Interim Results

RNS Number:0278W
Feedback PLC
19 December 2000


FEEDBACK plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2000

CHAIRMAN'S INTERIM STATEMENT

The Group experienced a challenging first half-year which resulted in a
pre-tax loss of #352,000 for the six months to 30 September 2000 of which
#218,000 related to our share of losses in our joint venture company,
TekniCAL. Group turnover increased marginally to #4,626,000 but increased
development and marketing costs, together with significant reductions in
margins at Feedback Instruments adversely affected the results. Whilst I had
forewarned at the AGM in August of the likely outcome for the first half year,
it is never-the-less very disappointing.

TekniCAL's disappointing results for the first half year were, in part, due to
continuing delays in the release of UK Government funding to prospective
customers, which is now anticipated to be available in Spring 2001. However,
the results do not reflect the potential for this business. Future financing
strategies for TekniCAL, which is a joint venture company with University of
Lincolnshire and Humberside, are currently under consideration to ensure we
maximise the opportunities for this company.

In the educational sector, TekniCAL is a core member of working groups on
standards and specification bodies and is well placed in the UK markets. The
TekniCAL Virtual Campus (VC) product has now been sold overseas. Foreign
language versions of the VC have been installed in China and also in Mexico,
where the initial ten site project could lead to a roll out to over two
hundred sites. The Virtual Training Manager (VTM), which uses Virtual Campus
technologies for corporate training activity, has been launched and the first
sales have been secured, with other pilot projects already underway, including
one with a major financial institution. The opportunities in this market
sector are considerable. In addition to the established VC and VTM products,
TekniCAL is currently working in a partnership arrangement with BT Education
to deliver 'The Classroom of the Future' which will be launched at the BETT
Conference and Exhibition, the largest educational exhibition in the world, to
be held in London in January 2001. The prospects for this section of the
business remain very encouraging.

I have indicated in the past that Feedback Instruments is very dependent on
larger, export orientated, packaged-deal business. Often these projects
require the supply of both the standard Instruments manufactured products,
together with factored products from other suppliers. The balance of these two
clearly affects margins and in the first half the adverse product mix resulted
in an overall reduction in margins achieved.

At both Feedback Instruments and TekniCAL substantial increases in product
development and marketing have been made and these additional costs are
reflected in the first half results. Product development focused on the
market's expectations of ever increasing computer support for laboratory
teaching equipment operating within a Managed Learning Environment. This has
been expensive to achieve, but essential, for Feedback and TekniCAL to remain
leaders in their areas. The investments considerably strengthen both companies
for the future and further enhances the integration of software with existing
hardware.

Feedback Incorporated has had a good first half-year. Both turnover and
profits increased and the current level of business continues to meet
expectations. Results at Feedback Data were significantly below expectations,
although this subsidiary continues to be profitable. In common with other IT
equipment providers, the company has seen a weakening in the market over
recent months, although business delayed by Y2K project implementation is now
re-emerging. The German subsidiary operated broadly in line with expectations.
The Data company continues to develop new, related Data Capture and Access
Control/Security hardware and software products designed to meet future market
requirements.

The level of activity in all subsidiaries of the Group remains encouraging. As
was the case at the time of the AGM, order book levels and prospects for a
number of overseas projects within the educational sector are positive.
Forecasting the timing of this potential business remains difficult, although
the product mix of these projects is more favourable than in the first
half-year. 

D H Harding, Chairman 19 December 2000


Note: The interim figures for the six months to 30 September 2000, which are
unaudited, have been prepared on the basis of the accounting policies set out
in the Annual Report and Accounts for the year ended 31March 2000. The
Financial information contained in this Interim Report does not amount to full
accounts within the meaning of Section 240 of the Companies Act 1985.

The results for the year ended 31 March 2000 are extracted from the published
accounts for that period on which the auditors gave an unqualified report and
which have been filed with the Registrar of Companies. 

The deficit per share for the six months ended 30 September 2000 is based on
the Group loss on ordinary activities after taxation and preference dividends
of #398,300 attributed to 11,604,129 ordinary shares, being the weighted
average number of ordinary shares in issue. The diluted earnings per share is
calculated allowing for both the full conversion of the Preference Shares and
the full exercise of outstanding share options.

However, in accordance with Financial Reporting Standard 14, as neither of
these conversions have a dilutive effect the earnings per share figure remains
unaltered.

SUMMARISED PROFIT AND LOSS ACCOUNT

                                     6 months to    6 months to       Year to
                                      30 Sept 00     30 Sept 99   31 March 00
                                          #'000s         #'000s        #'000s


Turnover                                 4,625.9        4,334.5       9,294.4
Operating (loss)/profit                   (140.0)         193.1         585.4
Share of operating (loss)/profit of 
joint venture                             (218.6)         103.1          28.3
Net interest receivable/(payable)            6.4            1.8          (2.0)
(Loss)/profit on ordinary activities      (352.2)         298.0         611.7
Tax on profit on ordinary activities          --          (89.4)       (207.6)
(Loss)/profit for the period after 
taxation                                  (352.2)         208.6         404.1
Ordinary dividends paid and proposed          --             --            --
Preference dividends paid and proposed     (46.1)         (58.2)       (105.6)
Preference share costs appropriation        (2.1)         (57.6)        (86.6)
Retained (loss) / profit for the period   (400.4)          92.8         211.9
(Deficit)/ earnings per share              (3.43)p         1.64p         2.10p
Diluted (deficit)/ earnings per share      (3.43)p         1.29p         2.10p


SUMMARISED BALANCE SHEET

                                        6 months to   6 months to      Year to
                                         30 Sept 00    30 Sept 99  31 March 00
                                             #'000s        #'000s       #'000s

Fixed assets                                  579.2         530.6       483.0
Investment in Joint Venture                   (71.5)        228.1       147.1
Investment in Joint Venture                   507.7         758.7       630.1
Current assets Stock                        1,787.7       1,314.7     1,444.7
Debtors                                     4,649.1       3,557.6     4,222.3
Cash at bank and in hand                      915.1       1,304.5       787.2
                                            7,351.9       6,176.8     6,454.2

Creditors: amounts falling due             
within one year                            (3,780.6)     (2,509.2)   (2,599.1)
Net current assets                          3,571.3       3,667.6     3,855.1
Total assets less current liabilities       4,079.0       4,426.3     4,485.2
Creditors: amounts falling due 
after more than one year                     (182.9)       (250.7)     (190.9)
Net assets                                  3,896.1       4,175.6     4,294.3
Ordinary share capital                      1,164.1       1,057.4     1,157.0
Preference share capital                      919.1       1,129.8       933.2
Reserves                                    1,812.9       1,988.4     2,204.1
Shareholders' funds                         3,896.1       4,175.6     4,294.3


CASH FLOW STATEMENT

                                       6 months to   6 months to       Year to
                                        30 Sept 00    30 Sept 99   31 March 00
                                            #'000s        #'000s        #'000s

Net cash (outflow)/inflow from 
operating activities                        (417.3)       (107.3)        24.2
Returns on investments and 
servicing of finance                           6.4           1.8         (2.0)
Preference dividend paid                     (46.1)        (58.2)      (105.6)
Corporation tax recovered/(paid)              83.3          (7.8)       (31.8)
Capital expenditure                         (128.6)        (51.5)       (68.8)
Financing                                    (18.7)        (22.7)       (37.4)
Management of liquid resources               650.0         500.0        200.0
Increase/ (decrease) in cash                 129.0         254.3        (21.4)


Reconciliation of operating (loss)/profit to operating cash flow

Operating (loss)/profit                     (140.0)        193.1       585.4
Depreciation charges                          57.5          67.1       138.6
(Profit) on sale of tangible fixed assets    (13.5)           --        (6.4)
Exchange difference                           (8.8)        (53.9)      (87.6)
(Increase)/ decrease in stocks              (343.0)        162.9        32.9
(Increase) in debtors                       (502.1)       (413.8)   (1,003.2)
Increase/(decrease) in creditors             532.6         (62.7)      364.5
Net cash (outflow) / inflow from 
operating activities                        (417.3)       (107.3)       24.2

REVIEW REPORT BY THE AUDITORS TO FEEDBACK plc

We have reviewed the interim financial information for the six months ended 30
September 2000 set out on pages 4 to 6, which is the responsibility of, and
has been approved by, the directors. Our responsibility is to report on the
results of our review.

Our review was carried out having regard to the Bulletin 'Review of Interim
Financial Information', issued by the Auditing Practices Board. This review
consisted principally of applying analytical procedures to the underlying
financial data, assessing whether accounting policies have been consistently
applied and making enquiries of management responsible for financial and
accounting matters. The review excluded audit procedures such as tests of
controls and verification of assets and liabilities, and was therefore
substantially less in scope than an audit performed in accordance with
Auditing Standards. Accordingly we do not express an audit opinion on the
interim financial information.

On the basis of our review: 

- in our opinion the interim financial information has been prepared using
accounting policies consistent with those adopted by Feedback plc in its
financial statements for the year ended 31 March 2000; and

- we are not aware of any material modifications that should be made to the
interim financial information as presented.

Copies of the interim statement will be sent to all shareholders in due
course.