TIDMFDBK
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(TM) 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 GBP450k down 20% (2019: GBP563k) as
strategic focus shifts away from TexRAD product
-- Operating loss increased 25% to GBP1.4m (2019: 1.1m loss)
following increased investment in resources to deliver Bleepa
strategy
-- Loss after tax of GBP1.1m (2019: 0.97m)
-- Cash at 31 May 2020 was GBP0.7m (May 2019: GBP0.54m)
-- Equity fundraising in August 2019, raising GBP2m (before
expenses), and post year end, in June 2020, a fundraising of GBP5.3
million (before expenses), to support scalability and commercial
strategy for Bleepa, resulting in unaudited cash at 30 September
2020 of GBP4.4m
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 +44 (0)1954 718072
Rory Shaw, Chairman IR@fbk.com
Tom Oakley, CEO
Lindsay Melvin, CFO
Allenby Capital Limited (Nominated Adviser)
David Worlidge / Asha Chotai +44 (0)20 3328 5656
Peterhouse Corporate Finance Ltd (Joint Broker)
Lucy Williams / Duncan Vasey +44 (0)20 7469 0936
Stanford Capital Partners Limited (Joint
Broker)
Patrick Claridge / John Howes +44 20 3815 8880
Instinctif Partners +44 (0)20 7457 2020
Melanie Toyne-Sewell / Phillip Marriage / feedbackplc@instinctif.com
Nathan Billis
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 Bleepa(TM) , a new secure, encrypted
medical communication app for clinicians accessible through
smartphones, tablets and desktops that facilitates rapid clinical
messaging and review of medical grade imaging for all members of a
clinical team, directly from a hospital Picture Archiving and
Communications System (PACS). For more information on Bleepa(TM) ,
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 GBP2 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 GBP3 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 GBP5.3
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 GBP2 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 GBP3 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 GBP5.27 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 2019
GBP'000 GBP'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
GBP449,983 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 GBP2m. 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 GBP2 million, before
expenses, by way of a placing and subscription of 166,666,667 new
Ordinary Shares at a price of 1.2 pence per share with new and
existing investors. The proceeds from this fundraise 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 GBP5.27 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 YEARED 31 MAY 2020
2020 2019
Note GBP GBP
=================================================== ====== ============ ===========
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 YEARED 31 MAY 2020
Group
Share
Share Share Capital Retained Translation option
Capital Premium Reserve Earnings Reserve Reserve Total
GBP GBP GBP GBP GBP GBP GBP
===================== ========= =============== =========== =========== ============= ============= ===========
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 Share Retained option
Capital Premium Earnings Reserve Total
GBP GBP GBP GBP GBP
===================== ========= =============== =========== =========== ============= ============= ===========
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
2020 2019
Notes GBP GBP
========================================= ======= ============ ===========
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
2020 2019
Notes GBP GBP
================================================= ======= ============ ===========
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 GBP1,906,671
(2019: GBP1,203,651)
Consolidated Cash Flow Statement
FOR THE YEARED 31 MAY 2020
2020 2019
GBP GBP
===================================================== =========== ===========
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 YEARED 31 MAY 2020
2020 2019
GBP GBP
============================================= =========== ===========
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 GBP1,087,457 and had a net cash
outflow of GBP786,647 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 GBP5.27m 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
GBP GBP GBP
==================================== =============== =========== ===========
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
GBP GBP GBP
==================================== =============== =========== ===========
Revenue
External 563,092 - 563,092
Expenditure
External (1,014,683) (678,982) (1,693,665)
==================================== =============== =========== ===========
Loss before tax (451,591) (678,982) (1,130,573)
==================================== =============== =========== ===========
Balance sheet
External Assets 1,008,278 481,828 1,490,106
External Liabilities (480,068) (64,420) (544,488)
==================================== =============== =========== ===========
528,210 417,408 945,618
==================================== =============== =========== ===========
Capital expenditure (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 Capital expenditure
location of assets by location of
assets
2020 2019 2020 2019 2020 2019
GBP GBP GBP GBP GBP GBP
======================= ========= ========= ========== ========= ========== =========
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
GBP172,000 (2019: GBP222,000) 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
GBP GBP
============================================ ========= =========
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
GBP GBP
============================================ ========= =========
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
GBP GBP
========================================= ========= =========
Interest received 606 1,283
========================================= ========= =========
606 1,283
========================================= ========= =========
8. Directors and employees
2020 2019
Average Average
========================================= ========= =========
Number of employees
Selling and distribution 2 2
Administration 4 4
Research and development 6 3
========================================= ========= =========
12 9
========================================= ========= =========
2020 2019
GBP GBP
========================================= ========= =========
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 Total
GBP GBP GBP in kind GBP
GBP
Year ended 31 May 2020
-------- ------ --------- -------- -------
Executive Directors
-------- ------ --------- -------- -------
T Oakley (including GBP40,000
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
-------- ------ --------- -------- -------
Benefits
Salary Fees Pension in kind Total
-------- ------ --------- -------- -------
GBP GBP GBP GBP GBP
-------- ------ --------- -------- -------
Year ended 31 May 2019
-------- ------ --------- -------- -------
Executive Directors
-------- ------ --------- -------- -------
A Riddell 41,591 - - - 41,591
-------- ------ --------- -------- -------
L Melvin 72,107 - 10,861 626 83,594
-------- ------ --------- -------- -------
T Oakley (appointed 9 April
2019) 18,712 - - 18,712
-------- ------ --------- -------- -------
D Crabb*** (to 6 July 2018) 30,178 - 2,708 28 32,914
-------- ------ --------- -------- -------
Non-executive Directors
-------- ------ --------- -------- -------
T Irish** - 25,000 - - 25,000
-------- ------ --------- -------- -------
S Sturge - - - - -
-------- ------ --------- -------- -------
A Riddell* - 2,667 - - 2,667
-------- ------ --------- -------- -------
Total 162,588 27,667 13,569 654 204,478
-------- ------ --------- -------- -------
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 GBP5,000 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 2019
Number 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
GBP GBP
==================================================== =========== ===========
(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 GBP596,000 (2019: GBP446,000) 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 GBP584,000 (2019: GBP425,000) 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
GBP1,906,671 (2019: GBP1,203,651 loss)
11. Loss per share
Basic loss per share is calculated by reference to the loss on
ordinary activities after taxation of GBP1,122,065 (2019:
GBP973,109) and on the weighted average of 498,854,027 (2019:
333,151,019) shares in issue.
As at 31 May As at 31
2020 May 2019
GBP GBP
==================================================== ============== ===========
Net loss attributable to ordinary equity holders (1,087,457) (973,109)
==================================================== ============== ===========
As at 31 May As at 31
2020 May 2019
GBP GBP
==================================================== ============== ===========
Weighted average number of ordinary shares for
basic earnings per share 498,854,027 333,151,019
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 Shares
undertakings in
joint Total
venture
GBP GBP GBP
================================ ============== ======== =========
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 Dormant England 100% Ordinary GBP1
Limited
Brickshield Limited Dormant England 100% Ordinary GBP1
Feedback Medical Limited Medical Imaging England 100% A Ordinary
GBP1 100% B Ordinary
1p
TexRAD Limited Medical Imaging England 100% Ordinary 1p
========================== =============== ============= =====================
TexRAD Limited is owned 100% by virtue of a direct holding by
Feedback plc of 91% and an indirect holding via Feedback Medical
Ltd of 9%.
All the subsidiary companies have been included in these
consolidated financial statements. Each subsidiary has a registered
office of Health Foundry, Canterbury House, 1 Royal Street, London
SE1 7LL.
13. Property, plant and equipment
Computer
Equipment Total
GBP GBP
================================== =========== =======
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
GBP GBP GBP GBP GBP
============================== =========================== =================== ========= ========== =========
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
GBP GBP GBP GBP
=========================================================== =================== ========= ========== =========
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
GBP GBP GBP GBP
==================================== ======= ======= ======= ======
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 46,146 - -
==================================== ======= ======= ======= ======
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
GBP GBP
================================================================ ========== ==========
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
30 days 60 days 90 days
Total Current past due past due past due
GBP GBP GBP GBP GBP
================================ ======= ========= ========== ========== ==========
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 GBP18,000 (2019: GBPNil).
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
GBP GBP
======================== =======
Trade receivables 99,560 104,904
======================== =======
99,560 104,904
======================== =======
As at 31 May 2020 GBP55,768 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 GBP2,788. 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
GBP GBP
============================== ========= =========
Current Financial liabilities
Trade and other payables 127,914 153,621
============================== ========= =========
The following are maturities of financial liabilities, including
estimated contracted interest payments.
Carrying Contractual 6 months
amount Cash flow or less
=======================================
GBP GBP GBP
======================================= ========= =========== =========
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
GBP GBP
========================================= =========== ===========
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 At 31 May Exercise price
2019 Lapsed Issued Issued 2020 (pence) Exercise date
to
========== ========= ========== ========= ========== ============== ====================
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
Prof R
5,000,000 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 At 31 May Exercise price
2019 Granted Exercised 2020 (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 GBP11,735.
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 GBP81,499 (2019:
GBP57,067). A balance of GBP8,491 (2019: GBP-) 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 GBP5.27 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 rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR VLLFFBBLEFBX
(END) Dow Jones Newswires
October 13, 2020 02:00 ET (06:00 GMT)
Feedback (LSE:FDBK)
Historical Stock Chart
From Mar 2024 to Apr 2024
Feedback (LSE:FDBK)
Historical Stock Chart
From Apr 2023 to Apr 2024
