Final Results: Revenue up 23%

STATEMENT OF COMPREHENSIVE INCOME

 

			Notes	2019 £	2018 £
Revenue			4	563,092	458,389
Cost of sales				(4,896)	(16,083)
Gross profit				558,196	442,306
Other operating expenses			5	(1,690,052)	(1,190,159)
Operating loss			6	(1,131,856)	(747,853)
Net finance income			7	1,283	59
Loss on ordinary activities before taxation				(1,130,573)	(747,794)
Tax credit			9	157,464	117,007
Loss on ordinary activities after tax
attributable to the equity shareholders of the Company				(973,109)	(630,787)
Total comprehensive expense for the year				(973,109)	(630,787)
Loss per share (pence)
Basic and diluted			11	(0.29)	(0.25)

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

GROUP	Share Capital	Share Premium	Capital Reserve	Retained Earnings	Translation Reserve	Convertible Debt Option Reserve	Total
	£	£	£	£	£	£	£
At 31 May 2017	615,167	2,376,033	299,900	(2,511,753)	(209,996)	-	569,351
New shares issued	88,875	355,500	-	-	-	-	444,375
Costs associated with the raising of funds		(17,600)	-	-	-	-	(17,600)
Total comprehensive expense for the year	-	-	-	(630,787)	-	-	(630,787)
At 31 May 2018	704,042	2,713,933	299,900	(3,142,540)	(209,996)	-	365,339
New Shares issued	229,167	1,145,833	-	-	-	-	1,375,000
Costs associated with the raising of funds	-	(82,-912)	-	-	-	-	(82,912)
Share option expense reserve	-	-	-	(261,300)	-	261,300	-
Total comprehensive expense for the year	-	-	-	(711,809)	-	-	(711,809)
At 31 May 2019	933,209	3,776,854	299,900	(4,115,649)	(209,996)	261,300	945,618

 

 

CONSOLIDATED BALANCE SHEET

 

			2019	2018
			£	£
ASSETS
Non-current assets
Property, plant and equipment			6,428	6,560
Intangible assets			449,497	154,416
			455,925	160,976
Current assets
Trade and other receivables			493,446	261,862
Cash and cash equivalents			540,735	632,285
			1,034,181	894,147
Total assets			1,490,106	1,055,123
Equity
Capital and reserves attributable to the Company's equity shareholders
Called up share capital			933,209	704,042
Share premium account			3,776,854	2,713,933
Capital reserve			299,900	299,900
Translation reserve			(209,996)	(209,996)
Share option expense reserve			261,300	-
Retained earnings			(4,115,649)	(3,142,540)
Total equity			945,618	365,339
Liabilities
Deferred tax liabilities			-	-
			-	-
Current liabilities
Trade and other payables			498,342	500,859
			498,342	500,859
Liabilities due after more than one year
Other payables			46,146	188,925
Total liabilities			544,488	689,784
Total equity and liabilities			1,490,106	1,055,123

 

The financial statements were approved and authorised for issue by the Board of Directors on 23October 2019 and were signed below on its behalf by:

Dr A J Riddell

Chairman

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

	2019	2018
	£	£
Cash flows from operating activities
Loss before tax	(1,130,573)	(747,794)
Adjustments for:
Net finance income	(1,283)	(59)
Depreciation and amortisation	106,781	57,143
Share based payment expense	261,300	-
Increase in trade receivables	(114,323)	(38,318)
Decrease in other receivables	2,248	1,523
Increase/(Decrease) in trade payables	8,870	(11,546)
(Decrease)/ Increase in other payables	(154,164)	381,466
Corporation tax received	37,953	-
Total adjustments	147,382	390,209
Net cash used in operating activities	(983,191)	(357,585)
Cash flows from investing activities
Purchase of tangible fixed assets	(3,422)	(6,250)
Purchase of intangible assets	(398,308)	(127,525)
Net finance income received	1,283	59
Net cash used in investing activities	(400,447)	(133,716)
Cash flows from financing activities
Net proceeds of share issue	1,292,088	426,775
Net cash generated from financing activities	1,292,088	426,775
Net decrease in cash and cash equivalents	(91,550)	(64,526)
Cash and cash equivalents at beginning of year	632,285	696,811
Cash and cash equivalents at end of year	540,735	632,285

 

NOTES TO THE FINANCIAL STATEMENTS

 

1.   General information

The Company is a public limited company domiciled in the United Kingdom and incorporated under registered number 00598696 in England and Wales. The Company's registered office is Unit 5, Grange Park, Broadway, Bourn, Cambridgeshire, CB23 2TA.

The Company is quoted on AIM of the London Stock Exchange. These Financial Statements were authorised for issue by the Board of Directors on 23 October 2019.

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

New standards impacting the Group that were adopted in the annual financial statements for the year ended 31 May 2019, are:

 

• IFRS 9 Financial Instruments (IFRS 9); and

• IFRS 15 Revenue from Contracts with Customers (IFRS 15)

 

At the date of approval of this financial information, the following IFRS Standards and Interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective. These new Standards, Amendments and Interpretations are those in issue but not yet effective which are expected to impact on the Group and are effective for accounting periods beginning on or after the dates shown below:

 

Mandatory for accounting periods commencing on or after 1 January 2019:

 

●     IFRS 16 - Leases

 

The Group has not early adopted this new standard. The Directors do not anticipate that the adoption of this standard will have a material impact on the reported results aside from the recognition of a right to use asset and liability for the Group's office lease disclosed in note 19.      

 

●     Annual Improvements to IFRSs 2015-2017 Cycle (IFRS 3 Business Combinations and IFRS 11 Joint Arrangements, IAS 12 Income Taxes, and IAS 23 Borrowing Costs)

 

The Group has not early adopted these amendments. The Directors do not anticipate that the adoption of these amendments will have a material impact on the reported results of the Group.

 

3.   Significant accounting policies

(a)  Basis of preparation

These financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements. The policies set out below have been consistently applied to all the years presented.

No separate income statement is presented for the parent Company as provided by Section 408, Companies Act 2006.

(b)  Basis of consolidation

The Group financial statements consolidate the financial statements of Feedback plc and its subsidiaries (the "Group") for the years ended 31 May 2019 and 2018 using the acquisition method.

The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.  All inter-company balances and transactions, including unrealised profits arising from them, are eliminated.  Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

(c)  Going Concern

The Group incurred a net loss of £973,109 and had a net cash outflow of £983,191 from operating activities for the year which are matters which may indicate a material uncertainty about the Group's ability to continue as a going concern. However, on 29 August 2019, the Company raised £2m before expenses by the issue of 166,666,667 new ordinary shares at a price of 1.2 pence per share. Following this fundraise the directors updated and reviewed the Group's business plan and cash flow forecasts and consider that the Group and the Company will have adequate cash resources for at least the next twelve months to 31 October 2020, from existing cash balances. These cash balances will be used to provide working capital, enable continued product development and international expansion.  If further resources are required, the directors consider, that although future equity fundraising can never be guaranteed, the group's recent history of successful fundraising means it likely that the group will be able to raise further finance through future equity issues. Accordingly, the Directors believe that the Group and Company are a going concern and have therefore prepared the financial statements on a going concern basis.

(d)  Intangible assets

Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable or arises from contractual or other legal rights and its fair value can be reliably measured.

The significant intangible asset cost related to software development of products which are integral to the trade of the Group's medical imaging products. Amortisation is recognised in other operating expenses in the income and expenditure account.

The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstance indicate that the carrying value may not be recoverable. Impairment losses are recognised in other operating expenses in the income and expenditure account. Impairment reviews are carried out annually.

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success, considering its commercial and technological feasibility, and costs can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development costs that have a finite useful life and that have been capitalised are amortised from the commencement of the commercial production of the product on a straight line basis as follows:

Intangible asset	Useful economic life
Patents	Over the life of the patent
Customer relationships	4 years
Software development	Over the anticipated life of the product

Software development costs capitalised in the year relate to products and product improvements which are yet to be ready for use. They are not yet amortised.

(e)  Valuation of Investments

Investments held as non-current assets are stated at cost less provision for impairment.

(f)   Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. When used, bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(g)  Goodwill

Business combinations on or after 1 April 2006 are accounted for under IFRS 3 using the acquisition method. Any excess of the cost of business combinations over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is not amortised.

After initial recognition, goodwill is not amortised but is stated at cost less accumulated impairment loss, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstance indicate that the carrying value may be impaired.

For the purposes of impairment testing, goodwill is allocated to the related cash generating units monitored by management. Where the recoverable amount of the cash generating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement.

(h)  Property, plant and equipment

All property, plant and equipment is stated at historical cost less depreciation. Depreciation on other assets is provided on cost or valuation less estimated residual value in equal annual instalments over the estimated lives of the assets. The rates of depreciation are as follows:

            Computer equipment                       10 - 50% p.a.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.

(i)   Leases

Rental costs under operating leases are charged to the income statement in equal annual amounts over the period of the lease.

(j)   Foreign currency

Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the date of the transactions.  Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates ruling at that date. These translation differences are dealt with in the income statement.

(k)   Revenue recognition

Sales transactions include software installation, software licenses, scientific and software support and consultancy.  Revenue is measured at the fair value of the contractually agreed consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of VAT. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the company's activities, as described below.

 

Revenue relating to software consultancy and similar services is recognised as the services are performed and completed.

 

Revenue relating to the sale of software licences or associated support services is recognised over the contractual period to which the licence relates or the duration of the support contract.

 

Revenue recognised from the sale of TexRAD software and related scientific support services are recognised over the estimated duration of the Group's involvement in a customer's project which is considered to represent its performance obligation.  There are no explicit performance obligations as such but a clear understanding that the Group will provide the support required as agreed when the sale was made.

 

The Directors have carefully considered the impact of IFRS 15 and the impact on both current year's and prior year's accounting for sales revenue and they are of the opinion that the current accounting policy is complaint with this standard.

 

(l)   Pension Costs

The Group operated a defined contribution pension scheme during the year.  The pension charge represents the amounts payable by the Group to the scheme in respect of that year.

(m) Taxation

The tax credit represents the sum of the current tax credit and deferred tax credit.

The tax currently payable is based on taxable profit for the period.  Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

(n)  Financial instruments

In relation to the disclosures made in note 17:

●     the Group does not hold or issue derivative financial instruments for trading purposes.

(o)  Employee share options and warrants

The Group has applied the requirements of IFRS 2 Share-based Payment.

The Group has issued equity-settled share-based payment transactions to certain employees and previously issued warrants to the vendors of the acquired subsidiary, TexRAD Limited.  Equity-settled share-based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured by use of the Black Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.

(p)  Key sources of estimation uncertainty

 

The preparation of financial statements requires the Board of Directors to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The key areas of judgement are:

 

●     Intangible assets - Patents are included at cost less amortisation and impairment. Other intangible assets including development costs are recognised only when it is probable that a project will be a success. There is a risk therefore that a project previously assessed as likely to be successful fails to reach the desired level of commercial or technological feasibility. Where there is no probable income to be generated from these assets an estimation of the carrying value and the impairment of the intangible assets and development costs, including goodwill, has been made.

●     Fair value measurement - share options and warrants issued included in the Group's and Company's financial statements require measurement at fair value. The calculation of fair values requires the use of estimates and judgements.

●     Revenue recognition-revenue on the sale of TexRAD software and provision of related scientific support services is recognised over the expected duration of the group's involvement in customer's projects as the group's staff contribute significant support, analysis and input to those customers using TexRAD software for research purposes.  Judgement based on past experience is used to determine the expected duration of involvement over which income should be deferred and recognised however the duration of the group's involvement may vary from expectations. 

 

 

4.   Segmental reporting

The Directors have determined that the operating segments based on the management reports which are used to make strategic decisions are medical imaging and head office.

Year ended 31 May 2019
		Medical Imaging	Head Office	Total
		£	£	£
Revenue
External		563,092	-	563,092
Expenditure
External		(1,014,683)	(678,982)	(1,693,665)
Loss before tax		(451,591)	(678,982)	(1,130,573)
Balance sheet
External Assets		1,008,278	481,828	1,490,106
External Liabilities		(480,068)	(64,420)	(544,488)
		528,210	417,408	945,618
Capital expenditure		401,724	-	401,724
Year ended 31 May 2018
		Medical Imaging	Head Office	Total
		£	£	£
Revenue
External		458,389	-	458,389
Expenditure
External		(774,179)	(432,004)	(1,206,183)
Loss before tax		(315,790)	(432,004)	(747,794)
Balance sheet
External Assets		840,814	214,309	1,091,395
External Liabilities		(581,287)	(108,497)	(726,056)
		259,527	105,812	365,339
Capital expenditure		133,775	-	133,775

 

 

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

 

	External revenue by		Total assets by			Capital expenditure by
	location of customer		location of assets			location of assets
	2019	2018	2019	2018		2019		2018
	£	£	£	£		£		£
United Kingdom	282,118	282,265	1,490,106	1,055,123		365,458		133,775
Europe	85,868	15,875	-	-		-		-
Rest of the world	195,106	160,249	-	-		-		-
Total	563,092	458,389	1,490,106	1055,123		365,458		133,775

           Major customers

 

During the year ended 31 May 2019, the group generated £222,000 (2018: £150,000) of revenue from one customer in the United Kingdom, which is equal to 40% (2018: 33%) of total group revenues in the year.

 

5.         Other operating expenses

				2019	2018
				£	£
Administrative costs:
Employment and other costs				1,583,271	1,133,016
Amortisation and depreciation costs				106,781	57,143
				1,690,052	1,190,159

 

6.         Operating loss

					2019	2018
					£	£
This is stated after charging
Depreciation and amortisation
Owned assets					3,554	3,799
Amortisation of intangible assets					103,227	53,344
Foreign exchange differences					8,488	11,181
Auditors' remuneration
Audit of parent company and group financial statements					14,000	10,000
Audit of subsidiaries					8,500	6,500
Tax and other services					-	5,000
Operating lease rentals
Land and buildings					12,179	9,417
Research and development costs expensed					38,408	-

 

7.         Net finance income

				2019	2018
				£	£
Interest received				1,283	59
				1,283	59

 

8.         Directors and employees

					2019	2018
					Average	Average
Number of employees
Selling and distribution					2	5
Administration					4	2
Research and development					3	1
					9	8
					2019	2018
					£	£
Staff costs
Wages and salaries					656,007	477,881
Social security costs					72,950	47,334
Payments to defined contribution pension scheme					67,928	61,563
Share based payment expense					261,300	-
					1,058,185	586,778

 

 

Directors and employees

 

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

 

	Salary	Fees	Pension	Benefits in kind	Total
	£	£	£	£	£
Year ended 31 May 2019
Executive Directors
A Riddell	41,591	-	-	-	41,591
L Melvin	72,107	-	10,861	626	83,594
T. Oakley (appointed 9 April 2019)	18,712	-	-	-	18,712
D Crabb*** (to 6 July 2018)	30,178	-	2,708	28	32,914
Non-Executive Directors
T Irish**	-	25,000	-	-	25.000
S Sturge	-	-	-	-	-
A Riddell *	-	2,667	-	-	2,667
Total	162,588	27,667	13,569	654	204,478
Year ended 31 May 2018
Executive Directors
D Crabb	41,667	-	2083		43,750
L Melvin	9,533	-	476	-	10,009
M P Hayball (to 14 April 2018)	78,750	-	4,500	-	83,250
B Ganeshan (to 14 April 2018)	70,000	-	-	-	70,000
Non-executive Directors
A H Menys	20,075	-	-	-	20,075
T Irish **	-	24,514	-	-	24,514
S Sturge	-	-	-	-	-
A Riddell*	-	45,417	-	-	45,417
Total	220,025	69,931	7,059		297,015

 

 

During the year, retirement benefits under money purchase pension schemes were accruing to 2 directors (2018: 2)

 

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

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

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

The following share options were issued and vested in the year and were outstanding at 31 May 2019 (2018: nil). Further information is provided in Note 18.

	Number
A Riddell	4,000,000
L Melvin	2,800,000
T. Oakley	9,332,081
S Sturge	2.500,000

9.         Taxation on loss on ordinary activities

			2019	2018
			£	£
(a)	The tax credit for the year:
	UK Corporation tax		(157,464)	(117,007)
	Current tax credit		(157,464)	(73,232)
	Under provision in prior year		-	(39,525)
	Deferred tax charge		-	(4,250)
			(157,464)	(117,007)
(b)	Tax reconciliation
	Loss on ordinary activities before tax		(1,130,573)	(747,794)
	Loss on ordinary activities at the standard rate of corporation tax in the UK of 19% (2018 - 19%)		(215,065)	(142,081)
	Effects of:
	Expenses non-deductible for tax purposes		56,624	2,155
	Additional deduction for R&D expenditure		(116,623)	(54,238)
	Surrender of tax losses for R & D tax credit refund		48,869	22,727
	Adjustments to tax charge in respect of previous periods		-	(39,525)
	Deferred tax not recognised		61,496	93,995
	Adjusting opening and closing deferred tax to average rate		7,235	-
	Tax charge for the year		(157,464)	(117,007)
(c)	Factors which may affect future tax charges
	In view of the tax losses carried forward there is a deferred tax amount of approximately £446,364 (2018: £422,587) which has not been recognised in these Financial Statements. This contingent asset will be realised when the Group makes sufficient taxable profits in the relevant company.
(d)	Deferred tax - company
	In view of the tax losses carried forward there is a deferred tax amount of approximately £425,318 (2018: £349,421) which has not been recognised in these Financial Statements. This contingent asset will be realised when the Company makes sufficient taxable profits.

 

10.        Results of Feedback Plc

As permitted by Section 408 of the Companies Act 2006, the income and expenditure account of the parent company is not presented as part of these financial statements.  The Company's loss for the financial year is £1,203,651 (2018: £931,379 loss)

11.        Loss per share

.     Basic earnings per share is calculated by reference to the loss on ordinary activities after taxation of £973,109 (2018: £630,787) and on the weighted average of 333,151,019 (2018: 252,403,981) shares in issue.

		As at 31 May 2019	As at 31 May 2018
		£	£
Net loss attributable to ordinary equity holders		(973,109)	(630,787)
		As at 31 May 2019	As at 31 May 2018
Weighted average number of ordinary shares for basic earnings per share		333,151,019	252,403,981
Effect of dilution:
Share Options		-	-
Warrants		-	-
Weighted average number of ordinary shares adjusted for the effect of dilution		333,151,019	252,403,981
Loss per share (pence)
Basic		(0.29)	(0.25)
Diluted		(0.29)	(0.25)

 

As disclosed in note 22, the Company issued 166,666,667 ordinary shares in August 2019. There is no dilutive effect of the share options and warrants as the dilution would be negative.

 

12.        Investments

		Share in group undertakings		Shares in   joint venture		Total
		£		£		£
	Company Cost
	At 31 May 2017	2,334,455		1,000		2,335,455
	At 31 May 2018	2,334,455		1,000		2,335,455
	As at 31 May 2019	2,334,455		1,000		2,335,455
	Provision for impairment
	At 31 May 2017	2,334,455		1,000		2,334,455
	At 31 May 2018	2,334,455		1,000		2,335,455
	At 31 May 2019	2,334,455		1,000		2,335,445
	Net Book Value
	At 31 May 2019	-		-		-
	At 31 May 2018	-		-		-
	All of the above investments are unlisted

The directors have made full provision against the cost of investment in the subsidiaries due to the net liabilities shown in the subsidiary financial statements.

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

Company	Activity	Country of incorporation and operation	Proportion of Shares held
Feedback Black Box Company Limited	Dormant	England	100% Ordinary £1
Brickshield Limited	Dormant	England	100% Ordinary £1
Feedback Medical Limited	Medical Imaging	England	100% A Ordinary £1
			100% B Ordinary 1p
TexRAD Limited	Medical Imaging	England	100% Ordinary 1p
TexRAD Limited is owned 100% by virtue of a direct holding by Feedback plc of 91% and an indirect holding via Feedback Medical Ltd of 9%.
All the subsidiary companies have been included in these consolidated financial statements. Each subsidiary has a registered office of Unit 5, Grange Park, Broadway, Bourn, Cambridgeshire CB23 2TA

13.        Property, plant and equipment

 

		Computer
		Equipment	Total
Group		£	£
Cost or valuation
At 31 May 2017		13,818	13,818
Additions		6,250	6,250
At 31 May 2018		20,068	20,068
Additions		3,422	3,422
As 31 May 2019		23,490	23,490
Depreciation
At 31 May 2017		9,709	9,709
Charge for the year		3,799	3,799
At 31 May 2018		13,508	13,508
Charge for the year		3,554	3,554
At 31 May 2019		17,062	17,062
Net Book Value
At 31 May 2019		6,428	6,428
At 31 May 2018		6,560	6,560

 

14.        Intangible assets

	Software development	Customer relationships	Patents	Goodwill	Total
Group	£	£	£	£	£
Cost
At 31 May 2017	563,099	100,000	103,558	271,415	1,038,072
Additions	89,363	-	38,162	-	127,525
At 31 May 2018	652,462	100,000	141,720	271,415	1,165,597
Additions	385,602	-	12,700	-	398,302
At 31 May 2019	1,038,070	100,000	154,420	271,415	1,563,905
Amortisation
At 31 May 2017	563,099	75,000	48,323	271,415	957,837
Charge for the year	-	25,000	28,344	-	53,344
At 31 May 2018	563,099	100,000	76,667	271,415	1,011,181
Impairment charge	38,408	-	-	-	38,408
Amortisation charge for year	44,009	-	20,810	-	64,819
At 31 May 2019	645,516	100,000	97,477	271,415	1,114,408
Net Book Value
At 31 May 2019	392,554	-	56,943	-	449,497
At 31 May 2018	89,363	-	65,053	-	154,416

.

15.        Trade and other receivables

	Group		Company
	2019	2018	2019	2018
	£	£	£	£
Amounts falling due within one year
Trade receivables	202,623	88,300
Other receivables	11,843	19,718	7,783	15,744
Corporation tax recoverable	248,585	129,075		-
Prepayments	30,395	24,769	21,348	16,682
	493,446	261,862	29,131	32,426

 

 

16.        Trade and other payables

	Group		Company
	2019	2018	2019	2018
	£	£	£	£
Amounts falling due within one year
Trade payables	30,538	57,400	14,608	38,000
Other payables	4,081	-		-
Other taxes and social security	39,311	77,892	7,312	6,817
Accruals	78,691	73,579	42,500	63,680
Deferred income	345,721	291,988	-	-
	498,342	500,859	64,420	108,497
Amounts falling due after one year
Deferred income	46,146	188,925	-	-

 

17.        Financial instruments

 

The Group's overall risk management programme seeks to minimise potential adverse effects on the Group's financial performance.

 

The Group's financial instruments comprise cash and cash equivalents and various items such as trade payables and receivables that arise directly from its operations. The Group is exposed through its operations to the following financial risks:

 

●     Credit risk

●     Foreign currency risk

●     Liquidity risk

●     Cash flow interest rate risk

●     Reliance on one major customer

 

Fair value Hierarchy

 

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

●     Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

●     Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly

●     Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data

 

The share options and warrants issued by the group during the current year and prior years were valued under level three above as noted in note 18 below.

 

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.  This note describes the Group's objectives, policies and processes for managing those risks. Further quantitative information in respect of these risks is presented throughout these financial statements.

 

There have been no substantive changes in the Group's exposure to financial instrument risks and consequently the objectives, policies and processes are unchanged from the previous period.

 

The Board has overall responsibility for the determination of the Group's risk management policies.  The objective of the Board is to set policies that seek to reduce the risk as far as possible without unduly affecting the Group's competitiveness and effectiveness.  Further details of these policies are set out below:

 

Credit risk

 

The Group is exposed to credit risk primarily on its trade receivables, which are spread over a range of countries, a factor that helps to dilute the concentration of the risk. The IFRS 9 expected credit loss impairment model is applicable to the Group's financial assets including trade receivables.

 

Group policy, implemented locally, is to assess the credit risk of each new customer before entering into binding contracts.  Each customer account is then reviewed on an ongoing basis (at least once a year) based on available information and payment history.

 

The maximum exposure to credit risk is represented by the carrying value in the balance sheet.

 

The carrying amount of financial assets represents the maximum credit exposure.  The maximum exposure to credit risk at the reporting date is:

 

						Cash, loans and receivables
						2019		2018
						£		£
Current financial assets
Trade and other receivables						214,466		108,018
Cash and cash equivalents						540,735		627,910
						755,201		735,928
Analysis of trade receivables
		Total		Current	30 days past due	60 days past due		90 days past due
		£		£	£	£		£
2019		202,623		68,149	51,602	38,225		44,646
2018		88,300		56,758	28,676	-		2,865

 

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables.  The provision for credit losses on trade receivables is based on an expected credit loss model that calculates the expected loss applicable to the receivable balance over its lifetime.

 

The Group policy is to make provisions against those debts that are overdue, unless there are grounds for believing that the debts will be collected.  During the year the value of provisions made in respect of bad and doubtful debts was £Nil (2018: £Nil).  

 

Foreign currency risk

Foreign exchange transaction risk arises when the Group enters into transactions denominated in a currency other than the functional currency. Foreign currency amounts generated from trading are converted back to sterling and required foreign currency amounts for suppliers will be converted from sterling and the use of forward currency contracts is considered. However the Group does not currently use any forward contracts.

The Group's main foreign currency risk is the short-term risk associated with accounts receivable and payable denominated in currencies that are not the subsidiaries' functional currency.  The risk arises on the difference in the exchange rate between the time invoices were raised/received and the time invoices were settled/paid.

The following table shows the net assets, stated in pounds sterling, exposed to exchange rate risk that the Group has at 31 May 2019

			2019	2018
			£	£
Trade receivables			104,904	86,140
			104,904	86,140

 

A 5% increase/fall in exchange rates at 31 May 2019 would had created a profit/loss of £5,245. The Group is exposed to currency risk because of the subsidiaries undertaking trading transactions in US dollars and Euros.  The Directors do not generally consider it necessary to enter into derivative financial instruments to manage the exchange risk arising from its operations, but from time to time where the Directors consider foreign currencies are weak and it is known that there would be a requirement to purchase those currencies, forward arrangements may be entered into. There were no outstanding forward currency arrangements as at 31 May 2019 or at 31 May 2018.

Liquidity risk

Cash flow forecasting is performed for both the Group and in the operating entities of the Group. Rolling forecasts of the Group's liquidity requirements are monitored to ensure it has sufficient cash to meet operational needs.

			Financial liabilities measured at amortised cost
			2019	2018
			£	£
Current financial liabilities
Trade and other payables			153,621	208,746
The following are maturities of financial liabilities, including estimated contracted interest payments.

 

	Carrying amount £	Contractual cash flow £	6 months or less £
2019
Trade and other payables	116,349	116,349	116,349
2018
Trade and other payables	208,346	208,346	208,346

 

Cash flow interest rate risk

The Group presently has no substantial interest rate risk exposure.

Capital under management

The Group considers its capital to comprise its ordinary share capital, share premium, capital reserve, and accumulated retained earnings.

            The group's objectives when managing the capital are:

●     To safeguard the group's ability to remain a going concern.

●     To maximise returns for shareholders in order to meet capital requirements and appropriately adjust the capital structure, the group may issue new shares, dispose of assets to pay down debt, return capital to shareholders and vary dividend payments.

There have been no changes to the group's capital management objectives in the year, and there have been no changes to the group's exposure to financial instrument risk in the year.

18.        Share capital and reserves

						2019	2018
						£	£
Authorised and issued share capital
Ordinary shares of 0.25 pence each						933,209	704,042
Allotted, called up and fully paid share capital:
						Number	Number
As at 31 May 2018						281,616,584	246,066,584
Issued						91,666,666	35,550,000
As at 31 May 2019						373,283,250	281,616,584

Share Options

Share options are granted to directors and employees. Options are conditional on the employee completing a specific length of service (the vesting period). The options are exercisable from the end of the vesting period and lapse after ten years after the grant date. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Share options are valued using the Black-Scholes option pricing model and no performance conditions are included in the fair value calculations. The risk free rate was 0.751%. The expected volatility is based on historical volatility over the last two years and is estimated to be 66%. The average share price during the year was 1.52 pence. During the year the Company had the following share options in issue:

Number of options
At 31 May 2018	Lapsed	Exercised	Issued	At 31 May 2019	Exercise price (pence)	Exercise date
2,400,000	-	-	-	2,400,000	1.25	21/05/14 to19/05/24
4,000,000	-	-	-	4,000,000	3.00	21/05/15 to19/05/24
4,000,000	-	-	-	4,000,000	5.00	21/05/15 to19/05/24
-	-	-	4,000,000	4,000,000	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
10,400,000	-	-	24,232,081	34,632,081

 

All share options vested one year after the grant date. Each option can only be exercised from one year after the grant date to ten years after the date of grant.

Warrants

Warrants were issued to the vendors of TexRAD Limited at the time of acquisition. The warrants are exercisable from the end of the vesting period and lapse ten years after the grant date. The Group has no legal or constructive obligation to repurchase or settle the warrants in cash.

Number of warrants
At 31 May 2018	Granted	Exercised	At 31 May 2019	Exercise price (pence)	Exercise date
4,200,000	-	-	4,200,000	1.25	19/05/16  to 19/05/24
18,200,000	-	-	18,200,000	3.00	19/05/17 to 19/05/24
22,400,000	-	-	22,400,000

Reserves

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

Share premium                     Amount subscribed for share capital in excess of nominal value.

Capital reserve                       Reserve on consolidation of subsidiaries

Translation reserve                Gains and losses on the translation of overseas operations into GBP

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

19.        Financial commitments

Total future minimum lease payments under non-cancellable operating leases for the Group's business premises.

						2019	2018
						£	£
In less than one year						9,125	11,088
Later than one year and less than five years						48,296	37,884
Later than five years						-	-

 

20.        Pensions

The Company operated a defined contribution scheme during the year and the assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost represents contributions payable and amounted to £57,067 (2018: £61,563). A balance of £- (2018: £5,431) was payable at the year end.

21.        Related party transactions

Key management personnel

Refer to note 8 for detail on directors' remuneration.

 

The Directors interests in shares of the Company are contained in the Directors' Report

 

22.        Post balance sheet events

 

On 29 August 2019, the Company raised £2m by the issue of 166,666,667 new ordinary share at a price of 1.2 pence per share, raising £2m before expenses totalling £86,000. 

 

23.        Ultimate controlling party

            There is no ultimate controlling party.

 

24.        Copies of Report and Accounts

 

Copies of the Report and Accounts will be posted to shareholders later today and will be shortly be available from the Company's registered office, Grange Park, Broadway, Bourn, Cambridgeshire, CB23 2TA and from the Company's website www.fbkmed.com.

 

25.        Notice of Annual General Meeting

 

The annual general meeting of Feedback plc will be held at the offices of Peterhouse Corporate Finance Limited, 80 Cheapside, London, EC2V 6EE at 3:00 p.m. on 18 November 2019.