TIDMFDBK
RNS Number : 3249L
Feedback PLC
29 July 2011
29 July 2011
Feedback plc
("Feedback" or "the Company")
Final Results for the year ended 31 May 2011
Chairman's Statement
Overview
My first annual statement as Chairman comes at the end of what
has been another difficult year for the Group but one that has also
seen a significant turnaround in recent months as the business
repositions itself for growth.
During the period under review the two operating companies
experienced differing fortunes. Our "locks and clocks" business,
Feedback Data Limited, showed promising signs with increased
turnover and reduced losses, whilst the educational business,
Feedback Instruments Limited, continued to suffer losses.
The Group made an encouraging start to the year but this was
followed by particularly poor trading in the third quarter for both
businesses. This resulted in Group revenues in the year ending 31
May 2011 of GBP6.3m, down from GBP7.4m in the previous year, and
operating losses worsening from GBP254k to GBP831k in the same
period. The loss after taxation in the period was GBP862k (2010:
GBP441k)
The continued poor performance of the Group over the last few
years has meant a greater reliance on the Group's banking
facilities and a focus on cash management. This, along with the
global economic environment and political unrest in some of our
international markets provides an uncertain backdrop as we seek to
turn the business around.
Feedback has a good name in its key markets but the Group has
failed to capitalise on its position and there is a clear need for
change. However, the trading performance over the last quarter of
the year has shown the Board that our trading proposition is
essentially sound.
We have begun the process of returning the Group to
profitability with a strong focus on sales and business development
combined with a range of operational initiatives that will drive
turnover, increase margin and cash flow, and better manage costs.
To a certain extent these early changes are laying the foundation
for the more strategic work which will follow as we clarify and
improve the Group's focus on its target markets, make sharper
funding and product decisions, and create a team to build upon and
then exceed the Group's historic trading performance.
Fundamental to the Group's future growth is a commitment to
building stronger relationships with our customers and partners.
Focusing on them, and offering products and services that
completely fulfil their needs, is at the heart of our success
strategy and is the principle that will deliver benefit to all our
stakeholders.
Investment in product development over the past two years in
both operating companies has yet to make a significant impact on
results but renewed focus and urgency has meant we are beginning to
see the benefit of this expenditure. Group IT issues highlighted in
last year's annual report continued to cause stock issues which in
turn has led to poor management information and unnecessary costs.
A second new system has been partially implemented with promising
initial results and is now being phased-in across all aspects of
the Group.
People
On 11 February 2011 my predecessor as Executive Chairman,
Michael Burt, left the company. Michael served as Chairman from
January 2008 and was appointed as Executive Chairman later that
year. He steered the Group through many initiatives, including
renewed investment in product development and the rebranding of the
Group.
I was appointed to the Group as Chairman and Chief Executive and
the Board appointed Mark Bird to join me on the Board as an
Executive Director at the same time. I've worked with Mark before
and asked him onto the team because of his experience in building
energetic sales groups and profitable commercial relationships.
Immediately before he agreed to join Feedback he spent two years in
a software start-up company and has previously served as either
sales director or managing director in a number of growth
companies.
Feedback Instruments Limited
Feedback Instruments Limited ("Instruments") continues to suffer
from delays in the release of public sector funding for education
projects around the world. Total revenue within Instruments fell to
GBP4.5m from GBP5.8m in the previous year with third quarter
trading in our International markets particularly
disappointing.
The rapid changes we've all witnessed this year in the Middle
East caused delays in expected business from the region and the
turmoil in Libya forced a large educational product order to be
shelved indefinitely. However, the short-term problems encountered
this year are not responsible for the long-term slide in
Instruments' export sales. I am therefore delighted to announce the
return to the Group of a previously successful Instruments Sales
Director who rejoined 1 June 2011 as Head of International
Sales.
One of the principal challenges facing Instruments is in new
product development. Supporting our broad range of legacy products,
and the continual demand to refresh them as technologies change,
draws resources away from designing products for newer and
potentially higher value engineering disciplines such as renewable
energies. Increased investment over the past two years has helped
and we will continue to invest with the aim of developing and
launching products that better meet the evolving needs of our
university customers.
Instruments' products are sold in North America through our
subsidiary Feedback Inc. which traded profitably at the operating
level in the year under review despite slightly reduced turnover.
This market has previously been very important to the Group but its
value has declined markedly in recent years as we've relied heavily
on third party multi-vendor agents and reduced our own sales staff,
eventually to nil. North America should be a stable and substantial
market for our products so we have reversed the recent policy of
reducing the sales force by appointing a full-time Head of Business
Development, based in the US, to work with - and add energy and a
Feedback focus to - our agent network.
Feedback Data Limited
Feedback Data Limited ("Data") also experienced a poor third
quarter but increased sales focus and energy has had an immediate
positive impact on order intake and the final result is
encouraging. Year-on-year, Data increased turnover from GBP1.6m to
GBP1.7m and reduced losses from GBP233k to GBP23k.
We restructured the Data business in March 2011 to align the
sales effort and internal operations more closely with the needs of
the market. The biggest change was in treating Service &
Support as a separate revenue driver rather than as a simple add-on
to an initial sale. The opportunity in this area derives from our
large installed base and the increasing importance our customers
place on the accuracy, reliability and availability of the
information our systems produce.
Our installed base presents the additional opportunity of
upgrades for existing customers. Much of our product development
investment over the past two years has gone into the new TS2020
line that is intended to replace earlier generations of our Time
& Attendance equipment.
The Nohmad range, which along with the TS2020 was mentioned in
last year's report, is a particularly significant development
because of it's use of the GPRS mobile 'phone network which allows
us to create contracts that generate long-term income. Early
customers identified the need for a suite of online tools to
support the Nohmad hardware and recent development effort has been
targeted in this area. We are now making good headway with existing
customers and are starting to see interest in new markets.
Focus and urgency
We are committed to restoring the business to growth and
profitability by building on the positives of the past year. I am
pleased with the actions of the last few months and see them as
first steps as we build momentum and deliver the required changes
within the Group.
However, more focus and urgency is required if we are to realise
the opportunity presented by our markets.
We are moving towards developing complete products that
completely fulfil our customers' needs. In Data, this means
products such as, the Nohmad, where we are supplying our hardware
products with software and services that can be implemented right
out of the box. In Instruments, this means putting maximum effort
into building new products that help universities deliver courses
that take students from the introduction of first principle to
complete understanding through experiment.
We are optimising our production capacity. Our recent
investments in business systems for both materials requirements
planning and customer relationship management give us real-time
transparency across the business and promise more responsive
working practices. The prime objectives are to manage costs more
effectively and to reduce the time products are in production so we
can fulfil orders and release working capital more quickly.
Both internally and externally we are refocusing the business so
that our customers find the Group easier to do business with. We
are starting to develop an attitude or service rather than system
which affects every interaction we have, whether by Web, email,
'phone, or face-to-face. In April 2011 we brought our working hours
more in line with our customers' needs and we are currently in the
middle of restructuring our Web presence around customer
groups.
Outlook
Achieving the turnaround of the business in the current economic
climate will not be easy and some aspects of the plan are likely to
take some time. However, the business has already delivered some
important initiatives that have already improved the Group's
trading performance.
In my opinion, Feedback is a great business that has lost its
way in recent years and is now starting to get back on track. The
Group has gone through much change already and I have been
delighted and proud of the way in which people at every level have
responded to the new initiatives that the Board have put in place.
I'd like to thank everyone involved for their continued hard work
and commitment which puts us in a significantly stronger position
to deliver our goals.
Nick Shepheard
Chairman
Statement of Comprehensive Income
for the year ended 31 May 2011
Note 2011 2010
GBP000 GBP000
REVENUE 2 6,308 7,443
Cost of Sales (3,969) (4,392)
-------- --------
GROSS PROFIT 2,339 3,051
Other Operating Expenses 3 (3,170) (3,305)
-------- --------
OPERATING LOSS (831) (254)
Net interest (9) 4
-------- --------
Loss on ordinary activities before taxation (840) (250)
Tax charge (22) (191)
-------- --------
Loss for the year attributable to the equity
shareholders of the Company (862) (441)
Other comprehensive expense
Translation differences on overseas operations (36) 28
-------- --------
Total comprehensive expense for the year (898) (413)
======== ========
LOSS PER SHARE (pence)
Basic and diluted 4 (0.79) (0.40)
======== ========
Consolidated Statement of Changes in Equity
for the year ended 31 May 2011
Share Share Capital Retained Translation
Capital Premium Reserve Earnings Reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 June 2009 273 633 300 2,960 (206) 3,960
Total
comprehensive
expense for
the year - - - (441) 28 (413)
-------- -------- -------- --------- ------------ -------
At 31 May 2010 273 633 300 2,519 (178) 3,547
Total
comprehensive
expense for
the year - - - (862) (36) (898)
-------- -------- -------- --------- ------------ -------
At 31 May 2011 273 633 300 1,657 (214) 2,649
======== ======== ======== ========= ============ =======
Consolidated Balance Sheet
at 31 May 2011
2011 2010
GBP000 GBP000 GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 5 1,505 1,603
Intangible assets 6 732 733
Deferred tax asset 134 156
------- -------
2,371 2,492
Current assets
Inventories 7 1,030 1,300
Trade receivables 930 1,578
Other receivables 233 176
Cash and cash equivalents 9 25
------- -------
2,202 3,079
------- -------
Total assets 4,573 5,571
------- -------
LIABILITIES
Non-current liabilities
Deferred tax liabilities 198 199
Current liabilities
Trade payables 909 959
Other payables 8 817 866
------- -------
1,726 1,825
------- -------
Total liabilities 1,924 2,024
------- -------
TOTAL NET ASSETS 2,649 3,547
======= =======
EQUITY
Capital and reserves attributable
to the Company's equity
shareholders
Called up share capital 273 273
Share premium account 633 633
Capital reserve 300 300
Retained earnings 1,443 2,341
------- -------
TOTAL EQUITY 2,649 3,547
======= =======
Consolidated Cash Flow Statement
for the year ended 31 May 2011
2011 2010
GBP000 GBP000 GBP000 GBP000
Cash flows from operating activities
Loss before tax (818) (250)
Adjustments for:
Net finance expenditure - (4)
Depreciation and amortisation 565 439
Foreign exchange difference (36) 28
Decrease in inventories 270 34
Decrease in trade receivables 956 130
(Increase)/decrease in other receivables (8) 53
(Decrease)/increase in trade payables (357) 214
(Decrease) in other payables (111) (284)
------- -------
1,279 610
------- -------
Net cash generated in operating
activities 461 360
Cash flows from investing activities
Interest received - 5
Purchase of tangible fixed assets (98) (122)
Purchase of intangible assets (370) (486)
------- -------
Net cash used in investing activities (468) (603)
Cash flows from financing activities
Interest paid (9) (1)
------- -------
Net cash used from financing activities (9) (1)
------- -------
Net decrease in cash and cash equivalents (16) (244)
Cash and cash equivalents at beginning
of year 25 269
------- -------
Cash and cash equivalents at end
of year 9 25
======= =======
1. ACCOUNTING POLICIES
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 (July 2011). The accounting policies have been
consistently applied to all the years presented.
These consolidated financial statements have been prepared under
the historical cost convention.
The financial information set out above does not comprise the
Company's statutory accounts for the periods ended 31 May 2011 or
31 May 2010. Statutory accounts for 31 May 2010 have been delivered
to the Registrar of Companies and those for 31 May 2011 will be
delivered following the Company's Annual General Meeting. The
auditors have reported on those accounts; their report was
unqualified, did not include references to any matters to which the
auditors drew attention by way of emphasis of matter without
qualifying their report and did not contain statements under
section 498(2) or (3) of the Companies Act 2006 in respect of the
accounts for 2011 or for 2010.
2. SEGMENTAL REPORTING
The directors have determined the operating segments based on
the management reports that are used to make strategic decisions.
The Group's business is analysed below between the Instruments
segment and the Data segment. The Instruments segment primarily
relates to the subsidiary companies Feedback Instruments Limited
and Feedback Incorporated. The Data segment primarily relates to
the subsidiary company Feedback Data Limited and Feedback Data
GmbH.
Year ended 31 May 2011
Instruments Data Other Total
GBP000 GBP000 GBP000 GBP000
Revenue
External 4,558 1,750 - 6,308
------------ ------- -------- --------
Finance expense - - 9 9
------------ ------- -------- --------
Loss before tax (466) (23) (351) (840)
============ ======= ======== ========
Balance sheet
Assets 1,359 975 3,329 5,663
Liabilities (1,096) (985) (1,635) (3,716)
------------ ------- -------- --------
263 (10) 1,694 1,947
============ ======= ======== ========
Capital expenditure 6 37 53 96
============ ======= ======== ========
Year ended 31 May 2010
Instruments Data Other Total
GBP000 GBP000 GBP000 GBP000
Revenue
External 5,828 1,615 - 7,443
------------ ------- -------- --------
Finance expense - - 1 1
------------ ------- -------- --------
Profit/(loss) before tax (53) (233) 36 (250)
============ ======= ======== ========
Balance sheet
Assets 2,249 991 5,219 8,459
Liabilities (3,019) (999) (1,612) (5,630)
------------ ------- -------- --------
(770) (8) 3,607 2,829
============ ======= ======== ========
Capital expenditure 10 21 90 121
============ ======= ======== ========
Reported segments' assets are reconciled to total assets as
follows:
2011 2010
GBP000 GBP000
Segment assets for reportable segments 5,663 8,459
Unallocated:
Inter-company receivables adjustment (1,541) (3,340)
Intangible assets 732 733
Investments (281) (281)
-------- --------
Total assets per the balance sheet 4,573 5,571
======== ========
Reported segments' assets are reconciled to total assets as
follows:
2011 2010
GBP000 GBP000
Segment liabilities for reportable segments 3,716 5,630
Inter-company payables adjustment (1,990) (3,805)
Deferred tax 198 199
-------- --------
Total liabilities per the balance sheet 1,924 2,024
======== ========
External revenue Total assets Capital expenditure
by location of by location of by location of
customer assets assets
2011 2010 2011 2010 2011 2010
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
United
Kingdom 2,820 2,841 4,312 5,181 95 117
Rest of
Europe 879 1,245 14 135 - -
United
States of
America 734 815 247 255 1 4
Other
Americas 148 47 - - - -
Asia 792 1,322 - - - -
Africa 192 446 - - - -
Middle East 743 727 - - - -
--------- -------- -------- -------- ---------- ----------
Total 6,308 7,443 4,573 5,571 96 121
========= ======== ======== ======== ========== ==========
3. OTHER OPERATING EXPENSES
2011 2010
GBP000 GBP000
Distribution costs 1,352 1,662
Administrative costs:
Research and development 526 420
Other 1,292 1,223
------- -------
3,170 3,305
======= =======
4. LOSS PER SHARE
Basic earnings per share is calculated by reference to the loss
on ordinary activities after taxation of GBP862,000 (2010:
GBP441,000) and on the weighted average of 109,146,746 (2010:
109,146,746) shares in issue.
5. PROPERTY, PLANT AND EQUIPMENT
Land and Plant and Motor
Buildings Equipment Vehicles Total
GBP000 GBP000 GBP000 GBP000
Cost of valuation
At 31 May 2009 1,441 696 14 2,151
Additions - 117 5 122
Disposals - (71) - (71)
Exchange adjustments - 15 - 15
----------- ----------- ---------- -------
At 31 May 2010 1,441 757 19 2,217
Additions - 96 - 96
Exchange adjustments - 2 - 2
----------- ----------- ---------- -------
At 31 May 2011 1,441 855 19 2,315
----------- ----------- ---------- -------
Depreciation
At 31 May 2009 47 515 12 574
Charge for the year 24 69 3 96
Disposals - (71) - (71)
Exchange adjustments - 15 - 15
----------- ----------- ---------- -------
At 31 May 2010 71 528 15 614
Charge for the year 23 170 1 194
Exchange adjustments - 2 - 2
----------- ----------- ---------- -------
At 31 May 2011 94 700 16 810
----------- ----------- ---------- -------
Net Book Value
At 31 May 2011 1,347 155 3 1,505
=========== =========== ========== =======
At 31 May 2010 1,370 229 4 1,603
=========== =========== ========== =======
6. INTANGIBLE ASSETS
Development
Expenditure
GBP000
Cost
At 31 May 2009 3,239
Additions 486
-------------
At 31 May 2010 3,725
Additions 370
-------------
At 31 May 2011 4,095
-------------
Amortisation
At 31 May 2009 2,649
Charge for the year 343
-------------
At 31 May 2010 2,992
Charge for the year 371
-------------
At 31 May 2011 3,363
-------------
Net Book Value
At 31 May 2011 732
=============
At 31 May 2010 733
=============
7. INVENTORIES
2011 2010
GBP000 GBP000
Raw materials and consumables 432 492
Work in progress 11 431
Finished goods 587 377
------- -------
1,030 1,300
======= =======
8. OTHER PAYABLES
2011 2010
GBP000 GBP000
Amounts falling due within one year
Other payables 260 368
Other taxes and social security 102 114
Accruals and deferred income 455 384
------- -------
817 866
======= =======
9. PUBLICATION OF ANNOUNCEMENT AND REPORT AND ACCOUNTS
A copy of this announcement will be available at the Company's
registered office (Park Road, Crowborough, East Sussex TN6 2QR) and
on its website - www.feedback-group.com.
This announcement is not being sent to shareholders. The Annual
Report will be posted to shareholders shortly and will be made
available on the website.
For further information contact:
Feedback plc Tel: 01892 653
322
Nick Shepheard
Merchant Securities Limited
Simon Clements/Lindsay Mair Tel: 020 7628
2200
This information is provided by RNS
The company news service from the London Stock Exchange
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