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Feedback PLC - Final Results

RNS Number : 8516B
Feedback PLC
13 October 2020
 

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

 

Feedback plc

 

Full Year Results to 31 May 2020

 

Bleepa™ drives Feedback's strategy in dynamic year of development

 

London, UK, 13 October 2020 - Feedback plc (AIM: FDBK, "Feedback" or the "Company"), the specialist medical imaging technology company, announces its audited results for the 12 months to 31 May 2020.

 

Operational highlights (including post period-end)

·     Flagship product, Bleepa, achieves CE Mark in less than a year and used by frontline NHS clinicians within two months of launch

-     September 2019 launched at NHS Expo to strong interest from healthcare professionals

-     First pilot study with Pennine Acute Hospitals NHS Trust (PAT) with positive early indications that average time to inpatient referral can be halved due to Bleepa

-     Subsequent adoption of Bleepa by PAT as COVID-19 management tool to support care delivery and COVID-19 inpatient referral pathways

-     Post year end, appointment to NHSx National Communications Framework, Bleepa is unique in being the only product on the framework with a CE mark for medical image display

·      Contract renewal in May 2020 of Cadran with upgrade to Bleepa by the Royal Papworth Hospital

·      New Cadran application, Fluorocapture software, being offered under licence in the US

·     Strengthened Board, with Prof. Rory Shaw appointed Chairman and new NED, Adam Denning as Non-Executive Director, and post year end appointed Philipp Prince as Non-Executive Director

 

Financial summary

·      Full year revenue of £450k down 20% (2019: £563k) as strategic focus shifts away from TexRAD product

·     Operating loss increased 25% to £1.4m (2019: 1.1m loss) following increased investment in resources to deliver Bleepa strategy

·      Loss after tax of £1.1m (2019: 0.97m)

·      Cash at 31 May 2020 was £0.7m (May 2019: £0.54m)

·      Equity fundraising in August 2019, raising £2m (before expenses), and post year end, in June 2020, a fundraising of £5.3 million (before expenses), to support scalability and commercial strategy for Bleepa, resulting in unaudited cash at 30 September 2020 of £4.4m

 

Dr Tom Oakley, CEO of Feedback, commented:

"This has been a transformational year as we transitioned the Company away from older products and towards the emerging mobile medical market which has significant potential for growth. We are now creating a very different company through our flagship product, Bleepa, our proprietary medical imaging communications platform.

"Our fast delivery on development, launch and roll-out of Bleepa has exceeded our expectations this year. We have delivered on the key milestones for Bleepa in a remarkably quick timeframe - from regulatory approval (CE Mark), launch and start of commercialisation. Covid-19 may have brought many challenges to the NHS healthcare and clinical staff, however, through our work with the Pennine Acute Hospitals Trust, the pandemic has catapulted Bleepa to the mainstream NHS and NHSx, as it has demonstrated how remote working capabilities can transform care delivery.

"We have been fortunate to have the support of our shareholders through two fundraisings, one during the financial year and one in post period, which will help us to drive Bleepa forward. Our aim for the new year is to scale the product, at pace, in order to acquire as large a userbase as possible. Longer term, our vision is that Bleepa will become the platform that all frontline clinicians use to access information about their patients and confer with their peers to reach collective, informed treatment decisions."

-Ends-

Enquiries:

 

Feedback plc

Rory Shaw, Chairman

Tom Oakley, CEO

Lindsay Melvin, CFO

+44 (0)1954 718072

[email protected]

Allenby Capital Limited (Nominated Adviser)

David Worlidge / Asha Chotai

+44 (0)20 3328 5656

Peterhouse Corporate Finance Ltd (Joint Broker)

Lucy Williams / Duncan Vasey

+44 (0)20 7469 0936

Stanford Capital Partners Limited (Joint Broker)

Patrick Claridge / John Howes

+44 20 3815 8880

Instinctif Partners

Melanie Toyne-Sewell / Phillip Marriage / Nathan Billis

+44 (0)20 7457 2020

[email protected]

 

About Feedback plc - www.fbk.com

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 BleepaTM, 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 BleepaTM, see www.bleepa.com.

 

 

CHAIRMAN'S STATEMENT 2019-20 AND POST PERIOD

The 2019/2020 financial year has been an incredibly dynamic period for the Company. The Group has accomplished a great deal during testing times and has initiated a number of major changes.

 

Bleepa

Our flagship product Bleepa, has been developed from a concept to a fully certified, CE marked medical device in less than a year. By any industry standard this is a staggering achievement, even more so within healthcare. Bleepa was launched at NHS Expo in September 2019 and was in use by frontline NHS clinicians at Pennine Acute Hospitals Trust within 2 months of launch.

Bleepa is our proprietary communication platform which combines access to clinical grade medical imaging, with instant messaging-based communication. It allows frontline clinical teams to discuss patient cases and make management decisions remotely using any internet connected device from phones to tablets and desktops.

The Company initially raised £2 million, before expenses, in August 2019 in order to develop the product, achieve the CE mark and launch Bleepa into the NHS; targets that were all achieved by June 2020 despite the global pandemic arising from COVID-19.

Bleepa has been manufactured in accordance with our corporate quality management system which was successfully re-accredited as meeting the ISO 13485 standard in July 2020 by our notified body SGS UK Ltd. As well as achieving compliance with the NHS Data Protection and Security Toolkit in March 2020, the Company also successfully accredited Bleepa with the Cyber Essentials certification relating to cyber security standards in September 2019 and is currently undertaking an application for ISO 27001 accreditation.

The onset of COVID-19 saw Bleepa deployed at scale across Pennine Acute Hospitals Trust in order to support care delivery and COVID-19 inpatient referral pathways. What had started as a product pilot and clinical evaluation was rapidly converted into a frontline deployment and catapulted Bleepa into the attention of the NHS mainstream, culminating ultimately in the appointment of Bleepa onto the NHSx Clinical Communications Framework in July 2020.

Bleepa is uniquely placed as a communication platform and has been endorsed by NHSx through its appointment to the NHSx National Communications Framework. This framework provides centralised funding up to a total value of £3 million to support NHS Trusts to procure solutions for up to a two year period and forms part of the Secretary of State's policy around pager removal from the NHS by 2021. Bleepa is the only product on the framework that has achieved a CE mark for medical imaging and is therefore able to display digital patient images for diagnostic purposes as part of clinical case discussion. This unique position enables our technology to be used by clinicians to review safely patient medical images "on the go", as part of wider team discussions, and as part of formal multidisciplinary team meetings.

Given Bleepa's initial success and evident market opportunities, the Company completed an equity fundraise in order to secure £5.3 million (before expenses) in June 2020. This funding is being used to help the Company achieve the scale required to drive sales and develop further opportunities for the Bleepa product line. As you will read in our strategic report, we believe that this is just the beginning of the journey for this exciting product as the Company now looks to grow.

 

Other products

Sales of TexRAD, which had grown since 2014, have now slowed. When he joined the Company, Tom initiated a strategic review into the Company's then products. The review revealed that TexRAD revenues were flattening despite escalating cost of sales. The Company was largely dependent on expensive direct sales routes which were not easily scalable. The routes represented a rising marginal cost as new sales became more difficult to secure and were often linked to bespoke new software development, such as GLCM (Gray Level Cooccurrence Matrix). Furthermore, the installation and maintenance contracts for TexRAD were requiring ever more costly scientific support from the team without any substantial repeat revenues from individual customers.

TexRAD remains an exciting imaging tool, based on exceptional technology. The evidence base for the product is encouraging but needs further studies in order to prove its clinical case with sufficient confidence. Currently the Company does not have sufficient funding to commission and finance the necessary research and is therefore dependent on the academic outputs of existing TexRAD customers, which the Company is unable to influence or coordinate. Without this degree of oversight, it is difficult to know when a sufficient evidence base will materialise in order to take the product forward into the clinical setting where its true potential could be realised.

The board has therefore taken the decision to reduce the costs associated with TexRAD sales by leveraging the Company's existing distribution partner GE Healthcare and reseller agreements with third parties in Korea, both on a commission only basis. The Company also stopped providing scientific support to customers and made certain personnel changes greatly reducing the costs associated with this product line.

The strategic review also touched the Company's other product, Cadran. Cadran has been a longstanding workhorse for the Company, delivering Picture Archiving and Communications System (PACS) services to four NHS Trusts since 2001. May 2020 saw the contract renewal of Cadran's service contract by its main customer, the Royal Papworth Hospital, showing the ongoing value of this core technology to its customers. Bleepa is based largely on Cadran's technology and was itself an output of Tom's initial strategic review when he joined the Company in February 2019.

In addition to Bleepa, the Company has already spun out a further application of the Cadran technology in the form of its Fluorocapture software which is being offered under licence to Imaging Engineering, LLC in the USA. Imaging Engineering is using the Fluorocapture software to update fluoroscopy equipment across the USA. Approximately 2,000 providers across the US will need to update or replace their fluoroscopy equipment in the next few years. Updating the equipment is considerably more cost effective than replacing it, and the board believes that this will create a sizable opportunity for the licencing of the Fluorocapture software.

With the appointment of Dr Tom Oakley as CEO and wider team members from the London area it became clear that the Company's office in Bourn was no longer the optimal location for the Company's operations. Tom initiated a culture of remote working and eventually closed the Bourn office in December 2019. The Company opened new offices in Peterborough for its technical and support staff in November 2019, this represented a more cost-effective office solution which was more easily accessible for all personnel. The Company's head office moved to the Health Foundry in January 2020, a dynamic co-working space established by St Thomas' Hospital in London which provided cost effective, scalable working space and benefited from close proximity to the frontline clinicians at St Thomas' Hospital. The prior development of a home working policy stood the Company in good stead when COVID-19 forced many organisations to close their offices in March 2020, as Feedback staff were already well versed in this way of working and were able to continue delivery without breaking step.

Feedback is a very different company today to the one it was even a year ago. The Company has had to come to terms with difficulties in its other product lines whilst simultaneously recognising the huge latent potential within them and aggressively leveraging that potential through its new products Bleepa and Fluorocapture. COVID-19 has presented many challenges but also provided an opportunity for Bleepa to demonstrate how its remote working capabilities can transform care delivery. The Company, already being familiar with remote working, has been able to rise to deliver on the opportunities presented and the team has moved at pace to deliver a truly transformative product to the market. It is a year that we are all very proud of.

I am extremely grateful for the hard work and support of my Board colleagues, and in particular for the efforts of the operational management team and their staff who have worked so effectively together during the past year and the Covid Pandemic. This has been an extraordinarily difficult time, and everyone has worked exceptionally well to bring our new products to the point where they are actually helping deliver better patient care. This progress constitutes a major strategic development for the Company. I would also like to thank shareholders for their continued support in the Company, our vision and strategic direction. We share a common aim of producing the best technology to meet the market need, and thus grow the company and increase shareholder value.

  

OPERATIONAL REVIEW

Feedback Medical

Feedback Medical Limited (FM Ltd) develops and sells the Group's proprietary technologies - Bleepa, the image- based communication platform for frontline clinicians, Cadran PACS, our longstanding Picture Archiving and Communication System and TexRAD, the quantitative texture analysis platform.

A shift in focus

Over the last year the Company has pivoted to embrace a change in the healthcare sector, as detailed below. The shift in strategic focus sees targeted investment in Bleepa with a deliberate move away from our legacy product lines.

As part of concentrating the Company's focus, the board has also considered ways of driving efficiencies in the business and reducing the associated cost base of maintaining existing product lines. This year saw the closure of the Bourn office as this location no longer suited the wider business needs of the Company and management were spending large amounts of time inefficiently commuting to this location. New offices were sourced in Peterborough as a regional centre for the support team and a head office was opened in London which provided easier access to customers and investors. Dr Balaji Ganeshan left the Group as part of the restructuring of the TexRAD division, driven by the need to reduce the costs associated with sales through focusing on indirect market opportunities through third party distributors.

Bleepa addresses a widespread change in the medical imaging market and leverages the Company's experience in the field of medical imaging to great effect.

Heritage

Feedback Medical has supplied medical imaging products since 2001, starting with Cadran PACS, then TexRAD and now Bleepa. The Company has pioneered its imaging technology over years of frontline delivery experience, building expertise in the form of its technological capabilities, integration capabilities with other technology platforms and regulatory expertise relevant to the field of medical imaging. This deep-seated heritage has enabled the rapid transformation of the Company in response to a dynamic and shifting market.

Market

The world of medical imaging is changing. With increasing workload and medical sub-specialisation, not only do specialist radiologists need to review all the medical images, but their front-line patient facing clinician colleagues now need immediate access to all the imaging data in order to rapidly make the correct clinical management decisions, often through discussion with colleagues. Medical imaging is core to almost all clinical decision making processes and the dependence on medical imaging is increasing(1) whilst at the same time there is a growing shortage of radiologists(2) The deficit has worsened the backlogs of imaging studies and delays in image reporting. Out of necessity, frontline clinicians are having to increasingly review their own patient's images, often ahead of the Radiologist reports being made available. The impacts are wide reaching with surgical specialties reviewing imaging directly in order to plan operations and the demand for timely access to medical imaging spreading to medical specialty areas such as stroke.

This is not the only change, however. Clinical practice is becoming more mobile. In a study by the British Medical Journal it was found that 97% of clinicians were using WhatsApp for routine clinical communication(3) Clinicians want to access information flexibly on the go whilst simultaneously being connected to colleagues, who may or may not be at the same physical site. COVID-19 has further driven this need for remote access, creating a number of situations where clinical staff need access to colleagues and patient imaging from home, such as when clinicians have to self-isolate.

Traditional providers of medical imaging solutions are struggling to keep pace with this change. PACS vendors have traditionally sold to Radiologists and understand the needs of this customer group. However, as the users of medical imaging grows beyond the traditional user base, providers need to adapt to service this broader range of customers.

This has created an opportunity for the Company. As a small PACS company, Feedback was perfectly placed and dynamic enough to evolve its product offering. We have leveraged our heritage of medical imaging expertise and repurposed them to meet the needs of a new and evolving market. We are now a PACS company that does not only sell to Radiologists, we also sell to everyone else. We have produced Bleepa.

 

(1) https://www.england.nhs.uk/statistics/wp-content/uploads/sites/2/2018/11/Annual-Statistical-Release-2017-18-PDF-1.6MB-1.pdf

(2) https://www.rcr.ac.uk/posts/nhs-does-not-have-enough-radiologists-keep-patients-safe-say-three-four-hospital-imaging

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

 

Bleepa

Bleepa is our flagship product, the culmination of nearly two decades of imaging experience and our answer to the rapidly changing medical imaging market.

Bleepa is a secure communication platform that combines remote access to clinical grade medical imaging with team based instant messaging. It allows clinicians to review patient imaging and discuss cases collaboratively with colleagues on the go using any internet connected device such as laptops, desktops, tablets and smartphones.

Bleepa is a zero footprint application meaning that no patient data is stored locally on the device used to access the service. If a clinician loses their phone there is no data on the device that can be hacked, access to that device is simply shut off and the clinician can access the service immediately from another device.

The key differentiator of Bleepa is the quality of the imaging provided by the platform. Bleepa uses DICOM formatted imaging, extracted directly from the client's PACS and renders the image at a quality that is certified as being suitable for clinical review. Bleepa conforms with the provisions of the Medical Device Directive(4), which considers any product that displays digital patient images for the purpose of diagnosis to constitute a medical device. As a medical device Bleepa has been developed according to an ISO 13485 certified quality management system and holds a CE mark.

In August 2019, the Company raised £2 million to develop Bleepa and take it to market within the NHS and the company has delivered what it set out to achieve in this period. The Company has taken Bleepa from a concept to fully certified medical device in under a year and seen it adopted at two NHS sites. The product was successfully launched at NHS Expo in September 2019 and subsequently piloted at Pennine Acute Hospitals NHS Trust in December 2019. The pilot at Pennine was used to provide the clinical evaluation component required as part of the CE marking process and was undertaken using a CE mark waiver for this reason.

Unfortunately, the pilot was interrupted by Covid-19. However the Trust had seen enough of the product to realise the potential it held in assisting with their response to the pandemic. As a result the pilot evaluation was paused and Bleepa was rolled out across the Trust as a tool to support internal Covid-19 referrals and facilitate referral to the RECOVERY Trial, which aimed to assess the impact of patient comorbidities on outcome following infection with the virus. After the initial rollout of Bleepa, work on the CE mark recommenced and was completed on 1 June 2020.

The pilot at Pennine Acute Hospitals Trust concluded with a benefits analysis from the Respiratory and Gastroenterology teams' usage of Bleepa, performed by the Trust. This analysis found that:

·       The average time from point of referral to clinician review was reduced from 2.1 days to 0.4 days by Bleepa

·       The referral process was able to be completely automated by Bleepa, having previously required administrative time to process each referral and the referral process was both digitally stored and auditable.

·       Bleepa reduced the time taken, on average, for clinicians to access the clinical information that they needed about a patient from 5.47 minutes to 1.04 minutes, saving on average 4.43 minutes of clinician time per referral.

·       Bleepa reduced the process of replying to referrals by an average of 7.5 minutes per clinical referral over traditional communication processes, such as pagers and telephones.

·       Based on the nearly 7,000 referrals performed last year at the Royal Oldham Hospital, it is predicted that Bleepa could save up to 36.3 weeks of clinical time per annum.

Bleepa was included as a product upgrade to Cadran Web Viewer as part of the Cadran contract with Royal Papworth Hospital on 21 May 2020, to be deployed at the Trust once the CE mark was achieved.

More broadly, Bleepa operates a SaaS model of recurring monthly revenue. Prices vary between NHS and private sector offerings but follow a fixed price per user per month on a recurring annual contract basis. The model used is comparable to a sim only mobile phone contract.

In August 2020, Bleepa was successfully appointed onto the NHSx Clinical Communication Framework. This framework was established to deliver the Secretary of State's mandate to remove pagers and fax machines from NHS communications by 2021. The framework enables NHS Trusts to select communication tools from a list of approved suppliers and NHSx then pay the contract on behalf of that Trust for up to two years, drawing down from a £3 million central pot of NHS funding. Appointment to the framework acts both as an endorsement of the product but also provides a mechanism for reimbursement. Bleepa is the only product on the framework that is certified to display medical images at a quality sufficient for clinical review and is therefore the only product to hold a CE mark for this purpose. This gives Bleepa a strong competitive advantage over other providers who are unable to display digital patient images for diagnostic purposes alongside chat and video calling. Our imaging USP makes us an attractive partner for other organisations who are looking to partner in the market and the company are currently evaluating a number of commercial partnership opportunities with large and small companies.

Following our initial success Feedback raised £5.27 million, before expenses, in July 2020 in order to drive Bleepa sales and further develop the product. The fundraise attracted a number of institutional investors including Unicorn Asset Management Limited, Octopus Investments, Premier Miton Investors and Tyndall Investment Management along with renewed support from many of our existing shareholders. The Company now stands ready to deliver the exciting potential of our flagship product.

 

(4) https://ec.europa.eu/docsroom/documents/17921/attachments/1/translations/en/renditions/native

 

Cadran

Cadran was where it all started. This PACS product has been in use in the NHS since 2001 and forms the base technology for both Bleepa and TexRAD. For those who are unfamiliar with medical imaging, PACS is essentially a digital library of medical images which radiologists use to store, locate and review medical imaging studies.

Despite a number of incredible technical features, Cadran has never realised its full potential. The traditional PACS market is dominated by large providers who compete on technical features, driven by the needs of an ever sub- specialising user base of Clinical Radiologists; customers are sticky which, combined with convoluted procurement processes, results in limited provider turnover. In this environment, growing a market share is challenging and relies on implementing costly product features more quickly than your competitors. For a company of Feedback's size this was never going to be achievable when compared with large providers. However, the loyalty of Cadran's customer base is testament to the quality of the product - despite very few technical modifications, Feedback has managed to fend off the incursions of much larger providers for many years.

Now the imaging market is changing, and changing quickly, with the demand for imaging extending far past the specialist field of Radiology. There is now a growing opportunity for smaller, dynamic providers who can move at pace. Now the very factors that worked against Feedback, most noticeably its small size, are the very factors that the Directors believe will enable Feedback to capitalise on this renaissance of medical imaging. As a small company, Feedback is agile and we are not starting from scratch but from an established market position. Leveraging the foundation of Cadran has allowed Bleepa to meet the needs of the emerging market at a pace larger providers cannot match whilst simultaneously giving a vastly superior product to new market entrants that are having to start their product development from scratch.

On 21 May 2020, the Company announced that Royal Papworth Hospital NHS Foundation Trust, Cadran's largest customer, had renewed its support contract for Cadran for another year.

 

Fluorocapture

Fluoroscopy is the use of high frame rate X-ray capture to generate cinematic views of patients allowing clinicians to examine the patient in real time. It is typically used in the field of Gastroenterology for swallowing assessments, Orthopaedics for dynamic joint imaging and during surgical procedures, and in Cardiology and Radiology for interventional procedures.

As fluoroscopy uses ionising radiation in the form of X-Rays there is an incentive to reduce the amount of radiation required to generate images. The majority of fluoroscopy equipment is old and in need of replacement or updating in order to improve the rate of image capture and achieve the desired reduction in radiation dose. Replacing the equipment can be extremely costly, in some cases over $1 million, therefore updating the equipment is preferred.

Imaging Engineering, LLC, our US partner organisation, has longstanding expertise in installing and updating fluoroscopy equipment. A version of our Cadran software is a core element of updating the fluoroscopy equipment and Feedback has licenced the software to Imaging Engineering in order to enable it to update fluoroscopy equipment across the USA. Our software is offered under licence per installation. Beyond maintaining the source code, Feedback has no obligations under this licencing agreement and there is no ongoing requirement for internal resource in order to deliver the product. Revenue generated from this licensing agreement is therefore considered to be additional revenue leveraged from an existing technology which is already maintained under our existing NHS contracts.

Imaging Engineering estimates that there are approximately 2,000 fluoroscopy centres in the USA that will need to update their equipment in the next few years and is aiming to update 200 centres within the next 18 months, though this has been impacted by COVID-19 and the inability of external companies to physically enter hospital premises during the pandemic.

Fluorocapture represents another example of how the Company is seeking to efficiently leverage its existing products to generate additional, low resource revenue opportunities.

 

TexRAD

TexRAD sales have traditionally accounted for approximately half of the Company's revenue but owing to market saturation the cost of sales has increased and revenues are now declining. In anticipation of this, management took pre-emptive action earlier in the year to drive down the internal cost of sales whilst continuing to drive revenue through third party distributors.

When a clinician reviews a medical imaging study, he/she typically produces a report which gives a qualitative analysis of the imaging study. TexRAD is a proprietary technology which measures areas of a scan to give a quantitative output, a texture feature, typically displayed as a histogram plot. The shape of the histogram plot changes according to the composition of the area of the scan that has been analysed. The aim of TexRAD has been to prove a link between the quantitative changes seen and underlying pathological changes in the patient's tissue. If a link between a texture feature and an underlying change in tissue can be proven then TexRAD could be used to monitor disease states in a quantitative way, in theory supporting clinical diagnosis and measuring treatment response. The goal is to move TexRAD from an academic research tool into a clinical tool that can inform treatment, however this requires a suitable body of evidence.

To date TexRAD has been deployed in more than 60 research centres around the world, each one looking to find a link between texture changes and disease. Without paying for these studies the Company is unable to coordinate the texture features being evaluated or the disease states that the studies are being conducted in. Without coordination, the evidence base is sporadic with insufficient depth in any one disease or texture feature to justify the transition to a clinical application. Given this, the strategy has been to continue selling TexRAD to academic centres to try to grow the evidence base organically until a texture feature is consistently demonstrated to be linked to a disease state and can be used to support clinical delivery.

The Company had been deploying an internal sales resource to drive direct sales of TexRAD to academic centres, however this direct sales approach was not cost effective. In May 2019, management reviewed the TexRAD pipeline and noted that the customer acquisition cost for new customers was rising and that the rate of new customer acquisition was declining, in part due to saturation of the available market. In response to customer feedback the board made a small investment to upgrade the TexRAD software and delivered the Grey Level Co-occurrence Matrix (GLCM) product feature in July 2019 with a view to re-energising the TexRAD sales pipeline. This upgrade had a moderate, but short term, impact on sales leading to a 14% increase in revenue as reported in the Company's interim results on 18 February 2020. Despite this momentary boost, sales of TexRAD continued to decline whilst at the same time the cost of sales were increasing, owing in part to the associated development costs. In light of this, management took the decision to reduce the cost base associated with research sales by removing our direct to market sales function, instead focusing on indirect sales through third party distributors on a commission only basis. The volume of sales has continued to decline, as expected, in the second half of the year which has impacted the overall revenue of the Company, however the reduced cost base associated with this business unit has resulted in a smaller net loss for this part of the business.

The Company believes that it remains viable to continue selling TexRAD through third party distributors, owing to the lower cost base, with a view that this may afford an opportunity for the evidence base associated with the product to grow. The opportunity for TexRAD still lies in the transition to the clinical setting once a sufficient evidence base is available, however the Company is not in control of this timeline. On this basis, the focus has now shifted to cost reduction associated with this product rather than driving new sales at a growing acquisitional cost.

 

R&D progress

Feedback recognises the potential in developing new products from its existing technologies. 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.

Feedback capitalises external 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 Bleepa, product enhancements and assessing the potential of Bleepa in non-medical markets and overseas requirements.

 

Current trading and future developments

The Group continues to focus on growing the opportunity of its flagship product Bleepa. Bleepa is currently installed in two NHS Trusts and the Company is seeking to grow the product's UK footprint through its recent appointment to the NHSx Communication Tool framework. This framework represents a key opportunity for the Company, it both validates Bleepa as a product, giving it NHS endorsement, but it additionally provides a route to revenue, allowing NHS Trusts to procure Bleepa for up to two years whilst NHSx pays for it on their behalf.

Beyond the NHS market the Company is pursuing opportunities for the CE marked version of Bleepa in adjacent market segments, such as the UK private healthcare sector, veterinary services and international healthcare setting. The Company is currently evaluating the relevant regulatory aspects of international expansion and are considering partnership opportunities to help scale the product more cost effectively to a wider market audience.

We have a big vision for Bleepa. Bleepa is about more than just bringing frontline clinicians together digitally and giving them access to imaging. In our advertising materials we coined the phrase 'Bleep-Share the whole picture'. Although this neatly covers imaging, it also encompasses our much larger vision to bring together all the information that clinicians need when making decisions about patients.

Our vision is that Bleepa will become the platform that all frontline clinicians use to access information about their patients and to speak with colleagues to reach collective and informed management decisions.

To progress this strategy, we need to scale the product, at pace, in order to acquire as large a userbase as possible.

Inherent to the value proposition of Bleepa is the requirement for Bleepa to be integrated into hospital systems and to be able to present patient data securely to clinical users. This requirement for integration means that market growth must be achieved on an institutional basis rather than directly to users; a freemium model, directly to clinical users, will therefore not work in this market. Selling to institutions requires multi-stakeholder engagement and is both time and resource intensive. The requirement to deploy on an institutional basis stands to slow down the rate of deployment but it does create a barrier to entry for competitors and a stickiness from customers that will ultimately result in a higher lifetime value of each customer site.

However, there are options to achieving rapid growth despite the institutional integration requirements. The Company is evaluating a number of relationships with third parties that can help to achieve this scale at a greater pace and more cost effectively than if we were to undertake that growth alone. The Company intends to help others grow the value proposition and scale the product, wherever possible leveraging its network of third parties to distribute the product cost effectively. However, firstly we have to initiate the market traction, grow the product footprint and get as many clinicians as possible using the platform. Our recent funding positions us well to deliver on this potential.

 

 

Financial summary

 

2020

£'000

2019

£'000

Revenue

450

563

Operating loss

(1,415)

(1,132)

Operating cash flow useage

(787)

(983)

Cash invested in intangibles

876

398

Year end cash balance

733

541

Intangible assets

1,297

449

Net assets

1,769

946

 

In the year to 31 May 2020, the recognised turnover of £449,983 decreased by 20% compared with the previous financial year. 35% of the turnover is attributable to one customer (compared with 40% in the previous financial year). Overheads, especially employment costs, have increased in the year to 31 May 2020, due to gearing up to deliver the new strategic direction as outlined above. The operating cash useage reduced mainly due to the research and development tax credit. The Company continued to invest shareholder funds in Bleepa development which resulted in a large increase in intangible assets. The net assets reflected the fund raise of £2m. The loss per share has decreased from 29p to 22p per share primarily due to increase in number of issued shares.

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. Only external development costs are capitalised. All internal research and development costs are written off in the year in which they are incurred. All development costs relating to TexRAD have been fully impaired.

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

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 August 2019 equity fundraise supported a healthy cash balance at the financial year end and has financed an acceleration in product development expenditure leading to increased intangible assets.

 

Principal risks and uncertainties

Economic and market risks

Feedback Medical 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 have little impact on the Group. The impact of Covid-19 has been both positive and negative for the future prospects of the Company. A number of potential customers delayed any further discussions due to their focus on COVID-19 management. However Pennine Acute Trust recognised the value of Bleepa in helping them to effectively manage the impact of COVID-19 and as a result are now rolling Bleepa out as a mainstream solution to more efficient patient care. COVID-19 was also a key driver to the creation of the NHSx Clinical Communication Framework which has both endorsed the product and created a vehicle for reimbursement.

 

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). 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. FM Ltd first obtained certification to ISO 13485 in 2014 and continues to maintain compliance with the current version of this Medical Device manufacturing standard.

 

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 equity fundraises in both 2019 and 2020 to enable it to implement 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 capital markets to support its 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

In July 2020, the Company raised £5.27 million, before expenses, by way of a placing and subscription of 505,000,000 new Ordinary Shares at a price of 1 pence per share with new and existing investors and 21,981,769 new Ordinary Shares at a price of 1 pence per share via an Open Offer to existing shareholders. The proceeds will be invested in developing the Bleepa product.

 

Key Performance Indicators

The Company monitors the following: its cash position, its investment in Bleepa development, Bleepa enquiries and feedback from pilot studies. The Board is developing key performance indicators to assess performance based on user acquisition, utilisation rates and revenue which will be necessary as Bleepa sales are made. These KPIs will be deployed across industry segments and by country.

By Order of the Board on 12 October 2020 and signed on its behalf

 

Prof R Shaw

 

 

 

Statement of Comprehensive Income

FOR THE YEAR ENDED 31 MAY 2020

 

 

 

 

Note

 

2020

£

 

2019

£

Revenue

4

449,983

563,092

Cost of sales

 

(1,866)

(4,896)

Gross profit

 

448,117

558,196

Other operating expenses

5

(1,863,180)

(1,690,052)

Operating loss

6

(1,415,063)

(1,131,856)

Net finance income

7

606

1,283

Loss on ordinary activities before taxation

 

(1,414,457)

(1,130,573)

Tax credit

9

327,000

157,464

Loss on ordinary activities after tax attributable to the

 

 

 

equity shareholders of the Company

 

(1,087,457)

(973,109)

Total comprehensive expense for the year

 

(1,087,457)

(973,109)

Loss per share (pence)

 

 

 

Basic and diluted

11

(0.22)

(0.29)

 

 

Consolidated Statement of Changes in Equity

FOR THE YEAR ENDED 31 MAY 2020

 

 

Group

 

 

 

Share

 

Share

 

Capital

 

Retained

 

Translation

Share option

 

 

Capital

Premium

Reserve

Earnings

Reserve

Reserve

Total

 

£

£

£

£

£

£

£

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

-

Loss 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

New Shares issued

416,667

1,583,333

-

-

-

-

2,000,000

Costs associated with the

 

 

 

 

 

 

 

raising of funds

-

(138,905)

-

-

-

-

(138,905)

Share options lapsed

-

-

-

92,141

-

(92,141)

-

Share option expense reserve

-

-

-

(50,000)

-

50,000

-

Loss for the year (excluding share

 

 

 

 

 

 

 

option reserve)

-

-

-

(1,037,457)

-

-

(1,037,457)

At 31 May 2020

1,349,876

5,221,282

299,900

(5,110,965)

(209,996)

219,159

1,769,256

 

Company

 

 

 

 

 

 

 

 

 

 

 

Share

 

Share

 

Retained

Share option

 

 

 

 

Capital

£

Premium

£

Earnings

£

Reserve

£

Total

£

At 31 May 2018

704,042

2,713,933

(3,312,163)

-

105,812

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

-

-

(223,159)

223,159

-

Loss for the year

-

-

(980,492)

-

(980,492)

At 31 May 2019

933,209

3,776,854

(4,515,814)

223,159

417,408

New shares issued

416,667

1,583,333

-

-

2,000,000

Costs associated with the raising of funds

-

(138,905)

-

-

(138,905)

Share option expense reserve

-

-

(50,000)

50,000

-

Share option lapsed

-

-

54,000

(54,000)

-

Loss for the year

-

-

(1,906,671)

-

(1,906,671)

At 31 May 2020

1,349,876

5,221,282

(6,418,485)

219,159

371,832

 

 

 

Consolidated Balance Sheet

AT 31 MAY 2020

 

 

 

 

Notes

 

2020

£

 

2019

£

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

13

11,830

6,428

Intangible assets

14

1,296,784

449,497

 

 

1,308,614

455,925

Current assets

 

 

 

Trade and other receivables

15

456,664

493,446

Cash and cash equivalents

 

732,650

540,735

 

 

1,189,314

1,034,181

Total assets

 

2,497,928

1,490,106

Equity

 

 

 

Capital and reserves attributable to the

 

 

 

Company's equity shareholders

 

 

 

Called up share capital

18

1,349,876

933,209

Share premium account

18

5,221,282

3,776,854

Capital reserve

18

299,900

299,900

Translation reserve

18

(209,996)

(209,996)

Share option expense reserve

18

219,159

261,300

Retained earnings

18

(5,110,965)

(4,115,649)

Total equity

 

1,769,256

945,618

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

16

718,788

498,342

 

 

718,788

498,342

Non-current liabilities

 

 

 

Other payables

16

9,884

46,146

Total liabilities

 

728,672

544,488

Total equity and liabilities

 

2,497,928

1,490,106

 

 

 

Company Balance Sheet

AT 31 MAY 2020

 

 

 

 

Notes

 

2020

£

 

2019

£

Assets

 

 

 

Non-current assets

 

 

 

Investments

12

-

-

Current assets

 

 

 

Other receivables

15

27,538

29,131

Cash and cash equivalents

 

473,809

452,697

 

 

-

481,828

Total assets

 

501,347

481,828

EQUITY

 

 

 

Capital and reserves attributable to the

 

 

 

Company's equity shareholders

 

 

 

Called up share capital

18

1,349,876

933,209

Share premium account

18

5,221,282

3,776,854

Share option expense reserve

18

219,159

223,159

Retained earnings

18

(6,418,485)

(4,515,814)

 

 

371,832

417,408

TOTAL EQUITY

 

371,832

417,408

Current liabilities

 

 

 

Trade and other payables

16

129,515

64,420

Total current liabilities

 

129,515

64,420

Total Equity and Liabilities

 

501,347

481,828

The Company's loss for the year was £1,906,671 (2019: £1,203,651)

 

 

 

 

 

Consolidated Cash Flow Statement

FOR THE YEAR ENDED 31 MAY 2020

 

 

 

2020

£

 

2019

£

Cash flows from operating activities

 

 

Loss before tax

(1,414,457)

(1,130,573)

Adjustments for:

 

 

Net finance income

(606)

(1,283)

Depreciation and amortisation

30,277

106,781

Share based payment expense

50,000

261,300

Decrease/(Increase) in trade receivables

103,063

(114,323)

Decrease in other receivables

11,921

2,248

Increase in trade payables

88,886

8,870

Increase/(Decrease) in other payables

95,258

(154,164)

Corporation tax received

249,011

37,953

Total adjustments

627,810

147,382

Net cash used in operating activities

(786,647)

(983,191)

Cash flows from investing activities

 

 

Purchase of tangible fixed assets

(7,189)

(3,422)

Purchase of intangible assets

(875,950)

(398,308)

Net finance income received

606

1,283

Net cash used in investing activities

(882,533)

(400,447)

Cash flows from financing activities

 

 

Net proceeds of share issue

1,861,095

1,292,088

Net cash generated from financing activities

1,861,095

1,292,088

Net increase/(decrease) in cash and cash equivalents

191,915

(91,550)

Cash and cash equivalents at beginning of year

540,735

632,285

Cash and cash equivalents at end of year

732,650

540,735

 

 

Company Cash Flow Statement

FOR THE YEAR ENDED 31 MAY 2020

 

 

 

 

2020

£

 

2019

£

Cash flows from operating activities

 

 

Loss before tax

(1,906,671)

(1,203,651)

Adjustments for:

 

 

Net finance income

(606)

(1,364)

Provision against intercompany receivable

1,267,998

524,671

Share based payment expense

-

223,159

Increase in other receivables

(1,266,405)

(521,253)

Decrease in trade payables

5,619

(23,393)

Decrease/(Increase) in other payables

59,476

(20,808)

 

66,082

219,153

Net cash used in operating activities

(1,840,589)

(1,022,639)

Cash flows from investing activities

 

 

Net finance income

606

1,364

Net cash generated from investing activities

606

1,364

Cash flows from financing activities

 

 

Net proceeds of share issue

1,861,095

1,292,088

Net cash generated from financing activities

1,861,095

1,292,088

Net increase in cash and cash equivalents

21,112

270,813

Cash and cash equivalents at beginning of year

452,697

181,883

Cash and cash equivalents at end of year

473,809

452,697

 

 

Notes to the Accounts

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 Health Foundry, Canterbury House, I Royal Street, London SE1 7LL.

The Company is quoted on AIM, a market operated by the London Stock Exchange. These Financial Statements were authorised for issue by the Board of Directors on the 12 October 2020.

 

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

The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board (IASB) that are mandatory for the current reporting period.

The following new and revised Standards and Interpretations are relevant to the company, but the Company 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 of the Company:

•         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 following new and revised Standards and Interpretations are relevant to the Company but not yet effective for the year commencing 1 April 2019 and have not been applied in preparing the financial statements:

•         IAS 1 Presentation of Financial Statements - classification of liabilities as current and non-current

•         IAS8 1 and IAS 8 Accounting Policies-definition of materiality

The following Accounting Standards and Interpretations are most relevant to the Company:

 

IFRS16 - Leases

The Company transitioned to IFRS 16 in accordance with the modified retrospective approach. The prior year figures were not adjusted. The Company has decided not to apply the new guidance to leases whose term will end within twelve months of the date of initial application. In such cases, the leases are accounted for as short term leases and the lease payments associated with them are recognised as an expense from short-term leases through the statement of comprehensive income.

 

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 2020 and 2019 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 £1,087,457 and had a net cash outflow of £786,647 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 1 July 2020, the Company raised £5.27m before expenses by the issue of 505,000,000 new ordinary shares at a price of 1 pence per share to new and existing shareholders and 21,981,769 new ordinary shares at a price of 1 pence per share via an Open Offer to existing shareholders. 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 October 2021, 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 external software development of products which are integral to the trade of the Group's medical imaging products. Amortisation and impairment charges are recognised in other operating expenses in the income and expenditure account. Internal development costs are not capitalised but written off during the year in which the expenditure is incurred.

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. Only external research expenditure is capitalised. Internal research expenditure is written off in the year in which it is incurred. 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 statement of comprehensive income.

(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)        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.

(j)        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. The sales invoice is raised when the customer's purchase order is received and the debt is payable within 60 days of the invoice date. In practice the debt is paid when the software installation has been completed. There are no obligations for returns, refunds or warranties.

Revenue relating to software consultancy and similar services is recognised as the services are performed and completed. The invoice is recognised on a linear basis over the duration of the contract.

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.

(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, 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 estimation uncertainty 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. The trading activities of the Company solely relate to Medical Imaging and the Head Office covers the costs of running the parent company, Feedback PLC.

 

Year ended 31 May 2020

 

 

Medical Imaging

Head Office

 

Total

 

£

£

£

Revenue

 

 

 

External

449,983

-

449,983

Expenditure

 

 

 

External

(1,233,767)

(630,673)

(1,864,440)

Loss before tax

(783,784)

(630,673)

(1,414,457)

Balance sheet

 

 

 

External Assets

1,996,581

501,347

2,497,928

External Liabilities

(599,157)

(129,515)

(728,672)

 

1,397,424

371,832

1,769,256

Capital expenditure (all located in the UK)

883,139

-

883,139

 

Year ended 31 May 2019

 

 

 

 

Medical Imaging

Head Office

 

Total

 

£

£

£

Revenue

 

 

 

External

563,092

-

563,092

Expenditure

 

 

 

External

(1,014,683)

(678,982)

(1,693,665)

Loss before tax

(451,591)

(678,982)

(1,130,573)

Balance sheet

 

 

 

External Assets

1,008,278

481,828

1,490,106

External Liabilities

(480,068)

(64,420)

(544,488)

 

528,210

417,408

945,618

Capital expenditure (all located in the UK)

401,724

-

401,724

 

 

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

 

External revenue by location of customer

Total assets by location of assets

Capital expenditure by location of assets

 

2020

2019

2020

2019

 

2020

2019

 

£

£

£

£

 

£

£

United Kingdom

229,073

282,118

2,497,928

1,490,106

 

728,672

544,488

Europe

57,073

85,868

-

-

 

-

-

Rest of the world

163,837

195,106

-

-

 

-

-

Total

449,983

563,092

2,497,928

1,490,106

 

728,672

544,488

 

Major customers

During the year ended 31 May 2020, the Group generated £172,000 (2019: £222,000) of revenue from one customer in the United Kingdom, which is equal to 35% (2019: 40%) of total Group revenues in the year.

 

5.    Other operating expenses

 

 

2020

£

2019

£

Administrative costs:

 

 

Employment and other costs

1,832,987

1,583,271

Amortisation and depreciation costs

30,193

106,781

 

1,863,180

1,690,052

 

 

6.    Operating loss

 

 

 

2020

£

2019

£

This is stated after charging

 

 

Depreciation and amortisation

 

 

Owned assets

1,530

3,554

Amortisation of intangible assets

28,663

103,227

Provision for doubtful debts

28,000

-

Foreign exchange differences

14,646

8,488

Auditors' remuneration

 

 

Audit of parent company and group financial statements

10,000

14,000

Audit of subsidiaries

7,000

8,500

Tax and other services

-

-

Operating lease rentals

 

 

Land and buildings (see note 19)

-

12,179

Research and development costs expensed

-

38,408

 

 

7.    Net Finance income

 

 

2020

£

2019

£

Interest received

606

1,283

 

606

1,283

 

 

8.    Directors and employees

 

 

 

2020

Average

2019

Average

Number of employees

 

 

Selling and distribution

2

2

Administration

4

4

Research and development

6

3

 

12

9

 

 

2020

£

 

2019

£

Staff costs

 

 

Wages and salaries

882,197

656,007

Social security costs

95,085

72,950

Payments to defined contribution pension scheme

81,499

67,928

Share based payment expense

50,000

261,300

 

1,108,781

1,058,185

 

 

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

 

 

Salary

£

Fees

£

Pension

£

Benefits in kind

£

Total

£

Year ended 31 May 2020

 

 

 

 

 

Executive Directors

 

 

 

 

 

T Oakley (including £40,000 performance bonus)

170,000

-

-

-

170,000

L Melvin

59,240

-

6,671

711

66,622

A Riddell* (1 June 2019 - 29 August 2019)

-

8,500

-

-

8,500

Non-Executive Directors

 

 

 

 

 

R Shaw (appointed 29 August 2019)

30,000

-

-

-

30,000

T Irish**

-

25,000

-

-

25.000

S Sturge

-

-

-

-

-

A Riddell* (29 August - 18 November 2019)

-

10,168

-

-

10,168

A Denning (appointed 3 February 2020)

 

8,333

-

-

8,333

Total

259,240

52,001

6,671

711

318,623

 

 

Salary

 

Fees

 

Pension

Benefits in kind

 

Total

 

£

£

£

£

£

Year ended 31 May 2019

 

 

 

 

 

Executive Directors

 

 

 

 

 

A Riddell

41,591

-

-

-

41,591

L Melvin

72,107

-

10,861

626

83,594

T Oakley (appointed 9 April 2019)

18,712

-

 

-

18,712

D Crabb*** (to 6 July 2018)

30,178

-

2,708

28

32,914

Non-executive Directors

 

 

 

 

 

T Irish**

-

25,000

-

-

25,000

S Sturge

-

-

-

-

-

A Riddell*

-

2,667

-

-

2,667

Total

162,588

27,667

13,569

654

204,478

 

During the year, retirement benefits under money purchase pension schemes were accruing to 1 director (2019: 2)

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

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

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

 

The following share options were issued and vested in the year and were outstanding at 31 May 2020.
Further information is provided in Note 18.

 

 

2020

Number

2019

Number

R Shaw

7,800,000

2,800,000

L Melvin

4,300,000

2,800,000

T. Oakley

9,332,081

9,332,081

S Sturge

2,500,000

2,500,000

 

9.    Taxation on loss

 

 

 

2020

£

2019

£

(a) The tax credit for the year:

 

 

UK Corporation tax

(327,000)

(157,464)

Current tax credit

(327,000)

(157,464)

Under provision in prior year

-

-

Deferred tax charge

-

-

 

(327,000)

(157,464)

 

(b) Tax reconciliation

 

 

Loss before tax

(1,414,457)

(1,130,573)

Loss at the standard rate of corporation tax in the UK of 19% (2019 - 19%)

(268,747)

(215,065)

Effects of:

 

 

Expenses non-deductible for tax purposes

8,916

56,624

Additional deduction for R&D expenditure

(242,737)

(116,623)

Surrender of tax losses for R & D tax credit refund

102,458

48,869

Adjustments to tax charge in respect of previous periods

-

-

Deferred tax not recognised

128,605

61,496

Adjusting opening and closing deferred tax to average rate

(55,495)

7,235

Tax charge for the year

(327,000)

(157,464)

 

(c)       Factors which may affect future tax charges

In view of the tax losses carried forward there is a deferred tax amount of approximately £596,000 (2019: £446,000) 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 £584,000 (2019: £425,000) which has not been recognised in these Financial Statements. This contingent asset will be realised when the Company makes sufficient taxable profits.

 

10.    Results of Feedback Plc

As permitted by Section 408 of the Companies Act 2006, the income and expenditure account of the parent company is not presented as part of these financial statements. The Company's loss for the financial year is

£1,906,671 (2019: £1,203,651 loss)

 

11.    Loss per share

Basic loss per share is calculated by reference to the loss on ordinary activities after taxation of £1,122,065 (2019: £973,109) and on the weighted average of 498,854,027 (2019: 333,151,019) shares in issue.

 

 

As at 31 May 2020

£

As at 31 May 2019

£

Net loss attributable to ordinary equity holders

(1,087,457)

(973,109)

 

 

As at 31 May 2020

£

 

As at 31 May 2019

£

Weighted average number of ordinary shares for basic earnings per share

333,151,019

Effect of dilution:

 

 

Share Options

-

-

Warrants

-

-

Weighted average number of ordinary shares adjusted

 

 

for the effect of dilution

498,854,027

333,151,019

Loss per share (pence)

 

 

Basic

(0.22)

(0.29)

Diluted

(0.22)

(0.29)

As disclosed in note 22, the Company issued 526,981,769 ordinary shares in July 2020.

There is no dilutive effect of the share options and warrants as the dilution would be negative.

 

 

12. Investments

 

 

Share in group

undertakings

Shares in

joint venture

 

 

Total

 

£

£

£

Company

 

 

 

Cost

 

 

 

At 31 May 2018

2,334,455

1,000

2,335,455

At 31 May 2019

2,334,455

1,000

2,335,455

Addition (see note below)

46,000

 

46,000

As at 31 May 2020

2,380,455

1,000

2,381,455

Provision for impairment

 

 

 

At 31 May 2018

2,334,455

1,000

2,334,455

At 31 May 2019

2,334,455

1,000

2,335,455

Additional impairment (see note below)

46,000

 

46,000

At 31 May 2020

2,380,455

1,000

2,381,445

Net Book Value

 

 

 

At 31 May 2020

-

-

-

At 31 May 2019

-

-

-

 

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. The addition in the current year related to options in FM which would be satisfied with PLC shares if/when they are exercised.

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

  Country of incorporation

Company

Activity

and operation

Proportion of Shares held

Feedback Black Box Company Limited

Dormant

England

100% Ordinary £1

Brickshield Limited

Dormant

England

100% Ordinary £1

Feedback Medical Limited

Medical Imaging

England

100% A Ordinary £1 100% B Ordinary 1p

TexRAD Limited

Medical Imaging

England

100% Ordinary 1p

 

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

All the subsidiary companies have been included in these consolidated financial statements. Each subsidiary has a registered office of Health Foundry, Canterbury House, 1 Royal Street, London SE1 7LL.

 

 

13. Property, plant and equipment

 

 

Computer

Equipment

 

Total

 

£

£

Group

 

 

Cost

 

 

At 31 May 2018

19,811

19,811

Additions

3,422

3,422

At 31 May 2019

23,233

23,233

Additions

7,189

7,189

As 31 May 2020

30,422

30,422

Depreciation

 

 

At 31 May 2018

13,508

13,508

Charge for the year

3,554

3,554

At 31 May 2019

17,062

17,062

Charge for the year

1,530

1,530

At 31 May 2020

18,592

18,592

Net Book Value

 

 

At 31 May 2020

11,830

11,830

At 31 May 2019

6,428

6,428

 

 

14. Intangible assets

 

Software development

 

Customer relationships

 

 

Patents

 

 

Goodwill

 

 

Total

 

£

£

£

£

£

Group

 

 

 

 

 

Cost

 

 

 

 

 

At 31 May 2018

652,468

100,000

141,720

271,415

1,165,603

Additions

385,602

-

12,700

-

398,302

At 31 May 2019

1,038,070

100,000

154,420

271,415

1,563,905

Additions

865,035

-

10,915

-

875,950

At 31 May 2020

1,903,105

100,000

165,335

271,415

2,439,855

Amortisation

 

 

 

 

 

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

Impairment charge

-

-

-

-

 

Amortisation charge for year

-

-

28,663

-

28,663

At 31 May 2020

645,516

100,000

126,140

271,415

1,143,071

Net Book Value

 

 

 

 

 

At 31 May 2020

1,257,589

-

39,195

-

1,296,784

At 31 May 2019

392,554

-

56,943

-

449,497

 

 

15. Trade and other receivables

 

 

 

 

 

Group                                                                                                                                                                              Company

 

2020

£

2019

£

 

2020

£

2019

£

Amounts falling due within one year

 

 

 

 

 

Trade receivables

99,560

202,623

 

-

-

Other receivables

7,648

11,843

 

7,648

7,783

Corporation tax recoverable

326,787

248,585

 

-

-

Prepayments

22,669

30,395

 

19,890

21,348

 

456,664

493,446

 

27,538

29,131

               

 

 

16.    Trade and other payables

 

Group                                                                                                                                                                              Company

 

 

2020

£

2019

£

 

2020

£

2019

£

Amounts falling due within one year

 

 

 

 

 

Trade payables

119,424

30,538

 

20,227

14,608

Other payables

8,490

4,081

 

6,672

-

Other taxes and social security

165,666

39,311

 

52,082

7,312

Accruals

135,101

78,691

 

50,534

42,500

Deferred income

290,107

345,721

 

-

-

 

718,788

498,342

 

129,515

64,420

Amounts falling due after one year

 

 

 

 

 

Deferred income

9,884

 

-

-

             

 

Neither the Group or the Company has any borrowings and so there are no changes in liabilities arising from financing activities.

 

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 Group holds no collateral. It has a minimal risk policy with funds held following fund raises so it holds the cash with mainstream UK banks.

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

 

2020

£

2019

£

Current Financial assets

 

 

 

 

 

Trade and other receivables

 

 

 

107,208

214,466

Cash and cash equivalents

 

 

 

732,650

540,735

 

 

 

 

839,858

755,201

 

Analysis of trade receivables

 

 

 

 

 

 

 

Total

 

Current

30 days past due

60 days past due

90 days past due

 

£

£

£

£

£

2020

99,560

4,959

-

22,513

72,088

2019

202,623

68,149

51,602

38,225

44,646

 

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 £18,000 (2019: £Nil). Each debt was reviewed in detail, reviewing correspondence and customer engagement and a view was taken on which debts should be provided for and which debts should be realised.

 

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 2020

 

2020

£

2019

£

Trade receivables                                                                                                          99,560

104,904

99,560

104,904

As at 31 May 2020 £55,768 of Feedback Medical's trade receivables are denominated in foreign currency. A 5% increase/fall in exchange rates would lead to a profit/loss of £2,788. The foreign currencies are 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 2020 or at 31 May 2019.

 

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

 

2020

£

2019

£

Current Financial liabilities

Trade and other payables

 

127,914

 

153,621

 

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

 

 

Carrying

amount

Contractual

Cash flow

6 months

or less

£

£

£

2020

Trade and other payables

 

127,914

 

127,914

 

127,914

2019

Trade and other payables

 

153,261

 

153,261

 

153,261

 

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

 

 

2020

£

2019

£

Authorised and issued share capital

 

 

Ordinary shares of 0.25 pence each

1,349,876

933,209

Allotted, called up and fully paid share capital:

 

 

 

Number

Number

As at 31 May 2019

373,283,250

281,616,584

Issued

166,666,667

91,666,666

As at 31 May 2020

539,949,917

373,283,250

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 0.29%. The expected volatility is based on historical volatility over the last two years and is estimated to be 124.32%. None of the share options were exercised. During the year, the Company had the following share options in issue:

Number of options

 

At 31 May

2019

 

Lapsed

 

Issued

 

Issued to

At 31 May

2020

Exercise price

(pence)

 

Exercise date

2,400,000

-

-

-

2,400,000

1.25

21/05/14 to19/05/24

4,000,000

-

-

-

4,000,000

3.00

21/05/15 to19/05/24

4,000,000

-

-

-

4,000,000

5.00

21/05/15 to19/05/24

4,000,000

4,000,000

-

-

4,000,000

1.86

26/06/18 to 26/06/28

2,500,000

-

-

-

2,500,000

1.86

26/06/18 to 26/06/28

2,800,000

-

-

-

2,800,000

1.86

01/03/19 to 26/06/28

2,800,000

-

-

-

2,800,000

1.86

01/03/19 to 26/06/28

2,800,000

2,800,000

-

-

-

1.86

01/03/19 to 26/06/28

9,332,081

-

-

-

9,332,081

1.09

09/04/19 to 09/04/29

 

 

13,498,748

T Oakley

13,498,748

1.2

29/08/19 to 29/08/29

 

 

5,000,000

Prof R Shaw

5,000,000

1.2

24/04/21 to 24/04/33

 

 

1,500,000

L Melvin

1,500,000

1.2

24/04/21 to 24/04/33

 

 

8,000,000

4 senior

8,000,000

1.2

24/04/21 to 24/04/33

 

 

 

managers

 

 

 

 

 

2,000,000

2 middle

2,000,000

1.2

24/04/21 to 24/04/33

 

 

 

managers

 

 

 

 

 

2,500,000

5 support

2,500,000

1.2

24/04/21 to 24/04/33

 

 

 

staff

 

 

 

34,632,081

6,800,000

32,498,748

 

60,330,829

 

 

 

With the exception of the share options issued on 24 April 2020, all share options vested one year after the grant date. The 19,000,000 share options issued on 24 April 2020 will vest, subject to the grantees' continued employment with the Company, over three years as to one-third on the first anniversary of the date of grant, one- third on the second anniversary of date of grant and one-third on the third anniversary of date of grant. The Employee Options expire 10 years after date of grant. All other options 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

2019

 

Granted

 

Exercised

At 31 May

2020

Exercise price

(pence)

 

Exercise date

4,200,000

-

-

4,200,000

1.25

19/05/16 to 19/05/24

18,200,000

-

-

18,200,000

3.00

19/05/17 to 19/05/24

22,400,000

-

-

22,400,000

 

 

 

Reserves

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

 

Share premium

Amount subscribed for share capital in excess of nominal value.

Capital reserve

Reserve on consolidation of subsidiaries

Translation reserve

Gains and losses on the translation of overseas operations into GBP

Retained earnings

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

Share Option Reserve

Fair value of share options issued

 

19.  Financial commitments

As at 1 June 2019, the Group operated from two rental properties in Bourn, Cambridgeshire. One of the leases was due to end 31 October 2020 but was exited early in December 2019 with full agreement of the landlord and with no financial penalty, as the landlord had another tenant wishing to occupy the premises. The lease on the other rental property was due to end on 3 January 2024 but there was a break clause within it which enabled the Group to exit the lease on 3 January 2020 with no financial penalties. The Directors therefore consider that these are (in substance over form) short term leases which have now been terminated.

There were therefore no lease commitments as at 31 May 2020.

 

The Directors have assessed the impact and the disclosure requirements of the adoption of IFRS 16 and consider that they do not affect the Statement of Comprehensive Income for the year or the Consolidated Balance Sheet as at 31 May 2020.

The total payments made in the year and recognised in the consolidated statement of comprehensive income relating to both premises, consisting of rent, maintenance charges, dilapidations totalled £11,735.

 

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 £81,499 (2019: £57,067). A balance of £8,491 (2019: £-) 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 1 July 2020, the Company raised £5.27 million by way of a placing and subscription of 505,000,000 new ordinary shares and 21,981,769 new ordinary shares via an Open Offer. All were issued at 1 pence per share.

 

23.    Ultimate controlling party

There is no ultimate controlling party.

 

24.       Posting of Accounts

The report and accounts for the year ended 31 May 2020 will be posted to shareholders later today and will be available from the Company's website www.fdbkmed.com 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 [email protected] or visit www.rns.com.

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Restructure sees Feedback Plc positioned for growth

Alastair Riddell, chairman of Feedback plc (LON:FDBK), tells Proactive's Andrew Scott they've merged two of their subsidiaries as part of plans to restructure and simplify the business. Feedback snapped up Cambridge Computed Imaging and TexRAD back in 2014 and both have been operating as...

on 19/4/18

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