k (FY2017: GBP300k)
-- Invoiced sales in first quarter of current financial year up
100% to GBP236k (Q1 FY2018: GBP117k), driven by international
sales
-- Equity fundraise in November 2018 raised GBP1.375m before
expenses, from new and existing investors
Dr Alastair Riddell, Executive Chairman of Feedback,
commented:
"The last year has been a period of transition and major growth
for Feedback. The Board has been strengthened and the restructuring
of our operating subsidiaries into one integrated unit under the
Feedback Medical brand is already bringing benefits, demonstrated
by the significant improvement in sales performance. During the
year and post period end, we secured significant investment from
new and existing shareholders, enabling us to invest further in the
sales and marketing of both TexRAD(R) and Cadran, including
pursuing US FDA approval.
"As the role of AI in assisting medical management decisions
begins to be appreciated, our products sit at the heart of this,
assisting radiologists to analyse and assess digital images from
CT, MRI and PET scans. The existing broad international customer
base for our TexRAD(R) research product will form the springboard
for the clinical product following regulatory approval and
validation in clinical trials.
"Our Cadran Picture Archive and Communication System has the
potential to assist machine learning from image data of hundreds of
thousands of patients, enabling better insight into disease
associations. This has potential applications in the selection of
patients most likely to benefit from particular treatments or
clinical trials, ultimately improving patient outcomes.
"We are encouraged by the measurable progress so far, which is
continuing into the current financial year. The potential for more
significant growth will be enabled by the renewed investor support
and our more integrated and collaborative operating company led by
an able and supportive board."
Enquiries:
Feedback plc +44 (0)1954 718072
Alastair Riddell, Executive Chairman IR@fbk.com
Lindsay Melvin, CFO
Allenby Capital Limited (Nominated Adviser)
David Worlidge / Asha Chotai +44 (0)20 3328 5656
Peterhouse Corporate Finance 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/ Deborah Bell/ 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 Medical works
with customers globally from headquarters in the internationally
renowned scientific hub of Cambridge, UK. Its proprietary
technologies are TexRAD(R) , the quantitative texture analysis tool
and Cadran, a picture archiving communication system (PACS). For
more information, see www.fbk.com
Chairman's statement
I am pleased to report that Feedback saw good sales progress
during the year to 31 May 2018 as a result of its investment in
staff training and new hires, along with the benefits of its
improved structure and strategic focus.
During the year, Feedback underwent a restructuring process,
bringing its two operating subsidiaries, TexRAD Ltd and Cambridge
Computed Imaging Limited (CCI Ltd), together under the Feedback
Medical brand. This has already resulted in improved synergies and
communication and enables the teams to maximise their expertise and
know how. Creating the right company structure and culture is a
critical step in galvanising the workforce and delivering success.
With the new executive team in place, supported by strong
non-executive directors, Feedback is well-positioned to grow into a
stronger, more efficient, global company at the forefront of the
medical imaging field.
There has been a strong focus on unlocking and developing the
potential of the Company's existing products and in building closer
collaborations with its partners. Now operating as one company,
Feedback is actively building on its existing strong customer base
with new, high calibre distributorships broadening its reach into
important international markets such as India, China and South
Korea. The growth of these distributorship relationships will be a
key driver for future sales growth.
In order to also address the huge potential in the US market,
post period end, the Company initiated plans for regulatory
approval of TexRAD(R) with the US FDA including 510(k) as a medical
device and Title 21 CFR Part 11 compliance for use in clinical
trials of drug candidates for FDA marketing approval.
Through strategic partnerships with existing customers Feedback
is evaluating the potential for the use of Feedback's analysis and
storage products beyond the research stage, as well as exploring
applications within the pharmaceutical industry. Following the CE
marking of TexRAD(R) Lung, Feedback's proprietary quantitative
analysis software for the assessment of lung lesions, the Company
is continuing to develop the evidence base for its use in clinical
applications. It is undergoing clinical evaluation in pilot
installations within three UK hospitals and the results of these
pilots will inform the next stage of maximising this important
technology for clinical use.
Feedback also recognises the potential in developing new
products based on its existing technologies and expertise within
software and machine learning. It is working closely with existing
customers to identify unmet needs, including further TexRAD(R)
derivatives for multiple clinical indications.
Feedback's Board of Directors has been strengthened during the
year with the addition of Tim Irish and Simon Sturge as
Non-Executive Directors and Lindsay Melvin as Chief Financial
Officer. Following the departure of David Crabb as CEO in July
2018, I have stepped up to the role of Executive Chairman with much
more involvement in company activities and I believe that with its
reorganisation and renewed strategic focus, Feedback has the
structure and expertise within the senior management team to enable
it to maximise the opportunities and commercial momentum it is
seeing. The current management arrangements are working well and
have helped the Company keep costs under control. However, now that
the funding of the Company has been secured for the foreseeable
future, the Company has increased its efforts to recruit a new
Chief Executive Officer. A further announcement will be made in due
course.
Dr AJ Riddell
Executive Chairman
29 November 2018
Financial summary
In the year to 31 May 2018, Feedback invoiced sales of GBP771k,
a 51% increase on the previous year (FY 2017: GBP508k), with
recognised revenue in the year remaining fairly flat at GBP458k (FY
2017: GBP466k). The difference between sales and revenue is due to
the contract structures which typically comprise installation
costs, a contract for a year or more, followed by 20% annual
maintenance fee thereafter. The increased level of sales will take
time to work through into increased revenue.
The significant increase in invoiced sales in the period is a
result of a significant two-year contact with an existing major
customer and the Company's investment in its employees with
training and recruitment of four new hires. The associated
recruitment, restructuring and other costs have meant that the
Company's operating loss has risen to GBP750k (FY 2017: GBP300k).
However, the investment has led to significant improvement in sales
performance and anticipated long term growth, with the momentum
importantly continuing into the 2019 financial year. 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 lability to reflect this.
In late March 2018, the Company raised GBP440k, before expenses,
by way of a placing and subscription of 35,200,000 new Ordinary
Shares at a price of 1.25 pence per share, with new and existing
investors, the proceeds of which were invested in product
development, sales and marketing with the balance being used for
general working capital purposes. Post year end, in November 2018,
the Company raised GBP1.375m 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 will be invested in growing Feedback's sales and
marketing and product support capabilities as well as working
towards US FDA 510(k) approval for TexRAD to open up the
significant US market.
Operational cash generation has been satisfactory and reflects
customer payments for new purchases and contracts before the
periods in which the revenue is recognised. The March 2018 share
issue, net of costs, also contributed to a healthy cash balance at
the financial year end.
Operational review
Feedback Medical
Feedback's former operating subsidiaries TexRAD Limited and
Cambridge Computed Imaging Ltd (CCI Ltd) have now been united under
the Feedback Medical brand - CCI Ltd has been renamed Feedback
Medical Limited (FM Ltd) and TexRAD Ltd has ceased to trade but
continues to hold intellectual property on behalf of FM Ltd. This
has resulted in the streamlining and better integration of
operations and an improved culture of sharing information,
expertise and new business opportunities. FM Ltd develops and sells
Group's proprietary technologies - TexRAD(R), the quantitative
texture analysis platform and Cadran, a Picture Archiving and
Communication System (PACS).
TexRAD
TexRAD(R) technology is currently installed in over 50 of the
world's leading research institutions across Europe, North America,
Asia and Australasia. It has seen growing interest during the year,
with nineteen new customers. These have been driven by
international orders facilitated by new distributor agreements with
Korea Computer Motion ISG in June 2017 and Boya Digital Technology
(Beijing) Co. Ltd. in July 2017 for sales and distribution of
TexRAD(R) in South Korea and the People's Republic of China.
Furthermore a major, non-exclusive global distribution agreement
was signed with GE Healthcare in April 2018 with the initial focus
being on the Indian market. These agreements represent a
significant step forward in expanding TexRAD(R) sales to meet the
fast-growing demand in Asian markets.
TexRAD(R) has traditionally been used as a research platform for
image analysis in many disease areas, primarily oncology, including
all major tumour types - head and neck, oesophagus, breast, lung,
liver, renal, prostate, colorectal, soft tissue sarcoma, melanoma
and lymphoma. Recent new applications are emerging in
non-oncological areas such as cardiovascular and cerebrovascular
diseases in the top UK academic university hospitals. Furthermore,
TexRAD(R) also has potential as a clinical decision-making tool
where the application of machine learning or AI to TexRAD(R)
algorithms may assist radiologists in their image interpretation.
This positions the Group within this exciting new modality as
applied to health care decision making.
The Group received its first Class 1, software only, medical
device CE certification, for use in the EU, in November 2017 for
the particular application in lung cancer (TexRAD(R) Lung). This
application provides additional image analysis beyond the
capability of the human eye, for the interpretation of CT and PET
scans of patients with lung cancer, giving clinicians a fuller
picture of a patient's disease and enabling more informed clinical
decision-making.
TexRAD(R) Lung's quantitative software integrates with existing
medical imaging systems, providing an objective assessment of the
architecture, evolution and prognosis of lung lesions based on
texture analysis. It is run on the Cadran imaging and retrieval
system and it is capable of reviewing decades-worth of data
extracting information of lesion size, density, heterogeneity and
other features of clinical significance which can be missed by
radiologists or nuclear-medicine physicians. TexRAD(R) Lung's
software algorithm provides the ability to rapidly assemble an
accurate database, a key step in applying machine learning and AI
to solving healthcare problems.
To enable Feedback to also address the huge clinical potential
for its technology within the US market, post period end it has
initiated plans for the regulatory approval of TexRAD(R) Lung with
the US FDA. This will include 510(k) approval as a medical device
and Title 21 CFR part 11 compliance for use in clinical trials of
drug candidates for FDA marketing approval.
During the year, Feedback initiated pilot installations of
TexRAD(R) Lung at three UK university hospitals: University College
Hospitals NHS Trust London, Royal Papworth Hospital Cambridge and
Leeds Teaching Hospitals NHS Trust Leeds. Preliminary results from
independent pilot studies seek to validate whether TexRAD(R) Lung
has a prognostic ability in routinely acquired staging PET/CT
images in lung cancer. An abstract of the results has been
submitted for presentation at the European Congress of Radiology in
Vienna in February 2019.
The outcomes from these pilot installations will guide the
strategy on rolling out TexRAD(R) Lung across Feedback's global
customer base and also on applying the platform technology to other
clinical indications. The Company will continue to seek clinical
guidance and input from qualified clinicians and key opinion
leaders to ensure that future products are primed for adoption
based on clinical need.
Discussions with Alliance Medical for integrating TexRAD(R) Lung
into its network of PET/CT scanners in UK hospitals continue. The
Company recognises that there has been little announced progress on
these discussions, but with the assistance of new Medical Director,
Prof Rory Shaw, the Board believes that the improved company
structure will result in progress on these discussions in the near
term.
Cadran
TexRAD(R) 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 contract renewal for the Cadran platform was announced in
April 2018. 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.
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, including further TexRAD(R) derivatives for
multiple clinical indications. To increase its software development
capabilities the Company is continuing and expanding its
collaboration with Future Processing to develop new imaging
software products.
This year Feedback has started to capitalise development costs
for writing off against income generated in future accounting
periods. The Directors consider that that this development
expenditure will generated future economic benefits. This is based
upon customer feedback on required product enhancements.
Current trading and outlook
The increased sales momentum seen particularly towards the end
of the last financial year is continuing into the current financial
year, with significant traction coming from the Asian markets. With
Feedback's first clinical product approved in the EU and pilot
launches underway, there is additional sales growth potential to be
addressed in the mid to long term.
On 7 June 2018, Feedback announced its revised strategy to build
a global Company. This strategy, of operating as one company,
building strategic partnerships with customers and distributors,
developing the clinical evidence base for the TexRAD(R) platform
and bringing new products to market, is already being
implemented.
The benefits of this strategy are evident from sales for the
first quarter of the current financial year with a 100% increase in
invoiced sales of both TexRAD(R) and Cadran product licences in the
first quarter to GBP236k, compared to GBP117k in the first quarter
of FY 2018. International sales accounted for most of this growth,
increasing by over 200%.
With the most recent fundraising, Feedback is well positioned to
be able to capitalise on the growing industry recognition and need
for AI and machine learning. Ongoing investment in its sales and
marketing, product development and in talented staff will continue
to grow short to medium term sales whilst the Company's longer term
strategy will be enabled by addressing the large opportunity within
the US market.
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 Company'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.
Regulatory approval
The development, evaluation and marketing of the Company's
products and ongoing research and development activities are
subject to regulation by governments and regulatory agencies in all
territories within which the Company intends to market its products
(whether itself or through a partner) and there can be no assurance
that any of the Company'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 Company'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 Company'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 Company'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.
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.
Liquidity
Management of liquidity risk concentrated on the maintenance of
appropriate credit lines and funding sources to ensure adequate
cash resources for the Company's operations. The Board regularly
monitors the cash position of the Company and ongoing cash
requirements. The Board believes the Company is likely to have
access to adequate cash resources from a combination of operational
cash generation and by obtaining further equity finance from the
financial markets to support its corporate strategy.
Credit Risk
The Company'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 Company is reliant on a small
number of highly skilled staff.
Post Balance Sheet Events
On 15 November 2018, the Company raised GBP1.375 million by the
issue of 91,666,666 new ordinary shares at a price of 1.5 pence per
share.
Key Performance Indicators
During the year the Company maintained its cash position as a
key performance indicator. The cash balance at 31 May 2018 was
GBP632,285 (2017 GBP696,811). The other key performance indicator
being invoiced sales.
By Order of the Board on 29 November 2018
Dr A J Riddell
INDEPENT AUDITORS REPORT
Opinion
We have audited the financial statements of Feedback PLC
("Feedback") for the year ended 31 May 2018 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 2018 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, 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.
Conclusions relating to going concern
We draw attention to the Note 3c in the financial statements,
which indicates that the group incurred a net loss of GBP630,787
and had a net cash outflow of GBP357,585 from operating activities
during the year ended 31 May 2018. As stated in Note 3c, these
facts, along with other matters may indicate that a material
uncertainty exists 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 We reviewed the group's revenue streams to consider
revenue recognition whether revenue is recognised and treated appropriately,
and in accordance with IFRS. Our review included
an assessment of deferred revenue and substantive
testing procedures.
In addition to our review of income recognised
during the year 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 2018.
Upon the completion of our work we did not note
any unadjusted material misstatements of revenue.
----------------------------------------------------------
Intangible assets - We reviewed and agreed the amounts incurred
Capitalised development through the use of third party developers to
costs develop the group's products. The rationale
for recognition of these costs was discussed
with management and the group's technical director,
and the group's business plans reviewed.
Upon completion of our work we considered management's
judgement in respect of the recognition of development
costs and subsequent decision to recognise these
costs as an intangible asset to be reasonable,
however as noted in Note 3p of the financial
statements there remains a risk that a project
currently assessed as being likely to be successful
may fail to reach the desired level of commercial
or technological feasibility.
----------------------------------------------------------
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
expenditure and related funding 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 GBP14,000,
based on 2% of the pre tax net loss of the group. For the parent
company, GBP4,000 is used as materiality being approximately 1% of
the loss for the year. This lower 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 GBP10,500.
The equivalent figure for the parent company was set at
GBP3,000.
We agreed to report to the Audit Committee all audit differences
more than GBP700, 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 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 and Non-Executive directors
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 in the annual report, 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)
29 November 2018
For and on behalf of
haysmacintyre, Statutory Auditors
10 Queen Street Place
London
EC4R 1AG
STATEMENT OF COMPREHENSIVE INCOME
Notes 2018 2017
GBP GBP
Revenue 4 458,389 465,885
Cost of sales (16,083) (11,007)
--------------- -----------
Gross profit 442,306 454,878
Other income - 150
Other operating expenses 5 (1,190,159) (755,960)
Operating loss 6 (747,853) (300,932)
Net finance income 7 59 5
--------------- -----------
Loss on ordinary activities
before taxation (747,794) (300,927)
Tax credit 9 117,007 34,924
--------------- -----------
Loss on ordinary activities
after tax (630,787) (266,003)
--------------- -----------
attributable to the equity
shareholders of the Company
Total comprehensive expense
for the year (630,787) (266,003)
=============== ===========
LOSS PER SHARE (pence)
Basic and diluted 11 (0.25) (0.11)
=============== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
GROUP Share Share Capital Retained Translation Convertible Total
Capital Premium Reserve Earnings Reserve Debt Option
Reserve
GBP GBP GBP GBP GBP GBP GBP
At 1 June 2016 509,185 1,593,136 299,900 (2,251,476) (209,996) 189,000 129,749
New shares issued 105,982 833,018 - - - (189,000) 750,000
Costs associated
with the
raising of funds - (50,121) - - - - (50,121
Share option and
warrant costs - - - 5,726 - - 5,726
Total comprehensive
expense for the year - - - (266,003) - - (266,003)
--------- ---------- ---------- ------------ --------------- --------------- -----------
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
========= ========== ========== ============ =============== =============== ===========
COMPANY Share Share Retained Convertible Total
Capital Premium Earnings Debt Option
Reserve
GBP GBP GBP GBP GBP
At 1 June 2016 509,185 1,593,136 (2,263,153) 189,000 28,168
New shares issued 105,982 833,018 - (189,000) 750,000
Costs associated
with the raising
of funds - (50,121) - - (50,121)
Share option and
warrant costs - - 5,726 - 5,726
Total comprehensive
expense for the year - - (123,357) - (123,357)
At 31 May 2017 615,167 2,376,033 (2,380,784) - 610,416
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 - - (931,379) - (931,379)
At 31 May 2018 704,042 2,713,933 (3,312,163) - 105,812
========== ============ =============== =============== ===========
CONSOLIDATED BALANCE SHEET
2018 2017
Notes GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 13 6,560 4,109
Intangible assets 14 154,416 80,235
160,976 84,344
------------ ------------
Current assets
Trade receivables 88,300 49,982
Other receivables 15 173,562 62,328
Cash and cash equivalents 632,285 696,811
------------ ------------
894,147 809,121
Total assets 1,055,123 893,465
============ ============
EQUITY
Capital and reserves attributable
to the Company's equity
shareholders
Called up share capital 18 704,042 615,167
Share premium account 18 2,713,933 2,376,033
Capital reserve 18 299,900 299,900
Translation reserve 18 (209,996) (209,996)
Retained earnings 18 (3,142,540) (2,511,753)
------------ ------------
TOTAL EQUITY 365,339 569,351
------------ ------------
LIABILITIES
Deferred tax liabilities 9 - 4,250
------------ ------------
- 4,250
------------ ------------
Current liabilities
Trade payables 57,400 68,948
Other payables 16 443,459 250,916
500,859 319,864
Liabilities due after
more than one year
Other payables 16 188,925 -
------------ ------------
Total liabilities 689,784 324,114
TOTAL EQUITY AND LIABILITIES 1,055,123 893,465
============ ============
COMPANY BALANCE SHEET
2018 2017
Notes GBP GBP
ASSETS
Non-current assets
Investments 12 - -
-
Current assets
Other receivables 15 32,426 39,733
Cash and cash equivalents 181,883 654,413
--------------------- ------------
214,309 694,146
--------------------- ------------
Total assets 214,309 694,146
===================== ============
EQUITY
Capital and reserves attributable
to the Company's equity
shareholders
Called up share capital 18 704,042 615,167
Share premium account 18 2,713,933 2,376,033
Retained earnings 18 (3,312,163) (2,380,784)
--------------------- ------------
105,812 610,416
TOTAL EQUITY 105,812 610,416
Current liabilities
Trade payables 38,000 49,508
Other payables 16 70,497 34,222
Total current liabilities 108,497 83,730
--------------------- ------------
Total Equity and Liabilities 214,309 694,146
===================== ============
The company loss for the year was GBP931,379 (2017:
GBP123,357).
The financial statements were approved and authorised for issue
by the Board of Directors on 29 November 2018 and were signed below
on its behalf by:
Dr A J Riddell
Chairman
CONSOLIDATED CASHFLOW STATEMENT
2018 2017
GBP GBP
Cash flows from operating activities
Loss before tax (747,794) (300,927)
---------- ----------
Adjustments for:
Share option costs 5,726
Net finance income (59) (5)
Depreciation and amortisation 57,143 48,182
Impairment of investment - 1,000
Increase in trade receivables (38,318) (9,087)
Decrease /(Increase) in other
receivables 1,523 (36,246)
(Decrease)/Increase in trade payables (11,546) 47,400
Increase in other payables 381,466 95,728
Corporation tax received - 57,624
---------- ----------
390,209 210,322
---------- ----------
Net cash used in operating activities (357,585) (90,605)
Cash flows from investing activities
Purchase of tangible fixed assets (6,250) (2,941)
Purchase of intangible assets (127,525) (15,200)
Net finance income received 59 5
Net cash used in investing activities (133,716) (18,136)
---------- ----------
Cash flows from financing activities
Net proceeds of share issue 426,775 699,879
---------- ----------
Net cash generated from financing
activities 426,775 699,879
---------- ----------
Net (decrease)/increase in cash
and cash equivalents (64,526) 591,138
Cash and cash equivalents at beginning
of year 696,811 105,673
Cash and cash equivalents at end
of year 632,285 696,811
========== ==========
COMPANY CASH FLOW STATEMENT
2018 2017
GBP GBP
Cash flows from operating activities
Loss before tax (931,379) (123,357)
---------- ----------
Adjustments for:
Share options costs - 5,726
Net finance income (59) (5)
Release of intercompany receivable - (100,886)
Decrease in other receivables 7,307 77,814
(Decrease)/Increase in trade
payables (11,508) 32,607
Increase in other payables 36,275 1,138
Impairment of investment - 1,000
---------- ----------
32,015 17,395
---------- ----------
Net cash used in operating activities (899,364) (105,963)
---------- ----------
Cash flows from investing activities
Net finance income 59 5
Net cash generated from investing
activities 59 5
---------- ----------
Cash flows from financing activities
Net proceeds of share issue 426,775 699,879
Net cash generated from financing
activities 426,775 699,879
---------- ----------
Net (decrease)/increase in cash
and cash equivalents (472,530) 593,921
Cash and cash equivalents at
beginning of year 654,413 60,492
---------- ----------
Cash and cash equivalents at
end of year 181,883 654,413
========== ==========
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 listed on AIM of the London Stock Exchange. These
Financial Statements were authorised for issue by the Board of
Directors on the 29 November 2018.
2. Adoption of new and revised International Financial Reporting Standards
No new International Financial Reporting Standards ("IFRS"),
amendments or interpretations became effective in the year ended 31
May 2018 which had a material effect on this financial
information.
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 apply to
the Group and are effective for accounting periods beginning on or
after the dates shown below:
IFRS Standards and Interpretations issued (and EU adopted) but
not yet effective that are applicable to the Company are:
Mandatory for accounting periods commencing on or after 1
January 2018:
-- IFRS 9 - Financial Instruments
-- IFRS 15 - Revenue from Contracts with Customers
-- IFRIC Interpretation 22 - Foreign Currency Transactions and Advance Consideration
Mandatory for accounting periods commencing on or after 1
January 2019:
-- IFRS 16 - Leases
Date of implementation in the European Union not yet known:
-- IFRS 14 - Regulatory Deferral Accounts
The Group has not early adopted these amended standards and
interpretations. The Directors do not anticipate that the adoption
of these standards and interpretations will have a material impact
on the reported results, but are currently reviewing their
impact.
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 2018 and 2017 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 GBP630,787 and had a net cash
outflow of GBP357,585 from operating activities for the year.
Matters which may indicate a material uncertainty about the Group's
ability to continue as a going concern. However, on 15 November
2018 the Company raised a total of GBP1.375m (before expenses)
through a placing to both invest further in product development and
in sales and marketing.
Therefore, having updated the Group's formal business plan the
Directors consider that the Group and the Company are likely to
have adequate cash resources for at least the next twelve months to
31 December 2019, from existing cash balances and resources
generated from operating cash flows to enable continued product
development and international expansion. 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
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 and will be amortised from the date the products
are ready.
(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:
Plant and equipment 10 - 50% p.a.
Motor vehicles 25 - 33% 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
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of VAT. The
company 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 development that is contracted on a
time and materials basis is recognised as the services are
performed.
Revenue relating to the sale of software licences is recognised
over the period to which the licence relates.
Revenue from services provided is determined by management's
assessment of the percentage completed of each contract. Management
determine the percentage of completion by considering the work
performed to date based upon internal reports and agreed project
milestones.
(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:
-- short term debtors and creditors are not treated as financial
assets or financial liabilities except for the currency
disclosures.
-- 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 has 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 estimating 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. Customer lists are included at cost
less amortisation. Other intangible assets and 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.
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 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 1,055,123
External Liabilities (581,287) (108,497) (689,784)
------------------- ------------ ------------
259,527 105,812 365,339
=================== ============ ============
Capital expenditure 133,775 - 133,775
=================== ============ ============
Year ended 31 May 2017
GBP GBP GBP
Revenue
External 465,885 - 465,885
Expenditure
External (535,027) (231,785) (766,812)
------------------- ------------ ------------
Loss before tax (69,142) (231,785) (300,927)
=================== ============ ============
Balance sheet
External Assets 197,247 696,218 893,465
External Liabilities (310,916) (13,197) (324,113)
------------------- ------------ ------------
(113,669) 683,021 569,352
=================== ============ ============
Capital expenditure 18,141 - 18,141
=================== ============ ============
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
2018 2017 2018 2017 2018 2017
GBP GBP GBP GBP GBP GBP
United Kingdom 282,265 250,582 1,055,123 893,465 133,775 18,141
Europe 15,875 96,672 - - - -
Rest of the
world 160,249 118,631 - - - -
------------------- -------- ------------------- -------- ----------- ---------
Total 458,389 465,885 1055,123 893,465 133,775 18,141
=================== ======== =================== ======== =========== =========
Revenue from one customer in the United Kingdom totalled
GBP150,000 in the year to 31 May 2018.
5. Other operating expenses
2018 2017
GBP GBP
Administrative costs:
Other 1,133,016 707,777
Amortisation and depreciation
costs 57,143 48,183
1,190,159 755,960
========== ========
6. Operating loss
2018 2017
GBP GBP
This is stated after charging
Depreciation and amortisation
Owned assets 3,799 2,471
Amortisation of intangible
assets 53,344 45,712
Development Expenditure - 35,897
Foreign exchange differences 11,181 3,845
Auditors' remuneration
Audit of parent company and
group financial statements 10,000 10,500
Audit of subsidiaries 6,500 9,000
Tax and other services 5,000 4,000
Operating lease rentals
Land and buildings 9,417 8,643
7. Net finance income
2018 2017
GBP GBP
Interest received 59 5
----- -----
59 5
===== =====
8. Directors and employees
2018 2017
Average Year end Average Year end
Number of employees
Selling and distribution 5 5 5 5
Administration 2 4 2 2
Research and development 1 1 1 1
-------- --------- -------- ---------
8 10 8 8
======== ========= ======== =========
2018 2017
GBP GBP
Staff costs
Wages and salaries 477,881 263,326
Social security costs 47,334 24,650
Payments to defined contribution
pension scheme 61,563 30,238
-------- ---------
586,778 318,214
======== =========
The value of all elements of remuneration received by each
Director in the year was as follows:
Salary Fees Pension Total
GBP GBP GBP GBP
Year ended 31 May 2018
Executive Directors
D Crabb 41,667 - 2,083 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
======== ======= ======== ========
Year ended 31 May 2017
Executive Directors
M P Hayball 51,724 - - 51,724
B Ganeshan 72,000 - - 72,000
Non-executive Directors
S G Barrell - 18,000 - 18,000
T E Brown 18,000 - 18,000
A H Menys - - -
A Riddell* - 48,750 - 48,750
Total 141,724 66,750 - 208,474
======== ======= ======== ========
During the year, retirement benefits under money purchase
pension schemes were accruing to 2 directors (2017: 2)
* A Riddell was paid consultancy fees through an agreement with
AJR & Associates.
** T Irish was paid consultancy fees through an agreement with
Pembrokeshire Retreats Limited.
M P Hayball holds interests in share options over 5,200,000
ordinary shares (2017: 5,200,000)
Dr B Ganeshan holds interests in 3,575,000 warrants exercisable
into ordinary shares (2017: 3,575,000)
9. Taxation on loss on ordinary activities
2018 2017
GBP GBP
(a) The tax credit for the year:
UK Corporation tax (117,007) (34,924)
------------- ----------
Current tax credit (73,232) (16,319)
Under provision in prior year (39,525) (3,477)
Deferred tax charge (4,250) (15,128)
------------- ----------
(117,007) (34,924)
============= ==========
(b) Tax reconciliation
Loss on ordinary activities before
tax (747,794) (300,926)
============= ==========
Loss on ordinary activities at
the standard rate of corporation
tax in the UK of 19% (2017 - 19.83%) (142,081) (59,684)
Effects of:
Expenses non-deductible for tax
purposes 2,155 7,506
Additional deduction for R&D expenditure (54,238) (14,908)
Surrender of tax losses for R &
D tax credit refund 22,727 6,000
Income not taxable - (29)
Adjustments to tax charge in respect
of previous periods (39,525) (3,477)
Deferred tax not recognised 93,995 44,796
Other timing differences and goodwill
amortisation - (15,128)
Tax charge for the year (117,007) (34,924)
============= ==========
(c) Factors which may affect future
tax charges
In view of the tax losses carried forward there is a deferred
tax amount of approximately GBP422,587 (2017: GBP321,189)
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 - group
The deferred tax included in the
balance sheet is as follows:
Deferred tax liability 2018 2017
GBP GBP
Deferred tax on development expenditure
As at 1 June 2017 4,250 19,378
Credit in the year (4,250) (15,128)
As at 31 May 2018 - 4,250
============= ==========
(e) Deferred tax - company
In view of the tax losses carried forward there is a deferred
tax amount of approximately GBP349,421 (2017: GBP280,486)
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 GBP931,379 (2017: GBP123,357 loss)
11. Loss per share
. Basic earnings per share is calculated by reference to the
loss on ordinary activities after taxation of GBP630,787 (2017:
GBP266,003) and on the weighted average of 252,403,981 (2017:
232,879,771) shares in issue.
As at 31 May As at 31
2018 May 2017
GBP GBP
Net loss attributable
to ordinary equity holders (630,787) (266,003)
============= ============
As at 31 May As at 31
2018 May 2017
Weighted average number
of ordinary shares for
basic earnings per share 252,403,981 232,879,771
Effect of dilution:
Share Options - -
Warrants - -
------------- ------------
Weighted average number
of ordinary shares adjusted
for the effect of dilution 252,403,981 232,879,771
============= ============
Loss per share (pence)
Basic (0.25) (0.11)
Diluted (0.25) (0.11)
There is no dilutive effect of the share options and warrants as
the dilution would be negative.
12. Investments
Share in Shares in Total
group undertakings joint venture
GBP GBP GBP
COMPANY
Cost
At 1 June 2016 2,334,455 1,000 2,335,455
-------------------- --------------- ----------
At 31 May 2017 2,334,455 1,000 2,335,455
-------------------- --------------- ----------
As at 31 May 2018 2,334,455 1,000 2,335,455
==================== =============== ==========
Provisions
At 1 June 2016 1,867,000 - 1,867,000
Provided in the year 467,455 - 467,455
-------------------- --------------- ----------
At 31 May 2016 2,334,455 - 2,334,455
Provided in the year - - -
-------------------- --------------- ----------
At 31 May 2017 2,334,455 1,000 2,335,455
Provided in the year - - -
-------------------- --------------- ----------
At 31 May 2018 2,334,455 1,000 2,335,455
==================== =============== ==========
Net Book Value
At 31 May 2018 - - -
==================== =============== ==========
At 31 May 2017 - - -
==================== =============== ==========
At 31 May 2016 - 1,000 1,000
==================== =============== ==========
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
incorporation of Shares
and operation held
Feedback Black Non trading England 100%
Box Company Limited Ordinary
GBP1
Brickshield Limited Non trading England 100%
Ordinary
GBP1
Cambridge Computed Medical Imaging England 100%
Imaging 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 2016 10,877 10,877
Additions 2,941 2,941
At 31 May 2017 13,818 13,818
Additions 6,250 6,250
------------------ -------
As 31 May 2018 20,068 20,068
================== =======
Depreciation
At 31 May 2016 7,238 7,238
Charge for the year 2,471 2,471
------------------ -------
At 31 May 2017 9,709 9,709
Charge for the year 3,799 3,799
------------------ -------
At 31 May 2018 13,508 13,508
Net Book Value
At 31 May 2018 6,560 6,560
================== =======
At 31 May 2017 4,109 4,109
================== =======
At 31 May 2016 3,639 3,639
================== =======
14. Intangible assets
Software Customer Patents Goodwill Total
development relationships
GROUP GBP GBP GBP GBP GBP
Cost
At 31 May 2016 563,099 100,000 88,358 271,415 1,022,872
Additions - - 15,200 - 15,200
------------- --------------- -------- ------------ ----------
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
============= =============== ======== ============ ==========
Amortisation
At 31 May 2016 563,099 50,000 27,611 271,415 912,125
Charge for the year - 25,000 20,712 - 45,712
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
============= =============== ======== ============ ==========
Net Book Value
At 31 May 2018 89,363 - 65,053 - 154,416
============= =============== ======== ============ ==========
At 31 May 2017 - 25,000 55,235 - 80,235
============= =============== ======== ============ ==========
At 31 May 2016 - 50,000 60,747 - 110,747
============= =============== ======== ============ ==========
In accordance with IIn accIn accordance with the accounting
policies and IFRS, the Directors have assessed the carrying value
of the intangible assets. In the year ended 31 May 2016 and 31 May
2017, the Directors took the prudent decision to write down the
carrying value of the software development costs in the balance
sheet in order to meet the requirements of IFRS. However the
Directors believe the Group's technology has great potential and
this write down did not reflect their commercial assessment of the
value of the Group's intellectual property. This is especially true
in relation to the TexRAD Lung CE Mark and other product
enhancements. The Directors have in the year to 31 May 2018,
capitalised some of this spend and will write it off against
revenue generated from this investment. The customer lists and
patents are deemed to have ongoing value to the Group.
15 Other receivables
Group Company
2018 2017 2018 2017
GBP GBP GBP GBP
Amounts falling due within
one year
Other receivables 19,718 18,396 15,744 14,878
Corporation tax recoverable 129,075 16,318 - -
Prepayments 24,769 27,614 16,682 24,855
-------- ------- ------- -------
173,562 62,328 32,426 39,733
======== ======= ======= =======
16. Other payables
Group Company
2018 2017 2018 2017
GBP GBP GBP GBP
Amounts falling due within
one year
Other payables - 5,534 - -
Other taxes and social security 77,892 7,033 6,817 292
Accruals 73,579 69,827 63,680 33,930
Deferred income 291,988 168,522 - -
-------- -------- ------- -------
443,459 250,916 70,497 34,222
======== ======== ======= =======
Amounts falling due after
one year
Deferred income 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
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 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.
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
2018 2017
GBP GBP
Current financial assets
Trade and other receivables 149,105 112,310
Cash and cash equivalents 627,910 696,811
---------- ----------
777,015 809,121
========== ==========
Analysis of
trade receivables
Total Current 30 days 60 days 90 days
past due past due past due
GBP GBP GBP GBP GBP
2018 88,300 56,758 28,676 - 2,865
=========== ========= ========== ========== ==========
2017 49,982 16,908 33,074 - -
=========== ========= ========== ========== ==========
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 (2017: 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 2018
2018 2017
GBP GBP
Trade receivables 86,140 44,524
Cash and cash equivalents -
86,140 44,524
======= =======
A 5% increase/fall in exchange rates at 31 May 2018 would had
created a profit/loss of GBP4,307. 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 2018 or at
31 May 2017.
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
2018 2017
GBP GBP
Current financial liabilities
Trade and other payables 208,746 82,393
The following are maturities of financial liabilities, including
estimated contracted interest payments.
Carrying Contractual 6 months 6-12 1 or more
amount cash flow or less months years
GBP GBP GBP GBP GBP
2018
Trade and other
payables 208,746 208,746 208,746 - -
2017
Trade and other
payables 82,393 82,393 82,393 - -
========= ============ ========= ======== ==========
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, convertible debt option
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
2018 2017
GBP GBP
Authorised and issued share
capital
Ordinary shares of 0.25
pence each 704,042 615,167
============ ============
Allotted, called up and
fully paid share capital:
Number Number
As at 1 June 2017 246,066,584 203,673,857
Issued 35,550,000 42,392,727
------------ ------------
As at 31 May 2018 281,616,584 246,066,584
------------ ------------
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 1.64%. The expected volatility
is based on historical volatility over the last two years and is
estimated to be 25%. The average share price during the year was
1.85 pence. During the year the Company had the following share
options in issue:
Number of options
At 1 June Lapsed Exercised At 31 May Exercise Exercise date
2017 2018 price (pence)
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
10,400,000 - - 10,400,000
=========== ======= ========== ===========
All share options vest 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.
Warrants are valued using the Black-Scholes pricing model and no
performance conditions are included in the fair value calculations.
The risk free rate was 1.64%. The expected volatility is based on
historical volatility over the last two years and is estimated to
be 25%. The average share price during the year was 1.85 pence.
During the year the Company had in existence the following
warrants:
Number of warrants
At 1 June Granted Exercised At 31 May Exercise Exercise date
2017 2018 price
(pence)
19/05/16 to
4,550,000 - (350,000) 4,200,000 1.25 19/05/24
19/05/17 to
18,200,000 - - 18,200,000 3.00 19/05/24
22,750,000 - (350,000) 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
Convertible debt option reserve Amount of proceeds on issue of
convertible debt relating to the equity component of the debt.
19. Financial commitments
Total future minimum lease payments under non-cancellable
operating leases for the Group's business purposes.
2018 2017
GBP GBP
In less than one year 11,088 -
Later than one year and less than five 37,884 -
years
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 GBP61,563 (2017:
GBP30,238). A balance of 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 15 November 2018, the Company issued 91,666,666 new ordinary
shares raising GBP1.375m (before expenses).
23. Ultimate controlling party
There is no ultimate controlling party.
24. Notice of Annual General Meeting (AGM) and availability of
report and financial statements
The Company's AGM will be held at the offices of Allenby Capital
Limited at 5 St Helen's Place, London EC3A 6AB at 1.00 p.m. on 23
January 2019.
The Company's Annual Report and Financial Statements for the
year ended 31 May 2018 will be posted to shareholders, along with
the Notice of AGM, later today and will be available on the Company
website: https://fbkmed.com/plc-landing-page/, shortly.
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 ZKLFLVFFXFBL
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November 29, 2018 09:37 ET (14:37 GMT)
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