Feedback plc
Full Year Results to 31 May 2022
Product Development and Strong Revenue Performance Underpin Growth Trajectory
Feedback plc (AIM: FDBK, "Feedback" or the "Company"), the clinical infrastructure specialists, announces its audited results for the twelve months to 31 May 2022 (the "Period").
Financial Highlights
· 105% increase in revenue to £0.59m (2021: £0.29m)
· Highest ever reported revenue since becoming a medical imaging company in 2014
· 280% increase in sales(1) to £0.67m (2021: £0.18m), with Bleepa contributing £0.26m (2021: £0.08m)
· Operating loss increased to £2.51m (2021: £2.06m), reflecting investment in the development and roll out of Bleepa
· Oversubscribed placing and open offer raising £11.20m - to support accelerated revenue growth and product development
· Cash at 31 May 2022 was £10.31m (31 May 2021: £2.22m)
Operational Highlights
· Two Bleepa contract wins with NHS trusts worth an aggregate value of £0.20m
· First non-NHS contract win, with CVS Group
· Expansion of product suite and routes to market with launches of CareLocker and BleepaBox
· First international Bleepa deployment at Orissa, India, for remote TB screening, in partnership with AWS and Qure.ai
· Selected to pilot the UK's first end-to-end symptom-based CDC pathway, connecting primary and secondary care - Bleepa's first example of cross-provider connectivity
· First cloud deployments of the technology, both for CVS and TB screening in India
Post period highlights
· Awarded £0.45m contract for a 12-month pilot extension of the Sussex ICS CDC development programme
· Named as a supplier on G-Cloud 13, the UK Government's digital marketplace
· Creation of the CareLocker app, giving patients direct access to their clinical data
First CareLocker deployment with an Indian imaging centre, Sampurna Diagnostics, Indore, making digital images available to their patients via the CareLocker app
Analyst Briefing, 11:00am Today
A briefing for Analysts will be held at 11:00am GMT this morning. Analysts interested in attending should contact Walbrook PR by emailing feedbackplc@walbrookpr.com or by calling 020 7933 8780.
Investor Presentation, 16.00 Today
Management will be providing a presentation and hosting an Investor Q&A session on the results and future prospects today at 16:00, through the digital platform Investor Meet Company. Investors can sign up for free and add to attend the presentation via the following link:
https://www.investormeetcompany.com/feedback-plc/register-investor
Questions can be submitted pre event and at any time during the live presentation via the Investor Meet Company Platform.
Dr Tom Oakley, CEO of Feedback, said: "We are delighted with the progress made during the period, which was significantly ahead of previous market expectations and the strongest performance, in terms of revenue, since entering the medical imaging market in 2014. The performance highlights the strength of our model - with revenues growing because of innovative product development, and importantly, proof within working environments that our technology expediates secure and regulated access to patient data, enabling faster decision making.
"Building on the success of the last year we have moved beyond just clinical communication to become a core platform for frontline clinical care delivery. Our unique suite of products provides digital infrastructure that connects multiple care settings around individual patient journeys, to enable cross-provider care delivery and new models of care. We describe Bleepa and Carelocker as a 'digital glue' that connects multiple provider settings and allows patients to 'be known' at any location of care that they attend.
"By focusing on cross-provider customer opportunities we are addressing a growing market, both domestically and internationally, where we can achieve high margins and larger contract values, while benefiting from first mover advantage. The strategy also recognises that, increasingly, cross-provider care is becoming a focus for our customers as they seek to achieve efficiencies, at a system level, to aid in the recovery of the pandemic; and to reduce the post COVID backlog of patient care.
"2022 was a crucial year for the Company as we recognised the initial success of our new strategic direction and the growth in Bleepa sales, continuing the move away from lower margin legacy products. Looking forward, we are now well positioned to address a number of at scale market opportunities and are sufficiently funded to deliver against them. We look forward to building on the momentum generated during the period and delivering further growth in the year ahead.
"Looking to the future, the Company is planning a share consolidation which will be detailed in a separate announcement shortly. The share consolidation is expected to result in a more appropriate share capital structure for the Company."
Further information on Feedback and its products can be found on the Company's website: https://fbkmed.com/feedback-plc/reports-and-presentations/
Note (1): "Sales" is non-IFRS metric representing the total customer contract value invoiced in a period. The figure does not take account of accrued or deferred income adjustments that are required to comply with accounting standards for revenue recognition across the life of a customer contract (typically 12 months).
-Ends-
Enquiries:
| Feedback plc Tom Oakley, CEO Anesh Patel, CFO | +44 (0) 20 3997 7634 |
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| Panmure Gordon (UK) Limited (NOMAD and Broker) Emma Earl/Freddy Crossley (Corporate Finance) Rupert Dearden (Corporate Broking) | +44 (0)20 7886 2500 |
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| Walbrook PR Ltd | Tel: 020 7933 8780 or feedbackplc@walbrookpr.com |
| Paul McManus/Nick Rome | 07980 541 893 or 07748 325 236 |
About Feedback
Feedback plc helps clinical teams to make better decisions faster for patients. We design products that enhance clinician access to patient data and to their colleagues. Our unique approach centres around individual patient episodes, into which we pull relevant clinical data from hospital systems and around which we build remote clinical teams for collaboration. As a result, we produce a digital infrastructure that makes patient data available to clinicians in multiple settings, in a format that enables them to meaningfully interact with it, providing flexibility to clinicians and free movement of patients between provider settings - clinicians can practice from anywhere and patients can attend any care provider for treatment.
Our products Bleepa and CareLocker work together to deliver unparalleled value to our customers. Bleepa is our application layer and sits on top of CareLocker as our data layer. Bleepa is a clinician facing platform that displays clinical results from a patient's CareLocker at a certified and regulated quality, that is suitable for clinical use and enables dialogue on a patient-by-patient basis with colleagues through a secure, auditable chat interface that links back to the patient medical record. The CareLocker data storage model is built around the patient. Our vision is one where relevant clinical data is always available to the patient as well as to any care setting that they may attend - a federated data architecture with the patient as the tenant.
The Company has a number of growth opportunities domestically and internationally across a range of markets including the NHS, the veterinary market and private healthcare providers and its highly scalable Software as a Service ("SaaS")-based revenue model is expected to provide increasing levels of visibility as the Company grows its customer base.
Feedback plc
Chairman's Statement
In 2022, as we emerge from the throws of the global pandemic, we have seen indicators that the strategic shift initiated in 2019 is beginning to bear fruit. The Company reported its highest ever revenue since becoming a medical imaging company in 2014, with strong revenue growth of 105% on the previous period. The pilot-to-contract model has resulted in successful contract awards in both the public and private sector, and Bleepa's first paying customer has renewed its subscription at a premium to the initial contract value.
Following further development of our product capabilities, the Company has moved beyond clinical communication to providing a core digital infrastructure, capable of connecting multiple care settings and delivering cross-provider care pathways on a patient-by-patient basis. This presents healthcare providers with unprecedented flexibility around designing care pathways and leveraging clinical capabilities to address their major priority areas.
As providers emerge from COVID-19, they are looking for suppliers that can support them to address major challenges around clinical pathway efficiency, to help reduce the backlog of patients, and also critical workforce challenges resulting from staff shortages and burnout. Our technologies help clinical teams to work more efficiently from remote locations, giving healthcare providers greater ability to leverage specialist skills across their clinical workflows. By making access to specialist advice more flexible, our technologies drive clinical decision making and care delivery forward, meaning that clinical teams can achieve more with fewer staff whilst simultaneously accelerating the patient journey.
Domestically, the customer landscape is changing with the creation of integrated care systems ("ICS") that are tasked with delivering regional and population-based care; with direct budgetary and procurement responsibility. The shift to regional decision-making bodies should simplify the route to market and favours our cross-provider focus. ICSs will oversee the roll out of national programmes of work, such as the community diagnostic centre ("CDC") programme, which aims to increase diagnostic capacity and reduce the elective care backlog. With an expected 150 CDCs to be created, and an estimated total addressable market of over £90m, the CDC programme represents a huge opportunity for the Company, for which we are uniquely positioned to exploit, given our regulatory compliant user interface (Bleepa) and patient-centric data architecture (CareLocker) which, in combination, can connect multiple providers around an individual patient journey. Our pilot deployment at Sussex ICS has successfully delivered the first end-to-end symptom-based CDC pathway in the NHS and would not have been achievable without our digital infrastructure offering. This should drive adoption of our products at sites that hope to replicate the success of the Sussex programme.
Internationally, the Company is exploring a number of at-scale opportunities in India, with potentially significant sizeable total addressable markets. The Company has initiated its market entry with a focus on providing remote TB screening to rural communities as part of a consortium offering with AWS and Qure.ai; with an estimated total addressable market of ~£2billion over a 3-to-5-year screening period. Further partners are being sought, including telecommunication providers and clinical service providers, but an initial pilot has been achieved in Odisha where over 520 cases have been processed, and Qure.ai identified TB in approximately 10% of cases. The TB screening project has raised the Company profile in India and has resulted in opportunities with independent hospital groups for Bleepa, and a patient facing B2B2C opportunity for CareLocker, which we are exploring as a way of providing patients with digital copies of their images, rather than the traditional model of providing film prints or CDs. The Indian diagnostics market was worth $10 billion in 2021 (of which radiology accounts for 43%) and is projected to grow at a compound annual growth rate of 14% to reach $20 billion by 2026, driven by an increasing population, urbanisation, and higher market penetration.
In November 2021 the Company successfully closed a financing round of £11.2m to enable the pursuit of opportunities in the domestic market and India in parallel. This essential funding has ensured that the Company is now well positioned to explore these large growth opportunities, as the Company closed the period with a strong cash position of £10.3m. The Company is investing strategically in personnel, business development and marketing, and software development to ensure that we maintain our competitive advantage and drive sales across our market segments.
The Company is making good headway and the Board is very optimistic about its future prospects, in light of the opportunities that have been unlocked by the 2019 strategic shift and sustained investment. The Board believes that as management continues to deliver beyond market expectations and progresses on the multiple fronts outlined in the report below, there is significant scope to provide increased returns, which should result in a growing market valuation. The Company looks forward to building on the momentum of 2022 in the year ahead and is aiming to report strong revenue growth as we strive towards profitability.
Chief Executive's Statement
As a Company, our mission is to enable clinicians to make better decisions faster and we believe that requires two things: connection to colleagues and easy access to meaningful patient data. Our approach has always been to place the patient at the centre of our design, wrapping multiple forms of clinical data around an individual patient to create a common, patient-specific view, and we enable clinical teams to be built around this patient view to enable collaborative working. This patient-centric approach is the opposite to the traditional models of clinical systems which typically group multiple patients' data by data type, and silo that data at a system or provider level. Processing data at the patient level liberates the patient from provider settings, allowing patients to attend anywhere for treatment and investigation, and allows any relevant clinician to participate in their care, regardless of traditional logistical and location care boundaries. In combination, these tools represent a digital infrastructure that holds the potential to fundamentally transform clinical workflow and patient care beyond recognition. It is worth reflecting briefly how we got here before we outline the opportunity ahead and where we are going.
In 2019 we initiated a strategic change in direction away from low-margin legacy products, with limited potential for growth, towards the emerging space of clinical workforce tools and data management. This strategy leveraged our heritage and expertise of clinical data management and medical device manufacture, derived from delivering PACS, to allow us to dynamically move into the medical technology space where we held a regulatory advantage over other companies. The creation of Bleepa and CareLocker has been transformative for the Company and we are now seeing the rewards of that strategic shift, with reported revenue of £590k, above the previous peak in 2019 of £563k and up 105% on the prior year, making this the best trading year in the Company's recent history, despite the adverse trading conditions generated by the global pandemic and war in Ukraine.
We started the year with the aim of building on the momentum of the previous period, which included our first contract win for Bleepa, with the Royal Berkshire Hospital NHS Foundation Trust ("RBH"). Our focus for the period was to win new contracts for Bleepa, ensure the renewal of RBH's Bleepa contract and to try to achieve a higher contract renewal value through the upselling of further Bleepa features and increased user numbers.
We additionally set ourselves the target of securing a sale in an adjacent market segment and to continue the development of Bleepa to unlock further customer opportunities.
During the period we delivered against all of these targets, and more - RBH became the first Bleepa customer to renew a Bleepa contract and our longstanding pilot at the Northern Care Alliance ("NCA") (previously Pennine Acute Hospitals Trust) was successfully converted to a paid contract. The Company then successfully piloted and converted a contract with the equine division of CVS.
These customer successes also resulted in product refinement and development which, in turn, led to further commercial opportunities towards the end of the period. Most noticeably, the ability to enable cross-provider care pathways, unlocking the opportunity to deliver the symptom-based pathway approach to CDC services in Sussex and TB screening in India. These opportunities required us to fundamentally consider the underlying architecture to Bleepa and assess how we process expanded types of medical data, beyond medical imaging, to render it to clinicians in a meaningful way; whilst ensuring its availability across multiple provider sites. To this end we developed CareLocker.
Clinical data currently resides in multiple system siloes, even within individual clinical settings. Extracting this, centralising it around a patient and presenting a common, single-patient view is core to the Bleepa/CareLocker value proposition for enabling collaborative clinical working - giving clinicians the relevant clinical information all in one place so that they can easily discuss it. However, the complexity of cross-provider care delivery is that data resides in different systems, at different sites, and needs to be accessible to all sites simultaneously. To solve this problem, we have extended Bleepa's architecture, leveraging a patient-centric approach to create a wrapper of clinical data around individual patients, sourced from multiple sites and systems, stored centrally so that it is available to clinicians at any of the sites.
This central, patient-specific store is CareLocker. CareLocker can act as a time limited cache of data to deliver a specific clinical episode or it can be maintained as a long-term store of relevant clinical data for a specific patient, allowing the patient to attend any care setting and know that their data is available to them. In combination, Bleepa and CareLocker enable teams to work collaboratively around an individual patient as they move between care settings and represent a digital architecture that plugs CDCs into wider regional care pathways. This allows these new diagnostic centres to meaningfully generate results as part of wider clinical programmes of work, reducing the backlog of care, rather than acting as isolated centres for additional diagnostic capacity, which will not meaningfully link into wider clinical work.
The pilot in Sussex is a key example of how our infrastructure can unlock the potential of CDCs and has enabled the first symptom-based referral pathway to incorporate a CDC in the UK and, post period, a £0.45m contract for the Company with Sussex ICS / QVH. QVH in Sussex is one of the UK's exemplar CDC sites and the first to deliver end-to-end symptom-based pathways through the CDC programme. Bleepa and CareLocker together create a digital infrastructure that links clinical data to patients and ensures its availability to clinicians in multiple provider settings, enabling patients to move seamlessly between primary and secondary care for definitive investigation and management based on their symptoms. The pilot shows other ICSs how they can use CDCs in a more connected and integrated way to address regional care delivery needs and that our technology is an essential component to enabling this model of care.
Strategically, regional cross-provider opportunities are of key importance to our future trajectory. The average contract value is considerably higher than a sale to an individual NHS trust, which requires a similar degree of customer development resource. It is also an area of low competition as no other provider can currently offer our combination of patient-centric data management and a regulated clinician interface, which gives us a large early mover advantage. Bleepa's UKCA-marked image viewer remains a key USP given the requirement for image display within a regulatory compliant image viewer. We hope to achieve significant commercial traction following the reporting of the initial Sussex pilot results and evolution of the CDC programme as central funding comes online.
CareLocker also enables the delivery of remote TB screening in India where individual X-ray studies are transmitted by Bleepa to the CareLocker cloud store, where they are processed by our partner Qure.ai, whose report is then made available back to the scanning clinician via Bleepa. This combination of technologies holds the potential to transform TB screening and to bring it to a wider population, including those in remote or rural communities. This potential to deliver at scale TB screening was recognised through the funding awarded by the AWS DDI programme in December 2021. Our initial pilot in Odisha has currently processed over 520 patients, identifying TB in approximately 10% of cases. The TB screening programme has enabled the Company to build a reputation in India that is unlocking further commercial opportunities for CareLocker as a vehicle for delivering digital results directly to patients, and for Bleepa as a clinical tool for Indian healthcare providers.
During the period, the Company further strengthened its regulatory credentials to both boost customer confidence and to further differentiate ourselves from potential competitors. The team successfully renewed the Company ISO 13485 quality management system accreditation and achieved ISO 27001 certification for information security and Cyber Essentials Plus for cyber security. Notably, Bleepa successfully undertook new accreditation with the post-Brexit CE mark equivalent, UKCA.
The range of commercialisation opportunities available to the Company, formed the basis of the Company's oversubscribed £11.2m fund raise in November 2021. In particular, the fundraise enabled the Company to pursue its strategy of moving into cross-provider opportunities for Bleepa and CareLocker within the UK and internationally, notably within India. It has resulted in a strong cash position of £10.3m at the end of the period which positions the Company well to pursue multiple upcoming opportunities for commercial growth, domestically and internationally.
Business strategy
The Company's strategy is to increasingly pursue opportunities for cross-provider care delivery where we expect to recognise higher contract values and operational margins, within a less competitive environment. This will predominantly be in the CDC space in the UK and in cross-provider settings in India, such as TB screening. The Company will continue to target its core products at traditional NHS opportunities with individual NHS trusts around clinical communication and replacement of legacy communication methods such as pagers and fax machines. In parallel, the Company seeks to develop opportunities for its core technologies in new and parallel market segments including developing B2C opportunities for CareLocker around providing diagnostic results directly to patients in India; where this is currently achieved by generating hard copies of results via radiology film or CD.
Whilst the Company has historically adopted a strategy of direct sales, we are increasingly looking at the opportunity presented by distribution partnerships, either on a license or co-sell basis. Increasingly, the strategy to pursue cross-provider regional contracts will necessitate collaboration with a range of partners to deliver the end customer value proposition. We have seen early evidence of this with the TB screening programme where we have partnered with AWS and Qure.ai, along with telecommunication and clinical partners in order to deliver a meaningful and scalable service.
Encouragingly, we are experiencing an increasing number of inbound enquiries for our products following targeted marketing campaigns and we have started to see referrals from Bleepa users who have championed the product, independently of the Company, to new trusts as they rotate to new sites as part of their training. Given the procurement lead time of NHS organisations, it will take time to convert these leads. However, this is clear evidence of both customer endorsement and product market fit.
It is particularly important to participate in appropriate procurement frameworks when targeting the NHS. This year the Company has successfully applied to the DOS6 framework run by the Crown Commercial Services and post-period, G-Cloud 13, the UK Government's digital marketplace, which provides public sector organisations with a simplified purchasing process for cloud-based services. The Company will continue to apply for relevant frameworks throughout the upcoming year, mandating that we simultaneously maintain our appropriate regulatory and security credentials.
To date, our commercial success has been derived from our ability to leverage and repurpose our legacy technologies. This has resulted in the creation of Bleepa, CareLocker, the BleepaBox (our data conduit and integration tool), and also the opportunity to license components of our Cadran technology to third parties; such as Image Engineering in the USA, a partnership that generated £0.14m (2021: £0.01m) of license fee revenue in the period. Leveraging legacy technology and developing our existing products to maximise product market fit and maintain our competitive advantage will remain a core strategy for the Company and will result in continued software development spend on a measured basis. The Company will also continue its strategy of robust regulatory certification and IP protection alongside the programme of software production as a medical device.
Operational Review
Bleepa™
Bleepa, the flagship product of the Company, is a clinical communication platform that provides a centralised view of an individual patient's clinical data and enables multiple clinicians to collaborate around that data to generate clinical management plans. Bleepa leverages the medical image display capabilities of the company's legacy and foundational product Cadran PACS, alongside the regulatory and information governance know how derived from this product line. Bleepa is the only communication platform to be regulated as a medical device, holding a UKCA mark for medical image display; a key requirement for clinical review of digital patient images. Bleepa is revolutionising the way in which clinicians work, delivering key efficiency gains for our customers and improved patient care. Using Bleepa, clinicians are able to adopt asynchronous communication and work effectively from any location, allowing them to contribute to patient care from multiple clinical settings and to move case management forward in and around other clinical work. This not only frees up clinical capacity, but it means that care decisions are reached more quickly and that patients move faster through care pathways, ultimately holding the potential to reduce patient waiting times and overcome some of the workforce challenges facing the NHS and other global providers.
This year has seen the continuation of the strategic business transition away from legacy products with Bleepa accounting for over one third of total sales made in the period, with the expectation that it will become the dominant revenue contributor in the next year. This is a reflection of the increase in relative contract value compared to legacy product lines, and the increasing number of sales achieved by the Bleepa product line. Over the last financial year, the Company saw the first pilot-to-contract wins in both the public and private markets with NCA and CVS customers, along with a key contract renewal at RBH. These opportunities have helped to identify further opportunities for Bleepa with emerging customer groups, such as ICSs, and prompted further development of the product in order to pursue these.
In addition to radiology images, the features of Bleepa have been expanded in the last year to include the display of multiple result types including: bloods, ECGs, spirometry, structured clinical reports and non-radiology clinical images such as patient photos and dermatoscope images. These changes were essential to enable Bleepa to deliver the breadth of clinical results required by clinicians engaged in the CDC care programme and have directly led to our involvement in the Sussex CDC pilot of symptom-based care pathways. Our deployment with Sussex has seen Bleepa become a core digital infrastructure tool that facilitates an end-to-end clinical pathway, starting in primary care, facilitating clinical result collection in the CDC, and culminating in a multidisciplinary review by specialists in the secondary care setting. This symptom-based approach is key to leveraging the CDC programme to reduce the elective care backlog challenges facing the NHS and has national implications for delivery. Our involvement in Sussex establishes Bleepa as a blueprint tool for delivering this programme at other CDCs across the NHS and represents a substantial growth opportunity for the Company.
The enhanced product features of Bleepa also included improvements to the in-app deployment capability of AI tools which has enabled the delivery of remote TB screening in India. The AI-powered screening pilot programme is being delivered in partnership with Qure.ai and AWS and represents an opportunity to deliver a national programme of work with the right government support. Our primary focus has been to establish a pilot of the solution in order to generate real-world evidence of effectiveness. We have achieved this in Odisha where we are now processing approximately 30 images a week. The Company is now focused on building on this pilot to partner with other key organisations in the value chain, including telecommunication providers and clinical service partners. Participating in the TB screening programme has raised the Company's profile within India and enabled conversations with a number of Indian providers, using Bleepa as a core product within their clinical organisations. Bleepa's potential value as a tool for referring patients between sites and collaborating between providers is growing in India, just as we have seen in the UK. India represents a huge commercial opportunity on several fronts for the Company.
The successful funding achieved in November 2021 was essential to the pursuit of the NHS and Indian opportunities in parallel, given the resource required to pursue each opportunity individually. The Company is now well positioned to advance the strategic approach in both settings and is currently making strong headway on all fronts.
CareLocker
CareLocker is both an architecture and a product. It is a way of centralising data around an individual patient and making the patient the central tenant of data, rather than having it reside in a multitude of individual system siloes. There are multiple advantages to the CareLocker methodology of data storage; including enhanced security, scalability and cost reduction, which links to lower cloud hosting energy consumption and, importantly, a reduced carbon footprint associated with data storage and processing.
The key advantage is that by making the patient the holder of the data you can ensure that the data is available to any setting that the patient attends and also removes the need to push data point-to-point between provider sites, a process that is neither secure nor resource efficient. Instead, data is centralised once and then made available to stakeholders through a process called 'pass by reference', whereby individual users are given controlled access to the central store of data via a permissions model.
CareLocker holds huge benefits to healthcare systems who suffer, universally, from poor data availability and integration between systems and sites, especially as care delivery moves towards a more regional model that requires individual organisations to work collaboratively. The CDC programme is a key example of this in the UK where at least three providers - GPs, CDCs and hospitals - have to work together to deliver a clinical pathway. TB screening in India is another, where clinical data relating to an individual patient must be securely transmitted and shared with specialist AI providers and clinical partners. Patient-specific cloud storage is the surest way of ensuring reliable and secure data flows across geography that link back to the patient in question.
When CareLocker is positioned as a vehicle for providing patients access to their own clinical data it becomes a product in its own right. In India, patients are typically given film prints or CDs of their images when they attend diagnostic imaging centres. Neither are a reliable way of transferring data, as they are easily lost and are not secure. Additionally, CD drives are increasingly becoming a thing of the past, reducing the number of clinicians that are able to receive data this way. Film printing, meanwhile, uses a huge number of chemicals that are environmentally damaging and it requires the patient to make multiple visits; once for the imaging and once a few hours later to receive the processed film, which is not a good consumer experience. CareLocker would provide a digital vehicle for storing a patient's images and a vehicle for securely giving access to their treating clinicians. If paid for by the patient, it would remove the cost of suppling images entirely for the imaging centre as there is no film production or CD burning required, increasing their margins. From a patient's perspective, they would have a secure digital version of their data and they would only need to attend the imaging centre for the image acquisition (one visit rather than two), making it far harder to lose the data that they had paid for. This creates an at-scale B2B2C opportunity for the Company with the expectation of annual recurring revenues through a subscription model.
Post period, the company has deployed a CareLocker pilot with an Indore-based imaging centre network called Sampurna Diagnostics, giving them the ability to give their patients digital copies of their imaging studies, rather than film print outs or CDs. This will give the Company an opportunity to assess the consumer market for CareLocker as a standalone product offering which we intend to sell via a B2B2C route where imaging centres can on-sell it to their client base.
The Company will develop this opportunity in parallel to the CDC opportunity in the UK using the funding secured in November 2021.
BleepaBox
BleepaBox is part of the Bleepa suite of products. It was developed as a vehicle for sending images directly from scanners to the cloud over a 3G mobile network for CVS. However, BleepaBox has also proved valuable in the Indian TB screening operations, which have the same requirements for remote image transfer.
More broadly, BleepaBox encompasses Bleepa's integration toolkit and has become the name of the product that we install in hospitals as a way of integrating the Bleepa system with provider systems, in order to retrieve patient data.
Imaging Engineering LLC
Image Engineering LLC (Image Engineering) has a license to develop products based on a Cadran technology for X-ray image capture that enables Image Engineering to repair and update hospital fluoroscopy suites at a considerably lower cost than a hospital (customer) having to buy entirely new equipment. There is a large domestic market for the solution within the US, with approximately 2,000 sites reaching the end of their current kit lifespan. Feedback receives a license fee for each installation of its software under the agreement, resulting in £0.14m (2021: £0.01m) of revenue following improved trading post Covid lockdowns. This represents a high margin opportunity as beyond the initial software configuration, and some ongoing maintenance, Feedback has no active involvement in the provision or support of the software. The Company expects to receive ongoing license fees as Imaging Engineering expand their offering across the USA.
TexRAD® & Cadran PACS
As per the previously stated strategy, the Company is reducing sales of its low-margin legacy products TexRAD and Cadran PACS to focus on its new product opportunities. The Company expects these products to form a reducing contribution to overall revenues over the coming years.
Board Changes
During the period there were some changes to the board. Simon Sturge stepped down in June 2021 after three years of service, to focus on his other commitments. Anesh Patel was appointed to the Board as Chief Financial Officer in November 2021 and has already delivered several positive initiatives, including improved financial processes and systems and optimisation of costs. This appointment was part of a succession planning programme following Lindsay Melvin's retirement from the Board, also in November 2021.
Post period, Tim Irish stepped down from the board on 01 June 2022, after five years of service for the Company. Annemijn Eschauzier joined the board as a NED on 01 June 2022 and brings with her a wealth of commercial and leadership experience across marketing, sales and business development in the healthcare sector.
Financial Review
| | 2022 | 2021 |
| Key performance indicators | £m | £m |
| Revenue | 0.59 | 0.29 |
| Gross margin | 83% | 91% |
| | | |
| Sales (non IFRS) | 0.67 | 0.18 |
| | | |
| Operating expenses | (3.00) | (2.32) |
| Operating loss | (2.51) | (2.06) |
| EBITDA loss (non IFRS) | (1.96) | (2.01) |
| Adjusted EBITDA loss (non IFRS) | (1.89) | (1.85) |
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| | |
| Cash outflows from operating activities | (1.25) | (2.03) |
| Cash outflows from investing activities | (1.15) | (1.44) |
| Cash & cash equivalents end of period | 10.31 | 2.22 |
| | | |
| Intangible assets | 3.29 | 2.68 |
| Contract liabilities (deferred income) | 0.20 | 0.12 |
| Net assets | 13.71 | 5.27 |
| | | |
Revenue for the year ended 31 May 2022 increased 105% to £0.59m (2021: £0.29m). The growth was primarily driven by a full year of Bleepa revenues (as Bleepa's initial commercialisation occurred in the final quarter of the prior financial year) and increased license fees from Imaging Engineering for Cadran X-ray image capture technology, following its improved trading post Covid lockdowns. Legacy product revenues from Cadran PACS and Texrad is expected to decline going forward, as planned, in large part due to the Group ceasing Cadran PACS services for Royal Papworth Hospital NHS Foundation Trust post period in July 2022. However, sales of Bleepa, with a higher average contract value versus legacy products, is expected to quickly eclipse the declining legacy products revenue going forward.
Gross margin reduced to 83%, in large part due to a veterinary customer contract which was signed in the period, resulting in one-off BleepaBox hardware costs (incurred in the first year only) and higher cloud hosting costs compared to the prior year.
Sales, a non IFRS measure representing the total customer contract value invoiced in the period, increased 280% to £0.67m (2021: £0.18m), of which Bleepa contributed £0.26m (2021: £0.08m) and Image Engineering license fees contributed £0.14m (2021: £0.01m). Sales are recognised as revenue monthly across the life of a customer contract (typically 12 months), with any amount not recognised as revenue in the current financial year remaining on the balance sheet as contract liabilities (deferred income), and recognised as revenue in the forthcoming financial year. Contract liabilities (or deferred income) as at period end was £0.20m (2021: £0.12m).
Operating expenses increased 29% to £3.00m (2021: £2.32m), primarily due to headcount expansion, commencement of amortisation of Bleepa software development costs, and cost inflation. Operating loss increased to £2.51m (2021: £2.06m). EBITDA loss, excluding depreciation and amortisation charges of £0.55m (2021: £0.05m), improved 3% to £1.96m (2021: £2.01m). Adjusted EBITDA loss, excluding share-based payment charges of £0.07m (2021: £0.16m), remained relatively flat at £1.89m (2021: £1.85m).
Cash outflows from operating activities decreased 38% to £1.25m (2021: £2.03m) primarily due to higher customer receipts offsetting the increase in operating expenses, and the benefit of two R&D tax credit refunds being received in the period, totaling £0.77m (2021: nil). Cash outflows from investing activities, primarily being software development expenditures with Future Processing, decreased 20% to £1.15m (2021: £1.44m) as the Group reduced expenditures to extend the cash runway prior to the fundraise completed in November 2021. The Group's cash position as at 31 May 2022 was £10.31m (31 May 2021: £2.22m), an increase of £8.08m over the prior year following net proceeds of £10.49m from the November 2021 fundraise.
Intangible assets increased by £0.61m to £3.29m (2021: £2.68m), primarily representing the capitalised software development expenditures of £1.15m, offset by amortisation charges of £0.54m (2021: £0.03m). Net assets increased to £13.71m (2021: £5.27m) as at 31 May 2022.
Outlook
The Company is now delivering substantial revenue growth, achieving its highest ever revenues during the period under review. This follows the decline in revenue associated with commencing the development of Bleepa, whilst winding down our legacy product lines during the previous period.
The Company is now benefiting from increasing Bleepa sales with a higher average contract value than legacy products, a trend that is set to increase as we move towards regional programmes of delivery around the CDC space. Post period, the Company was awarded a £0.45m contract with Sussex ICS / QVH to facilitate an extension of the current CDC pilot in Sussex to further GP practices and to enable the adoption of further clinical pathways. The contract covers the period from 31 March 2022 when the original pilot MOU formally ended. The contract will run until 31st March 2023 by which point QVH expect to have concluded a formal procurement for the next phase of the CDC programme rollout, as is required by NHS procurement policies. Feedback intends to submit a bid in this subsequent procurement phase.
The Company completed its pivot towards Bleepa during a particularly turbulent trading period resulting from COVID-19. While this undoubtedly impeded our ability to sell and connect with our target customers, we are already seeing a large increase in customer engagement as we emerge from the pandemic, giving the Board confidence in the future opportunity - as healthcare providers recover and look to solutions that can aid them in their recovery. Bleepa and CareLocker are now perfectly positioned to address the manifold problems affecting our customers in their post pandemic recovery. Namely, reducing the elective care backlog by driving efficiencies in clinical pathway delivery and clinical workforce shortages by enabling clinicians to work collaboratively across geography and to be deployed more effectively to maximise the impact of specialists within a region. These capabilities are unique to our patient-centric and regulated infrastructure, and the real-world example of Sussex positions us right at the front of the NHS recovery agenda.
The Board also expects to see progress on the various opportunities that we have been evaluating in India, following our initial trade mission with DIT in 2019. The Company has been scoping this market over an extended period looking for opportunities to leverage our product suite and have identified the opportunity to bring digital TB screening to rural communities, provide patient access to digital imaging through CareLocker, and position Bleepa as a core clinical tool directly with Indian healthcare providers, who echo many of the pain points experienced by our customers in the NHS. Time has also been spent identifying the right channel partners and we are now confident in our approach to market. Whilst the Board expects the price point achievable in India to be naturally lower than those seen in the domestic market, the scale of the opportunity more than offsets this, making India an extremely attractive proposition for the Company in the next 12-18 months.
It would not have been possible to pursue these opportunities had we not invested heavily in repurposing our legacy products. The pivot was a bold but necessary move, and we are now beginning to see the rewards of that decision; both through strong revenue growth from new customers and from the diverse pipeline of opportunity in front of us.
| Feedback plc | | | | |
| ||||||||
| Condensed Consolidated Statement of Comprehensive Income |
| ||||||||||||
| | | | | | |
| |||||||
| | | |
Note |
2022 £ |
2021 £ | ||||||||
| Revenue | | | 4 | 588,576 | 287,415 | ||||||||
| Cost of sales | | | | (99,321) | (25,024) | ||||||||
| | | | | | | ||||||||
| Gross profit | | | | 489,255 | 262,391 | ||||||||
| Other operating expenses |
|
| 5 | (3,002,489) | (2,322,518) | ||||||||
| |
|
| | | | ||||||||
| Operating loss |
|
| 6 | (2,513,234) | (2,060,127) | ||||||||
| Net finance income | | | 7 | 2,012 | 281 | ||||||||
| | | | | | | ||||||||
| Loss before taxation |
| | | (2,511,222) | (2,059,846) | ||||||||
| Tax credit | | | 9 | 392,631 | 440,333 | ||||||||
| | | | | | | ||||||||
| Loss after tax attributable to the equity shareholders of the Company | |
|
| (2,118,591) | (1,619,513) | ||||||||
| | | | | | | ||||||||
| Total comprehensive expense for the year | | | |
(2,118,591) |
(1,619,513) | ||||||||
| | | | | | | ||||||||
| Loss per share (pence) | | | | | | ||||||||
| Basic and diluted | | | 11 | (0.11) | (0.16) | ||||||||
| | | | | | | ||||||||
| | | | | | | ||||||||
|
| Feedback plc | | | | | |
| ||||||||
|
| Condensed Consolidated Statement of Changes in Equity | |
| ||||||||||||
|
| | | | | | | |
| |||||||
| GROUP | Share Capital | Share Premium | Capital Reserve | Retained Earnings | Translation Reserve | Share option Reserve | Total | ||||||||
|
| £ | £ | £ | £ | £ | £ | £ | ||||||||
| At 31 May 2020 | 1,349,876 | 5,221,282 | 299,900 | (5,110,965) | (209,996) | 219,159 | 1,769,256 | ||||||||
| | | | | | | | | ||||||||
| Loss of the year and Total comprehensive loss for the year | - | - | - | (1,619,513) | | | (1,619,513) | ||||||||
| | | | | | | | | ||||||||
| New shares issued | 1,317,454 | 3,952,363 | - | - | - | - | 5,269,817 | ||||||||
| Costs of new shares issued | - | (313,566) | - | - | - | - | (313,566) | ||||||||
| Share options lapsed | - | - | - | - | - | - | - | ||||||||
| Share-based payments | - | - | - | - | - | 162,615 | 162,615 | ||||||||
| Total transactions with owners | 1,317,454 | 3,638,797 | - | - | - | 162,615 | 5,118,866 | ||||||||
| | | | | | | | | ||||||||
| At 31 May 2021 | 2,667,330 | 8,860,079 | 299,900 | (6,730,478) | (209,996) | 381,774 | 5,268,609 | ||||||||
| | | | | | | | | ||||||||
| Loss of the year and Total comprehensive loss for the year | - | - | - | (2,118,591) | - | - | (2,118,591) | ||||||||
| | | | | | | | | ||||||||
| New Shares issue | 4,000,000 | 7,200,000 | - | - | - | - | 11,200,000 | ||||||||
| Costs of new shares issued | - | (709,008) | - | - | - | - | (709,008) | ||||||||
| Share-based payments | - | - | - | - | - | 68,264 | 68,264 | ||||||||
| Total transactions with owners | 4,000,000 | 6,490,992 | - | - | - | 68,264 | 10,559,256 | ||||||||
| | | | | | | | | ||||||||
| At 31 May 2022 | 6,667,330 | 15,351,071 | 299,900 | (8,849,069) | (209,996) | 450,038 | 13,709,274 | ||||||||
|
COMPANY |
|
|
Share Capital |
Share Premium |
Retained Earnings |
Share option Reserve |
Total | ||||||||
|
|
|
| £ | £ | £ | £ | £ | ||||||||
| At 31 May 2020 | | | 1,349,876 | 5,221,282 | (6,418,485) | 219,159 | 371,832 | ||||||||
| | | | | | | | | ||||||||
| Total comprehensive loss for the year | | | - | - | (437,373) | - | (437,373) | ||||||||
| | | | | | | | | ||||||||
| New shares issued | | | 1,317,454 | 3,952,363 | - | - | 5,269,817 | ||||||||
| Costs of new shares issued | | | - | (313,566) | - | - | (313,566) | ||||||||
| Share options lapsed | | | - | - | - | - | - | ||||||||
| Share-based payments | | | - | - | - | 162,615 | 162,615 | ||||||||
| Total transactions with owners | | | 1,317,454 | 3,638,797 | - | 162,615 | 5,118,866 | ||||||||
| | | | | | | | | ||||||||
| At 31 May 2021 | | | 2,667,330 | 8,860,079 | (6,855,858) | 381,774 | 5,053,325 | ||||||||
| | | | | | | | | ||||||||
| Loss of the year and Total comprehensive loss for the year | | | - | - | (559,408) | - | (559,408) | ||||||||
| | | | | | | | | ||||||||
| New shares issued | | | 4,000,000 | 7,200,000 | - | - | 11,200,000 | ||||||||
| Costs of new shares issued | | | - | (709,008) | - | - | (709,008) | ||||||||
| Share-based payments | | | - | | - | 68,264 | 68,264 | ||||||||
| Total transactions with owners | | | 4,000,000 | 6,490,992 | - | 68,264 | 10,559,256 | ||||||||
| | | | | | | | | ||||||||
| At 31 May 2022 | | | 6,667,330 | 15,351,071 | (7,415,266) | 450,038 | 15,053,173 | ||||||||
| Feedback plc |
| |||||
| Condensed Consolidated Statement of Financial Position |
| |||||
|
|
|
|
|
2022 |
2021 | |
|
|
| Notes |
| £ | £ | |
|
| Assets |
|
|
|
| |
|
| Non-current assets | | | | | |
|
| Property, plant and equipment | 13 | | 8,367 | 13,773 | |
|
| Intangible assets | 14 | | 3,288,811 | 2,681,641 | |
|
| | | | 3,297,178 | 2,695,414 | |
|
|
| | | | | |
|
| Current assets | | | | | |
|
| Trade and other receivables | 15 | | 308,293 | 138,042 | |
|
| Corporation tax receivable | | | 392,351 | 767,120 | |
|
| Cash and cash equivalents | | | 10,305,577 | 2,220,862 | |
|
| | | | 11,006,221 | 3,126,024 | |
|
| | | | | | |
|
| Total assets | | | 14,303,400 | 5,821,438 | |
|
| | | | | | |
|
| | | | | | |
|
| Equity | | | | | |
|
| Capital and reserves attributable to the Company's equity shareholders | | | | | |
|
| Called up share capital | 18 | | 6,667,330 | 2,667,330 | |
|
| Share premium account | 18 | | 15,351,071 | 8,860,079 | |
|
| Capital reserve | 18 | | 299,900 | 299,900 | |
|
| Translation reserve | 18 | | (209,996) | (209,996) | |
|
| Share option expense reserve | 18 | | 450,038 | 381,774 | |
|
| Retained earnings | 18 | | (8,849,069) | (6,730,478) | |
|
| Total equity | | | 13,709,274 | 5,268,609 | |
|
| | | | | | |
|
| Liabilities |
|
|
| | |
|
| Current liabilities |
|
|
| | |
|
| Trade and other payables | 16 | | 594,126 | 548,836 | |
|
| | | | 594,126 | 548,836 | |
|
| | | | | | |
|
|
Non-current liabilities | | | | | |
|
| Contract liabilities | 16 | | - | 3,993 | |
|
| | | | - | 3,993 | |
|
|
|
|
| | | |
|
| Total liabilities |
|
| 594,126 | 552,829 | |
|
|
|
|
| | | |
|
| Total equity and liabilities |
|
| 14,303,400 | 5,821,438 | |
| Feedback plc |
| ||
| Condensed Consolidated Statement of Cash Flows |
| ||
|
| 2022 | 2021 | |
|
| £ | £ | |
| | | | |
| Cash flows from operating activities | | | |
| Loss before tax | (2,511,222) | (2,059,846) | |
| Adjustments for: | | | |
| | | | |
| Net finance income | (2,012) | (281) | |
| Depreciation and amortisation | 552,931 | 48,755 | |
| Share based payment expense | 68,265 | 162,615 | |
| Decrease/(Increase) in trade receivables | (198,754) | 72,614 | |
| Decrease in other receivables | 28,503 | (80,779) | |
| Increase in trade payables | (30,100) | 77,915 | |
| Increase/(Decrease) in other payables | 71,397 | (253,759) | |
| Corporation tax received | 767,400 | - | |
| Total adjustments | 1,257,630 | 27,080 | |
| | | | |
| Net cash used in operating activities | (1,253,592) | (2,032,766) | |
| | | | |
| Cash flows from investing activities | | | |
| Purchase of tangible fixed assets | (5,450) | (16,083) | |
| Purchase of intangible assets | (1,149,246) | (1,419,472) | |
| Net finance income received | 2,012 | 281 | |
| | | | |
| Net cash used in investing activities | (1,152,684) | (1,435,274) | |
| | | | |
| Cash flows from financing activities | | | |
| Net proceeds of share issue | 10,490,991 | 4,956,252 | |
| | | | |
| Net cash generated from financing activities | 10,490,991 | 4,956,252 | |
| | | | |
| Net increase/(decrease) in cash and cash equivalents | 8,084,715 | 1,488,212 | |
| Cash and cash equivalents at beginning of year | 2,220,862 | 732,650 | |
|
| | | |
| Cash and cash equivalents at end of year | 10,305,577 | 2,220,862 | |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2022
1. General information
The Company is a public limited company limited by shares, domiciled in the United Kingdom and incorporated under registered number 00598696 in England and Wales. The Company's registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, England, United Kingdom, EC4Y 0DT.
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 16 September 2022.
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 these new standards. The Directors do not anticipate that the adoption of these standards will have a material impact on the reported results of the Company:
- IFRS 1 - Amendment First-time Adoption of International Financial Reporting Standards - resulting from Annual Improvements to IFRS Standards
- IFRS 9 - Financial Instruments - Amendments resulting from Annual Improvements to IFRS Standards 2018-2020 (fees in the 10 percent test for derecognition of financial liabilities)
- IFRS 17 - Insurance Contracts
- IAS 1 - Presentation of Financial Statements - Amendment regarding the classification of liabilities as current or non-current
- IAS 1 - Presentation of Financial Statements - Amendments regarding the disclosure of accounting policies
- IAS 8 amendment - Accounting Policies, Changes in Accounting Estimates and Errors - Definition of Accounting Estimates
- IAS 12 amended - Income Taxes - Amendments regarding deferred tax on leases and decommissioning obligations
- IAS 16 amended - Property, Plant and Equipment - Amendments prohibiting a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use
- IAS 37 amended - Provisions, Contingent Liabilities and Contingent Assets - Regarding the costs to include when assessing whether a contract is onerous
3. Significant accounting policies
(a) Basis of preparation
These financial statements have been prepared in accordance with UK adopted international accounting standards. 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 2022 and 2021 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.
Investments in subsidiary companies are held at cost less impairment.
(c) Going Concern
The Group incurred a net loss of £2,118,592 for the year ended 31 May 2022 however it had net assets of £13,709,274 inclusive of £10,305,577 of cash and cash equivalents at 31 May 2022. The directors have considered the applicability of the going concern basis in the preparation of the financial statements. This included a review of financial results, internal budgets and cash flow forecasts to 30 September 2023, including downside scenarios.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, and that the Group and Company will have sufficient funds to continue to meet their liabilities as they fall due for at least twelve months from the date of approval of the financial statements. 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 which are not yet being amortised because they are not yet available for use are reviewed for impairment annually. The carrying value of intangible assets which are currently being amortised are reviewed for impairment when there is an indication that they may be impaired. Impairment losses are recognised in other operating expenses in the income and expenditure account.
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 software development 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. Intangible assets that have a finite useful life and that have been capitalised are amortised on a straight line basis as follows:
| Intangible asset | Useful economic life |
| | |
| Intellectual Property | 5 - 10 years |
| Customer relationships | 4 years |
| Software development | 5 years |
Intellectual Property primarily relates to patent and trademark application costs. 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 include 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 and office 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 on the basis of following IFRS15 whereby revenue is recognised on the promise of goods and services to the customer at the transaction price contractually agreed and once the performance obligations have been met. Revenue is recognised depending on the related software or service outline below. The sales invoice is raised when the customer's purchase order is received, and the debt is typically payable within 30-60 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 such as Bleepa 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. This is that the Group will provide the support required as agreed when the sale was made.
The difference between the amount of revenue from contracts with customers recognised and the amount invoiced on a particular contract is included in the statement of financial position as contract liabilities. Normally, the full contract value is invoiced when the customer's purchase order is received. Cash payments received as a result of this advance billing are not representative of revenue earned on the contract as revenues are recognised over the duration of the contract (typically twelve months). Contract liabilities which are expected to be recognised within one year are included within current liabilities. Contract liabilities which are expected to be recognised after one year are included within non-current liabilities.
(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
Financial assets
Financial assets are measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL). The measurement basis is determined by reference to both the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset. The group's financial assets comprise of trade and other receivables and cash and cash equivalents.
Trade receivables
Trade receivables are measured at amortised cost and are carried at the original invoice amount less allowances for expected credit losses. Expected credit losses are calculated in accordance with the simplified approach permitted by IFRS 9, using a provision matrix applying lifetime historical credit loss experience to the trade receivables. The expected credit loss rate varies depending on whether, and the extent to which, settlement of the trade receivables is overdue and it is also adjusted as appropriate to reflect current economic conditions and estimates of future conditions. For the purposes of determining credit loss rates, customers are classified into groupings that have similar loss patterns. The key drivers of the loss rate are the aging of the debtor, the geographic location and the company sector (public vs private). When a trade receivable is determined to have no reasonable expectation of recovery it is written off, firstly against any expected credit loss allowance available and then to the income statement. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the consolidated statement of comprehensive income Subsequent recoveries of amounts previously provided for or written off are credited to the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and deposits with maturities of three months or less.
Financial liabilities
The Group's financial liabilities consist of trade payables and other financial liabilities. Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is held-for trading, it is a derivative or it is designated as such on initial recognition. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense is recognised in profit or loss.
(o) Employee share options and warrants
The Group has applied the requirements of IFRS 2 Share-based Payments.
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 for share options without performance obligations and the Monte Carlo option pricing model for share options with performance obligations. 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 areas of judgement
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 and judgements 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 - Patent and trademark applications 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, details of the valuation can be found in Note 18 of this report.
· 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 2022 |
| Medical Imaging | Head Office | Total | |
|
|
| £ | £ | £ | |
| Revenue | | | | | |
| External | | 588,576 | - | 588,576 | |
| Expenditure | | | | | |
| External (excluding depreciation and amortisation) | (1,629,998) | (916,869) | (2,546,867) | ||
| Depreciation and amortisation | (552,931) | - | (552,931) | ||
| Loss before tax | | (1,594,353) | (916,869) | (2,511,222) | |
| Tax credit | | 392,631 | - | 392,631 | |
|
| | | | | |
| Balance sheet | | | | | |
| Total assets | | 4,109,874 | 10,193,526 | 14,303,400 | |
| Total liabilities | | (520,112) | (74,014) | (594,126) | |
| | | 3,589,762 | 10,119,512 | 13,709,274 | |
| | | | | | |
| Capital expenditure (all located in the UK) | (1,154,697) | - | (1,154,697) | ||
| | | | | | |
| | | | | | |
| Year ended 31 May 2021
| | Medical Imaging | Head Office | Total | |
| | | £ | £ | £ | |
| Revenue | | | | | |
| External | | 287,415 | - | 287,415 | |
| Expenditure | | | | | |
| Total (excluding depreciation and amortisation) | | (1,546,183) | (752,323) | (2,298,506) | |
| Depreciation and amortisation | | (48,755) | - | (48,755) | |
| Loss before tax | | (1,307,523) | (752,323) | (2,059,846) | |
| Tax credit |
| 440,333 | - | 440,333 | |
| | | | | | |
| Balance sheet | | | | | |
| Total assets | | 3,700,845 | 2,120,593 | 5,821,438 | |
| Total liabilities | | (487,308) | (65,521) | (552,829) | |
| | | 3,213,537 | 2,055,072 | 5,268,609 | |
| | | | | | |
| Capital expenditure (all located in the UK) | | (1,435,554) | - | (1,435,554) | |
| | | | | | |
Reported segments' assets are reconciled to total assets as follows:
|
| External revenue by | Non-current assets by | Total liabilities | |||||
|
| location of customer | location of assets | location of assets | |||||
|
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||
|
| £ | £ | £ | £ | £ | £ | ||
| | | | | | | | ||
| United Kingdom | 432,129 | 217,394 | 3,297,179 | 2,695,414 | 594,126 | 552,829 | ||
| Europe | 4,485 | 5,364 | - | - | | - | ||
| Rest of the world | 151,962 | 64,657 | - | - | | - | ||
| Total | 588,576 | 287,415 | 3,297,179 | 2,695,414 | 594,126 | 552,829 | ||
| | | | | | | | ||
£115,000 of revenue recognised in the current year was recorded in contract liabilities in the prior year.
Major customers
During the year ended 31 May 2022, the Group generated £232,000 (2021: £153,000) of revenue from one customer in the United Kingdom, which is equal to 39% (2021: 53%) of total Group revenues in the year. Major customer from the rest of the world is located in USA and accounts for £142,164 of group revenue generated.
5. Other operating expenses
| | | | | 2022 | 2021 |
| | | | | £ | £ |
| Administrative costs: | | | | | |
| Employment and other costs | | | | 2,449,558 | 2,273,763 |
| Amortisation and depreciation costs | | | | 552,931 | 48,755 |
| | | | | 3,002,489 | 2,322,518 |
| | | | | | |
6. Operating loss
|
|
|
|
| 2022 | 2021 | |
|
|
|
|
| £ | £ | |
| This is stated after charging | | | | | | |
| Depreciation and amortisation | | | | | | |
| Owned assets | | | | 10,856
| 14,140 | |
| Amortisation of intangible assets | | | | 542,076 | 34,615 | |
| Provision for doubtful debts | | | | 1,529 | 266 | |
| Foreign exchange differences | | | | (648) | 24,573 | |
| Auditors' remuneration | | | | | | |
| Audit of parent company and group financial statements | 13,800 | 10,000 | ||||
| Audit of subsidiaries | | | | 9,200 | 6,800 | |
| | | | | | | |
7. Net finance income
|
|
|
|
| 2022 | 2021 |
|
|
|
|
| £ | £ |
| Interest received | | | | 2,012 | 281 |
| | | | | 2,012 | 281 |
8. Directors and employees
|
|
|
| 2022 | 2021 | 2022 | 2021 |
|
|
|
| Average | Average | Year-end FTE | Year-end FTE |
| Number of employees |
|
|
|
|
|
|
| Selling and distribution | | | 2 | 1 | 2 | 1 |
| Administration | | | 12 | 9 | 11 | 11 |
| Research and development | | | 5 | 6 | 6 | 6 |
| | | | 19 | 16 | 19 | 18 |
|
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
| £ | £ |
| Staff costs |
|
|
|
|
|
|
| Wages and salaries | | | | | 1,267,740 | 1,033,975 |
| Social security costs | | | | | 159,225 | 121,736 |
| Payments to defined contribution pension scheme | | | 144,308 | 108,796 | ||
| Share based payment expense | | | | | 68,265 | 162,615 |
| | | | | | 1,639,538 | 1,427,122 |
9. Taxation on loss
|
|
|
| 2021 | 2021 |
|
|
|
| £ | £ |
| (a) | The tax credit for the year: |
|
|
|
| | UK Corporation tax | | (392,631) | (439,589) |
| | | | | |
| | Current tax credit | | (392,631) | (439,589) |
| | Adjustments in respect of prior periods | | - | (744) |
| | | | (392,631) | (440,333) |
| | | | | |
| (b) | Tax reconciliation |
| |
|
| | Loss before tax | | (2,511,222) | (2,059,846) |
| | | | | |
| | Loss at the standard rate of corporation tax in the UK of 19% (2018 - 19%) | | (480,825) | (391,371)
|
| | Effects of: | | | |
| | Fixed asset differences | | - | (5,872) |
| | Expenses non-deductible for tax purposes | | (506,626) | 37,558 |
| | Other permanent differences | | - | 118 |
| | Other income | | (376,897) | - |
| | Additional deduction for R&D expenditure | | (1,530,494) | (325,572) |
| | Surrender of tax losses for R & D tax credit refund | | (392,631) | 136,424 |
| | Adjustments to tax charge in respect of previous periods | | - | (744) |
| | Deferred tax not recognised | | 2,903,525 | 332,069 |
| | Remeasurement of deferred tax for change in tax rates | | - | (222,943) |
| | Net capital allowances | | (8,683) | - |
| | Tax charge for the year | | (392,631) | (440,333) |
| | | |||
In view of the tax losses carried forward there is a deferred tax amount of approximately £1,609,875 (2021: £928,928) which has not been recognised in the group Financial Statements. This contingent asset will be realised when the Group makes sufficient taxable profits in the relevant company.
In view of the tax losses carried forward there is a deferred tax amount of approximately £789,816 (2021: £838,906) which has not been recognised in the company 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 £559,408 (2021 loss: £437,373)
11. Loss per share
Basic loss per share is calculated by reference to the loss on ordinary activities after taxation of £2,118,591 (2021: £1,619,513) and on the weighted average of 1,869,123,462 (2021: 1,023,499,123) shares in issue.
|
|
| 2022 £ | 2021 £ |
| Net loss attributable to ordinary equity holders |
| (2,118,591) | (1,619,513) |
| | | | |
| |
| 2022 | 2021 |
| Weighted average number of ordinary shares for basic earnings per share | | 1,869,123,462 | 1,023,499,123 |
| Effect of dilution: | | | |
| Share Options | | - | - |
| Warrants | | - | - |
| Weighted average number of ordinary shares adjusted for the effect of dilution |
| 1,869,123,462 | 1,023,499,123 |
| | | | |
| Loss per share (pence) | | | |
| Basic | | (0.11) | (0.16) |
| Diluted | | (0.11) | (0.16) |
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 2020 | 2,380,455 | 1,000 | 2,381,455 |
| Addition (see note below) | 59,913 | - | 59,913 |
| At 31 May 2021 | 2,440,368 | 1,000 | 2,441,368 |
| Addition (see note below) | 19,436 | - | 19,436 |
| Disposal of shares in joint venture | - | (1,000) | (1,000) |
| As at 31 May 2022 | 2,459,804 | - | 2,459,804 |
| | | | |
| Provision for impairment | | | |
| At 31 May 2020 | 2,380,455 | 1,000 | 2,381,455 |
| Additional impairment included in operating expenses (see note below) | 59,913 | - | 59,913 |
| At 31 May 2021 | 2,440,368 | 1,000 | 2,441,368 |
| Additional impairment included in operating expenses (see note below) | 19,436 | - | 19,436 |
| Disposal of shares in joint venture | - | (1,000) | (1,000) |
| At 31 May 2022 | 2,459,804 | - | 2,459,804 |
|
| | | |
| Net Book Value | - | - | - |
| At 31 May 2022 | - | - | - |
|
At 31 May 2021 |
- |
- |
- |
All of the above investments are unlisted. The disposal of shares in joint venture is due to the dissolution of Prostate Checker Ltd, which had been fully provided for previously.
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 additions in the current and prior year are related to options in Feedback Medical Limited which would be satisfied with Feedback 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:
| Company | Activity | Country of incorporation and operation | Proportion of Shares held |
| | | | |
| Feedback Black Box Company Limited | Dormant | England
| 100% Ordinary £1 |
| | | | |
| | | | |
| Bleepa Limited | Dormant | England | 100% |
| 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's registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, England, United Kingdom, EC4Y 0DT.
In accordance with section 394(A) of the Companies Act 2006, a company is exempt from preparing individual accounts for a financial year. This section 394(A) of the Companies Act 2006 applies to Brickshield Limited (company registration number 064514313) and Bleepa Limited (company registration number 12118570).
13. Property, plant and equipment
|
|
| Computer |
|
|
|
| Equipment | Total |
| Group |
| £ | £ |
|
|
|
|
|
| Cost |
|
|
|
| At 31 May 2020 | | 30,422 | 30,422 |
| Additions | | 16,083 | 16,083 |
| | | | |
| At 31 May 2021 | | 46,505 | 46,505 |
| Additions | | 5,450 | 5,450 |
| | | | |
| As 31 May 2022 | | 51,955 | 51,955 |
| | | | |
| Depreciation |
| | |
| At 31 May 2020 | | 18,592 | 18,592 |
| | | | |
| Charge for the year | | 14,140 | 14,140 |
| | | | |
| At 31 May 2021 | | 32,732 | 32,732 |
| | | | |
| Charge for the year | | 10,856 | 10,856 |
| | | | |
| At 31 May 2022 | | 43,588 | 43,588 |
| |
| |
|
| Net Book Value |
| | |
| At 31 May 2022 | | 8,367 | 8,367 |
| | | | |
| At 31 May 2021 | | 13,773 | 13,773 |
14. Intangible assets
| | Software development | Customer relationships | Intellectual Property | Goodwill | Total |
| | £ | £ | £ | £ | £ |
| Cost | | | | | |
| | | | | | |
| At 31 May 2020 | 1,881,105 | 100,000 | 187,335 | 271,415 | 2,439,855 |
| | | | | | |
| Additions | 1,419,472 | - | - | - | 1,419,472 |
| Re-class | (30,904) | - | 30,904 | - | - |
| At 31 May 2021 | 3,269,673 | 100,000 | 218,239 | 271,415 | 3,859,327 |
| | | | | | |
| Additions | 1,135,400 | - | 13,846 | - | 1,149,246 |
| Disposal of fully amortised assets | - | - | (34,233) | - | (34,233) |
| At 31 May 2022 | 4,405,073 | 100,000 | 197,852 | 271,415 | 4,974,340 |
| | | | | | |
| Amortisation | | | | | |
| At 31 May 2020 | 645,516 | 100,000 | 126,140 | 271,415 | 1,143,071 |
| Amortisation charge for year | - | - | 34,615 | - | 34,615 |
| At 31 May 2021 | 645,516 | 100,000 | 160,755 | 271,415 | 1,177,686 |
| Amortisation charge for year | 525,213 | - | 16,863 | - | 542,076 |
| Disposal of fully amortised assets | - | | (34,233) | | (34,233) |
| At 31 May 2022 | 1,170,729 | 100,000 | 143,385 | 271,415 | 1,685,529 |
| | | | | | |
| | | | | | |
| Net Book Value | | | | | |
| At 31 May 2022 | 3,234,344 | - | 54,467 | - | 3,288,811 |
| At 31 May 2021 | 2,624,157 | - | 57,484 | - | 2,681,641 |
| | | | | | |
15. Trade and other receivables
|
| Group | Company | ||
|
| 2022 | 2021 | 2022 | 2021 |
|
| £ | £ | £ | £ |
| Amounts falling due within one year |
|
|
|
|
| Trade receivables | 225,700 | 26,946 | - | - |
| Other receivables | 12,866 | 65,263 | 12,778 | 65,209 |
| Prepayments | 69,727 | 45,833 | 36,985 | 34,697 |
| | 308,293 | 138,042 | 49,763 | 99,906 |
16. Trade and other payables
|
| Group | Company | ||
|
| 2022 | 2021 | 2022 | 2021 |
|
| £ | £ | £ | £ |
| Amounts falling due within one year | |
| |
|
| Trade payables | 167,240 | 197,340 | 17,681 | 491 |
| Other payables | 15,262 | 39,575 | - | - |
| Other taxes and social security | 65,815 | 22,645 | 15,797 | 13,701 |
| Accruals | 142,135 | 174,151 | 40,522 | 51,317 |
| Contract liabilities | 203,674 | 115,125 | - | - |
| | 594,126 | 548,836 | 74,000 | 65,509 |
|
Amounts falling due after one year | | | | |
| Contract liabilities | - | 3,993 | - | - |
| | | | | |
Neither the Group or the Company have 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. 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 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.
Expected credit losses are calculated in accordance with the simplified approach permitted by IFRS 9, using a provision matrix applying lifetime historical credit loss experience to the trade receivables.
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 Group's customers were primarily the NHS in 2022, for which the risk of default has been assessed to be immaterial.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is:
|
Financial assets held at amortised cost |
| ||||||||
|
| Group | Company | |||||||
|
| 2022 | 2021 | 2022 | 2021 | |||||
|
| £ | £ | £ | £ | |||||
| Trade and other receivables | 308,293 | 138,042 | 49,763 | 99,906 | |||||
| Loans to subsidiary companies | - | - | 4,933,648 | 2,998,240 | |||||
| Cash and cash equivalents | 10,305,577 | 2,220,862 | 10,143,762 | 2,020,688 | |||||
| | 10,613,870 | 2,358,904 | 15,127,173 | 5,118,834 | |||||
|
|
| ||||||||
| Analysis of trade receivables | |||||||||
| |
Total |
Current | 30 days past due | 60 days past due | 90 days past due |
| |||
|
| £ | £ | £ | £ | £ |
| |||
| Group | | | | | |
| |||
| 2022 | 225,700 | 102,377 | - | 123,323 | - |
| |||
| 2021 | 26,946 | - | 26,946 | - | - |
| |||
| | | | | | |
| |||
| | | | | | |
| |||
| Company | | | | | |
| |||
| 2021 | - | - | - | - | - |
| |||
| 2020 | - | - | - | - | - |
| |||
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.
An additional allowance of £1,500 has been recognised during the year (2021: nil), due to exchange rate movements.
The following table shows the net assets, stated in pounds sterling, exposed to exchange rate risk that the Group and Company had at 31 May 2022.
|
|
| Group | Company | ||
|
|
| 2022 | 2021 | 2022 | 2021 |
|
|
| £ | £ | £ | £ |
| Trade Receivables | | 102,377 | 26,946 | - | - |
As at 31 May 2022 £102,377 of Feedback Medical's net trade receivables are denominated in foreign currency. A 5% increase/fall in exchange rates would lead to a profit/loss of £4,875. The foreign currencies are US dollars. 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 2022 or at 31 May 2021.
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 | | | Group | Company | ||
|
| | | 2022 | 2021 | 2022 | 2021 |
| | | | £ | £ |
|
|
| Trade and other payables | | | 182,502 | 236,915 | 17,681 | 491 |
The following are maturities of financial liabilities, including estimated contracted interest payments.
|
| Carrying amount £ | Contractual cash flow £ | 6 months or less £ |
| | | | |
| Group |
|
|
|
| 2022 | 182,502 | 182,502 | 182,502 |
| 2021 | 236,915 | 236,915 | 236,915 |
| | | | |
| Company | | | |
| 2022 | 17,681 | 17,681 | 17,681 |
| 2021 | 491 | 491 | 491 |
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
| Allotted, called up and fully paid ordinary shares of 0.25 pence each: | | | | |
| | Number | Number | ||
| As at start of period (01 June) | 1,066,931,686 | 539,949,917 | ||
| Issued during year | 1,599,999,991 | 526,981,769 | ||
| As at end of period (31 May) | 2,666,931,677 | 1,066,931,686 | ||
| |
|
| ||
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.
During the year, the Company had the following share options in issue:
| Grant Date | No. options as at 31 May 2021 | Granted in year | Lapsed in year | No. options as at 31 May 2022 | Exercise price (pence) | Exercisable period |
| | | | | | | |
| 21 May 14(1) | 2,400,000 | - | - | 2,400,000 | 1.25 | 21 May 15 - 19 May 24 |
| 21 May 14(1) | 4,000,000 | - | - | 4,000,000 | 3.00 | 21 May 15 - 19 May 24 |
| 21 May 14(1) | 4,000,000 | - | - | 4,000,000 | 5.00 | 21 May 15 - 19 May 24 |
| 26 June 18(2) | 2,500,000 | - | 2,500,000 | - | 1.86 | 26 June 18 - 26 June 28 |
| 26 June 18(3) | 5,600,000 | - | - | 5,600,000 | 1.86 | 01 March 19 - 26 June 28 |
| 09 April 19(2) | 9,332,081 | - | - | 9,332,081 | 1.09 | 09 April 19 - 09 April 29 |
| 23 April 20(4) | 17,500,000 | - | 1,000,000 | 16,500,000 | 1.20 | 01 June 20 - 24 April 30 |
| 06 August 20(5) | 13,498,748 | - | - | 13,498,748 | 1.20 | 06 August 20 - 06 August 30 |
| 23 February 22(6) | - | 145,237,200 | - | 145,237,200 | 0.70 | 31 May 22 - 31 May 30 |
| 23 February 22(7) | - | 16,772,640 | - | 16,772,640 | 0.70 | 23 February 23 - 23 February 32 |
|
| 58,830,829 | 162,009,840 | 3,500,000 | 217,340,669 | | |
1. Options vest in full on the anniversary of the date of grant
2. Options vest immediately upon date of grant.
3. Options vest in full on 01 March 19.
4. Options vest over three years as to one-third on 01 June 20, one-third on 01 June 21, and one-third on 01 June 22
5. Options vest over three years as to one-third on 06 August 20, one-third on 06 August 21, and one-third on 06 August 22
6. Options vest based on share price performance conditions as to one- third when the 60 day weighted average share price reaches 1.2p at any time during the period from 31 May 2022 to 31 May 2025, one- third when the 60 day weighted average share price reaches 1.86p at any time during the period from 31 May 2023 to 31 May 2025, and one- third when the 60 day weighted average share price reaches 3.00p at any time during the period from 31 May 2024 to 31 May 2025
7. Options vest over three years as to one-third on the first anniversary of the date of grant, one-third on the second anniversary of the date of grant, and one-third on the third anniversary of the date of grant
For the options granted on 6 August 2020 with no performance conditions, the following assumptions were made for valuation purposes using the Black-Scholes option pricing model:
· Risk-free rate: 0.21% based on the ten-year UK gilt
· Expected volatility: 48.22% based on annualised daily historical volatility
· Option period: Ten years
· Estimated fair value of each option at measurement date: £0.01
For the options granted on 23 February 2022 with no performance conditions, the following assumptions were made for valuation purposes using the Black-Scholes option pricing model:
· Risk-free rate: 1.31% based on the five-year UK gilt
· Expected volatility: 50% based on Medical Services sector as published in the Risk Measurement Service, London Business School manual, Vol 44 No 1 January - March 2022
· Expected life: Four years
· Estimated fair value of each option at measurement date: £0.0027
For the options granted on 23 February 2022 with share price performance conditions, the following assumptions were made for valuation purposes using the Monte Carlo option Pricing Model:
· Risk-free rate: 1.31% based on the five-year UK gilt
· Expected volatility: 50% based on Medical Services sector as published in the Risk Measurement Service, London Business School manual, Vol 44 No 1 January - March 2022
· Expected life: Five years
· Estimated fair value of each option at measurement date: £0.0014
The following table illustrates the number and weighted average exercise prices of, and movements in, share options during the year:
|
| Number | Weighted average exercise price | ||
|
| 2022 | 2021 | 2022 | 2021 |
|
|
|
| Pence | Pence |
| Outstanding at 01 June | 58,830,829 | 46,832,081 | 1.66 | 1.77 |
| Granted in year | 162,009,840 | 13,498,748 | 0.70 | 1.20 |
| Lapsed in year | 3,500,000 | 1,500,000 | 1.67 | 1.20 |
| Outstanding at 31 May | 217,340,669 | 58,830,829 | 0.94 | 1.66 |
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 2021 | Granted | Exercised | At 31 May 2022 | Exercise price (pence) | Exercisable period |
| | | | | | |
| 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. 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 £144,308 (2021: £108,796). A balance of £13,084 (2021: £9,660) was payable at the year end.
20. Related party transactions
Key management personnel
Refer to note 8 for detail on directors' remuneration.
Management fee from Company to subsidiaries
Feedback Plc invoiced Feedback Medical Limited £340,694 for the management fee related to 2022 (2021: £351,517). Feedback Plc invoiced Texrad Limited £34,192 for the management fee related to 2022 (2021: £43,925).
The Directors interests in shares of the Company are contained in the Directors' Report
21. Post balance sheet events
On 05 September 2022, post period, the Group was awarded a £0.45m contract with Sussex ICS / QVH to facilitate an extension of the current CDC pilot in Sussex to further GP practices and to enable the adoption of further clinical pathways. The contract covers the period from 31 March 2022 when the original pilot MOU formally ended. The contract will run until 31st March 2023.
22. Ultimate controlling party
There is no ultimate controlling party.
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