Feedback plc
Annual Report 2013

Plain-text annual report

FEEDBACK PLC Report of the Directors and Consolidated Financial Statements For the year ended 31 May 2013 FEEDBACK PLC CONTENTS Company Information Executive Chairman’s Statement Directors’ Report Corporate Governance Statement Independent Auditors Report Consolidated Income and Expenditure Account Consolidated Statement of Changes in Equity Consolidated Balance Sheet Company Balance Sheet Consolidated Cash Flow Statement Company Cash Flow Statement Notes to the Financial Statements Notice of Annual General Meeting Page 2 3 4 – 6 7 – 8 9 10 11 12 13 14 15 16 – 32 33 – 35 2 FEEDBACK PLC COMPANY INFORMATION Directors Secretary Registered Office N S Shepheard, Chairman & Chief Executive S G Barrell Temple Secretaries Limited Maple Barn Beeches Farm Road Uckfield East Sussex TN22 2QD Registered Number 00598696 Auditors Nominated Advisor and Broker Solicitors Bankers Registrars haysmacintyre 26 Red Lion Square London WC1R 4AG Sanlam Securities UK Limited 10 King William Street London EC4N 7TW Bates Wells & Braithwaite London LLP 2-6 Cannon Street London EC4M 6YH NatWest 7 High Street Crowborough East Sussex TN6 2PU Share Registrars Limited Suite E, First Floor 9 Lion and Lamb Yard Farnham Surrey GU9 7LL 2 FEEDBACK PLC CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 31 MAY 2013 Dear fellow shareholders The 2013 financial year proved to be a defining year for Feedback which resulted in the disposal of the Group’s remaining operating business, Feedback Data plc (“Feedback Data”), and the Company being reclassified as an Investing Company under the AIM Rules. As predicted when the half year results were announced, the restructuring of Feedback within the context of the strict cash constraints imposed over several years proved a very challenging environment. Feedback Data continued to experience reduced activity from key customers whilst the introduction of new products to the channel suffered a number of delays and setbacks. Whilst there was always the prospect of a recovery in Feedback Data’s markets, it remained illusive. Significant steps were taken to reduce overhead and minimise costs but the lack of an immediate and wholesale turnaround in Feedback Data still left the Company without critical mass and generating significant losses. In the board’s view this was an unsustainable position. Following a detailed review of the investment necessary to return the company to profitability the Board examined its strategic options and concluded that the disposal of Feedback Data was the best route to secure value for shareholders. After considering a number of alternative approaches the Company agreed, and sought shareholder approval for, the disposal of Feedback Data to Belgravium Technologies plc. The transaction was concluded on 31 May 2013 for a cash consideration of £600,000 that was used to repay bank debt and for working capital purposes. Following the year end the Group also completed the disposal of its former head office in Crowborough to Orbit South Housing Association Limited for a cash consideration of £940,000. This sale was approved by shareholders and was completed on 30 July 2013. Following completion of the disposal of Feedback Data and the property the Company now has one employee (being the executive Director) and approximately £700,000 of cash. The disposal of the trading businesses and its former head office means, under Rule 15 of the AIM Rules, the company was reclassified as an Investing Company and adopted the Investing Policy which was approved by Shareholders in May 2013. The Company has a technology focussed investing policy and is actively seeking opportunities in this sector. The Board has reviewed several opportunities and continues to pursue others. It will update the market as appropriate. Nick Shepheard Chairman 5 November 2013 3 FEEDBACK PLC DIRECTORS REPORT FOR THE YEAR ENDED 31 MAY 2013 The Directors present their report and the audited financial statements for the year ended 31 May 2013. PRINCIPAL ACTIVITIES OF THE GROUP The principal activity of the Group during the year was the design, manufacture and marketing of electronic, electrical and computer based equipment for access control and time and attendance monitoring. On 31 May 2013, the Company divested itself of its sole operating subsidiary, Feedback Data plc, and under Rule 15 of the AIM Rules the Company has been reclassified as an Investing company and has adopted an Investing Policy which was approved by shareholders. REVIEW OF THE BUSINESS The Chairman’s Statement on page 3 includes a general review of the Group’s business for the year. The Directors continued to monitor the performance of the Group and as indicated in the Chairman’s statement the Directors considered that the disposal of the operating subsidiary, Feedback Data plc, and the group becoming an investment company, was in the best interests of stakeholders. FUTURE DEVELOPMENTS IN THE BUSINESS Following the disposal of Feedback Data Limited on 31 May 2013 the company has become an investment company. The Directors are reviewing various opportunities for the business within the investment policy agreed. GROUP RESULTS AND DIVIDENDS The Group loss (2012 – loss) for the year after taxation amounted to £ 348,000 (2012: £1,819,000). No dividends are payable for the year under review. PRINCIPAL RISKS AND UNCERTAINTIES Investing strategy The Board will consider all viable strategic opportunities to maximise value for shareholders, including acquisitions that fall within the terms of our investing policy. The Board regularly reviews progress and considers risks. The company’s long term future is dependent upon finding a suitable acquisition within its investment policy and on being able to raise the funding necessary to follow through with any investment. If we adopt the wrong strategy or implement it poorly the Group may be negatively impacted. Economic and market risks During the year, the impact of the global economic downturn continued to drive demand for value from customers. Challenges to funding, competitor pricing and product costs affected the performance of the Group in terms of both sales and costs. Our focus was on delivering quality products that solved problems and completely satisfied customer needs, and at prices that represented clear value for all our customers. This was achieved through reviewing our customer relationships, management of costs, development of sales propositions and tuning our promotion and marketing activity. While external costs affected our business the Group continued to mitigate their impact on profitability. Liquidity Management of liquidity risk concentrated on the maintenance of appropriate credit lines and funding sources to ensure adequate cash resources for the Group’s operations. FEEDBACK DATA PLC Feedback Data’s main business was selling access control equipment and software that enabled central monitoring of fully integrated access, fire and security systems in larger organisations. The Company also supplied time and attendance terminals together with software for use with this hardware. The customers were both value added resellers and end users. The Company concentrated on supplying units for incorporation in enterprise systems in complex environments for customers with sophisticated needs. Products were designed in co-operation with the customers who were mainly based in the UK and Europe. Feedback Data plc was sold on 31 May 2013. FEEDBACK BLACK BOX COMPANY LIMITED Feedback Black Box Company’s main business was developing bespoke data-based electronic hardware products for customer markets of third-party organisations. The business ceased to trade on 5 June 2012. RESEARCH AND DEVELOPMENT The Group continued its policy of investing in development and marketing of improved, innovative, data capture and access control products, particularly with increasing software content during its ownership of Feedback Data plc. Subsequent to the disposal of Feedback Data plc there is no current investment in research and development. 4 FEEDBACK PLC DIRECTORS REPORT FOR THE YEAR ENDED 31 MAY 2013 DIRECTORS The Directors of the Company during the year were: S G Barrell (Appointed 11 November 2012) N S Shepheard D Barton (Resigned 16 October 2012) M P Bird (Resigned 31 May 2013) Professor J H Westcott (Resigned 11 November 2012) SECRETARY Temple Secretaries Limited SIGNIFICANT SHAREHOLDERS Shareholders who have notified the company of shareholdings in excess of 3%: T W G Charlton M G Burt Trustees of D Barton Feedback PLC (Pension Protection Fund) W R Ruffler Prof J H Westcott N S Shepheard H L Carrette No. of Shares % 19,238,397 16,595,930 16,044,871 14,846,411 9,397,893 5,999,287 5,000,000 5,000,000 14.69 12.67 12.25 11.34 7.18 4.58 3.82 3.82 DIRECTORS’ BIOGRAPHIES Nicholas Steven Shepheard, Chairman & Chief Executive Director Nick spent ten years as an independent consultant advising technology companies on corporate and go-to-market strategy. He had a short engagement in this role in 2007 and was appointed to the Board as Chairman and Chief Executive in February 2012. Nick’s early career included Dun & Bradstreet and Butterworths law publishers before time at TSO as General Manager of the London, Edinburgh and Belfast Gazettes. Mark Peter Bird, Group Sales Director (resigned 31 May 2013) Mark joined the Board in February 2012 as Group Sales Director. Prior to this he was a founding Director of a software start-up and he has previously held board positions as either sales or managing Director in a number of companies including Steljes Ltd which operates in the education sector. John Hugh Westcott, D.Sc., F.R.Eng., F.R.S. – Non-Executive Director and Life President (resigned 11 November 2012) A founder Director of the Company and Emeritus Professor of Control Systems and a Senior Research Fellow at Imperial College. He guided the Company on specification and design of equipment. He was a Member of the Group’s Remuneration and Audit Committees. David Barton, Non-Executive Director (resigned 16 October 2012) Having qualified as a Chartered Accountant with Coopers & Lybrand, he decided to leave the profession to pursue a commercial career. He has been actively engaged in numerous business sectors including banking, property, media and manufacturing. He was Chairman of the Group’s Remuneration and Audit Committees. Simon Barrell, Non-Executive Director (appointed 11 November 2012) Simon qualified as a chartered accountant with Arthur Young in 1983. He then joined an accountancy practice in Nairobi, Kenya as a Senior Manager. On his return to the UK in 1987, he joined Binder Hamlyn. In 1994 he was appointed finance director of Napier Brown & Company Limited and in 2003 as finance Director of Napier Brown Foods Plc. Since leaving Napier Brown & Company Plc in 2005 he has been finance Director in an executive and non-executive capacity for a number of public companies and continues to act as an adviser to listed and non-listed companies. He is on both the Audit and Remuneration Committees. EMPLOYMENT POLICIES The Group is committed to employee involvement in the business and there are consultative procedures available for management and other employees to discuss matters of mutual interest. The Group has a policy of non-discrimination in respect of sex, colour, religion, race, nationality or ethnic origin and the recruitment of disabled persons is only subject to any overriding consideration of access and safety. 5 FEEDBACK PLC DIRECTORS REPORT FOR THE YEAR ENDED 31 MAY 2013 CREDITOR PAYMENT POLICIES The Group’s policy for all suppliers is to fix terms of payment when agreeing the terms of each business transaction, to ensure the supplier is aware of those terms and to abide by the agreed terms of payment. Payment terms for the year ended 31 May 2013 averaged 45 days (2012: 48 days). TREASURY POLICY The Group has adopted formal treasury policies to control its financial instruments. It is a Group Treasury policy not to undertake transactions of a speculative nature. The Group utilised short-term Group overdraft facilities. Group cash flows are managed centrally and surplus cash is invested in short-term financial instruments. Export business was, wherever possible, carried out in sterling, in order to reduce exchange rate losses Compliance with these policies is monitored by the Board. Other than for currency disclosures, the Group has taken advantage of the exemption permitting it not to treat short-term debtors and creditors as financial instruments. STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the Group and parent Company financial statements in accordance with applicable laws and regulations. Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law the Directors are required to prepare the Group and parent Company financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The financial statements are required by law to give a true and fair view of the state of affairs of the Group and parent Company and of the profit and loss of the Group for that period. In preparing each of the Group and parent Company financial statements the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • • state whether they have been prepared in accordance with IFRS’s as adopted by the EU subject to any material departures disclosed and explained in the parent Company financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent Company will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and parent Company and to enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They have general responsibility for taking such steps as are reasonably open to safeguard the assets of the Group and parent Company and to prevent and detect fraud and other irregularities. Under applicable law and regulations the Directors are also responsible for preparing a Directors’ Report to comply with that law and those regulations. In determining how amounts are presented within terms in the income statement and balance sheet the Directors have had regard to the substance of the reported transaction or arrangement in accordance with generally accepted accounting principles or practice. AUDIT INFORMATION The Directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, there is no relevant audit information of which the auditors are unaware. Each of the Directors have confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. A resolution to reappoint haysmacintyre as auditors to the Company will be proposed at the Annual General Meeting. BY ORDER OF THE BOARD ON 5 NOVEMBER 2013 N S Shepheard Director 6 FEEDBACK PLC CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MAY 2013 Under the AIM rules the Group is not obliged to implement the provisions of the Combined Code. However, the Group is committed to applying the principles of good governance contained in the Combined Code as appropriate to a Group of this size. The Board will continue to review compliance with the Code at regular intervals. In common with other organisations of a similar size, the Executive Director is heavily involved in the day-to-day running of the business. The Board of Directors meets regularly and is responsible for formulating strategy, and for the trading subsidiaries historically, monitoring financial performance and approving major items of capital expenditure. All Directors have access to the advice and services of the Company Secretary. During the year the Board comprised two Executive Directors including the Chairman and up to two Non-Executive Directors. In view of the size and management structure of Feedback Plc, the Company has not complied with certain minor aspects of the Combined Code as discussed below. BOARD OF DIRECTORS The Board included up to two Non-Executive Directors. The Board has scheduled monthly meetings each year and others as required. The Board retains full responsibility for the direction and control of the Group. No strategic powers have been delegated and for these reasons the Board did not have, during the year, a formal schedule of matters specifically reserved to it (Paragraph A1 of the Code). There is currently no formal agreed procedure for Directors in the furtherance of their duties to take independent professional advice as necessary at the Company's expense (paragraph A5 of the Code). NON-EXECUTIVE DIRECTORS The appointment of Non-Executive Directors is a matter for the Board as a whole. Although recommended by the Code, there is currently no formal selection process. The Non-Executive Directors have contracts for services for an unspecified period. (Paragraph A7 of the Code). Non-Executive Directors are subject to re-election every three years. Terms and conditions of appointment of the Non-Executive Directors are available for inspection. EXECUTIVE DIRECTORS Directors are appointed by the Board of Directors but stand for election by the shareholders at the Annual General Meeting. The Executive Directors are subject to re-election every three years. BOARD COMMITTEES A Remuneration Committee was in place comprising the two Non-Executive Directors. The Remuneration Committee had two scheduled meetings in the year. Both serving members attended both meetings held in the year. As there is now only one Non- Executive Director he is responsible for reviewing the remuneration of the Chairman. An Audit Committee was in place comprising the two Non-Executive Directors. The Company's approach to internal control is described below. The Audit Committee had two scheduled meetings in the year. Both serving members attended both meetings held in the year. As there is now only one Non-Executive Director the Chairman and the Non-Executive Director review the financial statements with the auditors. There is no Nomination Committee. Given the size of the Group, the Board do not consider a Nomination Committee appropriate (paragraph A4 of the Code). PERFORMANCE EVALUATION There is currently no formal performance evaluation of the board, its committees and its individual directors (paragraph A6.1 of the Code). COMMUNICATION WITH SHAREHOLDERS The Directors are available to shareholders at any time to discuss strategy and governance matters. In addition, all Company announcements are published on the Company’s website, together with financial results. All shareholders have the opportunity to ask questions and express their views at the Company’s Annual General Meeting, at which all Directors are available to take questions. With the exception of the matters referred to above the Company has complied throughout the financial year with provisions of Section 1 of Revised Combined Code, issued in July 2008. AUDIT AND INTERNAL CONTROL The primary role of the Audit Committee was to keep under review the Group’s financial systems and controls and its financial reporting procedures. In fulfilling this role, the Committee received and reviews work carried out by the external auditors and their findings. The Board had overall responsibility for operating and monitoring the system of internal control within the Group and for monitoring its effectiveness. The system includes an on-going process for identifying, evaluating and managing significant 7 FEEDBACK PLC CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MAY 2013 AUDIT AND INTERNAL CONTROL (continued) business risks. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group's system was designed to provide the directors with reasonable assurance that any material problems were identified on a timely basis and dealt with appropriately. Guidance on the Turnbull Report was issued in September 1999 and gave guidance to Directors on the requirements of the Combined Code for reviewing the effectiveness of the Group's system of internal control, encompassing operational, compliance and risk management matters in addition to the traditional financial issues. The Audit Committee reviewed the effectiveness of the internal controls on an annual basis on behalf of the Board and considered that, given the small size of the Company and the close involvement of the Executive Directors in the day to day operations, it had complied with the requirements in the Combined Code and the Turnbull Report in the year under review and up to the date of approval of the Annual Report and Accounts. The key elements of the system, which had been designed to meet the specific needs and business risks of the Group, include: • • clearly defined organisation structures with segregation of duties wherever practicable; agreement of Group short term financial objectives and business plans; • monthly review by the Board of Group Financial Statements and monitoring of results against budgets; • • Board control over treasury, taxation, legal, insurance and personnel issues; Board control over appraisal, review and authorisation of capital expenditure. In common with organisations of similar size the Executive Directors were heavily involved in the day to day running of the business. The directors believe that although the Company's controls may be slightly less formal than those of larger companies, the close involvement of the Executive Directors more than compensated for this. The Board believes that it is not currently appropriate for the Company to maintain an internal audit function because of the small size of the Group following the recent disposals of subsidiaries. The Audit Committee considered the independence and objectivity of the external auditors on an annual basis, with particular regard to non-audit services. The split between audit and non-audit fees for the year and information on the nature of the non- audit fees appear in note 6 to the financial statements. The non-audit fees are considered by the Committee not to affect the independence or objectivity of the auditors. The Audit Committee monitors such costs in the context of the audit fee for the year, ensuring that the value of non-audit services does not increase to a level where it could affect the auditors’ objectivity and independence. The Audit Committee also received an annual confirmation of independence from the auditors. GOING CONCERN After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the accounts. Further information in respect of the Director’s consideration of going concern is included in note 1(c) to the financial statements. 8 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FEEDBACK PLC We have audited the financial statements of Feedback Plc for the year ended 31 May 2013 which comprise the Statement of Comprehensive Income, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Balance Sheets, the Consolidated and Company Cash Flow Statements and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Directors’ Responsibilities Statement set out on page 6, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition we read all the financial and non financial information in the Directors’ Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material inconsistencies we consider the implication for our report. Opinion on financial statements In our opinion: • • • • the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 May 2013 and of the group’s loss for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • • • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. George Crowther (Senior statutory auditor) for and on behalf of haysmacintyre, Statutory Auditor 26 Red Lion Square London WC1R 4AG 9 FEEDBACK PLC STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MAY 2013 Note 2013 £000 Continuing 2013 £000 Discontinued 2013 £000 Total Continuing 2012 £000 2012 £000 Discontinued 2012 £000 Total REVENUE Cost of Sales GROSS PROFIT Other Operating Expenses OPERATING LOSS Net finance expense (Loss)/profit on ordinary activities before taxation Tax charge LOSS/(PROFIT) ON ORDINARY ACTIVITIES AFTER TAX Profit/(loss) on disposal of discontinued operations (Loss)/profit for the year attributable to the equity Shareholders of the Company Other comprehensive income/(expense) Translation differences on overseas operations Total comprehensive expense for the year LOSS PER SHARE (pence) 4 5 6 7 9 - - - (492) (492) (57) 709 (890) (181) - 1,719 1,719 (1,010) (1,010) 709 - - - 7,046 7,046 (4,598) (4,598) 2,448 2,448 (1,382) (509) (2,353) (2,862) (673) (509) (57) (13) 95 - 95 (23) (414) (13) (427) (23) (549) (181) (730) (522) - - - - (549) (181) (730) (522) 72 (450) 12 - 382 382 - (1,369) (1,369) (549) 201 (348) (522) (1,297) (1,819) (3) (351) 10 (1,809) Basic and diluted 11 (0.42) 0.15 (0.27) (0.42) (1.05) (1.47) The notes on pages 16 to 32 form part of these financial statements. 10 FEEDBACK PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MAY 2013 GROUP Share Capital £000 Share Premium £000 Capital Reserve £000 Retained Earnings £000 Translation Reserve £000 273 54 - 327 - 327 At 1 June 2011 New shares issued Total comprehensive expense for the year At 31 May 2012 Total comprehensive expense for the year At 31 May 2013 COMPANY At 1 June 2011 New shares issued Total comprehensive expense for the year 300 - 1,657 - (214) - 633 218 - - (1,819) 10 (1,809) 851 300 (162) (204) 1,112 - - (348) (3) 851 300 (510) (207) Share Capital £000 Share Premium £000 Retained Earnings £000 633 218 824 - 273 54 - - (1,148) (1,148) Total £000 2,649 272 (351) 761 Total £000 1,730 272 At 31 May 2012 327 851 (324) 854 Total comprehensive expense for the year At 31 May 2013 - - (73) 327 851 (397) (73) 781 The notes on pages 16 to 32 form part of these financial statements. 11 FEEDBACK PLC CONSOLIDATED BALANCE SHEET AT 31 MAY 2013 ASSETS Non-current assets Property, plant and equipment Intangible assets Current assets Inventories Trade receivables Other receivables Cash and cash equivalents Non current assets held for sale Total assets LIABILITIES Non-current liabilities Deferred tax liabilities Current liabilities Trade payables Other payables Bank borrowings Total liabilities TOTAL NET ASSETS EQUITY Capital and reserves attributable to the Company’s equity shareholders Called up share capital Share premium account Capital reserve Translation reserve Retained earnings TOTAL EQUITY Notes £000 £000 £000 £000 2013 2012 - - 15 342 102 434 - 14 15 16 17 13 9 18 20 - - - 357 940 1,297 - 536 536 761 327 851 300 (207) (510) 761 316 343 160 - 228 688 158 73 330 403 819 1,050 2,272 86 1,074 1,160 1,112 327 851 300 (204) (162) 1,112 The financial statements were approved and authorised for issue by the Board of Directors on 5 November 2013 and were signed below on its behalf by: N.S. Shepheard Chairman The notes on pages 16 to 32 form part of these financial statements. 12 FEEDBACK PLC COMPANY BALANCE SHEET AT 31 MAY 2013 ASSETS Non-current assets Property, plant and equipment Investments Current assets Other receivables Cash and cash equivalents Total assets LIABILITIES Current liabilities Trade payables Other payables Bank borrowings Total current liabilities TOTAL NET ASSETS EQUITY Capital and reserves attributable to the Company’s equity shareholders Called up share capital Share premium account Retained earnings TOTAL EQUITY Co. Number 00598696 Notes £000 £000 £000 £000 2013 2012 973 340 14 12 17 18 20 - - 1,313 1,313 102 430 - 532 781 327 851 (397) 781 1,108 - 34 140 174 1,108 1,282 90 197 141 428 854 327 851 (324) 854 The financial statements were approved and authorised for issue by the Board of Directors on 5 November 2013 and were signed below on its behalf by: N.S. Shepheard Chairman The notes on pages 16 to 32 form part of these financial statements. 13 FEEDBACK PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MAY Cash flows from operating activities Loss before tax Adjustments for: Impairment provision against property Net finance expenditure Depreciation and amortisation Loss on disposal of property, plant and equipment Foreign exchange difference Decrease /(increase) in inventories Decrease in trade receivables Decrease in other receivables Decrease/(increase) in trade payables Decrease in other payables Net cash generated by/(used in) operating activities Cash flows from investing activities Purchase of tangible fixed assets Purchase of intangible assets Net cash disposed of with subsidiary Net proceeds from sale of subsidiary Net cash used in investing activities Cash flows from financing activities Interest paid Proceeds of share issue Net cash used from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2013 2012 £000 £000 £000 £000 (730) (427) 110 57 241 17 3 193 31 136 36 39 (9) (126) (11) 570 (57) - - 13 508 - (10) (310) (81) 42 (286) 434 (51) (258) - - 863 133 310 (117) 424 (309) (13) 272 (57) 500 (158) 342 259 (167) 9 (158) The notes on pages 16 to 32 form part of these financial statements. 14 FEEDBACK PLC COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MAY 2013 Cash flows from operating activities Loss before tax Adjustments for: Provision against investment Provision against intercompany receivable Finance charges Depreciation and amortisation Loss on sale of fixed assets (Increase)/decrease in other receivables Increase/(decrease) in trade payables Increase/(decrease) in other payables Net cash used in operating activities Cash flows from investing activities Purchase of tangible fixed assets Net proceeds from sale of subsidiary Net cash used in investing activities Cash flows from financing activities Interest paid Proceeds of share issue Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2013 2012 £000 £000 £000 £000 (503) (776) - 155 57 17 17 (18) 12 231 - 570 (57) - 80 147 13 90 - (33) 29 5 (33) - (13) 272 331 (445) (33) 259 (219) 78 (141) 471 (32) 570 (57) 481 (141) 340 The notes on pages 16 to 32 form part of these financial statements. 15 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2013 1. General information The Group was a leader in international markets in design, manufacture and marketing of electronic, electrical and computer based equipment. During the year the Company sold its remaining operating subsidiary, Feedback Data plc, and on 31 May 2013 became an investment company. The Company is a public limited company domiciled in the United Kingdom and incorporated under registered number 00598696 in England and Wales. The Company’s registered office is Maple Barn, Beeches Farm Road, Uckfield, East Sussex, TN22 5QD The Company is listed on AIM of the London Stock Exchange. These Financial Statements were authorised for issue by the Board of Directors on the 5 November 2013 2. Adoption of new and revised International Financial Reporting Standards No new IFRS standards, amendments or interpretations became effective in 2012 which had a material effect on these Financial Statements. At the date of approval of these Financial Statements, the following IFRS Standards and Interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective. These new Standards, Amendments and Interpretations are effective for accounting periods beginning on or after the dates shown below: Standard Description Effective for annual periods beginning on or after: IFRS 7 IFRS 10 IFRS 11 IFRS 12 IFRS 13 IAS 12 IAS 19 Amendment – Transfer of financial assets Consolidated Financial Statements Joint Arrangements Disclosure of interests in other entities Fair value measurement Deferred Tax: Recovery of Underlying Assets Employee benefits 1 Jul 2011 1 Jan 2014 1 Jan 2013 1 Jan 2014 1 Jan 2013 1 Jan 2012 1 Jan 2013 There have been various amendments made to existing standards and interpretations as a result of the May 2010 improvements to IFRSs, which provide clarifications to existing requirements. Amendments have been made to the following standards: IFRS 3 ‘Business Combinations’ – transition requirements for contingent consideration; measurement of non-controlling interest; and unreplaced and voluntary replaced share-based payment awards. IFRS 7 ‘Financial Instruments’ – increased emphasis on the interaction between qualitative and quantitative disclosures. IAS 1 ‘Presentation of Financial Statements’ – clarification of the presentation of the statement of changes in equity. IAS 27 ‘Consolidated and Separate Financial Statements’ – transition requirements for amendments made as a result of IAS 27 (revised). IAS 34 ‘Interim Financial Reporting’ – accounting for significant events and transactions The Group has not early adopted these amended standards and interpretations. The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s Financial Statements in the periods of initial application. 3. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation These financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements (November 2013). The policies set out below have been consistently applied to all the years presented. These consolidated financial statements have been prepared under the historical cost convention. No separate income statement is presented for the parent Company as provided by Section 408, Companies Act 2006. During the period the group disposed of its subsidiary Feedback Data plc, in the previous period the group disposed of its subsidiaries Feedback Instruments Limited and Feedback Inc. Subsequent to the year end disposed of its property (held by Brickshield Limited). For these reasons the results of these subsidiaries have been disclosed as discontinued and the property classified ‘as held for sale’. 16 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 (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 2012 and 2013. The accounts of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. (c) Going Concern The Group disposed of Feedback Data plc during the year and subsequent to the year end disposed of its investment property for £940,000. The company become an investment company following the disposal of Feedback Data plc. The Directors have produced forecasts which show that the company has adequate cash resources for at least the next twelve months from the date of this report. However, to achieve significant investments in the future it may be necessary to raise further capital. The Directors believe that the company is a going concern and has therefore prepared the financial statements on a going concern basis (d) Intangible assets Intangible assets were 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 assets related to software development of products were integral to the trade of the Group’s data capture and access control products. Amortisation is recognised in other operating expenses in the income and expenditure account. The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstance indicate that the carrying value may not be recoverable. Impairment losses are recognised in other operating expenses in the income and expenditure account. Research expenditure was recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) being recognised as intangible assets when it is probable that the project will be a success, considering its commercial and technological feasibility, and costs can be measured reliably. Other development expenditures were recognised as an expense as incurred. Development costs previously recognised as an expense were not recognised as an asset in a subsequent period. Development costs that have a finite useful life and that have been capitalised were amortised from the commencement of the commercial production of the product on a straight line basis over a period of 36 months. (e) Valuation of Investments Investments held as non-current assets are stated at cost less any provision for impairment. (f) Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. 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 purchase 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 was recognised in the balance sheet as goodwill and is not amortised. After initial recognition, goodwill is not amortised but is stated at cost less any accumulated impairment loss, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstance indicate that the carrying value may be impaired. For the purposes of impairment testing, goodwill is allocated to the related cash generating units monitored by management. Where the recoverable amount of the cash generating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement. 17 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 (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: Buildings Plant and equipment Motor vehicles 2.5%p.a 10 – 50% p.a. 25 – 33% p.a. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement. (i) Leases Assets held under finance leases and the related lease obligations are recorded in the balance sheet at the fair value of the leased assets at the inception of the leases. The amounts by which the lease payments exceed the recorded lease obligations are treated as finance charges which are amortised over each lease term to give a constant rate of charge on the remaining balance of the obligation. Rental costs under operating leases are charged to the income statement in equal annual amounts over the period of the lease. (j) Inventories Inventories are stated at the lower of cost and net realisable value. Cost represents materials, direct labour and appropriate production overheads. (k) 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. Assets and liabilities of the overseas subsidiaries are translated into sterling at the closing rate of exchange and trading results at the average rate of exchange for the period. These translation differences are dealt with as a movement in reserves. (l) Revenue recognition Revenue, which is stated net of Value Added Tax, represents the total amount receivable in the ordinary course of business after eliminating intra-Group transactions. (m) Pension Costs The Company operated a defined contribution pension scheme during the year. The pension charge represents the amounts payable by the Company to the scheme in respect of the year. Defined benefit scheme The Company formerly operated a defined benefit pension scheme. During 2007 the scheme was transferred to the Pension Protection Fund (PPF) for assessment. The PPF completed its assessment and confirmed the transfer in February 2012. The Company no longer makes contributions to the scheme and on the basis that it has no ongoing obligations in relation to the scheme it does not recognise the deficit/surplus on its balance sheet. (n) Taxation The tax expense represents the sum of the current tax expense and deferred tax expense. The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. 18 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 (o) Financial instruments In relation to the disclosures made in note 19: • • short term debtors and creditors are not treated as financial assets or financial liabilities except for the currency disclosures. the Group does not hold or issue derivative financial instruments for trading purposes. (p) Employee share options The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 April 2006. The Group issues equity-settled share-based payment transactions to certain employees. Equity-settled share-based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. Fair value is measured by use of the Black Scholes option pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of non- transferability, exercise restrictions, and behavioural considerations. (q) Non current Assets held for Sale Non current assets held for sale are measured at the lower of carrying amount and fair value less costs to sell. Assets are recognised as held for sale and are redesignated within current assets when available for immediate sale in their present condition subject only to completion of terms. A sale is only considered to be highly probable when the appropriate level of management is committed to a plan to sell the asset, and an active marketing program to locate a buyer has been initiated. (r) Key sources of estimating uncertainty The preparation of financial statements requires management and the Board of Directors to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances, the results which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. • • Stock provisions – provisions were made against slow moving stock based on sales and production reports from prior periods. If sales of particular products did not meet past levels there is a risk that stock provisions can be understated. Intangible assets - were 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 19 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 4. SEGMENTAL REPORTING The Directors have determined the operating segments based on the management reports that are used to make strategic decisions. The Group’s business was analysed below between the Instruments segment and the Data segment. The Instruments segment primarily related to the former subsidiary companies Feedback Instruments plc and Feedback Incorporated which were disposed of last year. The Data segment relates to the subsidiary company Feedback Data plc which was disposed of on 31 May 2013. Details of these companies are included in the Directors’ Report. On the 30 May 2013 the group disposed of its Data business (see Note 12). The results therefore include the results of the Data business for the full year to 31 May 2013. On the 23 May 2012 the group disposed of its Instruments business. For this reason the results shown below disclose the results of the Instruments business for the period to 23 May 2012. Data £000 1,551 - (38) - - - 135 Data £000 1,925 - (286) 781 (602) 179 185 Other £000 168 (57) (692) 1,297 (536) 761 - Other £000 186 (13) (452) 2,524 (2,138) 386 33 Total £000 1,719 (57) (730) 1,297 (536) 761 135 Total £000 7,046 (13) (427) 3,305 (2,740) 565 309 Year ended 31 May 2013 Instruments £000 Revenue External Finance expense Loss before tax Balance sheet Assets Liabilities Capital expenditure Year ended 31 May 2012 Revenue External Finance expense Loss before tax Balance sheet Assets Liabilities Capital expenditure - - - - - - - Instruments £000 4,935 - 311 - - 91 20 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 4. SEGMENTAL REPORTING (continued) Reported segments’ assets are reconciled to total assets as follows: Segment assets for reportable segments Unallocated: Inter-company receivables adjustment Intangible assets Investments Total assets per the balance sheet Reported segments’ liabilities are reconciled to total assets as follows:. Segment liabilities for reportable segments Inter-company payables adjustment Deferred tax Total liabilities per the balance sheet 2013 £000 2012 £000 1,297 3,305 - - - (1,223) 330 (140) 1,297 2,272 2013 £000 536 - - 2012 £000 2,740 (1,666) 86 536 1,160 External revenue by location of customer 2013 £000 2012 £000 United Kingdom Rest of Europe United States of America Other Americas Asia Africa Middle East Total 1,431 288 - - - - - 1,719 3,070 644 445 498 1,040 384 965 7,046 Total assets by location of assets 2013 £000 1,297 - - - - - - 2012 £000 2,258 14 - - - - - 1,297 2,272 Capital expenditure by location of assets 2013 £000 2012 £000 135 - - - - - - 135 309 - - - - - - 309 5 OTHER OPERATING EXPENSES Distribution costs Administrative costs: Research and development Other 2013 £000 2012 £000 - 1,821 243 1,139 1,382 619 422 2,862 21 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 6. OPERATING LOSS This is stated after charging/(crediting) Depreciation and amortisation Owned assets Auditors’ remuneration Audit of parent company and group accounts Audit of subsidiaries Tax and other services Operating lease rentals Plant and machinery Land and buildings Write off of intercompany loan Impairment of property held for sale Write back of stock provisions 7. NET FINANCE COSTS On bank loans and overdrafts 2013 £000 2012 £000 241 11 8 9 65 4 367 110 - 2013 £000 57 57 508 12 33 10 92 11 - 273 (260) 2012 £000 13 13 The bank overdraft borrowings included are in sterling and based upon varying margins above NatWest Bank base rate depending upon the overdraft level utilised. 8. DIRECTORS AND EMPLOYEES Number of employees Production Selling and distribution Administration Research and development Staff costs Wages and salaries Redundancy payments Social security costs Payments to defined contribution pension scheme 2013 2012 Average Year end Average Year end 2 9 5 2 18 - - 2 - 2 24 30 4 9 67 2013 £000 640 60 69 35 804 3 9 9 4 25 2012 £000 1,690 - 196 58 1,944 22 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 8. DIRECTORS AND EMPLOYEES (continued) The value of all elements of remuneration received by each Director in the year was as follows: Salary £000 Fees £000 Benefits in kind £000 Pension contributions £000 Total £000 Year ended 31 May 2013 Executive Directors M P Bird (Resigned 31 May 2013) N S Shepheard Non-executive Directors D Barton (Resigned 16 October 2012) Professor J H Westcott (Resigned 11 November 2012) S G Barrell (Appointed 11 November 2012)* Total Year ended 31 May 2012 Executive Directors M P Bird D J Marks (Resigned 14 October 2011) N S Shepheard Non-executive Directors D Barton Professor J H Westcott Total 85 100 - - 185 95 88 100 - 11 294 - - - - 13 13 - - - 9 3 12 - - - - - 1 1 - - - 2 - 4 - - - - 4 4 3 - - - 7 89 100 - - 13 202 100 92 100 9 14 315 Mr N S Shepheard holds options over 4,000,000 (2012: 4,000,000) shares exercisable on or after February 2014. Mr M P Bird holds options over no shares (2012: 1,000,000). Further details can be found under Note 20. * S G Barrell is paid consultancy fees through and agreement with SGB Consulting. 23 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 9. TAXATION LOSS ON ORDINARY ACTIVITIES (a) The tax charge for the year: UK Corporation tax Current tax Deferred tax charge (b) Tax reconciliation Loss on ordinary activities before tax Loss on ordinary activities at the standard rate of corporation tax in the UK of 24% (2012 - 26 % ) Effects of: Expenses non deductible for tax purposes Depreciation for the period in excess of capital allowances Excess tax losses carried forward Other timing differences Tax charge for the year 2013 £000 - - - - 2012 £000 - - 23 23 (730) (427) (175) (110) 66 4 108 (3) - 114 9 73 (62) 23 (c) Factors which may affect future tax charges In view of the tax losses carried forward there is a deferred tax amount of approximately £152,000 (2012: £1,086,000) which has not been recognised in these Financial Statements. This contingent asset will be realised when the Group makes sufficient taxable profits in the relevant Company. (d) Deferred tax - group The deferred tax included in the balance sheet is as follows: Deferred tax liability Deferred tax on development expenditure As at 1 June 2012 Charge in the year Disposed with subsidiary undertaking (e) Deferred tax - company 2013 £000 86 - (86) - 2012 £000 63 23 - 86 In view of the tax losses carried forward there is a deferred tax amount of approximately £105,000 (2012: £104,000) which has not been recognised in these Financial Statements. This contingent asset will be realised when the Group makes sufficient taxable profits in the relevant Company. 24 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 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 £73,000 (2012: £1,148,000) which is dealt with in the financial statements of the parent Company. 11. LOSS PER SHARE . Basic earnings per share is calculated by reference to the loss on ordinary activities after taxation of £348,000 (2012: £1,819,000) and on the weighted average of 130,949,746 (2012: 123,679,889) shares in issue. 12. INVESTMENTS COMPANY - Shares in Group undertakings Cost At 1 June 2012 Disposal of Feedback Data Limited At 31 May 2013 Provisions At 1 June 2012 Provided in the year At 31 May 2013 Net Book Value At 31 May 2013 At 31 May 2012 Total £000 2,007 (140) 1,867 1,867 - 1,867 - 140 All of the above investments are unlisted. Particulars of principal subsidiary companies during the year, all the shares of which being beneficially held by Feedback PLC, were as follows: Company Activity Feedback Data plc Feedback Black Box Company Limited Design, manufacture and sale of computer peripheral equipment for industry and commerce Design, manufacture and sale of electronic equipment for the leisure industry Feedback Data GmbH Distribution of products for Feedback Data plc Brickshield Limited Holding company of property located at Park Road, Crowborough Country of operation and incorporation Proportion of Shares held England England Germany England 100% Ordinary £1 100% Ordinary £1 100% Specific capital 100% Ordinary £1 Feedback Data GbmH is a subsidiary of Feedback plc following the transfer of ownership from Feedback Data plc on 31 May 2013. All the subsidiary companies have been included in these consolidated financial statements. During the year under review the group disposed of its interests in Feedback Data plc. The results of this subsidiary are included in the income statement to the date of the disposal, 31 May 2013. Feedback Black Box Company Limited ceased to trade on 5 June 2012. The results of this subsidiary are included in the income statement to the date of cessation of trade, 5 June 2013. During the prior year the group disposed of its interests in Feedback Instruments Limited and Feedback Incorporated. The results of these subsidiaries are included in the income statement to the date of the disposal, 23 May 2012. 25 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 12. INVESTMENTS (continued) Disposal of subsidiary undertaking, Feedback Data plc. Intangible assets Tangible assets Current assets Inventories Debtors Cash Deferred tax Net liabilities Total assets disposed of Net proceeds Profit on disposal £’000 264 13 277 123 323 11 (86) (460) 188 (570) 382 On the acquisition of the entire issued share capital of Feedback Data plc, the buyer assumed all assets, liabilities and TUPE obligations of the Company. The cash flows relating to Feedback Data plc were as follows: Operating cash flows Investing cash flows 2013 £’000 225 (138) 2012 £’000 (274) (185) The turnover and loss after tax included in the consolidated accounts for the year ended 31 May 2012 in respect of Feedback Data plc was £1,925,000 and £150,000 respectively. 13. ASSETS HELD FOR SALE At 31 May 2011 Reclassification from property, Plant and Equipment (note 14) Impairment At 31 May 2012 Impairment in the year At 31 May 2013 Land & Buildings £000 - 1,323 (273) 1,050 (110) 940 Total £000 - 1,323 (273) 1,050 (110) 940 Reclassification: As at 31 May 2012 the group was actively seeking to dispose of its property. The asset has therefore been reclassified as held for sale. Subsequent to the 31 May 2013 the property was sold for £940,000 and therefore a further impairment charge of £110,000 has been made in the year. 26 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 14. PROPERTY, PLANT AND EQUIPMENT GROUP Cost of valuation At 31 May 2011 Additions Disposal Reclassification At 31 May 2012 Additions Disposal Disposed with subsidiary Retired in the year At 31 May 2013 Depreciation At 31 May 2011 Charge for the year Disposal Reclassification At 31 May 2012 Charge for the year Disposal Disposed with subsidiary Retired in the period At 31 May 2013 Net Book Value At 31 May 2013 At 31 May 2012 Total £000 2,315 51 (509) (1,441) 416 9 (85) (65) (275) - 810 146 (495) (118) 343 49 (65) (52) (275) - - 73 Land and Buildings £000 Plant and Equipment £000 Motor Vehicles £000 855 51 (504) - 402 9 (71) (65) (275) - 700 121 (492) - 329 49 (51) (52) (275) - - 73 19 - (5) - 14 - (14) - - - 16 1 (3) - 14 - (14) - - - - - 1,441 - - (1,441) - - - - - - 94 24 - (118) - - - - - - - - 27 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 14. PROPERTY, PLANT AND EQUIPMENT (continued) COMPANY Cost or valuation At 31 May 2011 Additions At 31 May 2012 Disposals Retired in the year At 31 May 2013 Depreciation At 31 May 2011 Charge for the year At 31 May 2012 Disposals Charge for the year Retired in the year At 31 May 2013 Net Book Value At 31 May 2013 At 31 May 2012 15. INTANGIBLE ASSETS GROUP Cost At 31 May 2011 Additions Disposed on sale of subsidiary At 31 May 2012 Additions Disposed on sale of subsidiary At 31 May 2013 Amortisation At 31 May 2011 Charge for the year Disposed on sale of subsidiary At 31 May 2012 Charge for the year Disposed on sale of subsidiary At 31 May 2013 Net Book Value At 31 May 2013 At 31 May 2012 28 Plant and Equipment £000 Total £000 292 33 325 (50) (275) - 201 90 291 (33) 17 (275) - - 34 292 33 325 (50) (275) - 201 90 291 (33) 17 (275) - - 34 Development Expenditure £000 4,095 258 (2,236) 2,117 126 (2,243) - 3,363 362 (1,938) 1,787 192 (1,979) - - 330 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 16. INVENTORIES Raw materials and consumables Work in progress 17. OTHER RECEIVABLES Amounts falling due within one year Amounts owing by subsidiary undertakings Other receivables Prepayments 18. OTHER PAYABLES Amounts falling due within one year Other payables Other taxes and social security Accruals and deferred income 2013 £000 - - - 2013 £000 - - 15 15 2013 £000 349 22 63 434 Group 2012 £000 308 8 316 Company 2013 £000 2012 £000 - - - - - - Group Company 2012 £000 - 14 146 160 2013 £000 960 - 13 973 2012 £000 1,097 - 11 1,108 Group Company 2012 £000 124 44 520 688 2013 £000 346 22 62 430 2012 £000 122 22 53 197 Included within other payables is a loan and interest thereon from a company connected to a shareholder of £345,000 (2012 £101,000). The loan attracted interest at 12% per annum and was secured on the group’s property. The loan was repayable within 6 months and was fully repaid on 31 July 2013 following the sale on the property. 19. 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 risks: • Credit risk • • Foreign currency risk Liquidity risk • Cash flow interest rate risk 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. 29 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 19. FINANCIAL INSTRUMENTS (continued) 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 was exposed to credit risk primarily on its trade receivables, which were spread over a range of customers and countries, a factor that helped to dilute the concentration of the risk. It was Group policy, implemented locally, to assess the credit risk of each new customer before entering into binding contracts. Each customer account was then reviewed on an ongoing basis (at least once a year) based on available information and payment history. The maximum exposure to credit risk is represented by the carrying value in the balance sheet. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Current financial assets Trade and other receivables Cash and cash equivalents Analysis of trade receivables £’000 Cash, loans and receivables 2013 £000 15 342 357 2012 £000 503 - 503 2013 2012 Total Current 30 days past due 90 days past due - 343 - 103 - 163 - 30 90 days past due - 47 The Group policy made provisions against those debts that were overdue, unless there were grounds for believing that all or some of the debts would be collected. During the year the value of provisions made in respect of bad and doubtful debts was £Nil (2012: £3,000) which represented 0% (2012: 1%) of revenue. This provision was included within the management and administration costs in the comparative Consolidated Income Statement. Foreign currency risk Foreign exchange transaction risk arose when the Group entered into transactions denominated in a currency other than their functional currency. The general policy for the Group was to sell to customers in the same currency that goods are purchased in, reducing the transactional risk. Where transactions were not matched excess foreign currency amounts generated from trading were converted back to sterling and required foreign currency amounts were converted from sterling and the use of forward currency contracts was considered. Foreign exchange translation risk arises on translation of the balance sheets of Group operations whose functional currency is different to that of the Group as a whole. The Group’s main foreign currency risk was the short-term risk associated with accounts receivable and payable denominated in currencies that were not the subsidiaries functional currency. The risk arose on the difference in the exchange rate between the time invoices were raised/received and the time invoices were settled/paid. For sales denominated in foreign currencies the Group tried to ensure that the purchases associated with the sale were in the same currency. 30 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 19. FINANCIAL INSTRUMENTS (continued) The following table shows the net assets exposed to exchange rate risk that the Group has at 31 May 2013: Trade receivables Cash and cash equivalents Trade payables 2013 £000 - 3 - 3 2012 £000 41 109 (5) 145 The Group was exposed to currency risk because it undertook trading transactions in US dollars and euros. The Directors did 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 when the Directors considered foreign currencies were weak and it was known that there would be a requirement to purchase those currencies, forward arrangements may have been entered into. There were no outstanding forward arrangements as at 31 May 2013. Liquidity risk Cash flow forecasting is performed 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. Current financial liabilities Trade and other payables Overdraft Financial liabilities measured at amortised cost 2013 £000 536 - 2012 £000 916 158 The following are maturities of financial liabilities, including estimated contracted interest payments. Carrying amount Contractual cash flow 6 months or less 6-12 months 1 or more years 2013 Trade and other payables Overdraft 2012 Trade and other payables Overdraft Cash flow interest rate risk 536 - 916 158 536 - 916 158 536 - 916 158 - - - - - - - - The Group presently has no substantial interest rate 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. 31 FEEDBACK PLC NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 MAY 2013 20. SHARE CAPITAL Allotted, called up and fully paid share capital: 130,946,746 New Ordinary Shares of 0.25p each (2012: 130,946,746) 2013 £000 327 327 2012 £000 327 327 Share Options Share options are granted to Directors and employees. Options are conditional on the employee completing a specific length of service (the vesting period). The options are exercisable from the end of the vesting period and lapse after ten years after the grant date. The Group has no legal or constructive obligation to repurchase or settle the options in cash. Share options are valued using the Black-Scholes option pricing model and no performance conditions are included in the fair value calculations. The risk free rate was 2.67%. The expected volatility is based on historical volatility over the last two years and is estimated to be 55%. The average share price during the year was 0.73 pence. During the year the Company had the following share options in issue: Number of options At June 1 2012 1,000,000 3,000,000 1,000,000 5,000,000 . Granted Cancelled At 31 May 2013 Exercise price (pence) Exercise date - - - - 1,000,000 1,000,000 3,000,000 - 1.63 1.13 1.13 24/02/14 to 23/02/21 13/10/14 to 12/10/21 1,000,000 4,000,000 All 4,000,000 of the options at 31 May 2013 are only exercisable upon meeting of certain performance conditions relating to shares reaching mid-market criteria for a minimum period of 90 days. All share options vest three years after the grant date. Each option can only be exercised from three years after the grant date to ten years after the date of grant. 21. FINANCIAL COMMITMENTS The Company gave cross guarantees in respect of bank and other borrowings of its UK subsidiary undertakings at the year end of £300,000 (2012: £400,000). This guarantee was cancelled on 25 July 2013. 22. 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 £35,000 (2012: £58,000). There were no outstanding or prepaid contributions at the year end. 22. Post Balance Sheet Events On the 31 July 2013 the company’s subsidiary Brickshield Limited sold its property for £940,000. 32 FEEDBACK PLC NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the annual general meeting of Feedback Plc (the “Company”) will be held at Sanlam Securities UK Limited, 10 King William Street, London EC4N 7TW on 29 November 2013 at 11 am. You will be asked to consider and, if thought fit, pass the resolutions below. Resolutions 5 and 6 will be proposed as special resolutions. All other resolutions will be proposed as ordinary resolutions. As Ordinary Resolutions: 1. To receive and adopt the Company's annual accounts for the financial year ended 31 May 2013 together with the Directors' report and the auditors' report on those accounts. 2. To re-elect N S Shepheard, who retires by rotation pursuant to the articles of association of the Company and who, being eligible, offers himself for re-election as a Director. 3. To re-appoint haysmacintyre as auditors of the Company to hold office until the conclusion of the next annual general meeting and to authorise the Directors to fix their remuneration. 4. THAT, in substitution for all previous authorities and in accordance with section 551 of the Companies Act 2006 (the "Act"), the Directors be and they are hereby generally and unconditionally authorised to allot shares in the Company or grant rights to subscribe for or convert any securities into shares (“Rights”), provided that this authority shall be limited to the allotment of up to an aggregate nominal amount of £108,031provided that this authority shall expire at the earlier of the next annual general meeting of the Company or 30 November 2014 and that the Company may before such expiry make an offer or agreement which would or might require shares or Rights to be granted in pursuance of any such offer or agreement notwithstanding that the authority conferred hereby has expired. As Special Resolutions: 5. THAT, subject to the passing of resolution 5 above, but in substitution for all previous authorities, and in accordance with section 570 of the Act, the Directors be and they are hereby empowered to allot equity securities (as defined in section 560 of the Act) pursuant to the authority conferred by the previous resolution as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities: a. in connection with an offer of such equity securities by way of rights to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings of such shares, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or any legal or practical problems under the laws of any territory, or the requirements of any regulatory body or stock exchange and; b. up to an aggregate nominal amount of £65,473 provided that this authority shall expire at the earlier of the next annual general meeting of the Company or 30 November 2014 and that the Company may before such expiry make an offer or agreement which would or might require equity securities to be granted in pursuance of any such offer or agreement notwithstanding that the authority conferred hereby has expired. 6. THAT, for the purposes of section 701 of the Act, the Company be and is hereby generally and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Act) of ordinary shares of £0.25 each in the capital of the Company ("Ordinary Shares") provided that: a. b. the maximum number of Ordinary Shares which may be purchased is 19,628,917 (representing 14.99% of the Company's issued share capital); the minimum price which may be paid for each Ordinary Share is £0.25 and the maximum price (exclusive of expenses) which may be paid for such shares is 5 per cent above the average of the middle market quotations derived from the Daily Official List of London Stock Exchange plc for the five business days before the purchase is made; c. unless previously renewed, revoked or varied, the authority hereby conferred shall expire at the conclusion of the next annual general meeting of the Company to be held in 2013 or, if earlier, on the date which is [6 months] after the date of the passing of this resolution; and d. the Company may make a contract or contracts to purchase Ordinary Shares under the authority hereby conferred prior to the expiry of such authority which contract or contracts will or maybe executed wholly or partly after the expiry of such authority, and may make a purchase of Ordinary Shares in pursuance of any such contract or contracts. Dated 5 November 2013 By Order of the Board N S Shepheard, Director Registered Address: Maple Barn, Beeches Farm Road, Uckfield, East Sussex TN22 5QD Registered Number: 00598696 33 Explanatory Notes to the Notice of Annual General Meeting The notes on the following pages give an explanation of the proposed resolutions. Resolutions 1 to 5 are proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than half of the votes cast must be in favour of the resolution. Resolutions 4, 5 and 6 are proposed as special resolutions. This means that for each of those resolutions to be passed, at least three-quarters of the votes cast must be in favour of the resolution. Resolution 1: Approval of the annual report and accounts The Company is required to present its report and accounts to shareholders at its AGM. This provides an opportunity to discuss the performance of the Company during the year, its management and prospects for the future. Resolution 2: Re-election of director The Company's articles of association require one-third (but if the number of current Directors of the Board is not three or a multiple of three, as close to one-third as possible (but no more)), of the Board to retire and seek re-election at each AGM. As a consequence, Nicholas Steven Shepheard retires by rotation and being eligible, the Board proposes his re-election as a Director of the Company. Resolution 3: Auditors reappointment and remuneration It is a requirement that the Company’s auditor must be reappointed at each general meeting at which financial statements are laid, in effect, at each AGM. After considering relevant information, the Audit Committee recommended to the Board the reappointment of haysmacintyre. The resolution proposes haysmacintyre’s reappointment and to authorise the Directors to determine their remuneration. Resolution 4: Directors' power to allot relevant securities Under section 551 of the Act, relevant securities may only be issued with the consent of the shareholders, unless the shareholders pass a resolution generally authorising the Directors to issue shares without further reference to the shareholders. This resolution authorises the general issue of shares up to an aggregate nominal value of £108,031, which is equal to one third of the nominal value of the current share capital of the Company. Such authority will expire at the conclusion of the next AGM of the Company or six months after the Company’s accounting reference date (whichever is the earlier). Resolution 5: Disapplication of pre-emption rights on equity issues for cash Section 561 of the Act requires that a company issuing shares for cash must first offer them to existing shareholders following a statutory procedure which, in the case of a rights issue, may prove to be both costly and cumbersome. This resolution excludes that statutory procedure as far as rights issues are concerned. It also enables the Directors to allot shares up to an aggregate nominal value of £65,473, which will be equal to 20% of the nominal value of the current share capital of the Company, assuming resolution 5 being passed. The Directors believe that the powers provided by this resolution will maintain a desirable degree of flexibility. Unless previously revoked or varied, the disapplication will expire on the conclusion of the next AGM of the Company or six months after the Company’s accounting reference date (whichever is the earlier). Resolution 6: Purchase of own shares This resolution seeks authority for the Company to buy its own shares. This resolution would be limited to £49,072representing approximately 14.99% of the Company’s issued share capital, at the latest practicable date prior to the publication of the notice of AGM. In some circumstances, companies may find it advantageous to use surplus funds to purchase their own shares in the market. This can lead to increases in future earnings on those shares not purchased. The Directors confirm that they will only purchase shares where they believe the effect would be in the best interests of shareholders. Notes 1. 2. 3. 4. 5. A member of the Company entitled to attend and vote at the meeting convened by this notice is entitled to appoint one or more proxies to exercise any of his rights to attend, speak and vote at that meeting on his behalf. A proxy need not be a member of the Company but must attend the meeting to represent you. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy please contact Share Registrars on 01252 821390, overseas callers should call +44 1252 821390. A Form of Proxy is enclosed. To be effective, the Form of Proxy together with any power of attorney or other written authority under which it is signed, or a notarially certified copy or a certified copy in accordance with the Powers of Attorney Act 1971 of such power or written authority must be completed signed and to be valid the proxy must be duly executed and deposited with the Company at the offices of the Company’s registrars, Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL, or by scan and email to Share Registrars at proxies@shareregistrars.uk.com, not later than 11.00 a.m. on 27 November 2013. Completion and return of a Form of Proxy will not prevent a member from attending and voting in person if he or she so wishes. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 to be entitled to attend and vote at the meeting (and for the purposes of the determination by the Company’s register of members not less than 48 hours before the time of the meeting or, in the event that the meeting is adjourned, on the Register of Members of the Company not less than 48 hours before the time of any adjourned meeting, and only such members shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries on the Register of Members after 11.00 a.m. on 27 November 2013 or, in the event that the meeting is adjourned, not less than 34 6. 7. 8. 9. 48 hours before the time of any adjourned meeting, shall be disregarded in determining the rights of any person to attend and vote at the meeting. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of any other joint holders. For these purposes, seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding. In the case of a corporation, the Form of Proxy must be executed under its common seal or signed on its behalf by a duly authorised attorney or duly authorised officer of the corporation. A vote withheld option is provided on the Form of Proxy to enable you to instruct your proxy not to vote on any particular resolution. However, it should be noted that a vote withheld in this way is not a “vote’ in law and will not be counted in the calculation of the proportion of votes “For” and “Against” a resolution. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded. Where you have appointed a proxy and would like to change the instructions using another hard-copy Form of Proxy, please contact Share Registrars. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. 10. In order to revoke a proxy instruction, you will need to inform the Company using one of the following methods: By sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Share Registrars Ltd, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice. In either case, the revocation notice must be received by Share Registrars no later than 11.00 a.m. on 27 November 2013. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid. Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated. 11. As at 5.00 p.m. on the date immediately prior to this notice the Company’s issued share capital comprised 130,946,746 ordinary shares of 0.25 pence each (“Ordinary Shares”). Each Ordinary Share carries the right to one vote at a general meeting of the Company and therefore the total number of voting rights in the Company as at 5.00 p.m. on the date immediately prior to this Notice is 130,946,746. 35 Feedback plc Maple Barn, Beeches Farm Road, Uckfield, East Sussex TN22 5QD www.fbk.com 

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