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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Feedback Plc | LSE:FDBK | London | Ordinary Share | GB00BJN59X09 | ORD 50P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 62.50 | 60.00 | 65.00 | 62.50 | 62.50 | 62.50 | 168 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Electronic Computers | 1.03M | -2.92M | -0.2188 | -2.86 | 8.33M |
Hot Features
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RNS Number : 4297F
Feedback PLC
09 October 2008
FEEDBACK PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2008
EXECUTIVE CHAIRMAN'S STATEMENT
The past year has witnessed further considerable change for the Group particularly as a consequence of the arrangements with the Pension
Protection Fund (PPF) on the transfer of the Company's final salary pension scheme. As part of these arrangements and post the placing in
July 2007 which raised £1.4 million gross before expense the Group entered into a Company Voluntary Arrangement (CVA) on the 2 July 2007.
The CVA was discharged on the 11 February 2008 following the final payment of £500,000 to the PPF on the 22 December 2007. The transfer
of the net liability of some £7.9 million to the PPF resulted in the sum of £6.3 million being credited to the Income Statement as an
exceptional item. This sum in the main accounted for profit before tax reaching £6.8 million which after a tax credit of £0.4 million
resulted in profits for the year of £7.2 million.
For the year ending 31 May 2008 the Group produced a trading profit of £484,600 on turnover of £9.6 million. The trading profit was
struck before re-organisation costs of £479,400 most of which were incurred in the second half.
At the time of the interim results it was believed that the second half would be similar to that of the first half. However with the
change of financial management a root and branch review was undertaken and a significant stock discrepancy was uncovered of approximately
£175,000, which is believed to pre-date the interim announcement. A detailed review was undertaken in conjunction with the Company's new
auditors in both identifying and remedying the situation and it is confidently believed that these discrepancies have now been fully
provided for.
During the year we announced the sale of Park Road, the Group's Head Office. This sale had been committed to on the 16 March 2005 when,
in addressing the pension problems, your Board entered into a conditional sale subject to a change in planning consent for the sum of
£955,000. The appropriate consents were finally obtained by the proposed purchaser in March 2007 and completion was set for 22 December
2007. In the negotiations with the PPF it had been agreed that a sum of £500,000 would be paid on the 22 December 2007 upon completion of
the sale of the freehold.
During the prior period significant efforts were made to identify new premises but as a consequence of covenant issues relating to the
CVA and appropriate premises then not being available, the Board agreed to re-acquire the freehold of Park Road for £1.35 million. The
purchase was funded via a combination of existing cash resources and a placing of new ordinary shares with existing shareholders, including
certain Directors, to raise £700,000.
Although this was a far from ideal outcome it has permitted the Group to implement significant changes in its manufacturing works and
processes with a number of functions within Feedback Instruments being sub-contracted and the Company moving more to assembly and test
rather than as before, a fully integrated manufacturer. Further actions are under review.
Whilst it is the Board's intention to relocate the Company to more appropriate premises at some stage, the culture change currently in
progress will be allowed to fully develop before this occurs.
FEEDBACK INSTRUMENTS LIMITED
Although overall sales showed a slight weakening year on year strong sales were achieved in the Middle East, the Indian subcontinent and
Africa. This, combined with a good level of underlying business from around the World, supported by a number of larger individual contracts,
maintained the acceptance of Feedback products in the education market. A number of countries reported improved sales due to the activity
and increased effectiveness of newly appointed agents. There will continue to be agent changes in order to improve performance.
Sales in the UK higher education sector were bolstered by a curriculum-mapping activity which provided very good results at an
educational level where funding is relatively difficult to obtain. The science equipment for schools continued to show significant growth in
the UK. Following a contest with another UK manufacturer, we secured representation in Great Britain from a major European manufacturer for
an excellent range of pneumatics, hydraulics and automation equipment aimed at schools, colleges and universities. Although at an early
stage this range shows encouraging progress and sales are currently exceeding expectations.
New product developments provided encouragement to our international agents and a number of new launches were made. In particular the
new Control Engineering products were well received and, specifically, the development of the Distributed Control System in our Process
Control Range achieved excellent early results and bodes well for the future. We have a strong new product development plan and anticipate
the launch in the current year of a number of new products which will both compliment and expand our new range.
FEEDBACK DATA LIMITED
The terminal product range continues to satisfy the traditional markets of the Time & Attendance Industry, being primarily serviced by a
small but loyal network of Value Added Resellers. This side of the business has remained relatively stable throughout the year. The access
control products, sold through direct and indirect channels, continue to provide an increasingly important revenue stream for the company.
Efforts concentrated during the year on maintaining current market share in the company's chosen markets. The development of a 'common
product processor engine' has been undertaken and is now well advanced. The result should produce a lower manufacturing cost in the current
products as well as providing the guarantee of supply. As an added benefit the entire concept and design will provide a quick and efficient
route to the next generation of product.
During the year 'niche markets' that may benefit from the company's skill sets have been identified. The development of the first
product designed specifically to service these markets is well advanced and it is anticipated that these chosen industries will begin
producing new revenue streams in the near future.
FEEDBACK INCORPORATED
The performance of the American subsidiary was encouraging although the market remains challenging in terms of both competition and
funding. The increased emphasis on using manufacturers' representatives for distribution has begun to pay dividends particularly in the
western states which are more difficult to address directly from our office in North Carolina. An added benefit of this strategy is a
reduction in direct sales costs although the continuing weakness of the dollar has put pressure on margins.
New products, particularly in the Control sector, are beginning to gain acceptance and with enhanced support from the UK, it is hoped
that these improvements in the company's performance can be maintained.
CURRENT TRADING AND FUTURE PROSPECTS
The first three months of the current year have started slowly, although profitably. Trading is showing some weakness, particularly in
international markets, where commitments or orders are taking longer to show as a consequence of the slowdown in world trade and irregular
aid flows. The Group's order book is at a lower level than this time last year although this is partly due to production problems in early
2007. Notwithstanding these developments both divisions are launching new products in the next twelve months which show potential.
In the light of the difficulties in international markets it is appropriate to be cautious of immediate progress recognising that the
Instruments division is heavily reliant on exports although currently the order book is showing some resilience. The Data division is
currently trading slightly below expectations although a number of new relationships are expected to bring significant benefits.
Feedback is now well capitalised and as at 31 May 2008 had net assets of £3.4 million, as against a restated deficit of £6.0 million for
the previous year. In addition net cash has replaced borrowings.
The financial position is now the strongest it has been for many years and permits the Group once again to consider investment in its
two divisions so that the potential that exists maybe more fully exploited. As we enter the maelstrom of the current economic weakness we
are mindful to grow our businesses within our means so that we are as well equipped as possible to survive the growing recessionary trends.
Michael Burt
Executive Chairman
9 October 2008
Enquiries:
Michael Burt
Peter Smith 01892 653322
Feedback plc
Philip Davies 020 7149 6000
Charles Stanley Securities
(Nominated Adviser)
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MAY 2008
Trading Exceptional (a) Year ended Restated
below 31 May 2008 14 months ended
31 May 2007
£000 £000 £000 £000
REVENUE 9,607.4 - 9,607.4 9,639.4
Cost of Sales (6,030.1) - (6,030.1) (5,534.8)
----------------- ----------------- ----------------- -----------------
GROSS PROFIT 3,577.3 - 3,577.3 4,104.6
Other Operating Expenses (3,092.7) 6,294.2 3,201.5 (3,951.2)
----------------- ----------------- ----------------- -----------------
OPERATING PROFIT 484.6 6,294.2 6,778.8 153.4
======== ========
Profit on sale of fixed asset 86.9 307.6
Reorganisation cost (479.4) (763.9)
Gain on cancellation of loan 402.6 -
----------------- -----------------
6,788.9 (302.9)
Net interest (4.9) (143.2)
Finance costs - (248.0)
----------------- -----------------
Profit/(loss) on ordinary 6,784.0 (694.1)
activities before taxation
Tax credit 398.4 47.9
----------------- -----------------
Profit/(loss) for the year
attributable to the 7,182.4 (646.2)
equity shareholders of the
Company
======== ========
PROFIT/(LOSS) PER SHARE
(pence)
Basic 9.25 (4.93)
======== ========
Diluted 9.25 (4.93)
======== ========
Turnover and operating profit are derived from continuing activities.
Exceptional profit of £6,294,200 relates to the write back (after costs) of the deficit on the Group's pension schemes following the
agreement with its Trustees and the Pension Protection Fund. Full details of the agreement are set out in note 7 to the accounts.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 MAY 2008
Year ended Restated
31 May 2008 14 months
ended
31 May
2007
£000 £000
Retained profit/(loss) for the year 7,182.4 (646.2)
Other recognised gains and losses (137.9) 22.9
Actual return less expected return on pension scheme assets - (265.0)
Changes in assumptions underlying the present value of the scheme liabilities - 285.0
----------------
----------------
Total recognised income/(expense) for the year attributable to the
Company's equity shareholders 7,044.5 (603.3)
======== ========
CONSOLIDATED BALANCE SHEET
AT 31 MAY 2008
Restated
As at As at
31 May 2008 31 May 2007
£000 £000 £000 £000
ASSETS
Non-current assets
Property, plant and equipment 1,459.6 59.9
Intangible assets 667.9 898.7
Deferred tax asset 315.8 -
----------------- -----------------
2,443.3 958.6
Current assets
Inventories 1,259.3 1,179.5
Trade and other receivables 1,656.0 2,630.9
Cash and cash equivalents 679.1 486.4
----------------- -----------------
3,594.4 4,296.8
----------------- -----------------
Total assets 6,037.7 5,255.4
----------------- -----------------
LIABILITIES
Non-current liabilities
Borrowings - 505.5
Deferred tax liabilities 187.0 269.6
Retirement benefit obligations - 7,974.4
----------------- -----------------
187.0 8,749.5
Current liabilities
Borrowings 116.5 414.8
Trade and other payables 2,353.2 2,130.7
----------------- -----------------
2,469.7 2,545.5
----------------- -----------------
Total liabilities 2,656.7 11,295.0
----------------- -----------------
NET ASSETS 3,381.0 (6,039.6)
======== ========
EQUITY
Capital and reserves
attributable to the Company's
equity shareholders
Called up share capital 272.9 1,761.2
Share premium account 633.3 936.6
Capital reserve 299.9 299.9
Retained earnings 2,174.9 (9,037.3)
----------------- -----------------
TOTAL EQUITY 3,381.0 (6,039.6)
======== ========
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MAY 2008
Restated
Year ended 14 months ended
31 May 2008 31 May 2007
£000 £000 £000 £000
Cash flows from operating
activities
Profit / (loss) before tax 6,784.0 (694.1)
Adjustments for:
Cash flows in respect of - 30.7
exceptional reorganisation
costs
Finance charges 4.9 391.2
Depreciation and amortisation 567.5 727.4
Impairment of intangible fixed 132.4 -
assets
Profit on disposal of tangible (86.8) -
fixed assets
Foreign exchange difference (140.0) (47.5)
Increase in inventories (79.8) (179.3)
Decrease/(increase) in trade 69.9 (110.0)
and other receivables
Increase in trade and other 222.5 345.3
payables
Pension contributions paid (34.8) (486.6)
Share option charge 10.5 -
Pension written back (6,294.2) -
Loan written back (402.6) -
----------------- -----------------
(6,030.5) 671.2
----------------- -----------------
Net cash generated/(used) in 753.5 (22.9)
operating activities
Cash flows from investing
activities
Interest received 10.1 3.7
Purchase of tangible fixed (1,452.8) (32.2)
assets
Proceeds from sale of tangible 991.9 50.0
fixed assets
Purchase of intangible assets (416.4) (504.3)
----------------- -----------------
Net cash used in investing (867.2) (482.8)
activities
Cash flows from financing
activities
Issue of ordinary shares 1,819.7 -
Interest paid (15.0) (50.9)
Repayments bank and other - (32.5)
loans
Capital element of finance (11.9) (8.1)
leases and rental payments
Payments made to Pension (1,200.0) -
Protection Fund
----------------- -----------------
Net cash generated from/(used) 592.8 (91.5)
in financing activities
----------------- -----------------
Net increase/(decrease) in 479.1 (597.2)
cash and cash equivalents
Cash and cash equivalents at 87.7 684.9
beginning of year
----------------- -----------------
Cash and cash equivalents at 566.8 87.7
end of year
======== ========
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
This preliminary announcement is prepared on the basis of the accounting policies as stated in the interim report issued in February
2008.
Feedback PLC's consolidated financial statements were prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP)
until 31 May 2007. UK GAAP differs in some areas from IFRS. In preparing the consolidated financial statements, management has amended
certain accounting methods applied in the UK GAAP financial statements to comply with IFRS. Reconciliations and descriptions of the effect
of the transition from UK GAAP to IFRS on the Group's equity and its net income and cash flows were provided in the interim report for the
period ended 30 November 2007. Subsequently the Directors have identified that a further adjustment is required to comply with IFRS. The
comparative figures in respect of 2007 have been restated to reflect these further adjustments. Reconciliations and explanations of these
adjustments are included in note 2.
2. IFRS ADJUSTMENTS
As stated in note 1, the Directors have identified a further adjustment to the financial statements that are required to comply with
IFRS
Six months to 14 month
30 November period ended
Adjustments to the income statements 2007 31 May 2007
£000 £000
Profit/(loss) for the period as stated in 1,278.6 (527.8)
the interim report
Intangible asset 21.3 (169.2)
Deferred tax (3.9) 50.8
---------------- ----------------
Restated profit/(loss) for the year 1,296.0 (646.2)
======== ========
Adjustments to Retained Earnings
At At
At
30 November 2007 31 May
8 October 2006
2007
£000 £000
£000
As stated in the interim report (3,530.1) (8,906.0)
(9,379.3)
Intangible asset (247.1) (187.5)
(96.8)
Deferred tax 52.8 56.2 29.0
---------------- ----------------
----------------
Restated Retained Earnings (3,724.4) (9,037.3)
(9,447.1)
======== ========
========
Intangible asset
The Directors have reassessed which expenditure meets the criteria to be capitalised in accordance with IAS 38, Intangible Assets. The
Directors have
also refined the amortisation technique. Both changes have been made retrospectively.
3. SEGMENTAL REPORTING
The turnover, result before taxation and net assets of the Group are attributable to one business segment, the design, manufacture
and sale of electronic and computer peripheral equipment for industry and education.
Analysis by geographical market
Turnover Pre tax (loss)/profit Assets Liabilities
Assets Liabilities
2008 2007 2008 2007 2008 2007
2008 2007
£000 £000 £000 £000 £000 £000
£000 £000
Restated Restated
Restated
By origin
United Kingdom 8,557.5 8,326.7 396.3 (298.0) 5,548.6 (2,596.0)
4,951.4 (11,211.1)
Continental Europe 361.6 313.3 149.9 59.3 324.2 (12.8)
93.3 (13.4)
United States 688.3 999.4 21.1 0.9 164.9 (47.9)
210.7 (70.5)
Exceptional items - - 6,216.7 (456.3) - - -
-
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
----------------- -----------------
9,607.4 9,639.4 6,784.0 (694.1) 6,037.7 (2,656.7)
5,255.4 (11,295.0)
========= ========= ========= ========= ========= =========
========= =========
All capital expenditure incurred by the Group was in the United Kingdom.
Year Ended Restated
31 May 2008 14 months ended 31
May 2007
£000 £000
Turnover by destination
United Kingdom 3,899.7 4,223.3
Rest of Europe 1,544.6 649.9
Americas 1,115.3 1,162.1
Africa 171.6 717.7
Middle East 1,410.2 767.5
Far East 1,466.0 2,118.9
------------------ ------------------
9,607.4 9,639.4
========= =========
4. EXCEPTIONAL ITEMS
The consolidated income and expenditure account includes as exceptional items:
a) £86,900 (2007 - £307,600) in respect of the gain on the disposal of the freehold premises;
b) charge of £479,400 (2007 - £763,900) in respect of expenses incurred in negotiating the solution to the pension deficit,
reorganisation and accrued relocation costs and
c) £402,600 gain on cancellation of loan provided by Mr Charlton. Full details of the agreement are set out in note 6.
5. PROFIT/(LOSS) PER SHARE
Basic profit per share for the period ended 31 May 2008 is based on the Group profit on ordinary activities after taxation of £7,182,400
(2007: loss £646,200) attributed to 77,628,244 Ordinary Shares, being the weighted average number of shares in issue throughout the year
(2007: 13,113,250).
6. RELATED PARTY TRANSACTIONS
Mr T.W.G. Charlton, whilst a non-executive Director of the Company, lent the Company the sum of $1,000,000 on 12 December 2003. Mr
Charlton resigned from the board on 12 November 2004. The original terms of the loan were renegotiated, effective from 1 December 2004, the
loan becoming repayable on 8 October 2009, with interest at 0.575% per month accruing daily. The arrangements regarding the loan from Mr.
Charlton were subject to change as part of the Company Voluntary Arrangement entered into on 2 July 2007- Note 4 "Exceptional Items -
Restructuring" refers. Mr Charlton agreed to accept a write down of the loan to £100,654.25 (being an 80% reduction) which was satisfied by
the issue of 3,355,141 New Ordinary Shares, at the Placing Price, being the Director's Share Issue during the placing of July 2007.
Placing of 26,666,686 New Ordinary Shares in Feedback PLC at 2.625 pence per share
In May 2008 during the placing of new ordinary shares Mr Michael Burt, Executive Chairman, Peter Smith, Finance Director, David Barton
and John Westcott, both Non-Executive Directors, subscribed for 8,952,550, 1,904,761, 8,857,000 and 761,900 Placing Shares respectively. In
addition, Tom Charlton, who held 13.82% of the Company's Ordinary Shares, subscribed for 5,238,095 Placing Shares.
7. EXCEPTIONAL ITEM - RESTRUCTURING
(a) Agreement with the Pension Protection Fund (PPF) and Company Voluntary Arrangement
On 2 July 2007, the Company and its subsidiaries, Feedback Data Limited (FDL) and Feedback Instruments Limited (FIL) entered into a
Company Voluntary Arrangement (CVA) with its creditors under which all external creditors were paid in full save for:
* the liability to the Trustees of the Feedback Pension Scheme and
* the liability to Mr T.W.G. Charlton in respect of the loan made by him to Feedback Plc.
The Company, together with FDL and FIL entered into an agreement with the Board of the PPF, under the terms of which the Group:
* paid £700,000 from the proceeds of a share placing of 46,666,667 New Ordinary Shares of 3 pence per share;
* allocated to the Trustees of the Feedback Pension Scheme 14,846,411 New Ordinary Shares at 3 pence per share, which was equal to
18% of the enlarged share capital of the Group;
* paid £500,000 from the sale of the Park Road site;
* paid the reasonable legal and other professional costs incurred by the PPF and the Trustees in negotiating and completing the
arrangements.
The above constituted full and final settlement of all claims the Trustees and/or the PPF may have against the Company, Feedback PLC and
Feedback Instruments Limited, which formerly employed members of the pension scheme.
On 4 December the PPF confirmed that all conditions had been met and the Supervisor of the CVA issued his certificate of completion.
In addition, the Group agreed with Mr Charlton that the loan of $1,000,000 provided by him to Feedback PLC would be written down to the
balance satisfied by the allotment of 3,355,141 New Ordinary Shares in PLC at the Placing Price.
(b) Reconciliation of exceptional gain on write back of deficit on pension scheme
£000
(Deficit) at start of year (7,974)
Employer contributions received 35
-----------------
Deficit in scheme at closure (7,939)
Proceeds from sale of property 500
Feedback Plc shares allotted to Trustees 445
Proceeds from share placing 700
-----------------
Exceptional gain (6,294)
========
8. ANNUAL REPORT
The information in this announcement, which was approved by the Board of Directors on 8 October 2008, does not comprise statutory
accounts. The statutory accounts for the period ended 31 May 2007 have been delivered to the Registrar of Companies and included an audit
report which was unqualified and did not contain statements under s237(2) or (3) of the Companies Act 1985 (the Act). The statutory accounts
for the year ended 31 May 2008 will be delivered to the Registrar of Companies in accordance with Section 242 of the Act.
The Report and Accounts will be posted to shareholders by 10 October 2008 and the Annual General Meeting will be held at 11.00 am on 3
November 2008. Statutory financial statements will be filed with the Registrar of Companies following the Annual General Meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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