Feedback #FDBK – Final results, notice of AGM and TexRAD® Lung CE mark update.

Feedback plc (AIM: FDBK), the specialist medical imaging technology company, announces its final results for the year ended 31 May 2017.

Operational highlights (including post-period end)¹

·      Letter of Intent for TexRAD^® Lung signed with a leading global medical imaging company

·      Exclusive TexRAD^® distributor agreements signed in China and Korea

·      Prototype integration solution for TexRAD^® demonstrated to Alliance Medical Group

·      CCI collaboration with Future Processing Sp. z o.o. to develop medical imaging software

·      Significant TexRAD^® research interest including 19 presentations at RSNA annual conference

·      Certification received by CCI for ISO 13485:2016 quality management standard compliance

·      CE marked release of TexRAD^® Lung expected by the end of November 2017

Financial highlights (including post-period end)

·      Completion of a placing of 27,272,727 new ordinary shares of 0.25p each in the Company at a price of 2.75 pence per share to raise a total of £750,000 (gross) in April 2017

·      Revenue for the year £465,885 (2016: £431,454)

·      Loss after tax for the year £266,003 (2016: loss £183,156)

·      Loss before interest, tax and amortisation was £252,750 (2016: loss £206,523)

·      Cash as at 31 May 2017 was £696,811 (31 May 2016: £105,673)

1.     Cambridge Computed Imaging Limited is a wholly owned subsidiary of Feedback plc.

Dr Alastair Riddell, Chairman at Feedback plc, said: “We delivered solid operational progress during the period and the increased international sales exposure is particularly encouraging. Our technical and regulatory team have been working diligently on the delivery of a CE marked release of TexRAD^® Lung. We are acutely aware that this development has taken longer than originally expected, however we are confident that our rigorous regulatory review will pave the way for new products and therefore maximise the potential for TexRAD^®‘s clinical use worldwide. We remain focused on applying our leading research expertise to the clinical setting to drive future revenue growth and would like to thank our shareholders, customers and partners for their continued support.”

Notes to editors

About Feedback plc

Feedback plc is a specialist medical imaging technology company. It develops software and systems that provide innovative techniques and improved workflows for practitioners involved in medical research and treating patients. TexRAD^®, the Company’s patented quantitative image texture analysis technology, has the potential to assist clinicians in diagnosis, prognosis and treatment of patients with cancer and is currently installed in over 40 of the world’s leading research institutions across Europe, North America and Asia. The Cadran platform provides a suite of medical imaging tools for decision support. The Cadran range includes the picture archiving communication system (PACS) to provide decision support for scan analysis, diagnostic workstations which provide secure remote access to view scans on demand, and products to securely share and transport patient data. Visit www.fbk.com.

For further information, please contact:

Chairman’s statement

FINANCIAL PROGRESS

In the year ended 31 May 2017, the Group incurred a loss after tax of £266,003 (2016: loss £183,156) on revenue of £465,885 (2016: £431,454). The results show a continuation in revenue growth as more customers around the world adopt TexRAD^® and Cadran products and associated support services. On 26 April 2017, we announced the completion of a placing of 27,272,727 new Ordinary Shares at a price of 2.75 pence per share to raise a total of £750,000 (before expenses). A proportion of the net proceeds from the share issue has been invested in product development, sales and marketing with the balance being utilised for general working capital purposes. This accelerated expenditure, including investing in the team and external activities, has contributed to the increase in the loss during the period, however the Directors expect that the benefits of this investment will be seen in the current financial year. Operational cash generation has been satisfactory and reflects customer payments for new purchases and contracts before the periods in which the revenue is recognised. The share issue, net of costs, has contributed to a healthy cash balance at the end of the year.

OPERATIONAL PROGRESS

As previously announced, Feedback’s subsidiary company, Cambridge Computed Imaging Ltd (“CCI”) is working towards a CE marked release of “TexRAD^® Lung” for the clinical application of TexRAD^® in the diagnosis, prognosis and treatment of lung cancer.  CE marking is a claim by a medical device manufacturer that a product meets the essential requirements of the Medical Device Directive, which outlines the safety and performance requirements for medical devices in the European Union.  TexRAD^® Lung will be a “software only” medical device providing additional information for the interpretation of computerised tomography (CT) and positron emission tomography (PET) scans.

Feedback is committed to offering its customers the highest quality service across all areas of its business, and therefore compliance with international quality management standards is of paramount importance.  CCI received certification for its compliance with the ISO 13485:2016 quality management standard in September 2017.  In May 2017, Feedback announced that CCI had identified enhancements to improve the performance of TexRAD^® which will further support the wider clinical application of the TexRAD^® technology.  Since then, CCI has successfully prepared a “release candidate” version of TexRAD^® Lung, incorporating over 60 risk control measures to address the 50 potential clinical risk scenarios identified within the product. This in now in the final stages of testing, with an anticipated CE marked release by the end of November 2017. 

On 30 March 2017, as part of the intended distribution arrangements, CCI signed a letter of intent with a leading global medical imaging company which would make TexRAD^® Lung available for purchase on its diagnostic imaging solutions platform.  This would, in due course, enable easy access to TexRAD^® Lung for hundreds of potential users around the world on a subscription basis.  We look forward to continuing our ongoing discussions with this company and other leading imaging companies to broaden the range of potential routes to market for clinical versions of TexRAD^®.

Post-period end, CCI signed exclusive distributor agreements with Korea Computer Motion ISG in June 2017 and Boya Digital Technology (Beijing) Co. Ltd. in July 2017 for sales and distribution of TexRAD^® in South Korea and the People’s Republic of China, respectively.

These agreements represent a significant step in expanding TexRAD^® sales to meet the fast-growing demand in Asian markets. By successfully identifying and engaging with distributors who are experts in the local market, we can leverage the TexRAD^® brand to help build a regional sales pipeline.  Over the first few months of these agreements, joint marketing and promotional activities have been well-received, we have seen an increase in purchase orders for TexRAD^® from leading medical institutions in South Korea and we are receiving significant interest in China.

In September 2016, we announced that we have developed a technical solution with Alliance Medical Group that would allow the integration of TexRAD^® into Alliance’s network of PET/CT scanners in UK hospitals. A prototype version has been demonstrated to potential users and an abstract was presented at the Radiological Society of North America (RSNA) annual conference in November 2016. The poster, entitled “PET/CT in Lung Cancer: An Automated Imaging Tool for Decision Support”, highlighted results from a preliminary study which suggests that an automated PET/CT lung cancer tool may standardise clinical performance whilst allowing access to quantitative texture analysis to improve prognostication and fit within clinical workflow. We continue to work closely with Alliance on the future integration of TexRAD^® Lung.

In March 2017, the Company announced that CCI was finalising arrangements for the secure transfer of patient data from Papworth Hospital NHS Foundation Trust to the new Cambridge Biomedical Campus which was expected to open in April 2018. Papworth Hospital has since extended the timeframe to September 2018 and therefore preparation for the transfer of the extensive archive of medical images is ongoing.

RESEARCH AND DEVELOPMENT PROGRESS

In July 2016, we announced a large-scale collaboration with Future Processing Sp. z o.o. (“Future Processing”), a software development service provider based in Gliwice, Poland to develop medical imaging software. The collaboration will entail a substantially increased development team working on new products and the sharing of intellectual property and future revenues. We believe that by CCI working jointly with the Future Processing healthcare team, CCI’s existing product portfolio can be improved and new products developed more rapidly including further applications for TexRAD^®. The collaboration is fully underway and both teams are working towards agreeing formal licences for new software products to be brought to market in 2018.

We continue to receive significant TexRAD^® research interest from prestigious institutions worldwide which has resulted in multiple articles in leading publications. In September 2016, University College London (“UCL”) published a retrospective study of 67 prostate cancer patients which demonstrated that TexRAD^® analysis of multi-parametric MRI images may be able to identify the presence of clinically significant prostate cancers in the transition zone and therefore could potentially assist in optimising prostate radiologists’ workflow. In November 2016, we attended the 102^nd Scientific Assembly and Annual Meeting of the Radiological Society of North America (RSNA 2016); the premier global event for radiologists. We had a strong presence at RSNA 2016, with 19 scientific paper presentations featuring TexRAD^®analysis, further emphasising the significance of our technology across the healthcare industry. Further information on the papers presented at RSNA 2016 can be found at https://rsna2016.rsna.org/program/.

Post-period end in October 2017, our customer at the International University of Health and Welfare Hospital in Tochigi, Japan published article featuring TexRAD^® analysis in liver cancer. The paper, entitled “Impact of hepatocellular carcinoma heterogeneity on computed tomography as a prognostic indicator” was published in the Nature affiliated journal; Scientific Reports. We also sponsored the American British Course in Neuroradiology in Mumbai, India in October 2017, which included a lunch-time symposium presentation on brain texture analysis using TexRAD^® technology. These research activities continue to support the potential future clinical application of TexRAD^® in these other disease indications.

In 2015, we announced the incorporation of a 50:50 joint venture company, Prostate Checker Ltd, with QUIBIM S.L. (“QUIBIM”). The Board has concluded that a joint venture vehicle is no longer required for the collaboration. The Company continues to work closely with QUIBIM to develop a specific application of TexRAD^® texture analysis for the computer assisted detection and diagnosis of prostate cancer.

BOARD AND ORGANISATION

Tom Charlton stepped down as a director on 30 May 2017 in order to devote more time to his other investment activities. Post-period end, on 8 June 2017, we announced that Trevor Brown resigned as a non-executive Director in order to allow the Company to move rapidly to the next stage in its development. On behalf of the Board, I thank both Tom and Trevor for their invaluable support of the Company following its readmission in 2014 which has enabled it to achieve considerable progress to date.

To further support the Company’s growth strategy, Tim Irish joined the Board on 8 June 2017 as Non-Executive Director. Tim is a Professor of Practice at Kings College London as well as a board member of Bournemouth University. He joined the board of the National Institute for Health and Care Excellence (NICE) in April 2015 and became its Senior Independent Director in May 2017. Tim has worked in the life sciences industry for 30 years. His career has spanned global health technology companies across Europe and North America, including GSK, GE and Philips the latter two in senior positions responsible for medical imaging. Tim also currently holds a number of non-executive positions in health and technology related entities.

I would also like to recognise and thank the Group’s employees for the outstanding contribution they have made. Having completed the placing in April 2017, we are in strong position to continue to build and invest in a leading team to deliver our objectives.

STRATEGY AND OUTLOOK

Upon delivery of the first CE marked release of TexRAD^® by the end of November 2017, our ambition is to leverage our leading research, image processing and analysis expertise to position TexRAD^® technology for routine clinical use to drive future revenue growth. We look forward to continuing our ongoing discussions with leading imaging companies to broaden the range of potential routes to market for clinical versions of TexRAD^®. Our existing and future distributor agreements will continue to support the Company’s international expansion, ensuring that our technology continues to be used by the world’s leading institutions to expedite research in this important field. With pioneering technology platforms and strong industry trends, we believe the Group is ideally placed to deliver continued growth.

Dr A J Riddell

Chairman

6 November 2017

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MAY 2017 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MAY 2017

CONSOLIDATED BALANCE SHEET AT 31 MAY 2017 

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MAY 2017 

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2017

1.   General information

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

The Company is listed on AIM of the London Stock Exchange. These Financial Statements were authorised for issue by the Board of Directors on the 6 November 2017.

While the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Group has also published full financial statements that comply with IFRSs available on its website and to be circulated shortly.

The financial information set out in the announcement does not constitute the company’s statutory accounts for the years ended 31 May 2017 or 2016. The financial information for the year ended 31 May 2016 is derived from the statutory accounts for that year, which were prepared under IFRSs, and which have been delivered to the Registrar of Companies.

The financial information for the year ended 31 May 2017 is derived from the audited statutory accounts for the year ended 31 May 2017 on which the auditors have given an unqualified report, that did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006 and included the following paragraphs:

“Emphasis of matter – Going Concern

In forming our opinion, which is not modified, we have considered the adequacy of the disclosures made in Note 3c of the accounting policies regarding the group and parent company’s ability to continue as a going concern. The group incurred a loss of £266,003 in the year and may need to obtain further finance during the next twelve months which has not yet been obtained. These factors, along with the matters explained in note 3c of the accounting policies indicate the existence of a material uncertainty which may cast a significant doubt about the group and the company’s ability to continue as a going concern.

The financial statements do not include the adjustments that would result if the group and company were unable to operate as a going concern.”

The statutory accounts will be delivered to the Registrar of Companies following the Company’s annual general meeting.

2.   Adoption of new and revised International Financial Reporting Standards

No new International Financial Reporting Standards (“IFRS”), amendments or interpretations became effective in the year ended 31 May 2017 which had a material effect on this financial information.

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

IFRS Standards and Interpretations issued (and EU adopted) but not yet effective:

Mandatory for accounting periods commencing on or after 1 January 2017:

·      Amendments to IAS 12 – Recognition of Deferred Tax Assets for Unrealised Losses

·      Amendments to IAS 7 – Disclosure Initiative

·      Annual improvements to IFRS Standards 2014-2016 Cycle

Mandatory for accounting periods commencing on or after 1 January 2018:

·      IFRS 9 – Financial Instruments

·      IFRS 15 – Revenue from Contracts with Customers

·      IFRIC Interpretation 22 – Foreign Currency Transactions and Advance Consideration

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

·      IFRS 16 – Leases

Date of implementation in the European Union not yet known:

·      IFRS 14 – Regulatory Deferral Accounts

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 reported results.      

3.   SIGNIFICANT ACCOUNTING POLICIES

(a)  Basis of preparation

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

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

(b)  Basis of consolidation

The Group financial statements consolidate the financial statements of Feedback plc and its subsidiaries (the “Group”) for the years ended 31 May 2017 and 2016 using the acquisition method.

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

(c)  Going Concern

On 26 April 2017 the Company raised a total of £750,000 (before expenses) through a placing to both invest further in the product development and sales and marketing of TexRAD, Feedback’s patented quantitative imaging software, and also for general working capital purposes.

Having updated the Group’s formal business plan the Directors consider that the Group and the Company are likely to have access to adequate cash resources for at least the next twelve months, from both existing cash balances and by obtaining further equity finance from the financial markets, or alternative funding, if required to enable continued product development and international expansion.  Although this further finance has not yet been obtained, the Directors are confident that adequate additional finance will be forthcoming should it be required. Accordingly, the Directors believe that the Group and Company are a going concern and have therefore prepared the financial statements on a going concern basis.

4.   LOSS PER SHARE

Basic earnings per share is calculated by reference to the loss on ordinary activities after taxation of £266,003 (2016: £183,156) and on the weighted average of 232,879,771 (2016: 203,514,709) shares in issue.

There is no dilutive effect of the share options and warrants as the dilution would be negative.

5.   PROPERTY, PLANT AND EQUIPMENT

6.   INTANGIBLE ASSETS

In accordance with the accounting policies and IFRS the Directors have assessed the carrying value of the intangible assets. In the year ended 31 May 2015, the Directors took the prudent decision to write down the carrying value of the software development costs in the balance sheet in order to meet the requirements of IFRS. During the years ended 31 May 2017 and 2016 all similar development costs have been expensed as the provisions of IFRS have not been met. However the Directors believe the Group’s technology has great potential and this write down does not reflect their commercial assessment of the value of the Group’s intellectual property. Expenditure on software development is being written off as incurred until the provisions of IFRS are met. The customer lists and patents are deemed to have ongoing value to the Group.

7.   OTHER RECEIVABLES

8.   OTHER PAYABLES

9.   SHARE CAPITAL AND RESERVES 

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 1.64%. The expected volatility is based on historical volatility over the last two years and is estimated to be 25%. The average share price during the year was 1.85 pence. During the year the Company had the following share options in issue:

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

Warrants

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

Warrants are valued using the Black-Scholes pricing model and no performance conditions are included in the fair value calculations. The risk free rate was 1.64%. The expected volatility is based on historical volatility over the last two years and is estimated to be 25%. The average share price during the year was 1.85 pence. During the year the Company had in existence the following warrants:

Reserves

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

10.  NOTICE OF ANNUAL GENERAL MEETING (“AGM”) AND AVAILABILITY OF REPORT AND FINANCIAL STATEMENTS

The Company hereby announces that its AGM will be held at the offices of Mills & Reeve LLP at 4th Floor, 24 Monument St, London EC3R 8AJ at 3.00 p.m. on 30 November 2017.  

The Company’s Annual Report and Financial Statements for the year ended 31 May 2017 are expected to be posted to shareholders, along with the Notice of AGM, on 7 November 2017 and will be available thereafter at the Company’s registered office, Unit 5 Grange Park, Broadway, Bourn, Cambridgeshire CB23 2TA and on its website: http://www.fbk.com/category/financial-reports/